Lords Sitting of 31 January 1992

Preamble
The House met at eight minutes past eleven of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Bishop of Worcester.

Rail Freight: Investment
Lord Tordoffasked Her Majesty's Government:
What steps they are taking to encourage freight traffic to transfer from road to rail.
The Minister of State, Department of Transport (Lord Brabazon): My Lords, to encourage maximum use of the rail network, the Government are backing British Rail's proposals for joint ventures with the private sector and continental rail partners, together with investments totalling over £400 million to establish new freight services through the Channel Tunnel. We have substantially improved the grant scheme for private rail freight facilities, and we are committed to opening access to the rail network to allow further opportunities for the private sector.
Lord Tordoff: My Lords, I am grateful to the Minister for that reply. Did he see an article in the daily newspapers earlier this week which suggested that his right honourable friend the Secretary of State for Transport had secretly halted British Rail investment of up to £300 million in new freight schemes? The reasoning behind that was that British Rail was not going to be allowed to invest that money until privatisation was accomplished. That does not square with the need to move freight traffic from the roads on to rail—for environmental reasons as much as any.
Lord Brabazon of Tara: My Lords, it does not square with that need, and neither is it true. The Government's objective is, as I have said, to secure more investment in the railways, not less. At present, I am aware of one case only (an investment of some £5 million in a fleet of lorries for container delivery) where the department is awaiting information from the railways board on the scope of contracting out the activity to the private sector. Otherwise, there is no question of stopping investment.
Lord Mellish: My Lords, while I support any move to transfer freight from the roads to the railways, is the Minister aware that just outside the House is the greatest highway the world has ever seen—the river Thames? From morning until night it is virtually devoid of any freight at all. Why is that? Why do not this Government, above all, force firms which have non-urgent cargo to use the river Thames for the purpose for which it was intended?
Lord Brabazon of Tara: My Lords, it is not the Government's policy to force—
Lord Mellish: My Lords, I know all that.
Lord Brabazon of Tara: —firms to use a mode of transport which they do not wish to use. Grants available for increased rail freight, known as the freight facilities grants, are also allowable for the increased use of inland waterways.
Lord Mellish: My Lords, nothing is happening.
Lord Mowbray and Stourton: My Lords, I accept the merit of trying to put some of the freight on to the railways again; but is not the hope of the noble Lord, Lord Tordoff, pie in the sky? With the amount of freight being carried on the roads now, it is impossible to do more than slightly improve the situation. Is it not wrong to give the impression that we shall soon be living in a lovely Utopia where the roads are nearly empty?
Lord Brabazon of Tara: My Lords, I was not trying to give that impression. It is a fact that the majority of freight travels by road and will always continue to do so; but with the opening of the Channel Tunnel, there will be the opportunity—this will apply to longer distance freight, which is where rail transport comes into its own—to increase the amount of freight carried by rail. I hope we shall see that with the opening of the tunnel.
Lord Bruce of Donington: My Lords, will the Minister explain how it is that the German state railways are subsidised annually by the German Government to an extent that exceeds in one year all the capital investment programmes that the Minister has announced in respect of British Rail?
Lord Brabazon of Tara: My Lords, I am not sure whether the noble Lord is suggesting that we should follow the Germans in subsidising the railways to the extent that they do. They would probably like to see themselves having to give a smaller subsidy to their railways. The subsidy figures are not strictly comparable between the German and British railways in that the German subsidy includes, I believe, a large element for writing off the repayment of loans, whereas British Rail has a fairly small amount of loan outstanding.
Lord Morris: My Lords, is my noble friend confident that any increase in rail freight traffic will not affect passenger traffic, nor British Rail's famed punctuality?
Lord Brabazon of Tara: My Lords, I believe that there is ample capacity on the railway system to carry increased amounts of both freight and passenger traffic.
Lord Mellish: My Lords, I apologise to the House for speaking again, but the answer to my question about the River Thames was terrible. Is the Minister aware that every country in the world with a highway like the Thames uses it? For example, Germany with the Rhine. We do nothing with the River Thames. Why not? Please do not tell me that it is not the Government's responsibility.
Lord Brabazon of Tara: My Lords, that is another Question.
Lord Geddes: My Lords, does my noble friend agree that the key to persuading freight traffic to move from road to rail is the efficiency of the road distribution system at the rail destinations? Will he comment on that?
Lord Brabazon of Tara: My Lords, my noble friend makes a good point.
Lord Underhill: My Lords, in the light of the Minister's replies, will he confirm that the Government are prepared to honour their commitment to establish freight terminals in every part of the United Kingdom? If that is their position, will they ensure that finance will be available? Despite the reply given to the noble Lord, Lord Tordoff, may we have confirmation that finance will be available to ensure that freight terminals are established? At the same time, will the Minister say how much finance has been expended on Section 8 grants? Are the Government still committed to removing from environmentally sensitive roads traffic that should be transferred to freight terminals under Section 8?
Lord Brabazon of Tara: My Lords, regarding the freight terminals in connection with the opening of the Channel Tunnel, British Rail has already announced plans for the nine terminals which will be in operation by the opening of the Channel Tunnel in 1993. As the noble Lord said, they are situated all round the country and I am not aware of any problem with their finance.
As concerns the rules for Section 8 grants, these were changed only last year to make it easier and more attractive to give grants. Since 1979 the Government have awarded 137 grants with a total value of £55 million, which have enabled over 2.5 million lorry journeys annually to be removed from the roads. Since our announcement last year on changes in the scheme, we are now looking at applications for a further £35 million or so of gross capital cost projects.
Lord Ezra: My Lords, in addition to the measures which the noble Lord said would be taken to try to stimulate the movement of freight by rail, will he indicate whether a research and development effort is also being mounted?
Lord Brabazon of Tara: My Lords, I am afraid that I am not aware of the research and development in that area. I shall have to look into the point and write to the noble Lord.
Lord Tordoff: Finally, my Lords, since the Minister has denied the veracity of the newspaper statement, will he comment on the other statement in the article which suggests that the Secretary of State has blocked a grant for a new Channel Tunnel freight terminal for Liverpool at Seaforth?
Lord Brabazon of Tara: My Lords, as I said, the purpose of Section 8 grants is to support the provision by the private sector of rail freight facilities which would not otherwise go ahead. In the case that the noble Lord mentions, the decision to go ahead was taken and announced by British Rail and the Mersey Dock and Harbour Company before any proposal for
1550
grants was put to the department. It follows that a grant cannot be required in order to enable the project to proceed, therefore it would not be a good use of taxpayers' money.

Trident
11.24 a.m.
Lord Mayhewasked Her Majesty's Government:
Why they require Trident to be able, independently of allies, to penetrate the ABM defences of Moscow.
Earl Howe: My Lords, I have nothing to add to the Answer given by my noble friend Lord Arran to the noble Lord on 16th January.
Lord Mayhew: My Lords, is the noble Earl aware that it is quite understandable that the Government wish to discourage discussion of their follies on the issue? Is he aware that the Trident fleet, with the same fire power as Polaris, will for decades be able to inflict unacceptable damage on any adversary? Further, since the successful visit of Mr. Yeltsin, may we now assume that the Government have abandoned their plan to increase Trident's fire power beyond that point for the purpose, as everyone knows, of being able to penetrate the defences of Moscow?
Earl Howe: My Lords, the Government welcome the reaffirmation by President Yeltsin of the undertakings given by President Gorbachev last autumn. However, welcome though that is, it does nothing to alter the Government's policy for the defence of this country, which is to maintain a minimum deterrent alongside an adequate conventional capability within NATO.
Lord Glenarthur: My Lords, does my noble friend agree that whatever the target and whatever the anti-ballistic missile defences associated with it, there is great merit in having a deterrent ultimately controlled by a separate centre of decision-making to those of our other allies?
Earl Howe: My Lords, I fully agree with my noble friend. Deterrence is about creating maximum uncertainty in the mind of an adversary as regards the damage he might sustain were he tempted to commit aggression. Our independent nuclear deterrent reduces that temptation and increases that uncertainty. It provides a second centre of decision-making within the alliance.
Lord Mellish: My Lords, is the Minister aware that there are at least some on this side of the House who agree with the Government that we should have a minimum deterrent? Trident is just the job in that regard.
Earl Howe: My Lords, I am glad that the noble Lord agrees with the Government's policies.
Lord Chalfont: My Lords, I wish to follow up the matter of a second centre of decision-making. Does the Minister agree that one of the major advantages of an independent British deterrent is that it provides

1551
such a second centre? Would it not be foolish in the extreme if that second centre of decision-making did not itself dispose of a fully effective and credible deterrent?
Earl Howe: My Lords, the noble Lord has expressed the position well.
Lord Kennet: My Lords, the Minister used the words "minimum deterrent". Do the Government agree that the question of what constitutes a minimum deterrent is affected by the existence or non-existence of the ABM round Moscow? If the ABM round Moscow were to be removed, along with everything else that President Yeltsin proposes to remove in agreement with the United States, would the Government then reflect again on what the word "minimum" means? If so, will they take care to be closely associated with the negotiations between the United States and Russia on these matters?
Earl Howe: My Lords, we shall follow developments with interest. However, the noble Lord appears to suggest that we should allow the security of this country to rest on short-term horizons and what may well be a transient phase in the state of nations. The Government will not gamble with the country's security. The enhanced capability of Trident enables us to keep our options open for the long term.
Lord Kennet: My Lords, when the noble Earl reads my words in the Official Report tomorrow, I hope he will recognise that I made no such suggestion.
Viscount Mersey: My Lords, is my noble friend aware that Mr. Yeltsin said yesterday that the number of nuclear weapons at the disposal of the United Kingdom is not really comparable with the number at the disposal of Russia, and therefore the matter is not worth discussing?
Earl Howe: My Lords, yes, I am aware of that.
Lord Williams of Elvel: My Lords, will the noble Earl reflect on the question of what a minimum deterrent is? Is it really the case that we need 128 warheads per boat, one boat presumably being on station? Given that we on this side of the House support a minimum deterrent, would it not be better to have a single warhead per Trident boat?
Earl Howe: My Lords, the noble Lord is leaping to conclusions. We have said that each Trident submarine will carry a maximum of 128 warheads. The actual number deployed is a matter for the Government to decide. We shall deploy no more than the minimum capability needed to ensure that any potential aggressor faces the prospect of unacceptable damage.
Lord Campbell of Alloway: My Lords, is my noble friend aware that there are those of us on this side of the House who happen to support 100 per cent. the Government's defence policies and rather resent the suggestion that they should be discussed as if they were follies?
Earl Howe: My Lords, I am grateful for my noble friend's comments.
Lord Holme of Cheltenham: My Lords, does the noble Earl agree that these are legitimate questions which are being discussed in the United States and in the Soviet Union, both of which are disarming substantially in the nuclear field? The question which the Minister might address concerns whether minimum deterrence would not involve an assessment of the motives and levels of armaments of potential adversaries. Can he inform the House on what basis, in a new situation, the Government are working out minimum deterrents, which we, like the noble Lord, Lord Mellish, fully support?
Earl Howe: My Lords, I believe that I have already answered that question. The Government are following closely recent developments and will continue to do so. However, we are a long way from reaching the point at which the promises of major cuts in weapons achieve reality. It will take many years before those cuts are effected. In the meantime we must remain vigilant.
Lord Birdwood: My Lords, does my noble friend agree that at the end of the day Chevaline is detectable from space and Trident is not and that space-based sensors are now allowed under the American-written treaty of last year?
Earl Howe: My Lords, it would be inappropriate to comment too closely from across the Dispatch Box on that statement by my noble friend. Suffice it to say that we believe Trident to be the most appropriate form of strategic nuclear deterrent to replace Polaris.
Lord Chalfont: My Lords, I apologise for intervening again. Would the Minister care to remind the House that, of the many intentions expressed by President Yeltsin regarding cuts in the military and strategic capacity of the Soviet Union, the one item he did not mention as being on his list of cuts was the ABM defences around Moscow? Does the Minister agree that if President Yeltsin thinks them important we should too?
Earl Howe: My Lords, the noble Lord made a good point. Nor did President Yeltsin mention cuts in ICBMs.
The Lord Bishop of Worcester: My Lords, can the Minister comment on an innocent question —namely, that so often we have tried to fight the next war with the weapons of the last? Does he consider Trident to be an appropriate response to the type of situation we faced in the Gulf War, and may well face again, of a quick, effective response in cases where unacceptable governments have possibly acquired nuclear capability? Would Trident be appropriate in such a situation?
Earl Howe: My Lords, it is important to remember that alongside our strategic capability we also maintain a sub-strategic capability which, as I have said recently from this Dispatch Box, is a key plank in dealing with the type of situation to which the right reverend Prelate referred. It is the combination of conventional forces, sub-strategic capability and our

1553
strategic capability which should ensure that potential aggressors such as we have seen over the past few years are not tempted to repeat their aggression.
Lord Mayhew: My Lords, is the noble Lord aware that the Question is not about whether or not we need a nuclear deterrent or even about a minimum nuclear deterrent, on which we agree with the Government? The Question asks whether a minimum nuclear deterrent must include the ability to penetrate the ABM defences of Moscow. Ministers in another place have frequently said that the number of warheads needed for Trident is determined by anti-ballistic missile defences. They refer to those around Moscow, the only city in the world which has ABM defences. I ask again, since Mr. Yeltsin's visit have the Government abandoned their plan to increase greatly the number of Trident warheads for the purpose, known to everybody, of being able to penetrate the defences of Moscow?
Earl Howe: My Lords, as I said, the number of warheads must remain a matter for the Government to decide. We do not discuss any targeting plans which the Royal Navy may have. President Yeltsin's announcement is a welcome response to NATO's declaration last year that the Soviet Union was no longer regarded as an adversary. I can do no better than to quote the words of my right honourable friend the Prime Minister, who said yesterday:
"I also assured President Yeltsin of our intention to maintain only a minimum nuclear strategic force threatening no one".

Africa: Famine Relief
11.34 a.m.
Lord Redesdaleasked Her Majesty's Government:
Why the Overseas Development Administration has declined to contribute to the special famine relief programme run by the International Fund for Agricultural Development.
The Minister of State, Foreign and Commonwealth Office (The Earl of Caithness): My Lords, as I told the House only three days ago on 28th January, we believe that the future activities in Africa of the International Fund for Agricultural Development should be financed in the same way as its work elsewhere.
Lord Redesdale: My Lords, I thank the Minister for that reply. He spoke of the central budget for the International Fund for Agricultural Development. However, as a number of countries, including the USA, France, Belgium, Holland and Kuwait, have seen that it may be necessary to fund a special famine relief programme in Africa, could not the Government re-evaluate their position on the issue if the situation in Africa becomes any worse?
The Earl of Caithness: My Lords, I fear that the noble Lord has not read Hansard for 28th January. He will see that I answered that precise question then. France's pledge is conditional; Germany, Japan,
1554
Norway, Denmark, Finland and Switzerland all contributed to the first phase but have said that they do not intend to contribute to the second phase.
Lord Molloy: My Lords, bearing in mind that we are probably witnessing today in the countries of the Horn of Africa the worst famine in the history of mankind, instead of being guided by other countries should this country not ensure that its own aid makes a contribution to help the suffering and the starving, particularly in the countries of the Horn of Africa?
The Earl of Caithness: My Lords, the noble Lord knows full well from my Answers to Questions from him on this issue that the ODA and Britain are doing a very good job in Africa and are not being told what to do by other countries.
Baroness Ewart-Biggs: My Lords, is it not a fact that IFAD set up its special programme as a direct response to a decrease in its central budget because it did not wish those very vulnerable countries in Africa to suffer as a result of its reduced budget? Is he further aware that a development agency called SOS Sahel, of which I am president, has found IFAD an invaluable source of funding for work done with small farmers and women heads of households to help them grow more food? In the light of that and of the fact that Britain's aid programme is geared towards alleviating poverty, would it not be a good idea for the Government to rethink their position on the issue?
The Earl of Caithness: My Lords, I also answered those questions three days ago. The important issue is the fourth replenishment of the IFAD, discussions on which will begin in April in Qatar. We have always said and we believe it is important that the financing of IFAD should be established on the right basis. We have been pressing for that for many years. It is not on the right basis at the moment, but we believe that the agency is doing very good work. We hope that the fourth replenishment will establish IFAD's financing on the right basis.

Education (Schools) Bill
Brought from the Commons; read a first time, and to be printed.

Coal Industry Bill
11.38 a.m.
Lord Cavendish of Furness: My Lords, I beg to move that this Bill be now read a second time.
The Bill is of great importance to British Coal, enabling the corporation to continue the restructuring of the industry which is essential for its future. The Bill is essentially a technical measure, as will become clear from its detailed provisions.
The Government's primary objective for the coal industry is to see that the largest possible economic industry is developed that the market for coal can support. It has to be recognised, however, that changes in the nation's fuel requirements are reducing overall levels of demand for coal. Industry, commerce and domestic consumers have been moving away from

1555
coal to other fuels and forms of energy over many decades. The electricity generators are now following that trend. Increasing output of low cost coal by foreign competitors is adding to the pressures on the coal industry.
Clause 1 of the Bill represents recognition that the changing market for coal presents the industry with serious challenges. Heavy restructuring has been required and colliery closures and substantial job losses are involved. That is why Clause 1 of the Bill increases the overall limit on the payment of restructuring grant by £1.5 billion and extends the availability of the grant by three years until March 1996.
Between April 1987 and the end of this financial year, some £1,400 million in restructuring grant will have been paid, including over £300 million this year. The existing ceiling of £1,500 million would restrict the payment of restructuring grant to the balance remaining of around £100 million. This is unlikely to be sufficient to meet the needs of the industry for restructuring finance. Without additional restructuring grant, British Coal would face heavy losses and a financial crisis.
Restructuring grant represents a specific commitment by this Government to the workforce in the industry. The grant was introduced by Section 3 of the Coal Industry Act 1987 and provides support for British Coal's expenditure on redundancy and early retirement, transfers and retraining, and covers the losses of British Coal Enterprise.
I appreciate the concern felt in this House about what these increases may imply in terms of a further manpower rundown in the industry. The increase in the limit is not, I can assure your Lordships, based on any specific government view of future reductions in manpower. Total expenditure on grant could be below the limit. British Coal's actual requirement for restructuring grant payments will be determined primarily by the degree to which British Coal succeeds in cutting costs further and winning sales in the mid 1990s.
The extension of the period of grant should also not be taken as a signal either on the timing of privatisation or the duration of any future rundown of manpower. Some elements of restructuring grant in respect of early pensions are staged over a number of years and those payments may continue beyond privatisation.
Clause 2 of the Bill provides power to repeal the Coal Mines Regulation Act 1908. That Act, which specifies limits on hours of work, has long been recognised tacitly as out of date by most of those working in the industry—mineworkers and management alike. The Act restricts hours of work to a prescribed period of no more than 7.25 hours plus one winding time, which everyone working in the industry know to be too rigid a constraint.
Noble Lords on both sides of the House who take an interest in the industry will know that the 1908 Act is widely ignored in practice and now serves only to define the start of voluntary overtime working on weekdays. The limit does not reflect the latest mining methods, good modern mining management, nor the
1556
technology that has been the backbone of the industry's continuing modernisation and increasing competitiveness. Mechanisation has been under way in the coal industry since the 1950s and as a result, the 1908 Act has become increasingly impractical and constraining.
It is by adopting greater flexibility in working practices and by developing improved modern management as well as by investment in modern mining technology that the industry has achieved the improvements in productivity and reductions in costs that are so vital to its future. British Coal's efforts need to be sustained on a continuing basis as we move towards an energy market that will be one of the most competitive in the world. Outdated constraints on good management and the productive partnership between mineworkers and management clearly need to be removed if the coal industry is to compete. The industry has long left behind the days of hewing coal by pick and shovel.
No one who has a genuine interest in the future of the industry wants to see its efforts hampered by antiquated legislation of a bygone era. Conditions in the coal industry have been transformed by mechanisation and other applications of modern technology. Indeed, it would be true to say that the improving record of mine safety is due primarily to technology.
Safety was an issue raised a number of times in another place during consideration of the clause. Let me confirm that for this Government the safety of mineworkers is of paramount importance. The much improved standards achieved in mine safety must be maintained. This Government would not bring forward any legislation which prejudiced safety. The repeal of the 1908 Act will not prejudice safety.
The UK system of legislative protection for the health and safety of mineworkers will be maintained. The main statutory protection is provided by the Mines and Quarries Act 1954 and the Health and Safety at Work etc. Act 1974. Both remain very much in force, and both are being enforced by the Health and Safety Executive. Indeed, the chairman of the Health and Safety Commission has recently written to my right honourable friend the Secretary of State for Energy advising that the 1908 Act is not a relevant statutory provision under the Health and Safety at Work etc. Act 1974 and that hours of work are in general an industrial relations matter. His letter says that the proposals in the Coal Industry Bill are unlikely to lead to a reduction in standards of health and safety.
Repeal of the 1908 Act will not take effect on the enactment of this legislation. Clause 3 of the Bill provides for the Secretary of State for Energy to implement the repeal by order at a later date. Noble Lords will be aware that a draft European Commission directive on the organisation of working time is currently being negotiated by member states. If the directive is implemented, it would apply immediately to British Coal as a public sector body. My right honourable friend the Secretary of State said in another place that he will not implement the repeal of the 1908 Act until either the EC directive on

1557
working time comes into force or, if agreement is not reached on the directive, an alternative UK measure is introduced.
Power to repeal the 1908 Act is required now because British Coal and the mining unions will not be able to negotiate sensibly on new formal working arrangements within the limits set by the directive until it is clear that the Act is to be repealed. British Coal has to give six months' notice before renegotiating working hours agreements and the negotiations could easily take a number of months beyond that. Powers to repeal the Act are, therefore, needed well in advance of the date when the directive may be adopted, which may be as early as the end of this year.
The coal industry's performance over the past five years has been remarkable by any standards. British Coal has raised productivity by over 100 per cent since the 1984–85 strike and has cut colliery unit costs in real terms by over 40 per cent. over the same period.
Last year British Coal achieved a bottom-line profit for the first time in 13 years. Those achievements, which I am sure are welcomed in all parts of the House, would not have been possible without massive support from the taxpayer, including £6 billion provided under the Coal Industry Act 1990. That £6 billion provision enabled the corporation to carry out a major financial reconstruction, reducing the debt burden of the corporation by over £4 billion and relieving it of annual interest payments of some £400 million. As a result, British Coal's financial results now more accurately reflect the performance of the current ongoing business. The chairman of British Coal has informed my right honourable friend the Secretary of State that the corporation is on course this year to make a bottom-line profit once again.
That excellent improvement in British Coal's performance has not been achieved without difficulty or without sacrifice. The market for British coal has been in decline for decades and in recent years it has also had to face coal prices falling in real terms. In the past five years, over 70 collieries have closed and the number of employees has been reduced by over 100,000.
This exercise is, unfortunately, not new for the coal industry, which has faced difficult periods of adjustment and restructuring in the past, including times when the party opposite was in office between 1964 and 1970. In April 1964, there were 576 pits. By the time Labour left office in 1970 the number had fallen to around 300. Nearly 280 collieries had been closed and around 170,000 jobs had gone. It is a tribute to the workforce and management that the continuing contraction in employment has been achieved without disruption. British Coal has been able to offer alternative jobs to any and every man who chose to remain in the industry. Those who decided to leave received substantial sums in redundancy payments and, if they wished, retraining and counselling through schemes run by British Coal Enterprise.
The Government's commitment to the industry goes far beyond providing the finance needed to ease
1558
the difficult problems of redundancy, retraining and re-employment, important as that may be. I want to reaffirm the Government's commitment to an ongoing economic coal industry and to its long-term future. Since 1979 the Government have approved investment expenditure of over £7.5 billion in the coal industry, which is more than all other governments together since the war.
We have also provided grants totalling over £11 billion in addition to the £6 billion provided last year. We expect to provide around £700 million in grant this year. And our commitment to the coal industry is not only demonstrated through financial assistance. Last Session, for instance, we tackled the long-standing problem of subsidence in a Bill which was extremely well received in your Lordships' House. The provisions of the Coal Mining Subsidence Act should greatly improve the coal industry's relationship with the neighbours under whom it mines.
What of the future for British Coal? After the general election we intend to build on the achievements of the industry by returning it to the private sector. Our aim is to ensure that we achieve the largest coal industry that is economically sustainable. We intend to give those who work in the industry the opportunity to demonstrate their full potential away from the constraints of the public sector. But the need for the Bill before us today does not arise from our intention to privatise the industry. The measures that I have described are essentially technical. Further restructuring and the repeal of the 1908 Act are needed, whether or not the industry's future lies in the public or the private sector.
Of course, coal, not just in this country but worldwise, will face some pretty demanding challenges over the next decade. Here in Britain, the power generators, the major users in recent years of the bulk of the corporation's coal output, are increasing their use of gas, a fuel that is, apart from any other consideration, rather more environmentally friendly. Our policy and the policy of previous governments of both parties over the past two decades has been to support diversity of fuel supply. Nuclear, renewable forms of energy and gas all have key roles to play as well as coal. Increased use of gas in generation brings enormous benefits to the electricity consumer and to the environment. The consumer will benefit from the lower electricity prices that will result. The environment benefits from lower levels of carbon dioxide and sulphur dioxide emissions.
This Government will not hinder the development of the competitive market that we have created in privatising power generation and distribution. We will not deter the use of cost-effective gas nor force the nation to use costly coal. The benefits of our policies are starting to work through towards lower electricity price increases.
This Government believe that British Coal must face the challenges in its market head on. Much has been accomplished in the years since the miners' strike. Much still needs to be done. British Coal must fight for every tonne of commercially viable business. It must build on the increases in productivity already achieved.

1559
Further productivity gains are essential to meet growing competition from other fuels and imported coal. This Government have provided the means to enable the industry to restructure and invest in the latest technology in order to increase productivity further. It is now for the industry to go on developing the skills and drive to surmount the challenges that lie ahead. This Bill is a further measure of the Government's support for the industry. I commend it to the House.
Moved, That the Bill be now read a second time.— (Lord Cavendish of Furness.)
11.56 a.m.
Lord Donoughue: My Lords, it is a brief Bill. I thank the Minister for the brevity of his speech and the helpful explanations. However, the full implications of the Bill may not be quite so brief and simple as they appear. Therefore, I should like to make some observations on the specific clauses and some comments on the wider implications for the coal industry especially since my noble friends Lord Dormand and Lord Mason are unable to be present today, it being a Friday. They would have wished to raise general issues from their great experience.
Clause 1 amends Section 3 of the Coal Industry Act 1987. It raises the upper limit of grants and extends the period. We accept the practical necessity since the payments under the current arrangements are close to their ceiling. We also support maximum financial provision for unemployed miners and their communities. However, we must question the attempt to present the Bill as a mere technicality. The harsh truth behind the clause is that it prepares the way for massive unemployment in the coal industry and, as the Minister stated, for privatisation of the remaining rump once the taxpayer has paid for the mass redundancies.
What are the assumptions of the scale of the redundancies behind the grants? I know that the Secretary of State denies having forecasts of the rundown of manpower but they must have had assumptions of a range to put to the Treasury in order to persuade the Treasury to pay up an extra £1.5 billion. What broadly were those assumptions? We can of course do our own sums. Even accepting that the £1.5 billion is a maximum and may be excess to need, £1.5 billion pays for 40,000 to 50,000 redundancies at an average of about £30,000 a head. In other words, that is 30 to 40 pit closures. Interestingly, that scale of redundancies fits closely with the scenario in the Rothschild Report of some 28 to 40 pits closed and up to 40,000 redundancies. The report gives several scenarios but that was the broad range.
It is difficult to avoid the conclusion that the Government are preparing for the Rothschild scenario. I do not say that they plan it or forecast it —I do not suggest that they even want it—but obviously they are preparing for it. They are also preparing for the much more brutal conclusion to the negotiations with the electricity generators for the
1560
post-1993 contracts. We notice that the grants are extended to 1996, which is beyond the time scheduled for privatisation and those negotiations.
Clause 2 repeals the Coal Mines Regulation Act 1908 which limited time worked below ground to seven-and-a-half hours. This proposal has caused widespread concern because historically, sentimentally, that Act was the foundation stone of health and safety and the reforms in that area in this century. In fact we know, as the Minister rightly said, that health and safety are not dependent on that 1908 Act. However, I believe that the Minister accepts that the move must be handled with great delicacy. Ahead of privatisation there are bound to be suspicions that it is a move to loosen and to worsen miners' working conditions and to increase profits for the new private owners. I accept that the Minister does not wish that to happen. However, I am sure that he will understand that, on the face of it, the proposal means simply that miners will work longer hours below ground per day and will not be paid overtime for above seven-and-a-half hours. It is hard to see that that is not an apparent worsening of conditions.
The Government's arguments are seriously based. They say that the 1908 Act is outdated because of mechanisation and because the Act is frequently breached. Mechanisation has certainly transformed the mines since 1908 but it does not mean that it is Utopia below ground now. Machines create their own problems of noise, dust and water. On the breaches of the statutory limit, there is no question. Over half the men in the mines now work above the limit. However, they do so voluntarily, have the right to the provisions of the Act and are paid overtime.
The heart of the Government's argument is the need for productivity and flexibility to compete and survive. We cannot disagree with that. Greater productivity is the only way to preserve miners' jobs. However, we note that it is not doing so at present. There have been massive productivity rises accompanied by massive redundancies. More specifically, the Government must be absolutely clear in their guarantee that the repeal will not in any way diminish health and safety or the miners' right not to work excessive time underground. I welcome the Minister's assurance on that matter.
I wish to make two more comments on Clause 2 dealing with the repeal. First, I cannot understand why the Government did not consult the relevant people; for instance, the miners, the managers, the deputies and the shotfirers who have a statutory responsibility in this area. We recall that in 1986 the then Secretary of State for Energy, Mr. Walker, gave specific assurance that there would be consultation on any moves to allow longer shifts. Why was that pledge broken?
Secondly, I am puzzled by the link between the 1908 repeal and the proposed EC directive on the working week. That relates to Clause 3, which gives the Secretary of State the power to implement the repeal at a later date by statutory instrument. The EC draft directive sets out the minimum standards. Article 16 specifically provides that member states can retain local laws giving better protection, as does the

1561
1908 Act. The two provisions appear to be compatible. Therefore I am unclear about why the repeal is linked to the directive especially when, as we are told, the Government are fighting to prevent the EC directive coming into force. Indeed, the clause is most unclear on the timing of any replacement of the 1908 Act. There is a curious vacuum in the wording and we may need to look at that matter in Committee.
I shall turn to the more general issues and comment on the wider policy of the coal and energy industry. I confess that coming fresh and innocent to the policy area I am struck by the genuine dilemmas which face anyone trying to establish a proper energy policy for the future and a place for coal within that. It is not clear that anyone has a complete and coherent answer. I shall outline those dilemmas and the contradictions within some of the proposals which currently prevail.
I begin by stating the fact that I do not like the idea of people working underground. Therefore, I am uneasy in appearing to campaign to prolong that. However, I certainly do not want rapid mass unemployment in existing mining communities. So a timing dilemma exists. We want a balanced and diversified source of electricity generation, giving a place for gas, oil and renewables including nuclear generation. Coal has no predestined right to be produced and bought at any price, but we want a healthy coal industry as part of that diversified energy sector. I see no sense in massive imports of foreign coal and no sense in the rapid depletion of our gas reserves.
We accept that the coal industry must be competitive and that it must not live on subsidies. However, we believe that the industry must be given time to improve productivity further. It has already demonstrated what it can do. I do not accept that, for instance, the slave-labour markets of South Africa and South America should set the market levels with which British coal must compete. I wonder, in passing, why subsidies are okay for the nuclear industry, and in particular for the agricultural industry, while apparently they are unacceptable for the coal industry. I am suspicious that the size of this great industry and the long lead times involved in its investment are being determined by short-term market forces, typified by the renegotiations with the electricity generators.
Environmentally we accept that coal is still a source of dirty, noxious emissions, but we believe that it can and should be cleaned by new coal technology. That should be the centre of our coal policy and it must have the same positive priority for expenditure as have redundancies in a negative way. One ends with a fundamental gut feeling that there must be something crazy in wasting our greatest native energy resource.
Faced with those dilemmas the Government must make choices and reach decisions. This Government have done so and the Bill is part of that process. Those decisions constitute a policy that is not an energy policy but a broad economic and philosophical approach to the dominance of market forces. In the short-term, market forces indicate savage reductions in coal production. Therefore, there will be
1562
redundancies which must be paid for by the taxpayer, as provided for in the Bill. Then will come privatisation which will benefit from the looser working conditions and longer hours—again provided for in the Bill—in order to help to improve productivity and competitiveness.
I repeat and stress that I support the Government's efforts to make coal efficient and competitive. There is no way of ensuring miners' jobs without that. We cannot preserve coal as a museum industry frozen in time. However, is not the Government's approach too narrow and too doctrinal? Does it not have too little concern for the long-term energy interests of the nation? It contains no means of ensuring that Britain retains a coal industry at all. If short-term market forces, the flood of coal imports and the dash for gas by the generators dictate that there is no market for British coal, then the optimum size is zero and there is no policy to prevent that. The industry is left to the market.
Against that background I wish to ask the Minister some basic questions. The first relates to additionality. I shall be brief because I expect other noble Lords will raise the matter. Will the Minister explain why the threatened regions are deprived of a crucial injection of cash? If the reason is arcane Treasury accounting, cannot the Prime Minister knock some heads together? Secondly, have the Government no view on the flood of imports? The generators have already announced facilities for coal imports totalling 40 million tonnes by 1995. That will represent £2 billion on the balance of payments and the loss of 30,000 miners' jobs at a cost of £400 million in social security subsidy. It will also threaten the security of native supply. Have the Government no view on that matter?
In that context we should note the changes in the nature and reasons for pit closures. Until recently pits were closed for what one might call good reasons; they were geologically poor and had poor productivity. However, now pits are increasingly being closed as a result of imports. Those pits are currently highly profitable with rapidly improving productivity. Imports on such a scale are a flaw in the argument that pits must be profitable to survive. They are profitable yet they are being closed. Are the Government prepared to allow the closedown of the whole industry and to have no native supply whatever? The Minister may say that that is a decision for the generators. Well, is it? The Government still have a major stake in that interest and certainly the nation has an interest of its own.
What is the Government's view on the generators' switch to gas, which the Minister mentioned in such glowing terms? I accept that gas is cleaner and more flexible than coal, yet it is not cheaper. On 5th April last year the marketing director of National Power stated that gas is not cheaper and that it will become more expensive and be in short supply. The marketing director of British Gas this week forecast that there would be,
"severe gas shortages by the mid-1990s and higher prices".
He said that that is because of the rapid switch from coal to gas by the electricity generators. What is hitting the coal industry is not its lack of productivity

1563
but the switch to gas and to imports. Do the Government have a view on the prospect of gas shortages, higher gas prices and massive coal imports? Those are the market forces which are now eliminating the coal industry, however efficient it becomes. That is the background to the 1993 renegotiations with the generators. Will the Government play a role in those negotiations and, if so, what role will they play? I return to the question of whether the Government have a view of the minimum or optimum size of the future coal industry. Are they prepared to accept zero?
This is a brief and, as the Minister said, technical Bill. However, it is technical only on the surface. It has much greater significance, Providing for massive redundancies and preparing the way for the privatisation of what remains of the coal industry. Today the Minister made a reasonable and fair defence of the specific technicalities. We shall look at what he said to consider ways of improving the Bill in Committee. Clearly this is the hors-d'oeuvre and the main meal lies ahead. Whoever is in government then must take a fresh look at the broad field of energy policy, bearing in mind the long-term interests of the nation.
I conclude with a final question that goes to the heart of the discussion of whether market forces alone, with all their virtues, should determine everything. It is in the form of a quotation:
"Why should cheapness of production always be achieved at the expense of the human factor?"
That was asked by Winston Churchill on 6th July 1908 in winding up on the 1908 Bill to limit miners' hours. I believe that Ministers of any government dealing with the future of the coal industry, as we now see it, must answer that question.
12.12 p.m.
Lord Ezra: My Lords, this is a short Bill with two main clauses but, as both the noble Lords, Lord Cavendish and Lord Donoughue, have indicated, those clauses raise major issues affecting this great industry—the coal industry.
The industry is presently going through a crisis. Unfortunately, it is by no means the first. If one goes back no further than the end of the First World War, one sees that the industry has been going through recurrent crises interspersed with relatively short periods of stability. Between us, the noble Lord, Lord Haslam, who is to speak next, and I have covered quite a large part of the period since the last war in the industry and I can tell your Lordships that facing crises is almost a permanent feature in the coal industry.
What is special about the present crisis is that in the period since 1985, as the noble Lord, Lord Cavendish, reminded us, the coal industry's productivity has doubled. I doubt that any other major industrial sector in Britain comes up to that level of improvement in productivity. As the noble Lord said, unit costs have been cut by no less than 40 per cent.
In the normal run of events, that should have strengthened the position of coal to face up to the market, to establish its position and to look towards
1564
expansion. However, for the reasons so clearly indicated by the noble Lord, Lord Donoughue, that has not happened. Therefore, we face this serious position where we have an industry, with substantial reserves, achieving such remarkable improvements in its performance and nevertheless continuing to lose its market share. It is in that context that we must look at the two main provisions of the Bill.
The first provision is to provide further grants to meet restructuring and redundancy costs because, as the noble Lord, Lord Cavendish, made clear, under the present arrangements provided for by the 1990 Act, the financial reserves are likely to run out. Therefore, it seems only reasonable that those should be replenished.
Having said that—and both noble Lords referred to this—there is bound to be cause for anxiety that the substantial increase in financial provision may be made for some ulterior motive. The noble Lord, Lord Cavendish, assured us that is not the case. The Government are making the additional financial provision because, if not, there would not be a sufficient reserve in existing funds to meet an even fairly low level of future redundancies.
However, on the other hand, we have the calculation made by the noble Lord, Lord Donoughue, which implies that if the full amount of the fund were to be used up in the period in question, it would amount to a very serious reduction in the industry. I hope that we are right in accepting the assurances given to us by the noble Lord, Lord Cavendish, that that is not the underlying intention of the Government but that the provision is purely to provide for the normal course of redundancies.
The provision of those redundancy funds must be taken in conjunction with the question of regional aid from the EC to which the noble Lord, Lord Donoughue, briefly referred. There has been much comment in the press recently about the so-called RECHAR funds which are reserves of money especially built up in the European Community to help in coalfield areas where there have been redundancies and there has to be redeployment.
The RECHAR funds set aside for the United Kingdom amount to £115 million. Those have been available for over a year. Unfortunately, because of the treatment of additionality by the UK Treasury, which appears to infringe the agreement reached by Community countries in 1988 as to how those regional funds should be used, and because of the intransigent position taken by the Treasury, those funds have not been released for use in this country.
Many noble Lords have been concerned with the question of additionality for a number of years. The funds available from the Community under the regional budget are intended to supplement and augment the measures already being taken in the country concerned. That was the underlying requirement of the 1988 agreement. A number of European countries, which had similar arrangements to our own —Denmark, Italy and Greece, to name but three—have subsequently changed their arrangements by law to conform with that agreement. So far, the United Kingdom has not done so.

1565
The impression created—and perhaps the noble Lord, Lord Cavendish, will elucidate the situation—is that those regional grants from the Community are regarded as part and parcel of general funding of local authority activities in the United Kingdom and to the extent that the money comes from the Community, so the amount made available from United Kingdom resources is diminished. If that is so, the way in which the matter is being handled is contrary to what was intended under the 1988 agreement. We need to know where the Government stand on that matter.
It does not affect only coal-mining areas. We are told that there is a further £885 million waiting to be paid into other regions of the United Kingdom if that question can be resolved. How much longer are we to stand out as the only country not applying the 1988 agreement and, therefore, depriving ourselves of approximately £1 billion of much needed help in our sorely pressed regions? I hope that the noble Lord will answer that question.
The second provision of the Bill deals with the repeal of the 1908 Act, which limits the hours of work underground and which has remained on the statute book every since. Indeed, it is one of the basic laws in the history of the coal industry. It is interesting to recall that Mr. Winston Churchill, then President of the Board of Trade, to whom the noble Lord, Lord Donoughue, referred, in proposing the Bill in debate on 6th July 1908 stated that there had been much change in the mining industry in the past 50 years—echoing the remarks of the present Secretary of State for Energy in another place. Indeed, he went even further than that to echo those remarks because he said,
"There is more extensive application of coal-cutting machinery"—
we talk about mechanisation of the mines having transformed everything yet they were doing it in 1908—
"and the sinking of new pits with modern appliances".
In 1908 they were facing the same situation as we are facing today. It is absolutely right that in a period as long as between then and now changes have occurred and it is certainly right that we should have another look at the basic legislation. In my opinion that is not the issue; the issue is what is to replace the 1908 Act. That is where we come into a situation of uncertainty.
The Bill simply provides for the repeal of the 1908 Act. The Secretary of State and the noble Lord, Lord Cavendish, have assured us that that would not be done until the long awaited directive from the Community arrived or some other measures were introduced by the UK. But that leaves a vacuum. I do not believe that a measure as historically important as the 1908 Act—regulating hours of work underground was a big decision in those days, as now—should be dealt with in this rather uncertain manner. At least we should know, when we agree to the repeal of the Act, what is to take its place.
We are told that is uncertain because of the Commission's directive which has not yet been finally formulated. But here, like the noble Lord, Lord Donoughue, I must ask a couple of questions. First, as
1566
far as I can make out the directive forms part of the famous Social Chapter. I thought that as a result of the recent Maastricht negotiations the United Kingdom was not bound by the Social Chapter. In that case, why should it be assumed that the directive will apply in the United Kingdom and have to apply on the very day that it is promulgated? I should like some clarification on that point.
The second issue affecting the directive is that as far as one can make out it deals with hours of work generally in industry as a whole. In fact during the day time the directive is concerned with leisure periods, and limitation of work on shifts is limited to the night time. That is according to the draft of the directive that I have seen. It may have changed since. It did not seem to me on a first reading of the draft directive that its application to the mining industry was particularly close. I should have thought, whether or not we accept the Commission's's directive which deals generally with hours of work in industry, we would need some supplementary arrangements affecting underground working in the mines in this country.
My point is that I do not believe it is right that Parliament should be asked to agree to the repeal of the 1908 Act without knowing what is going to replace it and with the added confusion of the nature of the directive from Brussels. I hope that the Minister will be able to reassure us that whatever is intended to replace the 1908 Act will be debated in this House and have to be approved by this House, just as there was a major debate on 6th July 1908 when the 1908 Bill was introduced. Indeed, there was a major vote on the subject in another place which was carried by the then Liberal Government with a substantial majority.
Regrettably, I must say that the way in which the repeal of the 1908 Act has been handled—whether or not it may be justified on technical grounds is not the argument —without any indication of what is to replace it, introduces a further element of uncertainty surrounding the future of the coal industry at a time when clear guidance in regard to its future is badly needed. In spite of centuries of extraction, coal still represents the largest natural energy resource at the disposal of this country; it is the most profitably produced coal in the European Community; it is served by highly skilled miners and mining engineers, and the development of clean coal technology can make its use consistent with current environmental standards. All that may be put at risk unless there is a clearly defined strategy for the industry. That strategy must essentially include the legal conditions under which coal is mined underground.
12.26 p.m
Lord Haslam: My Lords, as a recent chairman of British Coal, like my noble friend Lord Ezra, I naturally retain a deep interest in the well being of the industry and welcome the Bill. My comments today will be focused essentially on the Bill itself.
As my noble friend Lord Cavendish said, the first clause will obviously support British Coal's continuing efforts to restructure the industry in order to meet the increasingly fierce market conditions in which it has to operate. In competing with gas, oil, nuclear

1567
energy and imported coal, British Coal has had to reduce its prices dramatically and progressively during the past five years. It is that demanding market situation which has created the imperative need to restructure the industry.
Since the miners' strike the number of pits has been reduced from 169 to 53 and the total manpower from 221,000 to 64,000. I believe that that represents the most dramatic restructuring of a major UK industry in recent history. It was achieved with only a marginal loss of output and the reduction has occurred only within the past two years.
One does not take pride in those somewhat negative statistics and I, better than most, appreciate the human problems that lie behind them. But it had to happen if the industry was to survive at all. During the eight years in which I was chairman of British Steel, and thereafter British Coal, Opposition spokesmen in another place or trade union leaders opposed nearly every closure and job loss. If we had responded to those overtures British Coal would now need an annual—I stress the word, annual—operating subsidy of over £3 billion per year. That is obviously an extreme scenario but conversely one was never able to ascertain what the critics visualised as the optimum future shape of the industry, how it would be financed and where any additional coal output would be sold.
As a result of that restructuring programme, which has been an enormously demanding and daunting task for management and mine workers alike, British Coal's massive losses have been staunched. As my noble friend Lord Cavendish said, last year British Coal made a profit for the first time for 13 years. I believe that this year it will probably make a larger profit than last year. It was primarily due to the rapid improvement in productivity, which has more than doubled since the miners' strike.
On the positive side—this has not been mentioned too much today—British Coal Enterprise, which is charged with creating jobs in mining communities where pits have been closed, continues to make a commendable impact. When it was established seven years ago we adopted a target that it should help to create 100,000 such jobs in the next decade. The intention was to try to balance the loss of mining jobs. The current figure of 75,000 is on course to meet that objective.
To sum up, I am a strong supporter of Clause 1 which will allow the restructuring of the coal industry to continue and will also support the endeavours of British Coal Enterprise and the retraining of miners for alternative jobs. Just one footnote: this massive reduction in manpower has been achieved entirely on a voluntary basis. That is a very important point. I pay tribute to the Government that they made it possible for British Coal to use generous redundancy terms to enable this dramatic restructuring to be achieved with a minimum of pain and without any major strikes or disruptions.
Turning to Clause 2, the modern framework of safety law is set out in the Health and Safety at Work etc. Act 1974 which enshrines the overriding commitment that the employer's duty is to ensure a safe system of working for all employees. In my view
1568
the 1908 Act is not part of that framework of UK safety regulations as it does not come under the umbrella of the health and safety Act. For example, that contains specific powers under which previous existing enactments, which are called "relevant statutory provisions", can be repealed. The 1908 Act is not listed as one of those provisions.
Not only British Coal but also the miner himself who works overtime in excess of the seven-and-a-half hours provided for under the Act, can be technically in breach of that Act. That overtime dilemma, which, as has been said, has not been honoured in recent times, has existed for many years. A recent committee in another place accepted that that was so and rightly concluded therefore that the Act is now obsolete.
Is that surprising? Can one really expect a detailed Act now over 80 years old to have relevance in an industry which meanwhile has experienced vast technological change? As yet I cannot go back 80 years, but it is just 50 years since I first worked underground. Most miners then worked a six-day week. Each working day was extremely demanding. This was the "pick and shovel" era and required great physical effort and stamina. Furthermore, travelling to and from the coal face could be equally arduous as most miners had to walk long distances, often bent double, along mine roadways which had been partially closed by rock pressures. Frequently temperatures were over 80 degrees and there was high humidity. Understandably, the assumption therefore was that work began at the pit bottom when the miner started to walk to his workplace.
Contrast that with the position now. Obviously, any underground environment will always be a harsh one and there is nothing that one can do about that. However, coal extraction is now fully mechanised and one has to look far and wide to find a pick or shovel on a modern coal face. Also, most miners are transported by comfortable man-riding systems close to their workplaces. Altogether life is much less physically demanding, and indeed is light years removed from what existed in 1908.
Many critics suggest that the repeal of the Act, allied to an emphasis on productivity, will lead to a serious deterioration in safety. There really is no evidence to support that view. Conversely, British Coal's safety record has been a commendable one. For example, in 1950 there were 476 fatalities; last year there were 11. After taking into account the major reduction in manpower involved, the occurrence of a fatality was still nearly six times more likely in 1950 than it is now.
More detailed statistical results have shown, too, that higher productivity is normally accompanied by improved safety standards; also that accidents are more likely to occur in the third or fourth hour of a shift rather than at the end of a long day.
Contrary to some views expressed in another place, British Coal has never sought productivity at the expense of safety. I have worked in many industries in my career, but British Coal's commitment to safety is outstanding. Further, its safety record compares favourably with that of the best deep-mines around the world. Altogether, that reflects great credit on

1569
both management and mineworkers. I have no qualms, therefore, about supporting the repeal of Clause 2.
Finally, I believe that the whole Bill will be a positive factor in ensuring that the UK coal industry will be best placed to meet the daunting challenges it obviously faces in the future.
12.35 p.m.
Lord Jay: My Lords, despite everything that the Minister has said today, I fear that this Bill will strengthen the anxieties of those who fear that the Government's policy of almost malign neglect for the coal industry is threatening to imperil one of our most precious natural assets. The increase in funds for redundancy purposes, which is the main object of the Bill and which is welcome in itself, nevertheless must suggest that the Government expect large-scale further redundancies and pit closures. We all agree that modernisation and the reduction of unit costs are desirable in this industry as in others. They have been dramatically realised as has already been pointed out today. Productivity has been increased by 100 per cent. and real unit costs have been reduced by 40 per cent. in the past seven years.
Modernisation of the industry is one thing, and the decimation of it is another. It is not only the labour force of the industry which has declined, but in recent years production also has fallen drastically. Before 1939 several hundred million tonnes of coal were produced by a labour force of nearly 1 million. Even in 1948, just under 200 million tonnes were produced by a labour force of 700,000. Now the labour force has fallen to 64,000, as the noble Lord said; but production in 1990–91 has also fallen to only 72 million tonnes.
Therefore, I ask the Minister and the Government to consider seriously whether it is wise to allow one of this country's greatest assets to be almost thrown away in this fashion. After all, our oil supplies are now steadily dwindling and gas supplies are far from inexhaustible. Whatever the short-term outlook, we have a 200 years' supply of high quality coal and a great deal of modern equipment in the industry installed with the taxpayers' money and under public ownership.
What would any other country and our competitors do with an asset of this kind? What would France or Germany have done with our coal industry? France had little coal and oil. It has built up from nothing through government action, and no doubt through an artificially low rate of interest, a nuclear industry which supplies all of that country's energy needs. Germany has subsidised substantially a coal industry which is less efficient than our own. If in these circumstances the Government simply repeat their rather simple-minded view that the British industry must be left to fight it out in what it calls a competitive market, under the guidance of, apparently, Messrs. Rothschild, then it is not merely the British coal industry but the British economy which will suffer damage as a result.
1570
It is no use arguing that it is all being left to a free, fair and competitive market. German coal is subsidised; French nuclear energy is subsidised, though—characteristically of the French—in rather more mysterious ways. Our Government are actually paying a current subsidy to our own nuclear industry. Indeed, all British Coal's chief competitors are heavily subsidised in one way or another. On top of all that, we should not forget that the present probable 20 per cent. over-valuation of the sterling exchange rate is enough in itself to subsidise coal imports and make it harder for the British industry to compete abroad. It is worth remembering that it was a 10 per cent. over-valuation of sterling in 1925 which led to the coal strike and the General Strike of 1926. I do not have much doubt that with an economic exschange rate now British Coal would certainly be able to compete.
To lay all these artificial burdens on our own industry is very far from establishing the level playing-field which we are always told about. It is more like turning the goal-posts the wrong way round for our own industry. Personally, I am in favour of our keeping a nuclear power industry as a hedge against all sorts of future uncertainties. But what possible justification can there be for paying a current subsidy to the nuclear industry and not to the coal industry? I have not heard that question answered at any time.
In answer to a Question the Minister told me on 14th January that the Government had spent —that was his word—£22.7 billion on the coal industry and he gave some further detailed figures today. He did not actually say then whether that £22 billion was over five years, 10 years or the lifetime of this Government. Perhaps he will make that clear and also how that £22 billion is divided up between one or another source of funds.
Ministers seem almost blind to the effect of all this on the nation's balance of payments over the years ahead. If we start importing fuel on a huge scale, when the British economy used to be based on exporting it, that is not a simple matter. We are also told, and constantly reminded, that coal-burning power stations produce carbon dioxide and sulphur dioxide. That is not in itself an argument for importing coal rather than producing it at home. It is also said that nuclear power is environmentally friendly. Surely it is not quite as simple as that. I need not remind the House that nuclear accidents can occur and have occurred and that there are major de-commissioning problems with the nuclear power stations which have not yet been solved. Nevertheless, as the noble Lord, Lord Ezra, has constantly reminded us, with adequate investment in clean coal technology the feared pollution can at least be substantially minimised.
How much better it would be to spend the millions of pounds made available by the Bill in making our own home supplies of energy safe and free, rather than paying it to thousands more employees to, in effect, stop work and probably do nothing.
12.43 p.m.
The Earl of Shrewsbury: My Lords, I must apologise to the House as I shall have to leave the Chamber before the winding up speeches to keep an

1571
urgent appointment. I shall read the Minister's speech and that of the noble Lord, Lord Donoughue, with great interest.
I declare an interest in the opencast mining industry and it is with regard to this section of the coal industry that I welcome the opportunity of being able to address your Lordships this morning. I am delighted that the provisions in the Bill will continue the extraordinarily generous levels of support to enable the industry to restructure itself on a competitive basis.
The opencast coal mining industry in the United Kingdom, as noble Lords will be aware, is a thriving sector of coal mining and a source of cheap coal. The output of opencast operations has remained fairly level over the past 10 years, around 16 million tonnes of coal being produced a year on average, rising to around 17 million tonnes in the year 1990–91.
The 1946 Act placed certain restrictions on both tonnages for licensing purposes and also restrictions on manpower in private underground mines. The private sector greatly welcomes recent changes in both these areas; first, on the tonnage limitations rising to 250,000 tonnes and, secondly, with a new figure of manpower raised to 150 men.
Perhaps I may first briefly address the matter of tonnage restrictions. Because of these restrictions the private sector is having to compete with British Coal on a very unlevel playing-field. For instance, prospecting licences are now being used as a means to restrict the private sector's activities. Prospecting licences are refused on the basis that the site and surrounding land may contain more than 250,000 tonnes and as such a production licence would not be issued. That even applies in areas where British Coal have no firm information upon which to assess tonnage.
The private sector firmly believes that the Act was intended to ensure that no safety or pollution problems were caused by uncontrolled drilling—not as a means of stopping the nation's resource being won by the private sector. The private sector believes that drilling should be allowed to provide all the information upon which a subsequent production licence application can be made. Only upon full consideration of that application and the details contained therein can a proper judgment be made as to whether the site can be licensed. If it is not, then the decision is now subject to an appeal process and it is surely improper to decide whether a production licence can be issued in advance of a detailed application being made.
No matter what the tonnage limitation is, the argument continues to be put forward that a licence cannot be issued as the coal is part of a larger reserve. The 1946 Act does not appear to require this to be considered where the amount of coal obtained by such operations from the area specified in the licence is, in the opinion of the Board, not likely to exceed, or greatly exceed 250,000 tonnes. There is no mention in the Act of any relevance of coal outside the area specified in the licence or, therefore, the licence application.
1572
I am advised by a company in the private sector that it has recently encountered several sites containing less than 250,000 tonnes where it has painstakingly proved the mineral, secured the land and obtained the necessary planning permission. Yet it is being prevented by British Coal from proceeding to win the coal on the basis that the reserves, when added to some other nearby reserves, exceed the 250,000 tonne limit. Yet in the same areas British Coal has never declared any interest whatever in working the coal. That is not fair competition and I am sorry that my right honourable friend the Secretary of State was unable to raise that restriction in the Bill. I urge my noble friend on the Front Bench to consider the further liberalisation of these onerous restrictions.
In turning briefly to the question of manpower restrictions perhaps I may also ask my noble friend to consider further relaxation of the manpower limit of 150 men. That recently relaxed figure, welcomed by the industry, still is not high enough to make the private mines economically viable. For example, the Monckton Hall colliery, which was mothballed for some years by British Coal, has recently been privatised. But the Monckton Hall Miners' Co-operative has found that with present manpower restrictions the business cannot pay its way.
The number of men in private underground mines was interpreted by British Coal as 30 underground at any one time; for instance, up to 90 could he employed on three shifts. The 150-man limit is now being interpreted as a total of 150 employed at the mine. While the private sector appreciates the safety legislation it could be argued that the real reason is to maintain a brake on the private sector's involvement in underground mining.
The capital invested by the private sector in the coal industry is vast and it is only right that this sector of the industry should be allowed to compete with British Coal on a level position. I am disappointed that the Labour Party displays unremitting hostility to this highly efficient and profitable sector of the industry. I can only surmise that perhaps it is because the National Union of Mineworkers holds no sway in the private sector.
Finally, the British coal industry is a highly successful industry. I believe that it can be competitive to the long-term benefit of all the consumers by producing cheap coal, lessening the amount of imported material and with obvious benefits therefore to the balance of payments situation. I urge the Government to consider carefully the two points that I have raised and further liberalise the restrictions placed on the private sector producers.
12.49 p.m.
Lord Cavendish of Furness: My Lords, the wide ranging debate today has been informed by much experience and wisdom. I sincerely thank the noble Lords who have taken part. I shall try to deal with as many points as I can; but, if I cannot do so, I shall of course write to noble Lords.
The Coal Industry Bill is of great importance to the future of British Coal. It enables the corporation to continue the restructuring of the industry, which is

1573
essential if its future is to be secured. That fact was, I believe, recognised by noble Lords, and especially by my noble friend Lord Haslam.
The Bill also provides the power to repeal the 1908 Act, with which I shall shortly deal. It removes an out-of-date restriction that prevents the management and the workforce negotiating working hours agreements which are appropriate to the modern mechanised coal industry of today.
Briefly, Clause 1 extends the ceiling on the payment of restructuring grant by £1.5 billion. Noble Lords opposite have made much of the point that that increase signals further redundancies in the industry. As I said when I opened the debate, the Government recognise that the market for coal within the UK will decline over the next few years. There will, nevertheless, still be a large coal market to compete for. British Coal has the advantage of proximity to its customers and sterling denominated prices. Let there be no mistake: the Government want to see British Coal securing as much of the market as possible.
So, while we are increasing the ceiling on grant in the Bill, the size of the industry and therefore the actual requirement for restructuring grant payments will be determined primarily by the degree to which the management and the workforce together succeed in cutting their costs and winning business.
A number of points were raised in relation to Clause 1 which I shall try to address. The noble Lord, Lord Ezra, suggested that the EC directive on working time was part of the social charter which the Government did not sign at Maastricht recently. My advice is that that is not the case. The draft directive is founded on the social chapter of the Treaty of Rome to which we still subscribe. It is unaffected by the agreement reached at Maastrict. The directive on working time, copies of which are in the Library, was considered by the EC scrutiny committee in both Houses of Parliament. The directive was subsequently debated by an EC standing committee in the other place early last year. I understand the problem and the anxieties as regards the repeal. I repeat the undertaking made by my right honourable friend the Secretary of State.
The noble Lord, Lord Ezra, asked why the Coal Industry Bill does not make repeal of the 1908 Act conditional on the EC directive on working hours being agreed, or whether it could be dovetailed in some way. The legal advice is that it would be very unnatural and a likely cause of considerable confusion to express that a repeal should be contingent upon the happening of an uncertain event—in this case, either the coming into force of the EC directive or, failing that, alternative yet unspecified domestic legislation. However, I have no doubt that we shall return to the matter in Committee.
The noble Lord, Lord Donoughue, asked what assumptions were put to the Treasury to justify the increase in grant provision. From the remarks of the noble Lords, Lord Donoughue and Lord Ezra, there appears to be some suspicion that assumptions have been made. No particular level was put to the
1574
Treasury. The limit on the restructuring grant is just that; it is an upper band. Actual expenditure could well fall within that limit.
I understand the anxiety expressed in various parts of the House so far as concerns the EC RECHAR funds. The point was raised by the noble Lords, Lord Donoughue and Lord Ezra. We fully support the ECs RECHAR programme. That will bring real benefits to the coalfield areas. We very much regret that Commissioner Millan still refuses to approve our RECHAR programmes. We hope for a resolution of the issue in the near future. RECHAR money derives from money that we contributed to the European Commission in the first place. We are entitled to get that money back.
The noble Lord, Lord Ezra, mentioned the Government's position on additionality. Additionality is provided at national level. Expected EC receipts are taken into account in setting national public expenditure programmes which are therefore larger than would otherwise be the case. Consequently, ERDF grants must be covered from within public expenditure provision.
Clause 2 provides the power to repeal the Coal Mines Regulation Act 1908. That Act, regulating hours worked underground to no more than seven-and-a-half hours, has long since become outdated and is widely ignored. The limit recognises neither the latest mining methods nor good mining management. Moreover, the limit plays no part in the safety regime operating in our mines today. If the Act were to be enforced—I have not heard it suggested during the debate that it should be—miners' pay could be cut and productivity reduced. Collieries with long journey times to face would be especially hard hit and even more jobs would be threatened.
Much has been made of what will replace the 1908 Act. Let me be absolutely clear on this point. The provisions of the Act will continue until such time as my right honourable friend the Secretary of State for Energy implements its repeal. The Government have no plans to implement the repeal until either the proposed EC directive on working time or an alternative UK measure is adopted. Therefore, there will be no gap between the repeal of the 1908 Act and any replacement measure. Again, I have no doubt that we shall return to that matter in Committee. However, I hope that I have been able to give some reassurance.
Lord Ezra: My Lords, in the process of giving that reassurance, can the noble Lord indicate that the alternative arrangements—whatever they may be—will come to this House for debate before they are approved?
Lord Cavendish of Furness: My Lords, I have not been able to ascertain that information. The noble Lord makes a good point. If necessary, I shall write to noble Lords who expressed an interest in the matter. There are great technical difficulties in enshrining such a provision in the Bill. However, I understand why noble Lords seek reassurance on the matter.
The debate spread, as I expected—and I make no complaint about that fact—and many points were raised. The noble Lord, Lord Donoughue, especially,

1575
wanted to look at the wider issue. Again, I think that that is perfectly reasonable. I should like to make clear the Government's view on the future of the coal industry in Britain. We very much believe that the coal industry has a future into the next century. But it is up to those in the industry to make it happen. They must continue to drive up productivity and drive down costs in order to compete successfully with overseas coal producers.
It may interest noble Lords to know that the Government have received an encouraging report from Boyds, the US mining and engineering company, which reviewed British Coal's colliery operations and found much scope for further productivity improvements. It concludes that British Coal should be able to compete with the prices of imported coal while continuing to improve safety standards.
The noble Lord, Lord Donoughue, was anxious about the attitude of standing back and of non-intervention. He feels that the future of the industry relies—and I believe that the noble Lord, Lord Jay, expressed the same view—on intervention in the market and that that would force the generators to contract for tonnage at the prices dictated, perhaps, by the Government. I believe that that approach would be counter productive. I should also point out that many of the present day problems of British Coal result from such policies in the past. Our mines would have lower costs now if they had been more exposed to competition. Indeed, that is a very hard argument to deny. Moreover, the burden on the taxpayer would also be less and the cost of electricity generation would be lower, thus benefiting the consumer.
The noble Lord, Lord Donoughue, referred to the question of pits moving to profit and then closing, with the obvious anxiety and job loss implications which arise, and the feeling of the workforce that they had been let down. I do not deny that that does happen. However, it is not always as straightforward as it seems. In the last years of mining operation, development work ceases, which then produces an artificial, temporary profit before closure.
The noble Lord, Lord Donoughue, asked why there had been no consultation with the mineworkers prior to the introduction of the Bill. The reason for providing for the repeal of the 1908 Act well in advance of the implementation of the proposed EC directive is precisely to commit adequate time for consultation and negotiation between British Coal and the mining unions on the new working arrangements.
The noble Lord, Lord Donoughue, expressed concern about the sufficiency of gas supplies. Due to continuing exploration successes gas reserves have remained substantially unchanged for many years. The department's latest assessment is that the UK continental shelf gas reserves are capable of supplying the expanding British market and will be able to meet power station demands well into the next century.
Lord Donoughue: My Lords, is the noble Minister saying that the marketing director of British Gas was misinformed when at the beginning of this week he specifically forecast a shortage of gas?
Lord Cavendish of Furness: My Lords, I have seen the remarks attributed to British Gas. It is for them to organise their affairs to meet the needs of their customers. Looking at the UK picture as a whole, if all gas-fired power station projects currently contemplated come to fruition, gas demand will continue to rise very rapidly. It is not clear to me that they will all come to fruition. As time is needed to bring new gasfields into production, there may be some tightness in the market over the next few years. However, the department's assessment is that our reserves are capable of supplying all our needs up to and beyond the end of the century.
The noble Lord, Lord Donoughue, and others spoke of the energy deficit and the balance of payments. A central feature of the Government's energy policy is to seek to ensure that UK energy users are able to choose the fuels they need at competitive prices. We are working towards the creation of a free market environment in which they are able to make those choices from a diversity of available energy sources. The United Kingdom has large indigenous energy resources and in my view has nothing to fear from free trade. I understand perfectly well that collieries with known coal reserves that close down can in many cases be sterilised. That is not always the case. Seams can be approached from different areas. The important principle is that ultimately no one gains from extracting a resource uneconomically.
Lord Jay: My Lords, can the Minister say why the Government think it right to subsidise the nuclear power industry through the levy system and not to give similar support to the British coal industry?
Lord Cavendish of Furness: My Lords, I did not intend to ignore that question and was going to turn to it. However, since the noble Lord raises it now perhaps I may say that, when comparing the nuclear and coal industries, it is as well to bear in mind that British Coal benefited from a £6 billion financial reconstruction in 1990. It receives effective assistance of about £700 million a year from advantageous prices under current contracts with the generators. It also receives on average assistance of about £5 million a year by way of social cost and restructuring grant. How that scale of aid compares with the £1 billion a year that Nuclear Electric receives through the non-fossil fuel levy is open to debate. It is fair to bear in mind that in 1994 there will be a nuclear review which I do not wish to pre-empt at this stage. All of this follows the overall policy of diversity of supply.
The noble Lord, Lord Jay, also spoke of the French and German coal industries. The French coal industry has been reduced to a small rump and the German coal industry has also been run down. My advice is that subsidies are not protecting French and German industries against market realities. The noble Lord, Lord Jay, was equivocal about nuclear power, on the one hand admiring it and on the other hand casting doubt on its safety. As a measure of how things stand in so far as environmental issues are concerned, if electricity currently provided by nuclear power

1577
stations were generated by coal, UK emissions of carbon would increase by over 15 million tonnes a year, increasing total emissions by nearly 10 per cent.
I have tried to reply to most of the points raised by noble Lords. I will read carefully what has been said and write to noble Lords if I have not covered all the points raised. As I said at the outset, the Bill provides the clearest possible evidence of the Government's commitment to the coal industry and I commend it to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Electricity (Northern Ireland) Order 1991
1.5 p.m.
The Paymaster General (Lord Belstead)rose to move, That the draft order laid before the House on 27th November be approved.
The noble Lord said: My Lords, I beg to move the order and at the same time would like to speak to the draft Electricity (Northern Ireland Consequential Amendments) Order 1991.
The purpose of the order is to facilitate privatisation of the electricity supply industry in Northern Ireland. This marks the latest in a series of successful privatisations and heralds the final stage of the transfer of the entire UK electricity industry to the private sector.
We believe that Northern Ireland Electricity as a company will benefit by being freer from government control; that consumers will get a better service and lower prices than would otherwise have been the case; and that taxpayers will no longer be burdened with financing the operations of a public monopoly.
The electricity industry in Northern Ireland today labours under a number of disadvantages. It is a small system and is unconnected to any other; the low population density of Northern Ireland makes for higher costs per customer; and for its generation capacity it relies very heavily (up to 70 per cent.) on imported oil. In making these comments I intend no disrespect to the existing management and workforce of NIE who have worked with great dedication within the limitations imposed on them. They have made strides to evolve new structures and increase efficiency, and I believe privatisation will accelerate that progress. But radical change on the scale which is needed cannot be expected to come from within.
Many of the inherent characteristics of the Northern Ireland electricity industry do not apply in the rest of the United Kingdom. Therefore, we have been careful in drawing up our proposals not to fall into the trap of believing that, because it has worked over here, the GB privatisation model can simply be dusted down and imposed on Northern Ireland.
However, as in the Electricity Act, there is to be a regulator, a director general of electricity supply for Northern Ireland, who is to be operationally independent of ministerial oversight (Article 5). The regulator will have a number of duties, the most important being to ensure that all reasonable demands
1578
for electricity are met; that operators are financially sound; that competition is developed in the generation and supply of electricity; and that consumers, especially the elderly and disabled, are adequately protected.
One particular addition made in your Lordships' House to the Electricity Act 1989 is that in terms of prices and supply the interests of consumers in rural areas shall in particular be taken into account. One other important duty of the regulator is that energy efficiency and a cleaner environment are to be promoted.
The director general will appoint a consumer committee for electricity to help him in protecting the interests of electricity consumers (Article 7).
In future, electricity operators will normally require a licence from the Department of Economic Development and subsequently the regulator authorising them to generate, transmit or supply electricity (Articles 8–10). The director general will have important powers to enforce the requirements placed on licence holders either by the order itself or by virtue of the terms and conditions contained in the licences (Articles 28–31).
The main supplier in Northern Ireland—in other words, the public electricity supplier —will be the company which carries out the functions of transmission, distribution and supply and which for convenience I will refer to hereafter as "TDS". Both the order and the licence will place special obligations on that company.
Articles 19 to 25 of the order place a duty on TDS to supply electricity on request, and enable it to make charges for doing so.
Under Articles 42 and 43, the regulator will demand high standards of performance from the supplier in relation to the services provided to customers. The licence, too, will require the public electricity supplier to put in place a number of important measures to assist customers: for example, he will have to draw up and adhere to strict codes of practice for dealing with customers who are behind with their payments, and for the provision of special services for the elderly and the disabled.
I should also briefly mention in this context that we propose to replicate promptly in Northern Ireland any improvements which are made to the powers of the GB regulator by means of the Competition and Service (Utilities) Bill now before Parliament.
The proposed regime also contains important provisions for, as I have said, protecting the environment (Article 4), and for promoting energy efficiency (also Article 4) and the use of renewable forms of electricity generation. (Articles 35 and 36). Perhaps I may mention briefly one or two recent developments. In order to maximise the potential for competition we have taken the decision to break up the monopolistic structure of Northern Ireland Electricity. We propose to separate the generation functions from those of transmission, distribution and supply. As I have already indicated, the transmission, distribution and supply functions will be incorporated into a separate company (TDS). We plan to float it on the stock market, probably in November this year.

1579
The small size of the generation stations make them unsuited for flotation, and they are being sold to independent bidders following an open competition. Bids have been under consideration since last November.
At present, the parties whose bids best meet the Government's objectives are an American/Belgian consortium (AES/Tracetebel) which is interested in acquiring the stations at Kilroot and Belfast West; British Gas, which is seeking to secure the station at Ballylumford; and a management/employee buyout, which wishes to take over one of the smaller stations at Coolkeeragh. Negotiations with interested parties are still under way, so the House will understand that I cannot give further details at present. We hope to be able to sign sale contracts soon after Parliament has approved the legislation.
I referred earlier to the importance that we attach to competition as a means of keeping costs as low as possible, and I should like to say a few words about how we see that developing. The transmission and distribution element of the industry—by which we mean, in effect, the network of pylons and wires which criss-cross the countryside—does not lend itself to competition, although we shall take measures to ensure that it is used fairly.
We see the greatest scope for competition arising when new generation capacity is being ordered. The TDS company will announce a competition for new capacity later this year, and will reach agreement with the company which offers the best deal. I should underscore the point that no such competition would be held if TDS and the generators merely formed self-supporting parts of the same organisation.
On the supply side, we propose to introduce competition gradually as conditions warrant. The Northern Ireland system is small and vulnerable to disruption if proper regard is not had to the technical aspects of its operation. We cannot therefore throw it open to competing parties immediately. Our objective is to give freedom of choice to consumers in deciding on their electricity supplier, to the extent that it is possible to do so without jeopardising security of supply, or the stability of the market. We have asked the regulator to involve himself closely in how that should be developed.
Because of geographic location, the lack of local fuel supplies, and the small size of the system, Northern Ireland's energy prices are always liable to be higher than those in other parts of the UK. That is why we believe that competition is so important as a means of creating downward pressure on prices, without us having to resort to intrusive regulation.
The provisions of the main order require certain amendments to be made to a small number of GB enactments. For constitutional reasons, the order, which comes before us under the Northern Ireland Act 1974, is not competent to make those amendments. A separate order, made by virtue of the Northern Ireland Constitution Act 1973, is the appropriate vehicle for these provisions. That is why I am speaking to the second order.
1580
In introducing this draft Order I have tried to outline its most important proposals, and to put them in the context in which we envisage them operating.
The NI economy has suffered from a variety of adverse circumstances—in particular, the combination of recession and terrorist activity—which together are unique in the UK. Anything we can do to promote economic growth in the Province must be considered carefully. Helping local industry to curtail its costs, and thereby retain a competitive ability, must be high on the scale of priorities. That is especially true with 1992 now here and as we progress towards a truly common market in Europe. I believe that the order will help in that respect and I commend it to the House. I beg to move.
Moved, That the draft order laid before the House on 27th November be approved—(Lord Belstead.)
1.15 p.m.
Lord Prys-Davies: My Lords, I thank the Minister for outlining the main provisions of this complex and detailed order which brings us to the end of what has been a long-running serial.
The Minister has explained that Northern Ireland Electricity is a small industry, very much smaller than the smallest electricity system in Great Britain. Yet it is the second largest employer in Northern Ireland and its employer/employee relationship is excellent. Northern Ireland industry, as the Minister has explained, is almost entirely dependent upon electricity so the decision to privatise Northern Ireland Electricity is crucial to the people of Northern Ireland.
The Government's decision, in principle, to privatise NIE was announced in July 1988. The decision was immediately examined by the Northern Ireland Economic Council, which is, after all, the Government's own advisory body. I should like to emphasise that the council's conclusion was that every possible alternative to privatisation should be explored with an open mind and great care. It went on to draw attention to a number of middle solutions between the status quo and privatisation.
The Northern Ireland Economic Council was mindful of the unique situation in which NIE found itself—a small industry serving a small population, part of which is thinly scattered over rural areas, and possibly inherently incapable of taking full advantage of economies of scale.
Apart from two or three organisations, one of which was specifically set up to press the case for privatisation of the electricity industry, there is little support for the privatisation of the electricity industry in Northern Ireland. There have been widespread and substantial objections to the proposal. If we leave aside those who are opposed, in principle, to privatisation—my colleagues and I on these Benches are opposed in principle to privatisation —the opponents of privatisation rest their case on one of three arguments. There has been objection to the structure proposed in the order because it involves the splitting up of the present integrated structure. That is one argument. Then there is a strong body of opinion which has not been satisfied that the proposal will

1581
achieve the fundamental aim of privatisation: namely, the reliable supply of electricity at a reasonable price to the consumer. We know that that aim has been asserted repeatedly, but there is a strong body of opinion which is not satisfied that it will be achieved. A growing body of opinion considers that it is premature to take a decision until about 1997, by which time the pros and cons should be much clearer.
Of those three arguments, I am unable to comment on the structure argument. As for the second, I believe that if we are fair-minded we should say that the jury is still out. Therefore, the decision should have been delayed, as advocated by the third group of opponents.
I have read most of the documents which have been made available to the public, but nowhere have I seen the Government's estimated costs of privatisation. When the Parliamentary Under-Secretary responsible for the order gave evidence to the Energy Committee of the House of Commons on 16th October 1991, he was specifically asked what he estimated the cost would be of privatising electricity in Northern Ireland. That was the second question addressed to the Under-Secretary of State and he replied:
"the costs … are pretty small in relationship to the benefits".
Then he went on to say in abstract terms what the alleged benefits would be. That is recorded on page 2 of the report. However, it is no answer; it does not help us to assess the balance between the costs and the benefits. The reply is particularly unsatisfactory because it is a relative answer, and relative to a figure which has not been quantified because the benefits have not been quantified.
Having read and re-read the Parliamentary Under-Secretary's evidence to the Select Committee, I must sadly confess that I am uneasy about his approach to the Northern Ireland electricity system; uneasy, because he acknowledged that he was a passionate believer in privatisation. There is plenty of evidence from Northern Ireland that passionate belief in a doctrine generates a great deal of heat but seldom does it generate light and understanding.
The case for delaying a decision was put succinctly in the written evidence of Mr. Michael McGurnaghan of The Queen's University of Belfast, to the Select Committee. That evidence is summarised in paragraph 7 on page 102 of the committee's report. Mr. McGurnaghan said:
"Assessing whether or not the proposed privatisation of NIE will result in significant benefits for consumers and the wider Northern Ireland economy is not clear at this early stage. From an economic point of view, the main strength of the White Paper lies in its fundamental aim of proposing to change the general structure of the electricity industry in Northern Ireland in order to introduce a measure of competition into a monopoly. Against this, the inherent weakness of the plan would seem to lie in attempting to impose a competitive structure on a system whose small size provides little opportunity for competition. … The problem facing the government is that the provision of electricity in Northern Ireland may be inherently high cost due mainly to factors outside the local industry's control".
That appears to me to be a fair and balanced assessment of the privatisation proposals.
Notwithstanding the reasoned objections, the deputations to Ministers and a deputation to
1582
Parliament, and notwithstanding that a general election is now imminent, the Government have pressed ahead to privatise the industry. The debate on Monday on this order in the House of Commons demonstrated the strength of feeling among all the Northern Ireland Members of Parliament who spoke. So far as I can judge, the Government have not won over any one of their opponents on the issue.
I thought that Northern Ireland Electricity received a great deal of unfair criticism from government quarters in the course of the debate. I am sure that the kind words of the noble Lord, Lord Belstead, in your Lordships' House today will be much appreciated by the men and women who have given service to the electricity industry in Northern Ireland.
Of course, the board has its faults. We on these Benches have been critical of its policies towards discrimination. However, the board was the agent of the department, the department was its principal. The board was accountable to the department, so I do not believe for one moment that it is right or fair that the Government should now transfer to the board all the blame for past investment decisions which, with hindsight, we can see were mistaken.
However, I wish to be fair to the department. The Government must take a huge slice of the blame for the investment decisions of the past 20 years made by the electricity board. The order, predictably, was passed by the House of Commons last Monday and in accordance with our stance in this House we shall not divide on its merits.
Thus, privatisation is to proceed apace. That being so, I obviously welcome some provisions in the order which the noble Lord, Lord Belstead, quite rightly underlined in his opening speech. We welcome the non-fossil fuel obligation written into Article 35, the duty to promote the efficient use of electricity in Article 45; and the emphasis on research to be found in Article 4.
I am pleased that there will be an electricity consumer council of lay people with special interests in the electricity industry. I was delighted to read yesterday that the General Consumer Council for Northern Ireland has given the proposed council its benediction, if I may use a theological term without causing offence.
I very much hope that the precedent established by the order in setting up the specialist consumer body of lay people will be followed in other sectors of the public services in Northern Ireland, particularly in the health service.
On the other hand, I am not so sure that the Government were wise in not appointing an independent director general of electricity supply for Northern Ireland. I acknowledge the weight of some technical arguments in favour of linkage with the director general for Great Britain, but there are and will be differences between the two systems and there is always the political dimension which, in the view of many of us, probably outweighs the benefit of those technical arguments supporting linkage with the director general for Great Britain.
I have three specific anxieties that I wish to place on record. I should be delighted if experience were to

1583
show that my anxieties are groundless. Indeed, they may be based on ignorance on my part of how this order will in practice work. My first fear is that in a few years' time privatisation of the industry will lead to a high percentage of the skilled, experienced craftsmen now employed in the industry being made redundant in the drive towards reducing the unit cost. I fear that that is a predictable outcome.
One can envisage station managers coming under increasing pressure to reduce unit cost, and to that end labour costs will be cut down to the bone. If that were to happen, that could undermine significantly the good employer/employee relationship which has developed over the years at Northern Ireland Electricity. I have already referred to that relationship. The new management structure at the interface between transmission, distribution and supply will require more managers but they will not be recruited from the ranks of the redundant skilled craftsmen.
Secondly, I fear that, again in pursuit of reduced costs and increased profit margins, station managers will also be driven to demand a local wages agreement for each station in the Province. I wonder what that would lead to.
Thirdly, I fear that the regulator may not be in a position effectively to monitor and control the unit price charged by station managers. I acknowledge that I have not seen a power purchase agreement. Therefore my comment may be expressed in some ignorance of the contents of a power purchase agreement. I must confess that I do not fully understand how the system will work. I am told that in practice the unit price does not remain constant over days or weeks let alone months, but may vary daily. That occurs for a number of reasons such as the condition of the boilers or the turbines on a particular day, or the need to generate maximum output to meet excessive demands due to exceptionally cold weather. We certainly welcome the appointment of the regulator but I am not so sure that he will be as effective as is hoped for.
There is no more I can usefully say about this complicated and detailed order. I repeat that our main regret is that the Government have failed, in Northern Ireland of all places, to come up with an answer to the problems of the industry which would rest within the middle solution and be supported by the people of Northern Ireland in general.
1.33 p.m.
Lord Holme of Cheltenham: My Lords, I join the noble Lord, Lord Prys-Davies, in thanking the Minister for his customary lucid exposition. It is of great help on a complicated issue that he should be leading us by the hand through it. Like the noble Lord, Lord Prys-Davies, we on these Benches are opposed to the order. I shall explain why shortly. We are not opposed to it for the reason the Labour Party opposes it; that is, on the grounds of the privatisation of electricity. We on these Benches believe, if anything, that the Government's privatisation proposals in the rest of the United Kingdom have not gone far enough and have not provided for enough competition.
1584
I believe we all agree that Northern Ireland is a special case. I know the noble Lord appreciates my next point more than anyone. This House and Parliament as a whole have dealt with most issues that involve Northern Ireland on the basis of bipartisanship. There has been a great degree of agreement across and between the parties on the need to act first and foremost in the interests of the welfare of the people of Northern Ireland.
The problem the order confronts us with is that it appears that two out of the three main parties in Great Britain, the Energy Select Committee, the Northern Ireland Electricity trade unions, various consumer bodies—mentioned by the noble Lord, Lord Prys-Davies —and, according to a recent survey, over two-thirds of the general public in Northern Ireland, have grave reservations about the good sense of this legislation. It seems as if the Government are being led by mainland ideology rather than being influenced by a perception of what is right and proper for Northern Ireland. In other words, this is a piece of filling-in legislation. It is what the Government wanted in Great Britain and therefore feel obliged to impose on Northern Ireland. It does not appear that the Government are starting—as we would have hoped —from the basis of an analysis of what would be best for the organisation of electricity in the Province.
The problem with the electricity industry in Northern Ireland is its scale. The Minister has referred to that. It is a small-scale industry. The Government's response is to say that within that relatively Lilliputian market—I hope I may use that expression without sounding pejorative —we should have competition. However, they should really be asking how they can enlarge the market by making sure there is interconnection of Northern Ireland not only with the Republic of Ireland—we all appreciate the great security problems that have been posed in the past and might be posed again—but also with Scotland. That latter interconnection is possible and is in contemplation. If that occurred, Northern Ireland would become part of a larger electricity and energy market in which some of the ideas on competition begin to make more sense.
The specific problem with the order is that it does not seem to meet the Government's own objectives as originally set out in the White Paper. Noble Lords will recall that one of the objectives is that of competition and lower prices. As I said, the tiny size of the industry poses a problem, as does the need to have all four generators running most of the time in order to preserve sufficient reserve spinning capacity to make up for the isolation from other sources of energy. That means that any competition will necessarily be limited.
In some respects there is already competition. The Minister knows that competition has operated in respect of tendering arrangements for power station construction. The only real benefit is that potential operators will have control over design and fuel choice for the new generating capacity.
As regards lower prices, there must be an obvious concern that once the industry has been privatised, the interests and needs of consumers will become secondary to the financial interests of the purchasing

1585
companies, particularly if those companies do not come from the Province. If that is the case, they will have little direct commitment and interest in Northern Ireland's future as a society.
There will be environmental and new investment requirements laid upon the companies, especially as regards the purchaser —I shall come back to this—who takes on the obligations of the interconnector. Whoever takes on the installation at Kilroot 2 will have to make a substantial investment. That will create pressures to increase prices.
I have already mentioned the interconnector. The cost of the interconnector is relevant to the sell-off. I hope when the Minister replies he will be able to enlighten the House on the matter. We certainly need an assurance from the Government that funds—we all know EC funds are in contemplation—are earmarked and are potentially available for the interconnector. If the cost of the interconnector, which provides the best way of introducing lower electricity prices into Northern Ireland, is to fall in part or in whole on private companies, is it not obvious that that cost must be passed on to the consumer in the form of higher prices? The House may know that the estimated cost of interconnection with Scotland is between £180 billion and £350 billion.
Secondly, the Government set out as their objective the welfare of the consumer. On the question of regulation, they made a virtue of the fact that in a privatised industry regulation of the consumer interest will be possible. We agree that in a privatised industry good regulation is important. Like the noble Lord, Lord Prys-Davies, I express some anxiety that it appears to be envisaged that Professor Littlechild, the GB regulator, will take on the job of regulation in Northern Ireland. I may not be right about that; perhaps the Minister will enlighten me. It would be good to hear the definitive answer. On these Benches we agree with the Energy Committee report that it would be better for Northern Ireland to have its own regulator, since it has its own problems.
I should like to raise one other specific matter on the question of the welfare of the consumer; namely, that £120 million has already been sunk into Kilroot 2 equipment. As I understand it there is now no obligation on the purchaser to install that equipment, thus making the company easier to sell. That is potentially a financial disaster for the taxpayer as great as the DeLorean fiasco. Again, it would be interesting to hear what the Minister has to say about the future of Kilroot 2.
Finally, I should like to deal with the Government's other aim of promoting participation by employees of Northern Ireland Electricity and electricity consumers in the ownership of the industry. As your Lordships know, there are four stations which may be bought. It seems likely that two or three of the stations may now pass into the hands of foreign competition as a result of higher bids. If one of the objectives was to create local ownership it would be cold comfort for Northern Ireland consumers to see Belgians and others with a large stake in the ownership of their electricity generators. Normally on these Benches we would be
1586
happy to see international movement of ownership, particularly within the European Community. We have no objection to that. However, the Government will acknowledge that in view of the sensitivities in Northern Ireland, and when they themselves set out with the objective of local ownership, that would not be in accordance with their intention.
The orders are clearly a fait accompli. This is a last chance for parliamentarians to express a view on them. Given that the Government are determined, at this very inopportune time, on the eve of a general election, to press ahead, there are questions which should be answered.
1.45 p.m.
Lord Fitt: My Lords, during the passage of this order through another place every voice representing the electorate of Northern Ireland expressed grave apprehension and anxiety about the Government's intention to privatise the Northern Ireland electricity service. Here we are today in this part of the building faced once again with an order which cannot be amended. The Government have made up their mind, irrespective of all of the views which have been forthcoming from Northern Ireland about the people's worries about the issue.
It was said during the course of the debate in another place that massive legislation of this kind—I believe that there are 98 clauses and a number of schedules—affecting any other part of the United Kingdom would have necessitated a Bill, which could have been amended by those who would be affected by its provisions.
I also noted that, in expressing his enthusiasm for what he considered was likely to happen after privatisation, the Minister in another place referred constantly to the success of British Telecom since privatisation. I have not noticed any great success. The Minister is telling the people of Northern Ireland that their telephone calls are 27 per cent. cheaper and that they are getting a fair deal from the privatised telecommunications service. I have not heard anyone express enthusiasm for British Telecom since privatisation.
It has already been said by both noble Lords who have spoken that Northern Ireland is unique. Northern Ireland is not as British as Finchley, as we were once told. What is good for Edinburgh or Cardiff may not necessarily be good for Belfast. In spite of the difficulties they have in agreeing with each other on any subject, many Members of Parliament in another place expressed their opposition to the provisions of the order.
In justifying his stance the Minister quoted selectively from those organisations in Northern Ireland which seemed to support his view. It is recognised that the Conservative Party believes wholeheartedly in privatisation. Therefore, the Minister would accept any views put forward by any organisation which supported his own dogmatic political view. However, one of the organisations in Northern Ireland which is under his control and whose members were appointed by the British Government is the Northern Ireland Economic

1587
Council. After all, the British Government have been in control of everyday affairs in Northern Ireland since 1972 following the abolition of Stormont, since when many councils have been set up under the aegis of a succession of governments, both Labour and Conservative. The Northern Ireland Economic Council, after deliberating on every aspect of the proposed changes, told the Minister that there is no obvious case that they will bring benefits to the people of Northern Ireland. Yet the Minister persists in disregarding such advice while accepting other advice from less important organisations in Northern Ireland which seem to support his view.
There has been a public monopoly in electricity in Northern Ireland for many years. As my noble friend Lord Prys-Davies said, since the introduction of direct rule the Northern Ireland electricity authority has been the child of the Northern Ireland Office, which is in effect the government of Northern Ireland. We have heard that over the years mistakes have been made, that investment decisions have been made which proved to be disastrous, and that the management has been totally wrong. The Minister in another place used the term "a mindset" —that because it was a public undertaking people's minds were set on the view that the industry should be allowed to continue as it wished without worrying about success.
The problems were not solely the responsibility of the NI electricity service. It was the responsibility of the Government to examine how the organisation was run since 1972. It was said in another part of the building, at a time when I was living in Northern Ireland, that the Northern Ireland electricity service had an obvious political slant. It had taken many decisions, with which I would not have agreed, which involved discrimination. Again, it was the policy of the Government to give directions to NI electricity service to ensure that it had a better political image and economic record. They did not. Now that they have taken the decision to privatise the service they place all the blame on the Northern Ireland electricity service.
That is not in fact an attitude that will be accepted by the people of Northern Ireland. They are now asked to accept that there will be a private monopoly rather than a public monopoly. Again, there are those who are opposed to the Northern Ireland electricity services. The very fact that one opposes the order does not mean that we are all great enthusiasts for the Northern Ireland electricity service; it does mean that we are asked to take a leap in the dark because of the Government's dogmatic views on privatisation. Their view is that everything will be all right in future and they have proved it with British Telecom. If any reading is taken from British Telecom and made applicable to what is likely to happen in a future Northern Ireland electricity undertaking, there is nothing there to make anyone very enthusiastic.
Again, there is the matter of how this order comes before the House. Elected representatives in Northern Ireland say that it should have been a Bill or have come before a Select Committee and the opportunity given to amend it. There is some validity in those observations. We have seen what has been happening
1588
over a number of years and particularly over a number of weeks. A poll has taken place in Scotland, in which it now appears that over 50 per cent. of the population in Scotland favour independence and a break from Westminster government.
One of the reasons why that attitude has become so prevalent in Scotland is that Scotland returns a majority of Labour MPs who are opposed to the Conservative Government. They feel that their views are not heard in relation to serious issues such as the poll tax, and so on. Naturally, where there is such discontent it will be fed upon by those who want to see a break-up of the United Kingdom.
The same can happen in Northern Ireland. In fact, Northern Ireland presents a much more serious situation. There have been ongoing constitutional problems since the creation of the state, and more particularly over the past 20 years. The Government should be careful when introducing orders of this kind to ensure that the views of ordinary people in the street and their representatives have been taken into consideration. It appears to me that in the introduction of this order that has not been done.
I believe that there is great apprehension about how the electricity organisations in Northern Ireland will act under privatisation. I have great concern about it. I believe that there was no need for the Government to push forward legislation at this time with such enthusiasm. It may be that in doing so they will create difficulties which at the moment cannot be foreseen.
1.53 p.m.
Lord Skelmersdale: My Lords, I had not intended to intervene in this debate. However, there are occasions in your Lordships' House when the Ministers on the Front Bench, and occasionally Members from the Opposition Front Bench, are in a rather lonely position. This afternoon is one of those occasions. The British taxpayer has always willingly taken on board the special requirements of Northern Ireland in the amount of finance which is projected in that direction; as, indeed, has also been done for Scotland and for Wales.
In this debate on the privatisation of electricity in Northern Ireland there is another point of view which needs to be put; namely, the view of the British taxpayer. In 1982 I had the enormous privilege of co-sponsoring in your Lordships' House, the Bill which undertook the first of the current series of privatisation exercises—that of Amersham International. I formed the view then, and I retain it today, that there is no justifiable reason for a Government of this country, or indeed any other country, to perform tasks which can realistically, rationally and better be done by other people—"other people" in this context meaning the private sector.
That view has been strengthened during the course of this debate. We all know that electricity generation in Northern Ireland, which is to be provided privately in the future on a competitive basis, is undertaken in four stations (if my memory serves me rightly) which are in need of substantial modernisation. That involves quite a large cost. I believe that that is not for

1589
the taxpayers of the whole of the United Kingdom to finance. It would be done far better by the City institutions and private capital.
I also believe that the department in Northern Ireland has taken enormous care over this order. As we heard, not only are the generating stations to be competitively tendered for individually, but the difficult problem of distribution is to be carried out by a single entity. In the particular and peculiar circumstances of Northern Ireland, I believe that that is right. My noble friend gave a very clear exposition when introducing this order. He and the Government as a whole are to be congratulated on it.
1.57 p.m.
Lord Belstead: My Lords, I am grateful to my noble friend Lord Skelmersdale for saying a few words in support of the order at the end of the short exchange that we have had this afternoon. I am also grateful for some of the remarks that noble Lords have made, particularly the noble Lord, Lord Prys-Davies, from the Front Bench opposite who, although critical of the order, welcomed certain aspects of it. He also put his finger on, for instance, the specific statutory provisions for research, the emphasis on environmental matters and the setting up of the Electricity Consumer Council. I have taken only three of the points made by the noble Lord in his rejoinder.
Both the noble Lords, Lord Prys-Davies and Lord Holme of Cheltenham, asserted that not only was there very little support for the new structure being set up in Northern Ireland for electricity privatisation, but that there would be inherent problems. Indeed, the noble Lord, Lord Holme, went so far as to say that he felt that the legislation did not fulfil the objective of competition set out in the White Paper.
In reply to him to begin with, perhaps in a rather general way let me urge noble Lords to remember that we start off with a comparatively small system, which has not been good, particularly for industry and commerce, in terms of cost. In Northern Ireland so long as I can remember it has been a concern that in cost terms, taking corresponding types of business across the water in Great Britain, there has been a power disadvantage in Northern Ireland.
In addition, the noble Lord, Lord Prys-Davies, put his finger on what is always an important point—whether we would be able to rely on supply. At the present time one of the problems is that some 70 per cent. of the power for the four stations in Northern Ireland comes from oil. There is a very heavy dependence on one particular fuel. In that context I believe that there are some good spin-offs from the privatisation proposals. I shall put my finger on four of them.
First of all, British Gas is interested in the Ballylumford power station. We believe that by stipulating in the proposals that we have made that there should be dual oil-gas firing, we shall find that gas will at last come to Northern Ireland. The exciting prospect is the possibility of developing that for the industrial and domestic markets.
1590
Secondly, we have been asking the industry as a whole to think about its sources of supply perhaps more deeply than it otherwise would have done in a monopoly situation. We now have heads of agreement signed for a Scottish interconnector between Scottish Power and Northern Ireland Electricity. The noble Lord, Lord Holme, asked me a specific question about costs. All I can say today is that Ministers in Northern Ireland have already initiated discussions with the European Community authorities. There were discussions quite recently in the Community about a subvention from EC funding for that. In principle, Community funding will be made available but the details remain to be worked out.
Thirdly, I believe there is a good spin off from privatisation proposals. We have sources of lignite in Northern Ireland, to be found in the north around Crumlin and Ballymoney. When there is an open competition as the two oldest stations come up for retirement, we shall find that a competitor fuel will be lignite. I am advised that it is a comparatively clean fuel. That again will be important in terms of European Community rules about power station emissions.
Finally, if, only a few years ago, one had asked whether anyone would be interested in the sale of the four power stations in Northern Ireland, I believe that people would have been sceptical. Today we know that not only do we have bids for the four power stations but those bids are of a high quality. Therefore when considering the problems that Northern Ireland faces in a monopoly situation with regard to electricity generation, distribution and supply, I beg your Lordships to note that we are beginning to see those spin offs.
Noble Lords have understandably referred to the devoted people who work in Northern Ireland Electricity. I go along entirely with what the noble Lord, Lord Fitt, and others have said. Those people have done a good job in a typically Northern Ireland way. However, I depart from what noble Lords said in that I believe the structure has been against those people. The noble Lord, Lord Prys-Davies, referred to problems in the past of investment. If there has been a problem, it is the inherent problem of trying to produce money—for what ought to be a commercial undertaking—from public sources; and it does not work. It is one of the arguments in favour of privatisation.
The noble Lords, Lord Prys-Davies and Lord Holme, asked in particular about the status of the regulator. Mr. Geoff Horton who has been appointed is indeed closely involved in the Great Britain office and in the Great Britain OFFER. However, his office will be a separate office. When he takes up his post it will be a separate post from that on the mainland. We shall have "the Northern Ireland regulator". The intention is that he will carry out his duties in full in April.
The noble Lord, Lord Holme, also spoke of the danger of foreign bids. As I mentioned in my opening remarks, there is a bid from the combined United States Belgian consortium. I believe that the main area where competition can be introduced for the Northern

1591
Ireland electricity industry is in new generation capacity. We hope to see it reflected in later supplies. It is reflected in the Government's proposals for the structure of the industry and for competitive tendering which will help to reduce the cost to the consumers. At present the Government have said nothing about a special share. We have not stated whether or not we shall go for one. When considering those who bid, whether or not they come from outside the shores of Northern Ireland, if it is a high quality bid, that will be good for the consumers of electricity in Northern Ireland.
The noble Lord, Lord Prys-Davies, asked me about possible redundancies of skilled workmen. I do not believe that that is inevitable. I believe that skill will always be required. Indeed the noble Lord will be well aware that usually the great cry when the economy revives is that it is difficult to obtain the skills that are required. A balance has to be struck between overmanning—which is obviously inefficient and costly for consumers—and decimating the workforce. The unions are already discussing personnel issues with those who are interested in the new generating stations.
The noble Lord, Lord Prys-Davies, indicated three areas which particularly worry him. The third referred to the control of the unit prices paid to the generators. The prices to be paid by the firm, which will be called TDS, to the generators depend on the power purchase agreements. For new plant Northern Ireland Electricity will have an incentive to contract at the lowest possible cost. In addition, NIE will have a duty to purchase electricity economically. That is a key condition of its transmission and public electricity supply licences. That requirement will of course be enforced by the director.
The noble Lord, Lord Holme, was concerned about a conflict of financial interests versus consumers' interests. I believe that competition is the best safeguard of consumers' interests. Where competition is not feasible the regulator will have the best possible powers to protect the consumers. The licensing regime has specifically been tailored to the special features of the small presently isolated Northern Ireland system. It has been designed to encourage NIE and the generators to behave as far as possible in the best interests of the consumers and economy. In particular the price regulation conditions applying to TDS encourage it to promote energy conservation.
The noble Lord also asked me about Kilroot 2. In order to maximise the opportunities for competition, it has been decided, as the noble Lord well knows, that the next tranche of generating capacity required by NIE (to be TDS) will be commissioned following an open competition. If Kilroot 2 proves to be the cheapest option, it will win the competition. However, the objective is to ensure the lowest price for consumers.
I hope that I have answered all your Lordships' questions. I shall read the debate and, if not, I shall write to noble Lords. After a lengthy debate and with another piece of business to be dealt with, I commend the order.
On Question, Motion agreed to.

Electricity (Northern Ireland Consequential Amendments) Order 1991
2.8 p.m.
Lord Belstead: My Lords, I beg to move.
Moved, That the draft order laid before the House on 27th November be approved. [5th Report from the Joint Committee].—(Lord Belstead.)
On Question, Motion agreed to.

Osteopaths Bill [H.L.]
2.9 p.m.
Lord Walton of Detchant: My Lords, I beg to move that this Bill be now read a second time.
I regard it as a singular honour and privilege to be given the opportunity of introducing this Bill into your Lordships' House. Traditionalists may think it remarkable that a doctor and former President of the General Medical Council should now be promoting enthusiastically a Bill which aims to develop, promote and regulate the profession of osteopathy. However, as Professor Ralf Dahrendorf (subsequently Sir Ralf) said in his Jephcott Lecture to the Royal Society of Medicine some years ago, professional self-regulation is one of the glories of a learned and civilised society. In an article entitled How to ruin the professions published in the Spectator in 1988 the noble and learned Lord, Lord Hailsham, expressed a similar opinion. He pointed out that in the United Kingdom many of our professions have that cherished privilege of being self-regulating.
Professor Dahrendorf contrasted the position in the UK with that in many other countries, including his native Germany, where the professions are regulated by the state. That was a position which he regarded in many respects as being fearful. The noble and learned Lord in his article made clear his view which I share. It was that while the privilege is cherished by the professions, including his and mine, it imposes significant responsibilities upon them in that the regulatory power which they possess must take full account of the needs, aspirations and interests of those with whom they deal; namely, their clients and their patients. It is therefore important that the professions, in fulfilling the statutory responsibilities imposed upon them by law, should take full account of informed lay opinion and advice.
The Bill is based upon a report of a working party on osteopathy established by King Edward's Hospital Fund for London. It had the following terms of reference:
"Having regard to the growing public demand for osteopathic treatment and increasing support, both professional and political, for early legislation to establish a statutory register to regulate the education, training and practice of osteopathy for the benefit and protection of patients, to consider the scope and content of such legislation, to make recommendations and report".
That working party, of which I was a member, was skilfully and judicially chaired by Sir Thomas Bingham, a Lord Justice of Appeal. It spent some two years collecting information and evidence before formulating its recommendations. I wish to pay a

1593
warm tribute to the chairman and to the hard working members of the working party, to Robert Maxwell and Norman Illingworth of the King's Fund and to Simon Fielding whose spirited advocacy on behalf of his profession was throughout so carefully balanced and yet utterly persuasive.
The Bill now before your Lordships embodies the 62 recommendations set out in that report. I mentioned at the outset that traditionalists might be surprised to learn that this proposal now has the support of the medical profession. Some 20 to 25 years ago it was regarded as improper for a doctor to associate with complementary practitioners. Indeed, a doctor referring a patient to an osteopath without medical qualifications would have fallen foul of the recommendations of the General Medical Council on professional conduct and discipline.
Since that time members of my profession recognising, as the King's Fund report stated, that osteopathy is a system of diagnosis and treatment which lays its main emphasis on the structural and mechanical problems of the body, have recognised that this discipline is not an alternative to conventional medicine but it is a complementary one which offers patients an additional treatment option for certain conditions which can affect the body's framework.
Osteopathic treatment involves the use of predominantly gentle manual methods of treatment. It utilises a diagnostic procedure similar to a conventional medical examination but it pays particular attention to detailed assessment of the patient's musculoskeletal system. Throughout the years some doctors and orthopaedic surgeons have sought formal training in osteopathic techniques. They have begun to apply those more and more often in the course of their professional practice. Others, recognising the increasingly comprehensive and detailed programme of treatment now being undertaken by osteopaths without medical qualifications, have referred their patients to such practitioners in whose professional competence they have full competence with the approval of the General Medical Council, while retaining ultimate clinical responsibility for the patient's management.
In other words, collaboration between the medical and osteopathic professions has become much closer and friendlier. I am happy to report to your Lordships that this Bill, based upon the King's Fund report, now has the warm support of the British Medical Association and the Conference of Medical Royal Colleges and Faculties.
It is also enthusiastically endorsed by all the bodies at present representing osteopaths. They each see the need to create a unified profession with common educational standards and a single statutory body replacing the present voluntary registration system.
I hope and believe that the Bill will commend itself to Her Majesty's Government. Following some discussions with lawyers from the Department of Health, I understand that I shall be invited to propose a number of amendments in Committee—many of them purely technical —either in order to clarify the
1594
import of certain clauses, especially in a European dimension, or to meet one or two anxieties expressed on behalf of Her Majesty's Government and the Privy Council where potential inconsistencies may conceivably arise. I shall be glad to do that.
Some of your Lordships may ask why this Bill deals solely with the osteopathic profession and why no attempt has been made to embrace within its provisions the regulation of other closely related professions such as that of chiropractic. That issue was carefully considered in the deliberations of the King's Fund working party; but after detailed consultations, it emerged that there were sufficient differences between the two professions to make it impractical for both to be covered by a single Bill. However, I can inform your Lordships, first, that the chiropractors warmly support this Bill and, secondly, that the King's Fund has now established a further working party to examine the profession of chiropractic in the hope that ultimately recommendations for the self-regulation of that profession will also emerge.
Finally, I turn to the Bill itself. Perhaps I may be so bold as to borrow a well-known phrase from the legal profession—res ipsa loquitur—it speaks for itself. In almost all respects its provisions are comparable to those at present governing the medical and dental professions through the General Medical Council and General Dental Council respectively. As the Financial and Explanatory Memorandum makes clear, the Bill provides for the establishment of a General Osteopathic Council which will have:
"the general function of developing, promoting and regulating the profession of osteopathy".
In its members the council will include doctors, lay people and educationists in addition to osteopaths.
The Bill also proposes the establishment of four committees; namely, the education committee, the investigating committee, the professional conduct committee and the health committee. It enables the council to appoint other committees where appropriate.
The education committee will have the general function of promoting and co-ordinating education in osteopathy. That committee will have the power to require that educational institutions granting qualifications shall report details of their courses of instruction to the education committee which in turn will be empowered to appoint visitors to visit such institutions in order to be satisfied that the instruction and examinations offered by those bodies are of appropriate quality.
Should that committee conclude that they are not, it may report its views to the general council which in turn would have the authority to recommend, ultimately to the Privy Council, that recognition of the qualifications conferred by that institution should no longer be recognised for registration.
Provisions are made in the Bill for the provisional registration of those not at present possessing a formal qualification in osteopathy but who have been in practice for a number of years. The general council would also be empowered to make rules about

1595
conditions of registration just as it would be empowered to give guidance about professional conduct and ethics.
Where allegations are made to suggest that a registered osteopath may have been guilty of unacceptable professional conduct, such allegations would be examined, first, by the investigating committee which would then have the power to refer such a case for a formal hearing before the professional conduct committee. I have been asked by some of your Lordships what is the meaning of unacceptable professional conduct. I simply go back to the famous quote many years ago in relation to the medical profession by Lord Justice Lopes, who defined the somewhat archaic term used in an early medical Act, "infamous conduct in a professional respect". He said that that meant:
"no more and no less than conduct judged as infamous by an informed body of medical opinion".
I would refer to the definition of "unacceptable professional conduct" as being subject to a similar definition.
The conduct committee would in turn have the power to admonish, to attach conditions to the osteopath's registration, to impose a fine or to cancel or suspend the individual's registration. Clauses are also included, such as those relating to the proposed health committee, to enable appropriate action to be taken in the case of an osteopath in whose case there was evidence to suggest that his or her health was so impaired as to constitute a danger to patients.
I trust that your Lordships will agree that it would be inappropriate for me to go into further detail in regard to the minutiae of the various clauses of this important Bill. I look forward to hearing your Lordships' comments upon it. Perhaps I may say how much I look forward to the maiden speech of the noble Lord, Lord Rennell. I am glad that he has chosen the Second Reading of this Bill to make his first contribution to the debates in your Lordships' House.
I believe that the Bill represents an important milestone which I trust will lead to formal recognition of the osteopathic profession, which has made, and is continuing to make, such an important contribution to the treatment of many musculoskeletal disorders. I beg to move.
Moved, That the Bill be now read a second time. —(Lord Walton of Detchant.)
2.21 p.m.
Lord Rennell: My Lords, I am most grateful to the noble Lord, Lord Walton, for introducing the Osteopaths Bill and so giving me the opportunity and privilege of making my maiden speech on a subject dear to my heart. I should like to thank him for his few kind words to me a moment ago.
I am particularly grateful because 10 years ago, just over one year after I had taken my seat in your Lordships' House, I met my friend the noble Earl, Lord Longford, who, in his most charming and always inquisitive manner, asked whether I had yet made my maiden speech. I said "no" and mumbled that nothing I knew anything about or was particularly interested in had come up for debate. The noble Earl, the kindest
1596
of men, said that it was quite unimportant to select a subject one knew about or indeed was interested in. The important thing to do was to get on with it and do it with the minimum of fuss. Here I am, 10 years later, indeed without fuss but speaking on a subject which interests me greatly.
Eighteen months ago, in May 1990, there was a brilliant debate in this House introduced by the noble Earl, Lord Baldwin, during which a number of noble Lords—some of whom, including the noble Earl, are speaking again today—put forward strong and compelling reasons for bringing together orthodox and complementary medicine. In his speech that day the noble Viscount, Lord Tenby, said:
"The way forward is to see the two bodies—orthodox and complementary medicine —working together, each with respect for the other's skills in a fruitful partnership which can only ultimately be of benefit to those who matter most, the patients. I look forward to the day when they are as one and have ceased to be separate entities".—[Official Report, 9/5/90; col. 1419.]
I agree entirely with those sentiments as indeed, if I judge correctly, did the vast majority of noble Lords who spoke in that debate. I understand that there are similar feelings on the subject in another place. The conclusions at the end of the debate, however, were twofold: first, that each different type of complementary practice should present its own case for acceptance within the so-called orthodox fold; and secondly, that the Secretary of State for Health has the onerous duty of safeguarding the health of the nation.
The first of the two conclusions is very much up and running, as evidenced by today's Second Reading and thanks to the truly sterling work of the working party on osteopathy, chaired by the right honourable Sir Thomas Bingham. The working party included the noble Lord, Lord Walton, and Simon Fielding. I would like to endorse the statement of the noble Lord, Lord Walton. I congratulate the team for such good work in a relatively short period of time. It has produced,
"a fair and practicable framework for the statutory regulation of osteopaths which has the support of both the medical and osteopathic professions".
Unlike noble Lords who will speak after me, I cannot declare or claim any learned or scientific knowledge of the subject of this debate. I can however claim 30 years' or so practical knowledge of the need for it. I was first introduced to an osteopath in 1962. I had just left the Royal Navy after 10 years. As a fit young man, I had taken part in every sort of sporting activity one can imagine. My only serious damage had been caused by a very large and annoying Army rugby player who jumped on my shoulder as I was picking myself up from a hard pitch in Hong Kong.
On leaving the Navy I continued to play rugby for five years and I remain an active sportsman. Having seen the rugby World Cup this year, I know that noble Lords will have no difficulty in picturing me, back in the 60s, facing packs of fearsomely ferocious and heavy rugby forwards from all over the world with very little on their minds other than burying a diminutive and very frightened scrum-half beneath them. I needed help from time to time—medical help that would work quickly to enable me to face the onslaught again the following week or even sooner.

1597
The first time I visited the osteopath back in 1962, two interesting things happened. I went with a bad back and came out seven minutes later completely cured. The other point was that I had to pay for the treatment. I had been in the Royal Navy which previously had paid everything. In this case I found that I had to pay even though my employers had provided me with private health cover.
Both two points will be affected by the Bill we are debating today. I had hoped that osteopathy would become available on the National Health Service. It would then be available to all and it would be free. I understand that at this stage that is not the case and that it will not be available on the National Health Service. We shall have to try to do something about that.
Perhaps I may revert to the safeguards for the safety of the nation. At the turn of the century, George Bernard Shaw was on the war path and not necessarily on the side of orthodox medicine. I crave the indulgence of the noble Lord, Lord Walton, in bringing this to your Lordships' attention. In Shaw's preface on doctors, he says:
"The distinction between a quack doctor and a qualified one is mainly that only the qualified one is authorised to sign death certificates—for which both sorts seem to have about equal occasion".
Bernard Shaw despairs at giving a surgeon a pecuniary interest in, for instance, cutting off your leg and the fact that the more appalling the mutilation the more the mutilator is paid. In The Doctor's Dilemma, Sir Patrick Cullen, on the recent discovery of inoculation, says:
"I've tried these modern inoculations a bit myself; I've killed people with them; and I've cured people with them; but I gave them up because I never could tell which I was going to do".
I am sure that the safeguards promised by the proposed General Osteopathic Council will satisfy the Secretary of State for Health. The working party has come so far, and it is so important for it. I am sure that it will not be found wanting.
I hope that the noble Baroness, Lady Hooper, who was so supportive of the osteopaths in May 1990 when she said that they have clearly shown the way forward, will feel confident that she can persuade her right honourable friend the Secretary of State for Health that this Bill is a big step forward for the good of the health of the nation.
2.30 p.m.
Lord Ennals: My Lords, not surprisingly I want to start by congratulating the noble Lord, Lord Rennell, on behalf of the whole House on the speech that he has just delivered. It was eloquent and witty and carried with it his own personal experience. My only complaint is, why in heaven's name have we had to wait for 10 years for the noble Lord to make his maiden speech? I hope that we do not have to wait another 10 years before he speaks again. Anyone who brings as much enthusiasm, experience and humour into a maiden speech will be able to do so time and time again. So for heaven's sake, stick with us; be one of us. However, he chose a very good subject on which to make his maiden speech.
1598
Next I should like to congratulate my noble friend Lord Walton for admirably presenting the Bill. It is very appropriate that, with his own medical experience, and as a former president of the BMA, he should do so. It helps to show that at last, and very positively, the appropriate alternative therapies and the medical profession are coming together. I congratulate the noble Lord on the part that he played on the working party and express my thanks also to the chairman, Sir Thomas Bingham. Also, for the third time, Simon Fielding is going to get my congratulations. I do not guarantee that he will receive congratulations on each speech that he has made, but certainly he does from those who know the work that he has been doing.
I shall be very brief because the Bill has been admirably presented. No one here has not read the excellent report and I add our thanks to the King's Fund for having brought it together and to His Royal Highness Prince Charles for having launched it at the quite memorable occasion just a few weeks ago.
I have to make my apologies as I shall not be here at the end of the debate. I am visiting a hospital for elderly people and I know that no one here would want to keep me away from my duty, which is at half-past-two this afternoon. I am going to be a little late, that is quite clear.
I should like to make a few general comments. Having offered my congratulations, my second point is to express our regret that the Bill has not been presented by the Government. I am delighted that the Government are, I believe, to give it their support and I hope that they will facilitate the passing of the Bill through this place. The noble Lord, Lord Walton, said that there are a few amendments and that he is likely to support them. I am certain that we all want to see the Bill go as quickly as possible to another place. I urge the Minister to do her best to see that it does so that the Bill can become law before this Parliament actually ends, as it must do soon.
The Bill is very important. As the noble Lord, Lord Walton, said, it paves the way. My next point, therefore, is to agree with him that this should pave the way for other professions to enter into the regulatory task. I am certain that regulation is right. I do not think that we shall ever get a situation in which complementary therapies will be generally accepted unless we are satisfied, and the public are satisfied, that what is being done is based on training, experience and high standards. I know that the chiropractics are ready and waiting and I was delighted to know that the King's Fund has set up a working party.
However, I should have liked it to have been a Government Bill. I hope that the Government of the day will not require the vagaries of a Private Member's Bill, which can always produce uncertainties, for the chiropractics and others who I hope will follow.
I should like to say a few words about remuneration, to which the noble Lord, Lord Rennell, also referred. As I understand it, the Bill does not deal with remuneration. However, I was glad to see an important statement made by the Parliamentary Under-Secretary of State for Health, Mr. Stephen Dorrell, in response to pressures upon him from the

1599
All-Party Parliamentary Group on alternative and complementary therapies. I should, perhaps, have declared an interest at the beginning of my remarks. It is not a professional interest, but it is one that I share with the noble Lord, Lord Colwyn. With him, I have the privilege of being joint president of the all-party parliamentary group. The group is delighted that the Bill is here and that the noble Lord, Lord Walton, has put it forward.
However, I return to this most interesting statement. It was made on 3rd December in a letter to the chairman of the all-party group, Mr. Peter Rost, MP. I should like to read to your Lordships just two extracts from it. The first is:
"Any GP therefore may employ a complementary therapist to offer NHS treatment within his practice".
It then continues, in a further paragraph, to explain:
"The critical point in the case of both fundholding and nonfundholding GPs, is that the GP remains clinically accountable for the care offered by the complementary therapist. It is not a 'referral' system whereby one registered practitioner refers a patient for treatment to another. It is a 'delegation' system where the GP asks another professional to provide care for which he remains clinically accountable. It is therefore for the individual GP to decide in the case of each individual patient whether the alternative therapist offers the most appropriate care to treat that patient's condition".
Therefore, we can see the way forward for those therapies that have been approved and regulated, where the GP is prepared, as the letter says, to delegate and therefore share the responsibility with the alternative therapist. We can see that alternative and complementary therapies can become a responsibility of the National Health Service, as I am sure they should be. It is neither right nor fair that such forms of treatment—and we are dealing only with homeopathy at present—should depend entirely on the patient's ability to pay. If the Minister can find the opportunity in her response to comment upon the remuneration aspect of the Bill, I should be grateful.
However. in every sense I warmly welcome the Bill. I hope that it will pass through all its stages in both Houses, that it will become law and that it will pave the way for other professions to be able to move in the same direction. In conclusion, I should like again to express my thanks to my noble friend and again congratulate the noble Lord, Lord Rennell.
2.35 p.m.
Earl Baldwin of Bewdley: My Lords, it is a Friday afternoon and I shall be brief. Like most of your Lordships, I warmly welcome the Bill. Osteopathy has been with us for a long time. Its founder, after all, was a contemporary of Lister and Pasteur. It therefore antedates the drugs revolution and most of the advances of modern medicine. Its genius is that it reaches those parts that other medical systems cannot reach. It keeps your Lordships' House ticking over. It is strongly to be commended, and it is a welcome sign of the times that the medical profession, and officialdom in general, now also thinks so.
What takes a little of the gilt off the gingerbread, as the noble Lord, Lord Ennals, pointed out, is the fact that the Government do not think so strongly enough to adopt the Bill. The Government have a responsibility for the health of the nation. It is now
1600
generally accepted that the promotion and the regulation of the osteopathic profession would contribute positively towards that. Therefore, I think that it is fair to argue that the Government are ducking their responsibility in leaving matters to the mercies of a Private Member's Bill, however ably introduced by my noble friend Lord Walton of Detchant.
In the debate that I initiated on 9th May 1990 on complementary medicine and its relationship to conventional treatment, to which the noble Lord, Lord Rennell, referred in a maiden speech which I enormously enjoyed, I appealed to the Government to make their stance a little more benign and a little less neutral. I repeat that plea today.
What of the future? Osteopathy within the National Health Service must be a goal to aim at. But we have here a first step, as the most orthodox of the unorthodox professions makes its way towards public respectability. Sometimes respectability exacts a price, and I hope that the profession will not lose its soul as it gains its place in the sun. That has been known to happen. The trail that is being broken by the osteopaths will in all probability be followed quite soon by the chiropractors —those other successful manipulators, using that word in its best sense. After an interval we may see the acupuncturists coming along. I must declare an interest in that I chair a board recently set up by that profession to regulate its training and accredit its institutions. Doubtless other therapies will follow.
This must be the right route for the professions of complementary medicine as a prelude to official recognition. Banning the unorthodox is not the right way. Setting high standards and regulating the professions so the public can see clearly and choose freely is surely the proper way. This the osteopaths have done and are doing, and they deserve our congratulations, as do the members of the King's Fund working party who have produced such a clear report. I support the Bill.
2.41 p.m.
Lord Cullen of Ashbourne: My Lords, about 30 years ago I had an arthritic hip and I went to see a brilliant osteopath who in a miraculous way cured the condition in half a dozen sessions. While she was working on my body she said, "Will you become a member of the Council of the Osteopathic Education Foundation?" I felt I was in no position to refuse, and for the past 25 years I have been chairman of that body.
Lord Ennals: Did she let the noble Lord off the fee?
Lord Cullen of Ashbourne: I am still around! My Lords, during that time I have seen the number of qualified osteopaths increase considerably and the medical profession become more and more prepared to recognise the benefits of osteopathy. I am pleased to be able very briefly to participate in the debate today.
As the noble Lord, Lord Walton, said, the Bill will mark a significant milestone in the history of the osteopathic profession. I read the King's Fund Report on Osteopathy with very great interest, and I was

1601
much impressed by the results of their deliberations and exhaustive consultations. The working party have achieved a remarkable consensus for their proposals which are encapsulated within the Bill before your Lordships' House today. Sincere thanks are due to all members of the working party for their hard work which has resulted in this most sensible and long overdue measure.
I should like to echo the tribute to Simon Fielding. He was not only on the working party but for several years has been a member of the Council of the Osteopathic Educational Foundation and has kindly kept me in touch with his indefatigable efforts behind the scenes. I feel that if it had not been for him we would not be here today debating the Second Reading of the Bill.
It is also extremely encouraging that the provisions for the regulation of osteopaths have attracted such support from the medical profession. In particular, I note that the secretary of the BMA has written to the King's Fund to confirm the BMA's support for legislation seeking to regulate the education and training of osteopaths. That is a major step forward and is not only a tribute to the Kings's Fund working party but also to the responsible and far-sighted attitude of those at the BMA.
Credit too must go to the osteopathic profession, which over the past few years has acted decisively upon the advice of Government Ministers and has now fulfilled all the criteria necessary for the swift passage of the Bill.
I recall the words of my noble friend Lady Hooper, when speaking on behalf of the Government in May 1990. She told your Lordships' House that members of the public who chose to avail themselves of treatment from osteopaths, for example, have a right to be safeguarded in the same way as those using the NHS professions.
I thoroughly agree with that view and believe that the Bill represents an eminently fair and practical way of achieving those safeguards for patients. This surely is a simple and common-sense measure which should I believe command the unanimous support of the House.
2.46 p.m.
Lord Colwyn: My Lords, I too should like to thank the noble Lord, Lord Walton, for the way he explained the Bill and for the work that he and the working party on osteopathy, set up by the King's Fund, were able to achieve. I must congratulate him on the way he has been able to persuade the Government to find time for the Bill, and hope that he has been sufficiently persuasive to ensure that the Bill will complete its passage before the general election, or at least go sufficiently far down the path that there is no chance of it being unduly delayed.
Before saying something about the Bill, I should like to pay tribute —along with the noble Lord, Lord Ennals—to the Prince of Wales, President of the King's Fund, for all his help, encouragement and
1602
belief that osteopathy deserved greater recognition, and also to my noble friend Lord Ferrier, who I know will read this debate when he receives Hansard.
Ever since I have been a member of your Lordships' House—and it is now nearly 25 years—I have been aware of my noble friend's constant pressure on Governments of both sides, to allow the use of manipulative techniques—and I know that my noble friend Lord Ferrier was an exponent of chiropractic —in the National Health Service. The King's Fund recommendations do not provide for any inclusion of osteopathy within the NHS, and the Bill has nothing to do with the recognition of osteopathy. It is merely a mechanism to ensure that there is adequate regulation of an increasingly accepted form of treatment. There is no doubt, however, that the consideration of this legislation is a major step towards my noble friend's ultimate goal. Our debate today is particularly fitting as it was my noble friend's 90th birthday Wednesday last and I am unable to think of a better present for him. I am grateful for all he has done.
I should also like to congratulate the Government on their farsightedness in allowing time for this Bill. In her speech to the House on the 9th May last year, during the debate on complementary and conventional medical treatments, my noble friend said,
"We have eyed the developments within the osteopathy profession with considerable interest, not only from the osteopaths' point of view but also as a possible model for other professions, particularly those which have reached an appropriate level of maturity with an established form of voluntary regulation and infrastructure and which wish to pursue the path to regulation".—[Official Report, 9/5/90; col. 1432.]
I hope that, after the election, she will find time to allow similar legislation for chiropractic, acupuncture and other therapies.
My noble friend will recall that with the noble Lord, Lord Ennals, and my noble friend Lord Baldwin, we were very close to inserting an amendment into the Health Services Bill which would have allowed fund-holding GP's to refer patients to alternative and complementary practitioners, outside their practices but within their budgets, rather than delegate an alternative therapist, as is the situation at present.
I should like to think that this is a first step towards that, and a government recognition of many of the complementary therapies which provide treatment at much less cost than orthodox medicine. During our frequent debates on health in the House, I have repeatedly pointed out to the Government that the continual cost crisis in the NHS will never be solved by throwing in more cash. We hear from doctors and politicians that all we need is more cash to purchase more equipment and hospitals, and to pay more staff, implying that, if only medicine had all the resources it needed, all our health problems would be solved. Nothing could be further from the truth. The NHS has evolved as a service with very little to do with health—waiting for people to fall ill before taking any action.
The working group on back pain which reported in 1979—and I do not have any more up-to-date figures —showed that more than 375,000 people a year, 1 per

1603
cent. of the population, experienced a spell of certified sickness incapacity because of back pain, leading to a loss of more than 11.5 million days from work and costing £220 million a year in lost output. In 1979 this cost the social security system over £40 million in sickness and invalidity benefits and disablement pensions. My noble friend will no doubt know how this problem is affecting us now. I suspect that it is more depressing.
In 1979, the working group's recommendations included the setting up of special back pain research centres, control by primary prevention and the initiation of comparative trials of manipulative treatment, including both orthodox and other means.
In 1986 in the British Medical Association report on alternative therapy, which was produced almost certainly as a direct result of Prince Charles's intervention, was criticised for being limited in its understanding and prejudiced in its approach. But it highlighted a number of common features in many of the techniques used, and suggested that the popularity of alternative medicine lay in the amount of time available to patients, the use of touch, the magical qualities surrounding alternative practitioners and the authoritative attitude and belief in their models and methods of healing. The report stated that there was,
"no substance in the theory that advances manipulation as a system of healing".
It went on to say,
"The core of the problem of the lay osteopathic manipulator rests not with whether these services are useful, for there are probably at least 2,000 in practice in Britain, but in that only some hundreds are registered as having had formal instruction".
They concluded however, by saying,
"the registered lay manipulator probably provides the community with a generally safe and helpful service".
I am delighted to hear from my noble friend Lord Cullen that the BMA gives the Bill some support. It has always been government policy that the individual should be free to seek the benefits of alternative medicines and therapies. In her address on 13th June 1986 to the Royal Society of Medicine, my noble friend Lady Trumpington said:
"Some people argue that it is the Government's responsibility to register alternative therapists. It may come to that one day, but, if it does, it will be because the alternative community has been unable to put its own house in order… I am firmly of the view that alternative therapists must themselves address the question of standards and qualification".
The osteopaths have taken that advice. I hope that there will be no delay in the implementation of this innovative legislation.
2.53 p.m.
Lord Brougham and Vaux: My Lords, noble Lords will be aware that I have some knowledge of the osteopathic profession as a few years ago I took over the sponsorship of a survey of osteopathic schools from our late friend Baroness Lane-Fox.
The recent publication of the report of the King's Fund Working Party on Osteopathy, under the chairmanship of Sir Thomas Bingham, demonstrates quite clearly that the case for the immediate statutory regulation of osteopathy is proven. Members of the
1604
working party should be congratulated upon the way in which they went about their task and for their most cogent and well presented report.
The working party's report proposes a fair, simple and, I believe, uncontentious mechanism to achieve the regulation of what is, after all, an important and increasingly popular form of treatment.
What is also clear is that these proposals, which are incorporated in the Bill of my noble friend Lord Walton, have the strong support not only of the osteopathic profession but also the medical profession.
As a former president of the Royal Society for the Prevention of Accidents, I am particularly interested in any measures which are designed to give greater protection to the public. In my view, the Bill will provide osteopathic patients with the safeguards that they deserve and it is quite right that this House and the Government should support this eminently sensible and straightforward measure.
2.55 p.m.
Lord Kindersley: My Lords, much has been said on this subject that I should have liked to say. I shall try not to repeat what has already gone before, in particular as regards the reference that has been made to those who have spent so many hours and such hard work in reaching the point we have today of this Private Bill.
Perhaps not sufficient mention has been made of His Royal Highness the Prince of Wales who, when he was president of the BMA, delivered a speech which set the ball rolling in a way it would not have done if the speech had come from any other source. There followed from that speech a series of dinner parties in Kensington Palace and a series of colloquia in the Royal Society of Medicine which have garnered tremendous interest in the conventional medical field and have enabled people who 20 years ago would not have thought of supporting complementary medicine —the noble Lord, Lord Walton, mentioned that fact —to become relatively enthusiastic supporters of it. A remarkable transformation has taken place.
I thank not only the noble Lord, Lord Walton, but also Mr. Simon Fielding, who is in the gallery today, for their efforts on this subject. I also wish to thank the chairman of the working party, Sir Thomas Bingham, for spending much precious time on the affairs of the working party and also for agreeing to chair the working party on the chiropractic Bill which is now under way.
The noble Lord, Lord Walton, has drawn attention to the change of attitude that has occurred on this matter. It is encouraging that, chiropractors are so close behind in that regard. One can only hope that within not too long a passage of time all the disciplines of complementary medicines will proceed down the same path with their own regulations. The noble Lord, Lord Walton, also referred to the opportunity to table amendments to the Bill in Committee.
I wish to declare an interest in this matter. I support complementary medicine and I am a director of the Sun Alliance insurance group. I wish to register a point relating to compulsory insurance. That is

1605
referred to in the Bill. I recognise the need for osteopaths to have insurance cover but I believe it is undesirable to require it by statute. Insurers should retain the right to decline cover. That might even be a help to the General Osteopathic Council in ensuring that the highest standards are maintained in its membership. I therefore wish to suggest that the requirement for insurance cover be a matter for the General Osteopathic Council to administer. The council would appear to have that power under Clause 8(2) (f) of the Bill. It would therefore only be necessary to remove paragraphs (1) (c) and (2) (c) of Clause 7 to achieve that objective.
I wish to refer to the Research Council for Complementary Medicine. As statutory recognition and regulation of the different disciplines in complementary medicines are granted, it is extremely important that money is spent on projects in those fields. The research council was set up some five or six years ago and is composed of distinguished members from both the conventional and complementary fields. It is being run on a shoestring and it has countless research projects put before it which cannot get off the ground as there are insufficient funds for that to happen. Some of the projects are under way but many more need to be started. I hope it will be possible for the Medical Research Council to start using even a minuscule amount of its funds in the field of complementary medicine.
My noble friend Lord Jellicoe, who is in the House today, was chairman of the Medical Research Council and made stout efforts to try to achieve that. He got one research project off the ground while he was chairman but I have not heard of any more. I hope that there will be renewed impetus in the Medical Research Council towards the complementary field. I am fully in support of the Bill.
3 p.m.
The Earl of Clanwilliam: My Lords, I apologise to your Lordships' House for being late on parade due to the vagaries of British Rail—an engine caught fire at Exeter station. I must also apologise to the noble Lord, Lord Walton, for missing his speech and to the noble Lord, Lord Rennell, for missing his maiden speech, which I regret especially.
I should like to congratulate the noble Lord, Lord Walton, on the introduction of the Bill. I should also like to congratulate the committee of the King's Fund, as have all other noble Lords who have spoken. I have been a user of osteopathy for some 35 years. The fact that your Lordships see me standing before you demonstrates how successful osteopathy has been. It is only surprising that it has taken so long for such a Bill to come forward on to the statute book. Naturally I thoroughly recommend it to your Lordships.
The noble Lord, Lord Colwyn, pointed out that some 11 million working days are lost each year as a result of back pain. Osteopathy, and perhaps I may add chiropractic, can cure those problems. They do so more cheaply, quickly and easily than the other professions. I am sorry that chiropractors could not bring themselves to be aligned with the osteopaths in
1606
this Bill. There appears to be very little difference between them apart from a question of whether or not one wants to be x-rayed. It is sad that the vitally important complementary therapies are so divided by such small differences and are unable to come together. However, I believe, as has been said, that chiropractic is to be the subject of the next report. That is excellent news. The King's Fund and the Bill have set a simple, straightforward and obvious precedent for all therapies which wish to come before your Lordships and the country in future. It provides all the necessary controls and would provide the format for a similar Bill covering homeopathy, medical herbalism or even acupuncture.
I note that the Bill provides for a council consisting of 24 people. Perhaps the prospect of 24 osteopaths in one room is daunting. However, the council will not be made up of 24 osteopaths but merely a number of osteopaths. The remainder of the members of the council would be equally able to perform the necessary tasks in relation to chiropractors, medical herbalists, homeopaths or whatever.
I do not wish to detain the House any longer. I apologise again for being late on parade. I thoroughly recommend the Bill to your Lordships' House.
3.4 p.m.
Lord Glenarthur: My Lords, my noble friend apologised for being late on parade. But nobody could have been later than me, and I am extremely grateful to my noble friend. I apologise to the House. It is a discourtesy to turn up at the last moment. However, I particularly wanted to say a few words on this important matter and I hope that my noble friend on the Front Bench and the noble Lord, Lord Walton of Detchant, will forgive me for not being present to hear the debate on the important matters which have been discussed.
I very much welcome this important Bill. While I was a Minister in the then DHSS from 1983 to 1985 I had a policy responsibility towards the rather fraught matter of alternative therapies. In a sense the King's Fund report stemmed from at least some of the discussions and initiatives which had been considered in the department and elsewhere round about that time. My own belief is that alternative therapies have a great deal to offer. I remember discussing which of those therapies might stand the best chance of finding some way of being recognised by the Council for Professions Supplementary to Medicine. Osteopathy and chiropractic seemed the most promising.
The exceedingly thorough King's Fund report is a major step in the direction that many want to see taken. This Bill—which establishes the General Osteopathic Council, sets up a register and deals, among other things, with requirements for training —is the fruit of the labours of Sir Thomas Bingham and his team. There are many who believe—as I said, I am one of them—that a case exists for a similar piece of legislation for chiropractic. That was no doubt referred to by other speakers today. I believe that it is long overdue.
The various schools of chiropractic have gone a long way toward reconciling any differences that there

1607
may have been among them. That is wholly to be applauded. Among those differences, the differing attitudes toward training have been a major cause of concern. I am delighted to note that a working party on chiropractic, also chaired by Sir Thomas Bingham, has been appointed and will report in the summer or perhaps earlier.
More and more conventional doctors are beginning to accept the advantages of the two therapies of chiropractic and osteopathy. It is right, however, that both of them should be fully scrutinised for their efficacy, the training and registration of those who practise them and for suitable means of protecting the public from those who are inadequate practitioners.
I wholly welcome this admirable Bill. I wish it all speed in getting on the statute book and I look forward to a similar Bill before too long for chiropractors. Again, I apologise profusely to the House for not having been able to be here earlier. I had a longstanding engagement which unfortunately made it quite impossible. I look forward with keen anticipation to the comments of my noble friend Lady Hooper from the Front Bench.
3.7 p.m.
Earl Jellicoe: My Lords, I have two apologies to make to your Lordships. The first is for being late on parade and I see that I join good company; the second is for not having put my name on the List of Speakers.
I should like to say that I warmly support the Bill. In my day I have suffered, at times considerably, from back pain. I remember vividly once hoping to take a train from Paddington to my station in Wiltshire and attempting to buy a paper at W.H. Smith or Menzies (I forget which one it was). The lady at the counter was a little surprised to find that suddenly I was no longer above the parapet. I had fallen over backwards with a rather acute onset of back pain. For a moment she thought that I was suffering from some other ailment.
As someone who has suffered from back pain, I am very aware of the benefits which the profession can accord. I have been accorded those benefits. In my time I have also been involved with the profession in an organisational way. As my noble friend Lord Kindersley said, I achieved a mite—but it was like moving a mountain to achieve that mite—in the Medical Research Council by getting it to undertake at long last one serious study of back pain. I apologise to my noble friend for not having achieved more.
Having said that, I should like to add my voice to those which have so warmly commended the Bill introduced by the noble Lord, Lord Walton.
3.10 p.m.
Lord Beaumont of Whitley: My Lords, I too should like to thank the noble Lord, Lord Walton, for introducing the Bill. I welcome the opportunity to share in the debate with so many noble Lords. I welcome the extremely interesting speech of the noble Lord, Lord Rennell. My noble friend Lord Falkland told me in advance to expect that it would be both informative and amusing; and indeed it was.
To a large extent it is a congratulatory debate. However, we thank not only His Royal Highness the
1608
Prince of Wales—he has been mentioned—but also his sister and his wife, both of whom have taken an interest in the matter. Indeed, the whole Royal Family have not been backward in expressing their support for extending the barriers of medicine.
My party welcomes the Bill. That is not just a personal statement; I speak on behalf of my party. My noble friend Lord Winstanley is unable to be here because unfortunately he is ill. I am sure that all our thoughts go out to him. It is a proof that even doctors are not immune from ill health. On my noble friend's behalf, I should like to say that he too, as a doctor, welcomes the Bill.
However, even if I were not speaking on behalf of my party, I would have wished to speak. Twenty years ago a distinguished Harley Street consultant put me in a corset and told me that my back would inevitably deteriorate, and that by the time I was my present age it no doubt would have deteriorated a great deal.
Today my back needs the attention of an osteopath about every three or four years. Thanks to her, I am fit for all these exercises to which I am inclined. Indeed, I no longer have the excuse of a bad back for those to which I am disinclined. She also looks after the backs of my wife, my two daughters, my two brothers-in-law and various other members of my family and friends. Although her charges are reasonable (as I believe are those of most osteopaths) it is not surprising that I too am quite keen that all that should come on to the National Health.
My osteopath tells me that 30 years ago—the noble Lord, Lord Walton, stated it too—the medical profession could not refer people to her and her colleagues; nor could she refer people to the medical profession. Doctors were forbidden to have any dealings with her on pain of instant execution—not quite that, but, professionally, very much the same. However, in the past 20 years the profession of osteopathy —it is a profession—has proved itself. Now surgeons refer patients to her before deciding whether to operate.
Today the profession comes of age. Those who are helping it are the doctors and surgeons. That is the good news. It gives us all a great pleasure to welcome that change of heart. There is more joy in heaven over one sinner who repenteth. But the debate is not a doctor-bashing exercise; it is to congratulate all the healing professions for getting together to put forward the Bill.
Many methods of healing are being tried today. Some, it is true, are in the hands of charlatans. Some have not yet proved themselves. Some of them operate in those areas where it is difficult to apply any scientific tests. Such methods may or may not be valid. But where they have proved themselves, as osteopathy has, they must be admitted to the brotherhood and sisterhood of those who strive to make people whole. The Bill gives privileges which have already been earned. It imposes responsibilities which I have no doubt will be fulfilled. It should certainly be supported by your Lordships' House.
3.15 p.m
Lord Carter: My Lords, I too thank the noble Lord, Lord Walton of Detchant, for introducing this important Bill and for giving the House such a clear exposition of its contents, and I too am surprised that it is not a government Bill. I hope that in reply the Minister will say that it has the support of the Government who intend to find the time to see it through the House.
When speaking on a Private Member's Bill from this Dispatch Box, I must say that I am speaking in my personal capacity. However, I wish to quote from the Labour Party statement, A Fresh Start for Health. It states that Labour would be willing to give legislative backing to the progress towards self-regulation within the complementary medicine disciplines,
"by introducing national systems of accreditation and registration for those disciplines which have developed high standards of training and practice such as chiropractice, osteopathy, homeopathy and acupuncture".
Therefore, your Lordships will not be surprised to learn that if I had been speaking as the Opposition spokesman my speech would be similar to that which I am about to make.
We have had an excellent debate with many notable speeches. As I expected, they contained some wince-provoking osteopathic anecdotes. However, no speech was more notable than the maiden speech of the noble Lord, Lord Rennell. I join with my noble friend Lord Ennals in saying that the noble Lord must not wait another 10 years before speaking again.
The Bill is a most welcome and sensible measure. It is based on the excellent report of the King's Fund. Most points have been well covered but I wish to raise some points of detail. The statutory register of osteopaths is the first for complementary medicine and others will surely follow. As was said by His Royal Highness the Prince of Wales, such a register will,
"consolidate the professional base of osteopathy and protect the public".
The Bill also marks a much healthier relationship between the medical professional generally and complementary medicine. That can result only in a general improvement in health care. Perhaps I may say as a layman that it appears that the medical profession is now prepared to admit that there are more things in heaven and earth than were dreamt of in its philosophy.
The measure leads to the obvious question of whether such a properly regulated and controlled treatment should become available through the National Health Service. I shall welcome the Minister's comments on the Government's view about the relationship between the registered osteopaths and the health service if the Bill becomes law. We have heard already that a GP fundholder or a GP under the health authorities can use part of the fundholding budget or the direct fund to pay for osteopathic services. My noble friend Lord Ennals referred to the letter from the Minister, Mr. Stephen Dorrell, in which he explained how a GP can use a complementary therapist. The letter covers the process of bidding for the payment of a complementary therapist. Will the Minister tell the House what
1610
judgment is exercised in the use of that therapist? Is it left entirely to the GP or is there some other procedure for ensuring that the complementary therapist is up to standard? For example, is the use controlled by the professions supplementary to those covered by the Medicine Act or is there some other device?
The Bill is extremely well drafted but I wish to ask a few questions. What sanctions will the proposed general council have if an educational institution falls below the standard which the council decides is appropriate? Will such an institution be barred from offering the courses and examinations in osteopathy? There are provisions in Clause 5 for dealing with the standard of qualifications but I cannot see the sanction which deals with the education institution itself. Perhaps the provision in Clause 5(3) is sufficient for the purpose. I should be grateful if the Minister would confirm that.
It seems that the initial full register will include unqualified osteopaths. That follows the recommendation made by the King's Fund working group. As I read it, the register will include unqualified osteopaths. Is the requirement of safe and competent practice for not less than five years, which need not be continuous, regarded as a sufficient safeguard for the osteopaths who appear on the initial full register?
The proposals in Clause 10 to separate the responsibilities of the investigating committee and the health committee are eminently sensible. They allow a distinction between osteopaths who are professionally unacceptable and those who are ill.
Perhaps I may say in passing to the Minister that in Clause 11(2) there are five sanctions on unacceptable professional conduct. I am sure that she recalls our discussions on the Nurses, Midwives and Health Visitors Bill about cautions, reprimands and so on, which eventually required an amendment to the Bill. This Bill sets out the sanctions available to the general council extremely clearly.
As regards the health committee, unlike the professional conduct committee there is no mention of legal or medical representation to assist the osteopath who is being investigated. Is the ability of the individual to call witnesses, which is mentioned twice in Clause 12, deemed to be a sufficient safeguard of the individual's rights at law?
I said that I would be brief because the matters raised by the Bill have been well covered by the debate. It is an extremely useful Bill which is well drafted and clearly explained. It deserves the support of this House and another place and we must hope that the electoral timetable does not prevent it reaching the statute book.
3.22 p.m.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Hooper): My Lords, I too thank the noble Lord, Lord Walton of Detchant, for bringing this Bill to the House and for outlining its provisions and purposes so clearly. I add my congratulations to my noble friend Lord Rennell on his exemplary maiden speech. I hope that he will consider health topics to be a firm interest in the future.

1611
I am glad too that my noble friend Lord Colwyn reminded us of another absent friend—my noble friend Lord Ferrier. In view of all his activity in this sphere in the past, I am sure that he would have participated with vigour in today's debate. Perhaps I may also take the opportunity to correct the record because my noble friend celebrated his 92nd birthday last Wednesday. It was good too to be reminded by my noble friend Lord Brougham and Vaux of the contributions made by the late Lady Lane-Fox in this important area.
I say straight away that the Government support the Bill in principle and they hope that it will receive the support of this House. From the comments already made, that seems to be without question.
Much has been said about the history and background of the Bill. I shall endeavour not to repeat what has been said but perhaps I may add my mite to the background because the regulation of osteopaths is an issue which has been around for some 60 years. Bills seeking to regulate the profession were presented to Parliament in 1931, 1933 and 1934. There was in fact a second attempt in 1934 when the late Lord Elisant re-introduced a Bill into this House. That Bill received a Second Reading but after Ministerial criticism was withdrawn.
However, on the suggestion of the then Minister of Health, supporters of the Bill set up a voluntary register of osteopaths. This body, known as the General Council and Register of Osteopaths, now governs the majority of professionally regulated osteopaths. There are in addition a number of other smaller bona fide osteopathic registering bodies which regulate and represent the interests of their members. I know that all those groups have long cherished the hope that one day they might achieve statutory regulation, their roles thus superseded by a single statutory regulatory body which would incorporate the breadth of experience and expertise contained within all branches of the profession.
Progress has perhaps been slow but there were many hurdles to surmount—the difficulty of bringing together the various groups within the professions, the attempts to achieve a consensus among all osteopaths and to obtain the agreement and support of the medical profession and its recognition of the value of osteopathy, about which we have heard.
Although 60 years may seem a long time to have taken to accomplish those goals, the difficulties were very real. It is in recognising that that I wish to add my thanks to the King's Fund and to all those concerned with the preparation of the report and the draft Bill. I should particularly like to congratulate Sir Thomas Bingham, Mr. Fielding and other osteopaths, the noble Lord, Lord Walton, and other representatives from the medical associations and two observers from my department who participated in the working group and made it such a success. They consulted widely and their proposals met with widespread support, not only from the osteopathic profession as we have heard, but most importantly from the principal bodies within the medical profession. As was stated in the report, all the conditions were satisfied that the Government believed must be met before legislation could be
1612
contemplated. The proposals provide a fair and practical basis for statutory regulation which will include all established osteopaths and provide patients with real safeguards for the future. Sixty years of gestation may be coming to an end with, if I may be permitted to put it in this way, the noble Lord, Lord Walton, in the guise of the midwife.
I turn to the Government's part in all this. During the debate in your Lordships' House in May 1990, introduced by the noble Earl, Lord Baldwin, I informed the House that Ministers had been kept fully informed of the progress of the working party on osteopathy, and we awaited its report with interest. I can now say that we follow with equal interest the new King's Fund Working Party, again chaired by Sir Thomas Bingham, which seeks to make progress for chiropractors. I hope that that will reassure my noble friend Lord Clanwilliam and others that those other professions are not being missed out.
To answer a question raised by the noble Earl, Lord Baldwin, we have long said that regulation of the complementary therapy professions should be by way of Private Member legislation, so that Parliament can make up its own mind on this important issue without political inferences. We remain of that view. Nevertheless, I hope that Parliament will feel able to give the Bill its safe passage. I appreciate also and must point out the difficulties in a measure of this sort being piloted through a short and extremely busy Session. If strong support is shown for the Bill, but it unfortunately runs out of time or fails for some procedural reason to complete its course, we may need to look again and consider the case for introducing a Government Bill in a future Parliament.
In the time available since the publication of the report last December—less than two months ago—we have not been able to look as closely at the detail of the Bill as we would have liked. However, it is already apparent that there is a significant number of amendments, mainly technical and consequential as the noble Lord, Lord Walton, pointed out, but which would nevertheless be necessary. Indeed the noble Lord, Lord Carter, pointed to other areas of anxiety which will require consideration. It is particularly important also to ensure that the Bill conforms to the requirements of the European Community legislation and is broadly similar to other professional regulatory systems. So your Lordships' House will be quite busy during the Committee stage of the Bill in seeking to ensure that it is perfected.
Perhaps I may respond to one or two specific points and questions that were raised. My noble friend Lord Kindersley raised the issue of compulsory insurance. We are aware of the anxieties about the possibility that the Bill would introduce compulsory insurance for osteopaths as a condition of registration. Again, that is one of the details of the Bill of which we are aware and which will need careful scrutiny at Committee stage. In that regard, I expect to see an amendment introduced.
My noble friend also made reference to research. Although that is not precisely within the scope of this Bill, I feel sure that his message will be heard and echoed outside the walls of your Lordships' House. I

1613
believe that my noble friend Lord Jellicoe would confirm that the MRC is always willing to consider good protocol for clinical research, including research into complementary medicine.
As regards the subject raised by my noble friend Lord Rennell of what availability there will be for osteopathy services on the National Health Service, since the Bill is solely concerned with the regulation of the profession, it does not deal with the supply of NHS services. Therefore, it will not directly affect the provision of osteopathy services in the National Health Service. However, in view of my noble friend's remarks and those of the noble Lords, Lord Beaumont of Whitley and Lord Carter, I outline what happens at present regarding the National Health Service and osteopathy services.
Currently, fund-holding general practitioners may already directly employ complementary therapists using the staff element of their practice budget in the same way as they might employ other practice staff such as nurses or chiropodists. Non-fund holding GPs may also employ complementary therapists to provide treatment for NHS patients if their Family Health Service Authority will agree to pay for that provision. We are aware of a growing number of practices where that already takes place. To respond specifically to the noble Lord, Lord Carter, that means that it is a matter for the professional judgment of the GP concerned. I have no doubt that the better the regulation of the profession with the clearer standards that have to be achieved, we shall see that trend continue.
As I said at the beginning of my contribution, the Government welcome the Bill in principle. I can express my personal hope that it will prove possible to secure the necessary changes during later stages of the Bill. I hope that we shall be able to ensure the Bill's safe passage through your Lordships' House and that it will pass rapidly through another place.
3.34 p.m.
Lord Walton of Detchant: My Lords, I am very grateful for the warm and generous support which this Bill has received from so many quarters of your Lordships' House. I would like to add my personal congratulations to the noble Lord, Lord Rennell, on his most interesting and stimulating maiden speech. He will not expect me to spring to the defence of the medical profession in reply to his comments quoted from the late George Bernard Shaw. That would perhaps be appropriate on some other occasion. However, I cannot forbear mentioning the fact that one of my most distinguished teachers, a professor of pathology, was called Arthur Frederick Bernard Shaw—GBS was his uncle. When asked whether he had any relationship to the George Bernard Shaw, he used to say, with typical medical modest terminology, "I am the Bernard Shaw".
We have had a great deal of support from many quarters of the House. I should particularly like to thank all of those who have spoken so enthusiastically. I am especially grateful to the noble Lords, Lord Ennals, Lord Colwyn and Lord Kindersley, for drawing to the attention of the House the important
1614
role played in this regard by His Royal Highness the Prince of Wales, not only in his capacity as president of the King's Fund but also in his capacity as a former president of the BMA. I had the privilege of handing over personally to him the presidential chain of office in 1982 when he made that most notable speech on complementary medicine which led to so many important developments. I believe that in those capacities he would have been very keen to contribute to your Lordships' debate today were it not for the fact that he is visiting, on a long-standing engagement, the Royal Victoria Infirmary in Newcastle, where I trained in medicine.
Having made those introductory remarks in reply to the debate perhaps I may pick out one or two points of importance. I am glad to hear that many noble Lords were interested in the possibility that ultimately osteopathy may become available on the National Health Service other than through the reference and delegation of authority by a general medical practitioner, which is possible at present. But of course that is a totally different issue. The Bill deals with the regulation and education of the profession and not with the provision of services. Therefore, that matter should be discussed on another occasion and under separate consideration. I trust that no such considerations will in any way delay the progress of this Bill through your Lordships' House and another place.
In reply to the noble Earl, Lord Jellicoe, and others who raised the important issue of research referred to by the Minister, I can only confirm, as a former member of the Medical Research Council, that the council will, I have no doubt, be willing to support well-conceived and well-constructed research projects in the field of complementary medicine to which it is always open. Many people in this House will have heard of the well-publicised trial conducted by the MRC into the effects of chiropractic on low back pain which demonstrated the beneficial results of that form of treatment.
I now turn to some points of detail raised by certain noble Lords, I say at once to the noble Lord, Lord Kindersley, that the issue of insurance is one of which I and the other supporters of the Bill are only too well aware. That clause in the Bill was specifically included at the request of the osteopathic profession because its services are at present wholly private. In other professions, as in mine, the requirement to have a form of insurance is a requirement of employment within the National Health Service. The osteopaths were particularly keen to see such a provision included. I am sure that they now recognise that such a provision ought not to be, as the Association of British Insurers has said, on the face of the Bill. It is something which might perhaps be pursued by the general council under its rules, but I wholly agree that under a proposed amendment it should be removed.
To answer points made by the noble Lord, Lord Carter. I confirm that under Clauses 4 and 5 of the Bill that if the education committee had evidence from visitations or other evidence to suggest that an educational institution was not providing instruction or examinations of an appropriate standard, that

1615
committee would have the power to recommend to the general council that the qualifications conferred by such an institution should no longer be registered. That is on the face of the Bill. Secondly, I take his point about the health committee. There is a series of long subsections in Clause 12 relating to the health committee. Those subsections make it quite clear that the osteopath whose health may be called into question has the power to present a case. I take it that that may well include legal representation. But at the end of the clause there is a phrase which states that the osteopath would be entitled to legal representation. The way I read it, the provision at the end of Clause 12 applies to the whole of the clause. However, I may be mistaken and if I am I shall certainly look at that before we come to the Committee stage.
In conclusion I should like to tell the Minister how much I appreciate the fact that the Government support the Bill in principle. The history is most interesting. Perhaps I may remind the noble Baroness that before the medical Act 1858 to regulate the medical profession had been published and was accepted by Parliament, no fewer than 20 medical Acts had been introduced into Parliament and each had fallen by the wayside. I trust, as the noble Baroness was willing to suggest, that this will be the
1616
end of the road and that we are approaching the moment when the osteopathic profession will receive its well-deserved recognition and the statutory control of its activities which the Bill would provide.
In thanking the Minister for her comments on the role that I personally played as regards the Bill, I should just tell her that my last practical experience in midwifery was in general practice in 1945. Nevertheless, what the noble Baroness suggested in relation to the progress of the Bill is something that I hope I shall be able to achieve. I am most grateful for the suggestion that she made that if, for legislative and other reasons such as pressure of government business, the Bill was significantly delayed in its progress, consideration would be given to the introduction of a government Bill. I trust that that will not be necessary and that we can, after today's debate, see the Bill proceed rapidly through its various stages in this House, to be quickly followed by similar progress in another place.
I trust that your Lordships will agree to give the Bill a Second Reading.
On Question, Bill read a second time, and committed to a Committee of the Whole House.
House adjourned at nineteen minutes before four o'clock.