Lords Sitting of 7 July 1992

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

Lord Merlyn-Rees
The Right Honourable Merlyn Merlyn-Rees, having been created Baron Merlyn-Rees, of Morley and South Leeds in the County of West Yorkshire and of Cilfynydd in the County of Mid Glamorgan, for life —Was, in his robes, introduced between the Lord Dean of Beswick and the Lord Richard.

Lord Parkinson
The Right Honourable Cecil Edward Parkinson, having been created Baron Parkinson, of Carnforth in the County of Lancashire, for life—Was, in his robes, introduced between the Lord Brabazon of Tara and the Lord McAlpine of West Green.
Noble Lords Noble Lords —Took the Oath.

War Crimes Act 1991
3 p.m.
Viscount Caldecote Viscount Caldecote asked Her Majesty's Government:
How much money has been spent on investigations of suspects under the War Crimes Act 1991.
The Minister of State, Home Office (Earl Ferrers): My Lords, in England and Wales in 1991–92 the costs were £1,003,072. The corresponding figure for Scotland is about £300,000.
Viscount Caldecote: My Lords, I thank my noble friend for that clear reply. Can he say what the estimated further expenditure is likely to be before the stage is reached when a decision can be taken on whether prosecutions should be started on these suspects?
Earl Ferrers: My Lords, I cannot tell my noble friend whether or when prosecutions will be started. However, I can tell him that in the forthcoming year a figure of £6.2 million has been provided. In Scotland the figure is £1.15 million.
Lord Strabolgi: My Lords, can the noble Earl say whether the decision to prosecute by the prosecuting authorities in the United Kingdom will be taken only if there is enough evidence to suggest a realistic prospect of a conviction?
Earl Ferrers: My Lords, that is the usual course of events but the decision to prosecute will be taken by the Director of Public Prosecutions after consultation with the Attorney-General; and in Scotland it will be taken by the Lord Advocate.
Lord Morris: My Lords, bearing in mind the second criterion which is always brought to bear when considering whether prosecution should go forward —namely, that it is in the public interest—and bearing in mind the appalling costs, can my noble friend demonstrate that it is in the public interest so to do?
Earl Ferrers: My Lords, it is not for a government Minister to decide whether it is in the public interest. That is a matter for the lawyers. I have told your Lordships that that will be one of the cases which will be considered by the Director of Public Prosecutions and, indeed, by the Attorney-General.
Viscount Tonypandy: My Lords, in view of the fact that the Question relates to the War Crimes Act 1991, and to the millions who were slaughtered, is it possible to measure in pounds and pence the cost of finding the criminals?
Earl Ferrers: My Lords, those were parts of the arguments which were deployed when the War Crimes Bill was going through Parliament. The fact is that the Bill went through Parliament. Parliament decided to enact it and it is now for those responsible to take the necessary action.
Lord Stoddart of Swindon: My Lords, can the noble Earl tell the House how many cases are at present under investigation?
Earl Ferrers: My Lords, 300 cases were identified by the Hetherington-Chalmers inquiry. A further 43 cases have been brought to the attention of the Metropolitan Police War Crimes Unit. All those cases have been reviewed. Ninety-two cases are under active investigation.
Lord Gridley: My Lords, can my noble friend inform the House how many suspects are under investigation in the figures he has just given?
Earl Ferrers: My Lords, 92 cases are under active investigation.

Unemployment and Bankruptcies
3.5 p.m.
Lord Molloy Lord Molloy asked Her Majesty's Government:
What steps they will take to reduce unemployment and business bankruptcies.
The Parliamentary Under-Secretary of State, Department of Employment (Viscount Ullswater)The Parliamentary Under-Secretary of State, Department of Employment (Viscount Ullswater): My Lords, the Government's key role is to ensure a sound and stable economic framework within which enterprise can flourish and produce the goods and services that people want to buy at the price they are willing to pay. That is how jobs are created and businesses become successful.
Lord Molloy: My Lords, I thank the noble Viscount for that reply. When will the Government commence the policy to which he has referred? Is he aware that the jobless figure for this year is the highest for the past five years? It is 75 per cent. higher than in May 1990. Is he also aware that 26,000 Britons have become personally bankrupt?

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Notwithstanding the magnificent endeavours of Mr. Malcolm Rifkind in his discussions with the Germans, it now appears that the contract for the European Fighter Aircraft will not now take place, involving the loss of 40,000 jobs. In future ought we not to make sure that a superb Minister like Mr. Rifkind is not put to that embarrassment? I am sure that if he had the job of seeking to get rid of unemployment and bankruptcies he would be able to carry out the policy that the noble Viscount has said that the Government intend one day to implement. Would it not be proper for us to write into any such contract that where there is some disagreement the contract will not immediately be broken so that both governments can examine the situation without thousands of people being put out of work?
Viscount Ullswater: My Lords, I agree entirely with much of what the noble Lord said. I too admire my right honourable friend. Perhaps the noble Lord, Lord Molloy, would like to come and sit on this side of the House. I am sure that he would be a good advocate for us.
We obviously need now to discuss the German proposals on the European Fighter Aircraft in detail with Italy and Spain to establish whether there is a cost effective way to continue the EFA programme on a three-nation basis before we take rash decisions about the number of jobs that might be involved.
Lord Mackay of Ardbrecknish: My Lords, does my noble friend agree that one has to set against the number of bankruptcies the much larger figure which represents the number of new companies being created? Does my noble friend also agree that one way to reduce the number of bankruptcies and the level of unemployment is for local authorities and large companies to pay their accounts to small companies more timeously than many of them do?
Viscount Ullswater: My Lords, my noble friend brings out an important point in his last supplementary question. It is the duty of all large companies to make certain that their payment contracts are honoured. However, in any dynamic economy there will always be firms ceasing trading and new firms starting up. The National Westminster Bank and Barclays Bank estimate that between 120,000 and 134,000 new businesses started up in the first quarter of 1992. That puts the 30,000 failures reported in the first six months by Dun and Bradstreet—regrettable though they are—into perspective.
Lord Rochester: My Lords, does the noble Viscount agree that one way to reduce bankruptcies, in particular of small businesses, is for training and enterprise councils to provide the counselling and informed advice needed to help fledgling businesses to survive.
Viscount Ullswater: My Lords, yes, indeed. In 1992–93 TECs plan to help about 50,000 business start-ups and about 100,000 other training and counselling support activities using financial resources of £170 million.
Baroness Turner of Camden: My Lords, is the Minister aware that between 1st January and 18th March this year over 33,000 jobs were lost in manufacturing industry? Is that not a very sorry record despite what he said about a dynamic economy? Will the Government consider utilising its presidency in Europe as a first means of devising a strategy for coping with unemployment at a European level? Should not a strategy be developed at European level to deal with unemployment as a first priority?
Viscount Ullswater: My Lords, I agree that the number of jobs in manufacturing industries is continuing to drop, although at a much lower rate. However, the percentage of GDP within manufacturing has remained broadly the same for the past 10 years. Therefore, manufacturing industry is not being whittled away, as some noble Lords would have us believe. It is important that we should consider manufacturing industry because it has a part to play. However, we should not forget that a large number of jobs have been re-classified into the service industry sector.
Lord Harmar-Nicholls: My Lords, in view of the previous supplementary question and the answer that the Government are responsible for setting up a general framework to minimise unemployment and bankruptcies, can my noble friend say with certainty that some of the actions that the Government might like to take are hampered to some extent by the directives which come from Strasbourg and Brussels?
Viscount Ullswater: My Lords, if my noble friend is alluding to working practice, we need to be aware that we have one of the most flexible work forces. We must ensure that it remains so.
Baroness Fisher of Rednal: My Lords, is the Minister aware that the West Midlands is known as the heartland of manufacturing and that in that area manufacturing is rising week by week? Is the Minister further aware that although he speaks about GDP, unemployment does not pay the mortgage?
Viscount Ullswater: My Lords, the manufacturing industry is in a healthy state. During the three months to April output rose by 1 per cent. Productivity is increasing and we must ensure that we remain in a competitive position when the upturn in the economy arrives.
Lord Mackie of Benshie: My Lords, in view of the fact that any revival of prosperity must be as the result of an export-led increase, do the Government intend to take any action to revise the cuts which they have made in export credit guarantees for industry, considering the disadvantages which our exporters face when dealing with the French and the Germans?
Viscount Ullswater: My Lords, the policy is kept under review. It is pleasing to report that during the three months to May exports were 2.5 per cent. higher than in the previous three months. They are now running at a record level.
Lord Taylor of Gryfe: My Lords, has the Minister noted that, faced with similar circumstances, the

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United States recently reduced interest rates? Do the Government believe that a stimulus would be given to the economy if interest rates were reduced, or are we constrained from taking such action by our membership of the ERM?
Viscount Ullswater: My Lords, interest rates play an important part in the control of the economy. As inflation has fallen it has been possible to reduce them; since October they have fallen by some 5 per cent. The Government will continue to set interest rates at a level necessary to bear down on inflation and to keep sterling within its ERM bands. It is more important to keep down inflation than it is to keep down interest rates.
Lord Molloy: My Lords, will the Government consider setting up a body such as the National Economic Development Council, which its creator, Mr. Selwyn Lloyd, rightly stated was helpful to government and industry? Does the Minister agree that there is a human side to bankruptcies and unemployment and that the misery of bankrupt businessmen and their former employees should be taken into account?
Viscount Ullswater: My Lords, I was not aware that Neddy created many jobs. Its role and composition ceased to be relevant to the challenges facing industry in the 1990s and for that reason it was abandoned. I understand the anxiety of all noble Lords for the people who lose their jobs and for the effect that that has upon them and their families.
Lord Hatch of Lusby: My Lords, does the Minister agree that if the Government were seriously concerned about unemployment or bankruptcies they could easily allow local authorities to use the capital which they have accumulated as a result of the sale of council houses to build more houses? That would encourage employment in the construction industry. Does the Minister further agree that the addition of provisions for energy efficiency would greatly increase employment among the workforce which installs insulation and other means of increasing energy efficiency?
Viscount Ullswater: My Lords, the issue is one of financial prudence. Many assets will have been acquired by borrowing and it is sensible that a substantial part of the receipts from the sale of an asset should be set aside to repay debt.

"Working Peers"
3.15 p.m.
The Earl of Longford The Earl of Longford asked the Leader of the House (Lord Wakeham):
How many Members of the House are "working Peers" according to the definition used by Her Majesty's Government.
The Lord Privy Seal (Lord Wakeham): My Lords, I do not believe that the House or our constitution recognises the term "working Peer" as a separate category. Certain categories of Peers have, however, been created with the purpose of strengthening the
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political parties in this House. Since 1975, 107 Peers have been ennobled on that basis, of whom, I am pleased to say, 96 are still with us.
The Earl of Longford: My Lords, I had intended to say that I was grateful to the Minister for his Answer but after hearing the first part I became less grateful. Does he agree that it is high time that the distinction, which is so embarrassing to working Peers if they can be identified—I do not suppose that they would like to be asked to stand up this afternoon—and so insulting to the rest of us, should be discontinued?
Lord Wakeham: My Lords, as I indicated, I do not believe that it is a term that we recognise. However, any definition of the term "working Peer" would be phoney if the noble Earl were not included in it.
Lord Cledwyn of Penrhos: My Lords, in view of the imbalance between the parties in the number of Peers for life, does the noble Lord the Leader of the House agree that there is a strong case for introducing a better and more equitable system of appointing Peers who are prepared to give their time and abilities to the service of this House?
Lord Wakeham: My Lords, since 1975, when so-called working Peers were created, 50 Labour Peers, 49 Conservative Peers, 5 Liberal Peers, 1 Social Democrat Peer (who I am afraid has died) and 1 Cross-Bench Peer have been introduced. There is also 1 Ulster Unionist, who has yet to be introduced. Therefore, it is unreasonable to say that the Opposition Benches do not receive a reasonable number of Peers.
Lord Cledwyn of Penrhos: My Lords, I am obliged to the noble Lord for producing those figures. Is it not the case that during the past 13 years the disparity between the Conservative and Official Opposition Benches in this House has increased by 63?
Lord Wakeham: My Lords, I have studied the figures and I believe that there are many ways of interpreting them. The noble Lord and I have discussed the issue and I have no doubt that we shall continue to do so. However, on the basis of Peers specially created to assist the political parties, I do not believe that the Opposition parties have done too badly.
Lord Tordoff: My Lords, is it not fair to say that, even on the figures that the noble Lord has presented to the House, the introduction of five Peers on these Benches out of a total of 114 is an under-representation in relation to the level of support that we have in the country and to the level of support which this House receives from Peers on these Benches?
Lord Wakeham: My Lords, 59 Peers now take the Liberal Democratic Whip and that figure is shortly to rise to 60. That represents 6 per cent. of the total number entitled to attend. However, in practice the percentage is higher because a significant number of Members of this House do not attend regularly. Of course, this House has never been constituted so as to reflect votes cast or the composition of the House of

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Commons. I believe that the Liberal Democrats are reasonably well represented in numbers and that their contributions are extremely valuable.
Lord Marlesford: My Lords, given the continuing and perhaps increasing importance of this House in scrutinising legislation and the particular burden that that imposes upon those who speak from the Opposition Front Benches, does not my noble friend consider that the time has come for those who speak regularly from the Opposition Front Benches to be paid?
Lord Wakeham: My Lords, it is always an attractive proposition to support a suggestion of that kind from my noble friend. I hope that he will not believe me to be a wet blanket if I do not go totally enthusiastically overboard as regards his suggestion. First, I do not believe that the quality of the Opposition is in any way lacking in this House. It is of an extremely high standard. The payment of Opposition spokesmen is governed by the Ministerial and other Salaries Act 1975. The noble Lord the Leader of the Opposition and the noble Lord the Opposition Chief Whip are both salaried office holders. Of course, support for the Opposition Front Bench spokesmen is also available through the system of Short money. I have no plans to suggest any changes but those matters are discussed from time to time.
Lord Callaghan of Cardiff: My Lords, there is no lack of quality on the Opposition Benches; as the noble Lord said, it is the lack of numbers. With the noble Lord's mastery of statistics which he has shown this afternoon—and we all know the definition of statistics—is it not clear that if there are 50 on one side and 49 on the other, nothing has been done to remove the disparity between the two sides? I am sure the noble Lord will take into account the fact that unless something is done to remedy the disparity, questions of reform of the House of Lords will continue to grow and this side of the House will continue to labour under a grievance as regards the failure by the Government to remedy that difference.
Lord Wakeham: My Lords, I understand the noble Lord's point. I was not particularly quoting statistics. I was giving the House some simple facts which I thought would be helpful. I do not believe that the Opposition parties have done too badly in recent years. As the House will know, we are shortly to receive a number of welcome additions to our ranks from the Labour Party. However, we must keep the matter constantly under review.
Lord Elton: My Lords, do not recent voting figures suggest that the Opposition do not labour under the great disparity which is claimed? Is there not a great deal in the proposal by my noble friend Lord Marlesford that it would be possible for the Front Bench opposite, no matter which party is in office, to be strengthened if the great amount of time required
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by private individuals to devote to public business were to be recognised by some modest form of remuneration?
Lord Wakeham: My Lords, those proposals can be considered but we should not lightly adopt them—not that we should be able to do that. There are a number of other considerations as regards the payment for attendance at the House. At present, expenses are reimbursed. If we sought to move to another system the Inland Revenue may have a view about that.
Earl Russell: My Lords, if it is true that the representation on these Benches in this House is not too bad, is it not the case that that is not as a result of the policy of successive Prime Ministers but rather because the hereditary principle is the only part of our constitutional arrangements which contains a de facto element of proportional representation?
Lord Wakeham: My Lords, as I heard the noble Earl asking his question I wondered whether it was his father in my youth rather than the noble Earl. It is a wise question to which I do not know the answer.
Lord Annan: My Lords, will the Leader of the House consider something other than numbers in regard to this matter? He is able to refresh his Front Bench with young and spritely Members from among the hereditary Peers, whereas the Opposition are often driven to appoint to their Front Bench men and women of advanced years who find that late-night sittings and sustained committee work are intolerably burdensome?
Lord Wakeham: My Lords, that struck me as another way of saying that the Opposition Front Bench is full of the wisdom of years rather than the inexperience of youth. However, my noble friends on the Front Bench do their best while labouring under that difficulty.
Lord Mishcon: My Lords, as we are dealing somewhat lightheartedly with a serious question, will the noble Lord the Leader of the House, who has such a command of English, look tomorrow at Hansard? What will he do about his sentence to his noble friend in which he said that he did not wish to be considered a wet blanket if he did not go overboard?
Lord Wakeham: My Lords, I should say to the noble Lord that since 24 minutes have elapsed, perhaps it is time to move on to the next Question.

Cosmetics Marketing: EC Directive
3.25 p.m.
Lord Clinton-Davis Lord Clinton-Davis asked Her Majesty's Government:
Whether they will endeavour during their Presidency of the Council of the European Community to ensure the adoption of the proposed amendments to the EC directive on the marketing of cosmetics.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Baroness Denton of Wakefield): My Lords, Her Majesty's Government hope that the member states will be able to reach a common position on those proposals during the United Kingdom presidency.
Lord Clinton-Davis: My Lords, would the noble Baroness not agree that the higher status which is accorded to animal welfare, not least by the Maastricht declaration on the protection of animals, should be reflected by the Council of Ministers agreeing to phase out—and to do so quickly—all testing of cosmetics on animals, not just confining it to skin and eye irritancy testing?
Baroness Denton of Wakefield: My Lords, I agree with the noble Lord. We should like to see all testing on animals phased out. As soon as there are validated alternatives, we should wish to see that.
Lord Williams of Elvel: My Lords, what validated alternatives are the Government suggesting to the Commission so that the directive can be properly amended?
Baroness Denton of Wakefield: My Lords, validated alternatives are being worked on. Her Majesty's Government drew attention to the skin and eye irritancy tests. In March of this year my predecessor asked for the target date of 1998 to be set because it would appear that that target can be achieved. As soon as other targets can be achieved relating to the problems of cancer-inducing substances and acute and repeated dose toxicity, we shall again be in the lead as regards the phasing out of animal testing.
Baroness Nicol: My Lords, does the Minister accept that it is extremely important that there should be a Europe-wide ban so that cosmetic testing in other countries across the world will also be affected? If it is a European ban, does that not mean that British industry would not be at a disadvantage and, therefore, that the Government should pursue that course as vigorously as they can?
Baroness Denton of Wakefield: My Lords, I agree with the noble Baroness. It is important that we should pursue that course with the utmost conviction.
Lord Rodney: My Lords, would the fairer sex be very much less fair if cosmetics were phased out altogether?
Baroness Denton of Wakefield: My Lords, I should point out that the definition of cosmetics includes soap, toothpaste and deodorants. Your Lordships may wish us to continue our work in those areas.
Lord Clinton-Davis: My Lords, does the noble Baroness not accept that the proposal advanced by the Commission takes full account of the possibility that validated alternatives may not be ready by 1998? Consequently, why can the Minister not go along with the idea at this stage of a total ban and allowance for the qualification to take effect if need be?
Baroness Denton of Wakefield: My Lords, I believe I said clearly that we support the directives. There is an explicit provision out of the parliamentary requirement that, if non-animal validated tests were not available, then the matter would be deferred until they were.

London Regional Transport (Penalty Fares) Bill
3.30 p.m.
Read a third time, and passed, and returned to the Commons with amendments.

Peterhead Harbours Order Confirmation Bill
Considered on report.

Civil Service (Management Functions) Bill [H.L.]
3.31 p.m.
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee. —(Earl Howe.)
Lord Cledwyn of Penrhos: My Lords, before we proceed to Committee I should like to say a few words on behalf of my noble friends on this side of the House and also on behalf of noble Lords of the Liberal Democrat Party.
It became clear in the Second Reading debate of the Bill that there is a great deal of uncertainty in regard to its scope and meaning. As a result the noble Lord the Leader of the House arranged a meeting on 22nd June to seek to clarify the position. We were grateful to him for that.
The responsible Minister, the right honourable gentleman the Chancellor of the Duchy, Mr. William Waldegrave, was good enough to attend that meeting and the assurances we were given tended to allay our apprehensions. We were told that the purpose of the Bill was not to introduce market testing, contracting out or privatisation. Of course, Parliament must scrutinise an enabling Bill with special care, as noble Lords will concede. But we have an uneasy feeling that behind the innocent facade stalks the menacing spectre of Henry VIII.
Following the meeting on 22nd June we are informed that a meeting was held between Cabinet Office officials and representatives of the Civil Service trade unions. Union officers left the meeting feeling that the responses on the central issue of market testing and privatisation were still ambiguous. Their impression was that although the Bill is not directly aimed at those matters, it is nevertheless part of a process for facilitating them.

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The noble Earl, Lord Howe, will be aware that we are concerned, first, about the alleged need for primary legislation. We were never sure about that. It is a complex matter because it still affects the Royal prerogative. Since 1968 considerable powers have been vested in the Minister responsible for the Civil Service. We are told that functions cannot be delegated by transfer of functions orders. Is that the legal position? The House needs to know that before we move into Committee. Is that the reason why the Bill is deemed essential? We need to be clear on that point also.
We were further told that the Bill will not authorise or facilitate market testing, contracting out or privatisation of the Civil Service. As I said, we appreciated that assurance when it was given to us at the meeting. However, I must put a crucial point to the Minister. Are the Government also saying that the policies outlined by Mr. Waldegrave in his speech of 1st June—that is, market testing, contracting out and privatisation on a large scale —can be implemented without further legislation in Parliament?
At the meeting of 22nd June the Minister said that there would be a parliamentary debate on the policies outlined by him in his speech of 1st June. No doubt that can be confirmed by the noble Earl today. I shall be most grateful if either the Leader of the House or the noble Earl can assist with the points I have raised.
Earl Russell: My Lords, it is proper that I should offer my apologies to the House for the fact that I was unable to attend the Second Reading of the Bill. Nevertheless, speaking rather more selfishly, I must admit to a certain relief that I was not present. Had I been present I may have found myself faced with a rather indigestible diet of words.
At present I believe that the Bill is not a conspiracy. However, it caused a certain amount of alarm, first, because of the lack of consultation with the Civil Service unions and, secondly, because of the absence of Notes on Clauses—in other words, the absence of any intelligible explanation of the Bill. Thirdly, it caused alarm because of the coincidence of its publication with the Minister's speech of 1st June on competition and market testing.
Since that time Notes on Clauses have become available—the most helpful documents to come from the Government for some time, containing a perfectly intelligible explanation of the Bill. I have now read the Bill several times. It seems to me appropriate for the purposes set out in the Notes on Clauses. They are purposes to which I have no objection. In due course, when we go into Committee, I hope to help the Government to achieve them.
My first object will be to make sure that the Government have not inadvertently enabled their successors to do things which perhaps they do not want to do but which others may want to do. For example, I wondered what the effect of the Bill would be on a proposal introduced in a subsequent Parliament for Scottish devolution. It is well known that that is something which I support and this Government do not. But I do not support it so blindly that I would wish to see it done without any further
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parliamentary scrutiny of the administrative changes involved. I wonder whether the Bill would involve that.
Secondly, I shall be scrutinising the Bill to see whether it has perhaps inadvertently authorised some future government to privatise parts of the Civil Service. That is a purpose I would find extremely sad.
Lord Harmar-Nicholls: My Lords, does not the noble Earl think he is out of order in making a Second Reading speech? The issue before the House is a point raised by the noble Lord, Lord Cledwyn. I wish to comment on that; the noble Earl is virtually making a Second Reading speech.
Earl Russell: My Lords, I am explaining why my reasons for supporting the noble Lord, Lord Cledwyn, are rather different from those that the noble Lord, Lord Harmar-Nicholls, may attribute to me. That, I hope, is in order. I was explaining that, although I do not regard the Bill as a conspiracy, it has caused considerable alarm. Since the publication of the Notes on Clauses I have attempted, in conversations with a number of people who may be affected by the Bill, to try to dispel that alarm. I found that to be a surprisingly difficult task. It is one on which I am entitled to ask for the Government's help.
I now come to the nub of my answer to the noble Lord, Lord Harmar-Nicholls. It is not at all clear that the purposes outlined in the Minister's speech of 1st June would require further legislation. The question therefore arises of whether they should be scrutinised while we are dealing with the Bill or whether they should be scrutinised on some future occasion—for scrutinised they must be. Those who support them may agree to that equally with those who oppose them.
There are some quite significant changes. They may not be directly connected with the Bill; they could be indirectly connected. They could change our constitutional arrangements quite fundamentally. Therefore, before we go into Committee on the Bill and accept the Government's reassurances—the noble Lord perhaps now sees why I began by explaining that, provisionally at least, I accept those reassurances —I should like to ask whether the noble Earl, when he replies, can undertake that the proposals in the Minister's speech on 1st June will receive parliamentary scrutiny before any significant action is taken upon them. I am asking whether we can have a scrutiny of those proposals separate from the Committee stage of the Bill. That means a debate in government time before any action is taken. It means significant consultation with the Civil Service unions. When I hear the noble Earl's answer to that, which I await with interest, I shall then consider the Motion to go into Committee.
Lord Boyd-Carpenter: My Lords, before my noble friend replies to the very important points raised by the Leader of the Opposition and to what I may describe as the Second Reading speech of the noble Earl on the Liberal Benches, perhaps I may ask him whether he appreciates that to many of us it seems that the points raised by the Leader of the Opposition

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would be considered in Committee much more conveniently and more in accordance with the rules of order. They will arise indubitably on several of the amendments which are already on the Marshalled List. I suggest that the right thing for your Lordships to do is for the House to go into Committee and for these matters then to be discussed.
Lord Harmar-Nicholls: My Lords, quite apart from the point put by my noble friend, I believe that the intervention made by the noble Lord, Lord Cledwyn, should be looked at from a parliamentary point of view. He reminded the House that the Government offered to meet to discuss certain feelings of difference with the Opposition. That was honoured and the meeting took place. We are told that it was attended by the right honourable Minister who is responsible for eventually getting the matter to the statute book.
At that meeting the Opposition clearly must have been satisfied. Following it there was no question that the parliamentary contact was anything other than satisfied with the explanation given. This is the point that disturbs me. The noble Lord, Lord Cledwyn, then said that an outside union had information which was obviously not known at the parliamentary meeting. That convinced the noble Lord that what had been said were not the facts. I should like to know what were the grounds which any union could have for implanting that state of mind in the noble Lord. How did the union get the information which caused that response? Are we now again in the position of having another leaked document where Ministers' advisers have leaked information which has not been made known? The noble Lord has raised a matter which stands on its own, quite apart from the procedures which take place when we go into Committee. This matter is very important. Why should some outside interventionist, who is not in a position to know the facts officially, be able to have information which influenced the noble Lord to the point where he wants to hold up the normal proceedings?
Baroness Turner of Camden: My Lords, perhaps I may help the noble Lord. When we raised the matter at Second Reading we complained that there had been inadequate and indeed no consultation with the unions. We then had the meeting to which my noble friend Lord Cledwyn referred. It then transpired that there had been further discussions with the unions. But they reported to us that what had emerged had not been totally in line with what had transpired at our meeting with the Secretary of State. It is arising from that situation that we have raised these points. There is no leak or anything of that sort; the matter arose precisely from the consultation process.
Lord Elton: My Lords, is it not quite extraordinary that we should be holding up our proceedings in order to discuss matters which appear to be largely hearsay and which have been raised by Members of your Lordships' House between one stage and another when we have a perfectly satisfactory stage in which to debate these issues? Noble Lords who are interested already know from the Order Paper that they should attend.
3.45 p.m.
Lord Houghton of Sowerby: My Lords, I hope that noble Lords on both sides of the House will try to keep a little cool on this matter. This is the first time in the 18 years I have been in your Lordships' House that we have had any full-dress debate on the Civil Service. That of itself is remarkable because, generally speaking, the House of Commons regards itself as responsible for the Civil Service to the extent that it is necessary for Parliament to come into the matter at all.
I do not believe that your Lordships fully appreciate the atmosphere of apprehension and suspicion which the Government have aroused throughout the Civil Service by talk about privatisation, putting jobs out to tender and testing the market on price and effectiveness. The Minister concerned, who is the Chancellor of the Duchy of Lancaster, should not have made the remarks that he did to the Sunday Times without having made them somewhere else a little closer to those concerned on both sides.
There is such a thing as the Civil Service National Whitley Council. It has not been convened to hear anything about this issue. It is true that that council is a large and august body. It has representatives from both sides with heads of department in large numbers to see and to take part in the proceedings. They do not meet unless there is a situation of considerable gravity arising in connection with Her Majesty's Civil Service as a whole. This is such a case.
The Government are proposing reforms which are equal in significance and importance to those made over 100 years ago in an entirely opposite direction by Sir Stafford Northcote. That was then the basis: centralisation, uniformity, standardised recruitment, stopping log-rolling and all that kind of thing. The Civil Service has been built on the traditions that were then laid down. Now the Government believe that there is an opportunity, and probably a need in certain ways, to do something drastic in order to try to revitalise, if you like, the vast public service which is now far beyond anything contemplated 100 years ago.
What the Government are doing is so indefinite and imprecise, yet full of potential threats to jobs, that your Lordships' House cannot expect those of us who are deeply concerned with the Civil Service and who have spent a lifetime in its work, to sit here and see a spirit of co-operation and a constructive approach to these matters destroyed by incompetent presentation and procedure.
Therefore, in the interests of peace in the Civil Service and of what is fair to it, an opportunity should be taken to outline the strategy and the machinery for these changes for the benefit of the Civil Service as a whole. This is not a fractious request. It is necessary in order to avoid laying the seeds of further trouble. I plead with your Lordships for a little patience on this matter.
It is no good some noble Lords shaking their heads. Either they give attention to this matter or they may not. If they do not, they cannot expect co-operation from those of us who feel very deeply about it. I do not believe that this House should proceed with the Bill until opportunities have been taken for the fullest

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consultation with the Civil Service staff and these matters have been outlined for the benefit of both Houses of Parliament.
If noble Lords ask whether this Bill has been handled in a competent way perhaps I may remind them that at Second Reading we were all in a serious dilemma in trying to understand it. We do not have Notes on Clauses, which we understood were intended to be in our hands. They did not arrive. That Second Reading was largely futile because we were at cross-purposes. We believed that this Bill contained the potential for widespread powers to dispose of Civil Service work and personnel. The Government tried to explain that it is a technical Bill and not of very significant importance. Now we have discovered, having had interviews with the Minister and an exchange of documentation, that if we had been fully informed on Second Reading as to what the Bill meant it would have been a more fruitful debate. However, we are now in possession of that information and the more information that we get, the more concerned we become. Already some steps have been taken in one government department to shift work out of the Civil Service altogether and to put it out to contract.
The new headquarters of the Inland Revenue are now up in Nottingham and a contract has already been placed with Blue Arrow Personnel Services. Some of us have heard of Blue Arrow in a different connection—nothing to its detriment, but it certainly excited a certain amount of public attention. Work has been put out to contract with Blue Arrow. Those of us who are concerned should be able to see the framework of that contract because seeds of discord can arise on the conditions of contracts which are at variance with those in the Civil Service, especially if there is to be any juxtaposition of contracted staff and civil service staff. Do your Lordships not realise what problems we can get into? I warn your Lordships that there is serious unrest about this. Somehow or other, it must be cleared up.
I said on Second Reading that it was probably a pity that this Bill was introduced into your Lordships' House at all because what should have happened—and what should now happen—is that the issue should go before a Select Committee so that evidence can be taken and explanations can be given about the Government's intentions. However, nothing of that kind is on offer. I believe that the Civil Service National Whitley Council is entitled to be convened to hear authoritative statements from Ministers.
Perhaps I may also suggest that the ministerial arrangements for this Bill are quite unusual, to say the least. In what circumstances is the Duchy of Lancaster now taking the part of a Minister of controversial duties in the public service? With great respect to the noble Earl, Lord Howe, he is Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food. This Bill is the first paving-stone up the path that the Government wish to take, and they have appointed the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food to lead us there. With great respect to the noble Earl, he has no connection with the administration of the Civil Service. He is not,
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so far as I know, a Minister in the Office of Public Service and Science, which apparently is the new title of the department which is responsible for the Civil Service. Part of the difficulty arose last time because we were not informed—and nor, I submit with every respect, was he—about the real significance of the document that he was handling.
The Bill is disrespectful to the Crown and is almost a contempt of the Civil Service. I am referring to the way in which this Bill seeks to make statutory provision for shifting work which has already been devolved by the Crown into the hands of Ministers of State, in respect of whom specific provision for the transfer of functions has already been made. However, this Bill proposes that that should now he opened more widely without further reference to Orders of the Privy Council. A serious constitutional question is involved. The way in which the Royal Prerogative can be frittered away by Parliament in this way raises some questions of formality in a constitutional form.
I am sorry to take up the time of your Lordships' House, but I am probably the only spokesman who, because of my close contacts with the staff movement in the Civil Service, is fully informed about the significance of this matter. I feel that, at the very least, we are entitled to have put on the record of this House some summary of proceedings since Second Reading which, in the view of the Government, provide the basis for making progress with this Committee stage. I repeat that it is a Committee stage and we cannot be hurried over it. Each one of the amendments raises different aspects of the matter. The amendments are intended to curb and to inhibit the excessive powers that are given in an enabling Bill. It is always the case that enabling Bills are intended to be as wide as possible.
Well, I have had my say and it is for the House to decide what it does next—and it is for us on these Benches to decide what we do next.
Earl Howe: My Lords, I am grateful for the opportunity to respond to the points that have been made by various noble Lords, and in particular by the noble Lord, Lord Cledwyn of Penrhos, and the noble Earl, Lord Russell. I welcome the latter's support for the thrust of the Bill. I hope to allay any residual misgivings that he and other noble Lords may have about it.
There are two main points on which the noble Lord, Lord Cledwyn, asked me for a response. I shall deal first and simply with the question that the noble Lord asked me about market testing and contracting out. However, before I do so, I should like to make it absolutely clear from the outset that there is nothing in this Bill which the Government need to enable them to pursue their market testing policies. The purpose of the Bill is to allow for the more effective management of services which are kept within the Civil Service. As I stressed several times on Second Reading, it has no bearing either on our market testing policy or on the ability of the Government to contract out services where to do so would achieve better value for money. I hope that we can keep that clearly in mind throughout this afternoon.

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I have said that the Government need no new powers to enable them to contract out activities. Even if they did, the Bill would not grant them. The Government have been contracting out work to the private sector and buying in services from the private sector for years. Noble Lords may like to refer to page 8 of the White Paper Competing for Quality to remind themselves of that. It lists a wide range of functions that are already provided by the private sector, including building and construction, refurbishment, estate management, the bulk of the central government road programme, cleaning, laundry, catering and so on.
Having said that, there is no doubt that the Government's policy on market testing has attracted a good deal of attention both in the press and elsewhere. Perhaps that is why it reared its head as an issue on Second Reading. The noble Lord, Lord Cledwyn, has asked that the House be given, at some convenient time, an opportunity to debate the Government's policies on contracting out and market testing. I am happy to confirm to him that we shall do so, though, as I am sure he will understand, I am afraid that an opportunity will not present itself this side of the summer break. However, we shall do our best to find a slot for it later in the year.
Having dealt with what the Bill is not about, let me now turn to what it is about. In particular, I should like to address the question that was raised by the noble Lord, Lord Cledwyn, concerning consultation with the Civil Service unions. There are three levels of consultation which are relevant to this Bill. First, there is the question of consultation over the Bill itself. Secondly, there is the question of consultation over the making of delegations by the central departments. Thirdly, there is the question of consultation over the use, by departments and agencies, of the powers delegated to them under the Bill. I shall have more to say on the last two points when we come to debate the relevant amendments, but my main focus now is on the first—the question of consultation over the Bill itself.
The Government accept that the introduction of the Bill may have appeared to the unions to be rather sudden—and so it was. However, I hope that the noble Lord will accept my assurance that there was nothing underhand about it. The unions have been aware of our intention to legislate on delegation for almost a year. As I have said before, it was clearly indicated in the Citizen's Charter White Paper which was published in July 1991. The Government had always intended to consult the unions over the Bill before its introduction and, with hindsight, the Government recognise that it might have been helpful to take the unions into their confidence rather sooner. However, I emphasise that in practical terms that would have been difficult. The legal complexity of the Bill meant that its final scope was determined only shortly before officials wrote to the unions to alert them to its introduction, and everything was done to let the unions know as quickly as possible of developments as matters progressed. A slot for legislation then presented itself in your Lordships' House, and we seized it.
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I accept that the history of the Bill may have given the unions a whiff of conspiracy when, in fact, no conspiracy existed. But it is also important to keep these matters in perspective. This is not a major constitutional Bill with widespread ramifications for the future of the nation. It is, as I have said before, a minor, technical measure of very limited scope.
Whatever the shortcomings of the consultation with the unions before the introduction of the Bill, they have been adequately redressed since. I believe we are here dealing with a question of timing as much as one of substance. Since the introduction of the Bill, officials have spent a good deal of time and effort addressing the unions' concerns. Two meetings, comprising in all five-and-a-half hours of discussions, some of them late into the night, have been held with the unions to respond to specific questions they have put to the Government. The unions have had written answers to all the questions they have put to us. We have worked hard—as have the unions—to address their concerns and to ensure that they have a full understanding of the issues involved.
That does not mean that the unions have come in the past fortnight wholeheartedly to embrace the Bill. Their more deep-seated concerns about the purpose of the Bill, which were in any case pretty wide of the mark, have, I think, been allayed, as, I trust, have the corresponding concerns of the noble Lord. I hope that we can now put those misunderstandings behind us. What are the unions' concerns? With respect to the Bill, they remain, I believe, concerned to ensure that there will be adequate consultation with staff before anything is done which might affect the welfare of the Government's employees. Let me immediately give assurances on the question of consultation. The Government have no intention of denying civil servants generally any rights that would be available to other employees. If terms and conditions of staff are to be changed as a result of any powers delegated under the Bill, those who are affected will be consulted, as they have always been. The Government have no other intention. And there is nothing in the Bill that would give the Government as an employer any rights to avoid consultation. We shall consult on all relevant matters.
I should make just one further point. It is a point which may not have been fully appreciated earlier but I think it is relevant. I said just now that the Bill is a minor measure of limited scope. The sole purpose of the Bill is to give the Treasury and the Minister for the Civil Service powers which would be available to any other employer but which, through a technicality—and that is all it is—are currently denied to the Government. No large corporation is constrained by legislation, or even by its shareholders, from delegating powers from one level of the organisation to another. I suspect that any large business would find it most surprising that the Government have to seek legislation to allow them to move management decisions from, as it were, their corporate headquarters to their individual operating companies. Yet that is all we are seeking here.
Nonetheless, if it would reassure the noble Lord, I can categorically assure him that the Government

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intend to consult the Civil Service unions over the making of major delegations. That is precisely what has been done when discretions have been given to departments and agencies, and the Government have no plans to change that practice.
As any sensible employer would, the Government consider it important that staff know with whom they are dealing in respect of their terms and conditions. We shall ensure that they do. Beyond that, staff will still be entitled to, and will receive, the opportunity either directly or through their representatives to influence the outcome of any proposals to change their terms and conditions. I welcome the opportunity to give the House those assurances and, in the light of them, I hope that the noble Lord will feel able to allow the Bill to proceed to Committee.
Lord Cledwyn of Penrhos: My Lords, I am obliged to the noble Earl for his explanation and for the assurances which we on this side appreciate. Can he clarify one point? He and his colleagues now say that the policies outlined by the right honourable gentleman the Chancellor of the Duchy in his speech to the meeting arranged by the Sunday Times can be proceeded with by way of secondary legislation and that primary legislation will not be needed for substantial privatisation in the future.
Earl Howe: My Lords, as I understand the position, if privatisation is being talked about, we shall need primary legislation; if contracting out is being talked about, which is what I referred to earlier, we do not need any other legislation.
Lord Cledwyn of Penrhos: My Lords, I am much obliged. In those circumstances I do not think that we on this side would object now to proceeding to Committee.
On Question, Motion agreed to.
House in Committee accordingly.
[The Lord Murton of Lindisfarne in the Chair.]
Clause 1 [Delegation of functions]:
Lord McCarthy Lord McCarthy moved Amendment No. 1:
Page 1, line 8, leave out from ("which") to end of line and insert ("is the subject of the Civil Service Orders 1968 (SI 1968/1656) and 1971 (SI 1971/2099) and the Transfer of Functions (Minister for the Civil Service and Treasury) Orders 1981 (SI 1981/1670), 1987 (SI 1987/2039) and 1991 (SI 1991/188)").
The noble Lord said: In moving this amendment I shall speak also to Amendment No. 10. The Government have said that this is a minor Bill. This is a minor amendment. The object of the amendment is to make clear on the face of the Bill that the Government indeed mean what they say they mean —that is, that the Bill applies to existing TFOs and only to existing TFOs and to no further TFOs; that the area to which it applies is the area of personnel matters; that it has nothing to do with organisational change, nothing to do with privatisation, nothing to do with market testing, and so on. The Government can make this clear beyond peradventure by accepting this amendment and a number of other amendments which other Members of the Committee on this side will be pressing later today.
The amendment works by deleting the last sentence in Clause 1(1),
"which has been the subject of a transfer of functions Order",
which, it will be noted, is in the past tense and in place of that general statement inserting a list of the actual transfer of functions orders as we understand it and as Sir Peter Kemp informed the union in a technical note —all those transfer of functions orders listed in the amendment. If Amendment No. 1 is agreed to, we do not need subsection (5) and therefore Amendment No. 10 seeks to delete it.
I remind the Committee, because I am not sure what the Government will say, that the Government have repeatedly told us that they are concerned only with past TFOs. The best example of that we have had is a statement saying that it was typically—that was the phrase used—the power to determine numbers, pay and other conditions of service. In other words, only those typical functions are to be affected. Of course, there might be other atypical functions. If the amendment is not passed, I submit that the Bill could be read to mean that further transfer of functions orders could be passed which would not simply affect the past, because once they are passed they are for the purposes of the Bill the past. Everything could then be introduced and a wide number of issues could be said to be personnel. One could reorganise offices, shift work, take away work, completely redeploy staff and then call that personnel deployment. But that is not what the Government say they want to do. The Government say that they merely want to take these powers of delegation for existing TFOs and past TFOs.
One of the curious facts about the face of the Bill and one of the reasons why staff were concerned—it was not because of leaks but because they could read the face of the Bill—is that it is couched in general terms. There is nothing on the face of the Bill about personnel management. The term does not appear. There is nothing on the face of the Bill about pay and conditions. The Preamble to the Bill states:
"An Act to make provision with respect to functions relating to the management".
It does not refer to personnel management. It does not refer to personnel functions. Clause 1 of the Bill states:
"This section applies to any function".
It does not refer to personnel functions. It is not clear why it should not apply to past functions or future functions. Yet the Government have told us that it is only intended to apply to those TFOs which they have already passed and that those TFOs typically concern personnel matters. Well, as I said, they can prove that beyond peradventure by supporting the amendment. I beg to move.
Earl Russell: I am happy to support the amendment with a few brief remarks. The TFOs named in the amendment are, I believe, of the Government's own selection; in other words, they are the ones named in the Notes on Clauses. One of the questions which concerns us here is why primary legislation has been necessary for the Bill. It is, therefore, relevant to ask whether primary legislation is necessary specifically for some reason connected with the particular TFOs that have been mentioned, or for some reason relating

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to all TFOs—that is, past, present and even future. Answers to that and to the amendment, which is a probing one, would help us to understand why the Bill has been tabled and why it has been tabled in the form of primary legislation.
Lord Houghton of Sowerby: Perhaps I may make an observation on the amendment. Usually, an enabling Bill is constructed and debated in the context of a purpose which is clearly understood. In many cases, enabling clauses of Bills are merely to give delegated powers to the Minister to carry out the broad intentions of the Bill and of Parliament. But here we have an enabling Bill which has a very obscure object: to relieve Ministers of the need to get a transfer of functions order before they can pass on to some one else delegated authority which has been given to them. In other words, the Bill seeks to open the field for the transfer of functions from one department to another, provided that there is a civil servant at the end of the transfer, without having to come back for further functional transfer orders.
We should bear in mind the fact that these are not statutory instruments; they are Orders in Council; we are dealing with the Royal prerogative. That is what makes it so tricky and difficult. I fear that this may be the only Bill that it will be necessary to bring before Parliament before the Government can set about what appears to be promised in newspaper headlines—for example, "130,000 Jobs Are Put at Risk". It really is an astonishing situation. It is done under the procedures whereby Parliament has no direct control over some of the functions of the Crown; they are taken by law and under certain conditions. The clause proposes to remove those conditions. That makes us all the more reluctant to go along with what the Government propose. We really do not know where they are going. Enabling powers of that sort ought to be accompanied by some indication of what use is to be made of them.
Can the Minister give Members of the Committee an example of what they may want to do with the powers that the clause would confer on certain Ministers? We were not really impressed by the condition—although the Minister seemed to think that we should be—that the transfer on and on and on could only be to a civil servant. We thought that the Government, in their subtle approach to the whole question of privatisation and so on, might create a Civil Service post to which these delegated powers could be transferred within the meaning of the clause; for example, that they could create a director of delegated services in a particular region and give him the power of an inspector, an ombudsman, a referee or whatever with the duty to look at the propriety of some of the practices that may be undertaken on a contract which is transferring work, without coming to the House or to the Crown for an order.
I wish we knew what the Government have in mind. They are asking for such powers without disclosing what is up their sleeve. That is the trouble. Who is in danger here? What kind of work will it be? Will it be statutory work under the income tax Acts? Will it be
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statutory work under the Customs and Excise Acts? What is to be? Alternatively, will it affect supporting services?
So far as I understand it, Blue Arrow in Nottingham is contracted to supply supportive services and not to come into the field of actual tax assessing. The company will not lay any charge on the citizen. But let us be careful, if we have a transfer of functions it is possible that under an Act of Parliament —for example, a finance Bill—certain taxation duties may be required and they could be passed on to a private firm to administer. The Bill is full of mischief and potential trouble. I cannot believe that noble Lords on the opposite side of the Chamber understand what is afoot. Therefore, if they do not understand what is afoot, they must not be astonished if they find that the Civil Service rises in its wrath a year from now and says, "We won't stand for it". I do not want to rumble dire threats of trouble ahead, but already this year the conferences of some of the unions have had great difficulty in keeping to the constructive line of discussion when so many people want militant display. That may not be so easy to do a year hence when people begin to see what can happen.
Finally, without knowing what the Government propose to do, without knowing what the terms of the contract will be to transfer government work to private enterprise and without knowing about the conditions of service that they will impose on the workers—and all the other matters that give rise to friction and difficulty when dealing with staff and the distribution of work—I believe that there is room here for a bundle of trouble. Yet nothing has been said either by the Minister in the other place or by the noble Earl. Do they have one single item in their minds about what should be done and about what use they should make of the clause? If they do not have that, it seems to me that they are asking us to buy a pig in a poke. When they have the powers, they can then dispose of the prerogative where they like so long as a civil servant of one grade or another, or one of their own creation, is waiting to take direction over it. We shall come later to discuss what type of civil servant will be there; indeed, that is the importance of linking one thing with another. But, unless we know where we are going, we must be careful before we go from one stage to another. I make the plea: we are entitled to know where we are going. What have the Government in mind?
4.15 p.m.
Earl Howe: Perhaps I may first deal with one fundamental questions which was raised by the noble Earl, Lord Russell, and the noble Lord, Lord Houghton. It concerns the purpose of the Bill; namely, why do we need primary legislation? I think that I can encapsulate the reasons threefold. At present, we have a system whereby Orders in Council, by means of transfer of functions orders (TFOs, for short), transfer responsibilities between the Treasury and the Minister for the Civil Service. No delegation beyond the Minister for the Civil Service or the Treasury can take place. Therefore, the transfer of functions orders can only be used to transfer functions

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between Ministers, and not to permanent heads of departments or agency chief executives. That is the shortcoming of TFOs. There is also a need to delegate selectively—by function, by department or by agency. That potential number of delegations makes TFOs an impractical way of setting about the process of delegation.
As Members of the Committee will be aware, there is a system of discretions under which powers can be partially passed down the line; but they do not properly decentralise responsibility. There is always the need to refer back at the end of the day to the Minister for the Civil Service or to the Treasury. That is why we need a Bill of this kind. I have given that explanation off the top of my head but—if the Committee will forgive me—I do not believe that I shall need to correct myself. In broad terms, that is why we need legislation.
As it stands, Clause 1(1) defines the scope of the Bill in precise terms. Since 1968, various governments have transferred management responsibilities for the Civil Service between the Treasury and the Minister for the Civil Service. Those reallocations, as I have said, have been made by transfer of functions orders. They include all aspects of the determination of pay and other conditions of service of the Civil Service. It is those functions which the Bill is intended to cover. Other matters, such as the responsibility of the Civil Service Commissioners to ensure fair and open competition for entry to the Civil Service, have never been transferred, and are thus outside the scope of the Bill. Pension arrangements which also form a condition of service are also outside the Bill, being covered by separate legislation.
It may be of help to the noble Lord, Lord McCarthy, if I list the management functions itemised in the latest Civil Service Order in Council which was promulgated last year. That records that the Treasury has responsibility for numbers, grading, remuneration, expenses, allowances, hours of work, retirement and redundancy, reinstatement and redeployment, and qualifications for recruitment. The Minister has responsibility for regulating conduct and all other conditions of service.
As the Committee is aware, the Bill's intention is to facilitate the decentralisation of the Civil Service by allowing the central departments to delegate the management functions I have spelt out to departments and agencies. Typically it will be, as I said on Second Reading, to Ministers in charge of departments or the heads of Next Steps agencies. Many of those agencies and departments are substantial employers. We believe, subject to conditions which may be set by central departments, that the interests of good management dictate a need, where justified, to grant those organisations greater freedom to manage their own affairs.
The amendment lists all the transfer of functions orders which have been introduced since 1968. I hope that I can persuade the noble Lord, after consideration, to withdraw the amendment. I can, first, confirm that the Bill applies currently to those orders listed in the amendment only. The amendment
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therefore adds nothing to the Bill as it stands. However, the effect of the amendment would be to place an arbitrary time limit on the operation of the Bill. Future transfer of functions orders, intended to switch responsibilities between departments, might define existing functions in different terms. The amendment would have the effect of introducing an area of doubt as to whether those functions could be delegated. I trust that the noble Lord will accept that that would be an undesirable and confusing state of affairs. On that basis, I hope that he will withdraw the amendment.
Lord McCarthy: I thank the Minister for that answer which was unsatisfactory. In the answer he gave to my noble friend Lord Houghton he said that the purpose of the Orders in Council was to transfer responsibilities from one department to another. He said that that meant one could not transfer down to agencies. We do not understand why—if there is a transfer from one department to another, and that department has the powers—that department itself cannot decentralise and push those decisions further down. We do not understand that, because it has happened all over the place. The Government have given us one concrete example. On 15th June the Minister gave us examples of what the Government would use the power for. He said:
"I cite as an example HMSO's responsibility for the pay of its staff".
That has been decentralised. He then said:
"There are many others which we would like to delegate; for example, the power to determine pay and grading structure". —[Official Report, 15/6/92; col. 30.]
That has been decentralised. He talked about performance-related pay. That is going on all over the Civil Service. In other words, the very powers that he claims are so essential in the Bill are already being operated and practised by chief executives and other people. If the Minister wishes to intervene I shall of course give way.
Earl Howe: I said that, under the system which currently operates, those powers are partially delegated under what are termed "discretions". It is not a complete delegation. A discretion is given to set various terms of service, but in the end Ministers, or whoever has those discretions, have to refer back again up the line. They do not have freedom of action. They are discretions and therefore an unsatisfactory form of delegation. That may be what the noble Lord has in mind.
Lord McCarthy: I have to ask again—since a degree of delegation and decentralisation has been done with discretion—what can be done further that can be done only with the Bill. I pass on, because I want to come to what the Minister said about the amendment. What he said shows that the Government do not mean exactly what they have said. He said that at some time in the future the Bill could be used to introduce TFOs which go beyond personnel. He said they could go into pensions and recruitment and such things which the Government do not intend them to go into. With the Bill they could go into those things.

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The only way to stop them is to accept the amendment, which is what the Minister does not want to do.
Earl Howe: The noble Lord is incorrect. A future transfer of functions order would be caught by the Bill but it must relate to management functions in respect of the Home Civil Service. That is the point. Those management functions, as I have said, embrace staff pay, staff terms and conditions of service, and those functions that I listed earlier. Future TFOs will have to follow that pattern. I hope that that is a reassurance.
Lord Houghton of Sowerby: Is there a working model of this anywhere? Has a pilot scheme of any kind been carried out? We have heard only pure theory about all these matters. They have not been translated into practical or feasible terms. In those circumstances, we may be walking in the dark. This is a momentous change which Mr. Waldegrave in his Sunday Times seminar lecture said would have an enormous effect. When one is embarking upon something which is capable of having an enormous effect I should have thought that someone would have wanted to carry out an experiment in branches of work in particular departments which are already available for transfer to find out what will happen.
The Nottingham scheme—I do not know from where the authority came to start it—has not yet begun. However, preparations have been made and, as I understand it, the contract has been placed. I do not know whether that is a standard form of contract. I have seen a ministerial letter of some kind relating to guidelines on the transfer of legal services. What does that mean? Guidelines to what? The position is uncertain. One wonders where one goes for information. We have the curious set-up of the Duchy of Lancaster with a Parliamentary Secretary. In this place there is a Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food. That is based no doubt on the fact that he knows a great deal about sheep, and the Government think that sheep we are all going to be.
The Bill is ill-prepared from top to bottom. There is no sign of any constructive work being done by those engaged in the tasks that anyone can observe or understand. That is one of the reasons why there should be a meeting of the Civil Service National Whitley Council. I hope that the staff side will demand one, because it would bring to the council all the permanent heads of department involved. At present no such gathering, so far as I am aware, has taken place.
4.30 p.m.
Earl Howe: I have already given the Committee an assurance about consultations with the unions. We have had extensive talks with them and have replied to their questions in detail. I believe that on the whole they are satisfied with those answers. I have also given assurances about future consultations on delegations.
Regarding specific points raised by the noble Lord, at present there is a need to act in accordance with a central legal framework, which means that residual
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central rules have to be retained even when they are unnecessary and where it would otherwise be desirable to delegate completely to departments and agencies. For example, we have had to abandon proposals to allow departments and agencies to devise their own rules on probation, on age limits for recruitment and on performance pay and incremental progression for home workers, because that would have resulted in the central departments giving up too much of the responsibility placed upon them by the Order in Council.
The noble Lord asked whether we have a pilot project. No, we have not, precisely because we need primary legislation of this kind before we can put a pilot project in place. The noble Lord, Lord McCarthy, asked why we could not use TFOs in relation to departments to allow them to decentralise. The main reason for that is the sheer range of delegations that may be required. There are many departments and agencies. We may wish to delegate to all of them, to some of them, to a few of them or only to one. Delegations may need to he altered or withdrawn. TFOs would be an impossibly cumbersome way of achieving what we want and I think that, as we proceed with the Committee stage, the noble Lord will understand that the Bill is a much more flexible and amenable way of achieving what he, I am sure, wishes: namely, the better management of the Civil Service.
Lord McCarthy: I do not want to drag this debate on because the noble Earl will have many opportunities in regard to subsequent amendments to show that he is in fact flexible. I therefore beg leave to withdraw this amendment.
Amendment, by leave, withdrawn.
Lord Cledwyn of Penrhos Lord Cledwyn of Penrhos moved Amendment No. 2:
Page 1, line 8, at end insert:
("( ) In this section "servant of the Crown" means a Minister of the Crown, a member of Her Majesty's Home Civil Service or a holder of a statutory office.").
The noble Lord said: I beg to move the amendment standing in my name and the names of the noble Earl, Lord Russell, and the noble Lord, Lord Allen of Abbeydale. As the Committee will be aware, this amendment lies at the heart of our concern about this Bill, and its objective is pivotal. There have been discussions on the issue both during and after Second Reading, and the Chancellor of the Duchy was good enough to deal with it in his letter to me dated 18th June. I will read the relevant paragraphs out of respect for the right honourable gentleman. They are as follows:
"The drafting of the Bill restricts its scope to the delegation of management functions to 'a servant of the Crown'. That immediately renders the Bill quite useless as a mechanism for contracting out a task or transferring an organisation to the private sector. Its purpose is rather to permit management responsibilities within the Civil Service to be reallocated, where appropriate, within the Civil Service itself.
I am afraid the confusion may have been caused by the phrase 'servant of the Crown'. This is a technical term covering Ministers, civil servants, members of the armed forces, diplomats and a new small group of public servants and it is used in the Bill on legal advice. The term explicitly excludes private citizens and private companies. The Bill

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cannot therefore empower ministers to delegate the management of Civil Servants to the private sector and cannot therefore be used in any way to support contracting out or privatisation.
Market testing and, where appropriate, contracting out, remain important elements in the Government's strategy for continuously improving value for money in the public sector. It is right that we should be tested on matters of policy and principle in the Second Reading stage. But I hope you will recognise that the issues raised are not in any practical sense related to the Bill itself."
I say at once that we must give due weight to the words of the right honourable gentleman. Notwithstanding that, the Bill as drafted has raised many questions about the term "servant of the Crown". I am informed that there has been a "lexis search", which has shown there is no particular reason why the phrase "servant of the Crown" is used in preference to "Crown servant". The two terms seem to be interchangeable and have been used in a number of statutes over the years, as many of your Lordships may recall. In a recent Act, the Companies Act 1989, both terms are used. There appears to be no definitive explanation why in any particular Bill one term is used in preference to the other. Further, we are told that there is no distinction between the terms, and then we hear that the Treasury cannot prove that there is no difference.
I must stress that it is crucially important that there is no ambiguity about this term in the Bill, not least because the Government have made plain their aim to contract out civil servants' work. It is therefore essential that there should be a clear and unambiguous definition of the category of person to whom delegation may be made. Furthermore, I understand that the Civil Service unions received a note from the Cabinet Office on the 23rd June, stating that:
"the precise boundary of the definition of 'servant of the Crown' is not established."
The object of this amendment is to define and clarify beyond reasonable doubt that group of individuals to whom delegation may be made. If the noble Earl argues that it is not wide enough to embrace members of the diplomatic service or the armed forces, it must be for the Government to make out the case for their inclusion. If the Minister does so, we shall be very glad to listen to the arguments.
Our chief concern, however, is not solely the term "servant of the Crown". It is the qualifying words in Clause 1(2); namely,
"a servant of the Crown of such description as he may specify".
That is where the ambiguity lies. We have been told that those qualifying words are there to require a Minister to be specific about to whom the delegation is to apply. The nub of the problem is that the term "servant of the Crown" may be legally recognised, but it does seem that there is no clear established definition. In other words, the phrase,
"of such description as he may specify",
could be used to delegate management functions to virtually anyone. I hope the Minister will be able to clarify this for us when he replies. For example, could the words not give Ministers authority to extend the meaning of "servant of the Crown"? The definition must be made clear in this Bill, as a lack of clarity
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could mean that Ministers or, more importantly, some future Administration may totally redefine what is meant by this term. Ministers have given an assurance that the term is designed to be specific. If that is the case and if they are ready to stand by their assurances they should have no problem whatever in accepting this amendment. I beg to move.
Earl Russell: I should like to thank the noble Earl, Lord Howe, for the answers he has given so far. I have found them very helpful and I entirely accept the assurances that he and indeed the Secretary of State, in the letter just quoted, have given about the intention of the phrase which we are now considering, "servant of the Crown". What I am not certain of is whether the drafting of the clause is sufficiently precise to achieve what I accept is the Government's intention and therefore whether it might be further tightened. I have no trouble with the assumption that "servant of the Crown" means the same as Crown servant. I accept the considerable body of usage behind it. However, I should be glad to know whether there is law as well as usage behind it. I should like to know whether we have any statute law or any case law that gives a clear definition to the phrase "servant of the Crown". I am not myself aware of any. I have consulted academic colleagues who are also not aware of any.
If there is no clear, standing legal definition of the phrase, we are driven back to usage over quite a long period of our history. With that in mind I consulted an academic colleague who has been engaged in work on the meaning of the related term "King's servant". The advice which he gave me I found interesting. It was that the clause in the Bill is an entirely circular statement because anyone to whom a ministerial function is delegated in virtue of this order thereby and ipso facto becomes a servant of the Crown. Therefore the statement is simply tautological and the clause becomes our old friend, "the Secretary of State may do whatever he likes".
That has quite far-reaching implications. It means that under the clause as drafted it would be possible to transfer functions into the private sector, and anyone in the private sector to whom such functions were transferred would automatically become a servant of the Crown. I do not believe that that is the Government's intention. I look forward to co-operation in the tightening of the phrase to make clear exactly what is intended. By using an undefined term the Government slightly remind me of the candidate who entered for the Chancellor's English essay prize and began in the following manner: "I shall not define my terms; I do not like playing with marked cards." In this Chamber it may be rather more convenient to mark our cards and know exactly what we are playing at.
I should be glad to know whether the meaning of the term "servant of the Crown" is the same in Scottish law as it is in English law. I regret to say that the question occurred to me only at breakfast time today. The advice I have been able to obtain in the intervening time seems to indicate that the terms are

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the same in the two different legal systems. However, I should be glad of further reassurance before we leave the words as they stand.
The amendment defines the term more precisely. I do not think that we are wedded to the particular definition of what is meant. If the Government wish to put forward a different definition, which is equally tight, I am sure we would be prepared to consider it sympathetically. The trouble is that although all civil servants are servants of the Crown, not all servants of the Crown are necessarily civil servants. It is, for example, the effect of this amendment to block the transfer of functions to the Armed Forces who are servants of the Crown. There are certain circumstances in which I would be perfectly happy to see functions transferred to the Armed Forces, but I would wish to see those functions fairly carefully and tightly defined before the Bill leaves this Chamber. Lest I be misunderstood, I should say that I believe every noble and gallant Lord in this Chamber would say the same.
Similarly, Her Majesty's judges are Crown servants. Again, I can imagine certain functions which could properly be transferred, but one would want to know which these were. Members of the Forestry Commission are Crown servants but if we were to transfer the making of foreign policy to members of the Forestry Commission, the rain forests would be taken a great deal more seriously than they have been hitherto. I am sure the Committee will see why I should like a little more definition in the Bill.
4.45 p.m.
Earl Howe: As has been explained, the effect of the amendment is to define the term "servant of the Crown" in such a way as to restrict the range of persons to whom management functions may be delegated under the Bill. The Government believe the proposed restriction is unnecessary, and unacceptable as it stands, because, as the noble Earl said, the amendment does not include the diplomatic service and Her Majesty's Armed Forces. Members of those groups are servants of the Crown, but they may also be chief executives of Next Steps agencies with management responsibility for members of the home Civil Service. The chief executive of a Defence Research Agency, the Hydrographic Survey, is for example a serving naval officer. That is why members of the Armed Forces have to be brought within the scope of the Bill. The effect of the amendment would be to prevent delegation to such chief executives.
It is the intention of the Bill to enable the central departments, if they so wish, to delegate management functions directly to chief executives of agencies, all of whom are Crown servants. The many improvements in efficiency and customer service which Next Steps agencies have achieved are directly related to the management discretion they have been given to enable them to meet the exacting targets imposed by their parent departments. As I said, we believe that the process can be extended further by delegation to agencies which are ready to take on more responsibility for managing their own staff.
I turn now to the definition of "servant of the
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Crown". This is a difficult matter. I assure the noble Earl, Lord Russell, and the noble Lord, Lord Cledwyn, that the meaning of the term "servant of the Crown" is identical to that of Crown servant. There is no legal distinction that my officials can produce. Indeed in the 1989 Companies Act both terms are used. The noble Earl asked whether the term means the same in Scots law. My advice is that it does.
The noble Earl also asked about Clause 1(2) which states:
"a servant of the Crown of such description as he may specify".
The noble Lord, Lord Cledwyn, also asked about that subsection. What does it mean? The phrase,
"of such description as he may specify"
does not permit any kind of redefinition of the term "servant of the Crown".
People to whom delegations are made must in the first instance be servants of the Crown. The qualification means only that the Minister may, if he wishes, specify either a named individual or the holder for the time being of the office. I am also advised, contrary to what the noble Earl told us, that the phrase is not circular. However, I shall he happy to go away and reconsider the matter before the Report stage.
I have heard with surprise some remarks in relation to an earlier amendment—I perhaps skirted over the point made by the noble Lord, Lord Houghton, on the previous amendment —that constitute what I would call scaremongering on the Bill. I hope that I have been clear enough in what I have said as regards what the Bill does and does not enable us to do. I should be interested to hear from the Opposition Benches any explanation of how contracting out can possibly be carried forward under this Bill. It cannot be done. I hope that I have allayed any residual worry to that effect.
If someone is in the employment of the Crown, he is a Crown servant. If he is not in the employment of the Crown, he is not a Crown servant. The Bill allows delegation and sub delegation where relevant only to servants of the Crown. No amount of ingenuity of interpretation can create the situation in which the Bill is used somehow to disenfranchise civil servants. The Bill does not empower the Government to allow a private sector employer to determine the terms and conditions of Civil Service staff. It cannot therefore empower privatisation. Having said that, I concede that there are some problems of definition in that area. The Bill uses terms which can be recognised as having some reasonably clear legal standing. It therefore uses the term "servant of the Crown", which includes Ministers, civil servants, judges, diplomats, members of the Armed Forces and members of the Forestry Commission. It also includes a wide range of smaller bodies which carry out functions on behalf of the Crown and statutory office holders.
As I said at Second Reading, the Government intend that in practice the vast majority of delegations will be made to Ministers and, to a lesser extent, to agency chief executives, who may come, as I have explained, from a number of different groups within the Crown service. The term "servant of the Crown" is used in the Bill to ensure that there is sufficient

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flexibility in the power to delegate while clearly retaining the management function within the public sector.
Nevertheless, I appreciate the points that have been made by Members of the Committee opposite. I should be happy to assure them that the Government will consider between now and Report stage whether it is possible to amend the Bill to make it explicit that delegation is only possible to servants of the Crown who are responsible for managing members of the home Civil Service. I hope that in the light of that assurance the amendment will be withdrawn.
Lord Cledwyn of Penrhos: I wonder whether the noble Earl could clarify one point relating to delegation to the Armed Forces. I understand that there are problems about extending the definition to members of the Armed Forces. It has been argued that if there is to be an extension to the military it should be confined to existing agency functions which are currently undertaken by members of the Armed Forces in the Ministry of Defence. Can the noble Earl please throw light on that question?
Earl Howe: The noble Lord has bowled me out with that question. I shall write to him on that particular point. I hope that that does not affect his decision whether or not to press the amendment.
Lord Cledwyn of Penrhos: I am much obliged to the noble Earl for his explanation. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 3 not moved.]
Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 4:
Page 1, line 10, after ("may,") insert ("by order made by statutory instrument").
The noble Baroness said: In speaking to Amendment No. 4 I should like to speak also to Amendments Nos. 11 and 12 with which it has been grouped. The three amendments are connected and have the same purpose. The intention is to try to satisfy the desire of Parliament to have the opportunity of scrutinising what is being done under the Bill when it becomes an Act.
It seems to me that the discretionary powers conferred on Ministers by the Bill are very wide. Nowhere is a limit to those discretionary powers laid down. Therefore the purpose of the amendments is to ensure that there is an obligation on the Minister when he exercises those powers to present them for parliamentary scrutiny via the affirmative procedures of both Houses. The point is a short and simple one. The Civil Service works for us and for the public; and Parliament is a public watchdog in these matters.
I accept that, as the noble Earl said this afternoon, it is not intended and indeed would not be possible to privatise without primary legislation. I am grateful for having that assurance on the record. However, the noble Earl said that it would be possible to contract out without further legislation, utilising the powers conferred on Ministers by the Bill. The object of this exercise is to ensure that when such proposals are
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made there is some means by which Parliament may scrutinise the way in which the powers are being exercised. I beg to move.
Earl Russell: I am happy to support the amendment and what the noble Baroness, Lady Turner of Camden, said about it. However, it is not only a matter of parliamentary scrutiny. It is necessary that within the Civil Service it should be known what functions have been delegated to whom. The Bill as it stands contains no provision whatever that the Minister should actually tell anybody when he has delegated a function. I should have thought that that was a necessary condition of delegating functions effectively. I should be very glad to hear the noble Earl's answer to that point.
Lord Prentice: Reading the amendments I was not sure whether they were intended as probing amendments or were to be taken literally. Having listened to the noble Baroness it appeared that she was asking the Committee to take them literally. If so, I can only suggest that they would make a very unsatisfactory situation a great deal worse.
Surely the situation we are dealing with is this. At present the Treasury and the Civil Service Department have to regulate all matters of importance. The Bill is intended to amend that situation. It is intended to create a more flexible system and to enable managers within departments or within the Next Step agencies to have responsibilities commensurate with comparable managers throughout the rest of our society. Under the present situation they are given the responsibility for management without the basic powers of management. The amendment would not merely cancel out the advantages of the Bill; taken literally, it would make a bad situation worse. It would create detailed supervision by Parliament of the administration of the Civil Service in a way we have never had before and which as far as I know no one has ever demanded before and no other major country in the world operates.
The amendment would be a prescription for long delay; it would be a prescription for overloading both Houses of Parliament to a considerable extent. Above all, I am worried about the effect on line management within the Civil Service and the agencies. People in line management would be discouraged from suggesting reforms which would mean delegation of powers to themselves or their colleagues. At best it would mean that, when delegations were being framed for which statutory instruments would have to he brought before Parliament, managers would try to pack in as much as possible so that the proposals would become general rather than specific, leading to all kinds of difficulty. At worst, those managers unwilling to ask for extra responsibility and to show the initiative that we require would say, "Well, I had better not do it because it might upset my superiors as they would have to go to Parliament".
I suggest to the Committee that the amendment sends the wrong message. The message that we—in all parties—ought to be sending to managers within the Civil Service and the new agencies is: seize the new powers; take initiatives; work out ways in which you

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can give a better service to your clients; and then ask for the changes which are needed. What should not be sent is a negative message, and I fear that that would be the effect of the amendment.
Earl Howe: The three amendments have an almost identical effect. As the noble Baroness explained, they would require the Government to achieve each delegation by statutory instrument. Amendment No. 11 goes further by requiring the draft of such a statutory instrument to be subject to approval by both Houses of Parliament.
I have to say, with great respect to both the noble Baroness and the noble Earl, that the amendments would run entirely counter to the better management of the Civil Service, which is the sole aim of the Bill. The Bill deals with an inflexibility of the management system which has hampered decentralisation. It gives the central departments a flexible power to introduce, extend, restrict and withdraw delegations. It allows them to delegate across the board, to some departments or to only one department. The amendments would not only prevent that flexibility but make decentralisation extremely difficult and cumbersome to achieve.
There may be many delegations of quite small matters to departments and agencies. An agency may perhaps be given the right to introduce a tailor-made pay scheme to encourage home working. A department may be given the right to determine its own probation arrangements. Another agency may be given the power to determine its own arrangements for dealing with disciplinary matters.
Is the noble Baroness saying that such small management adjustments, possibly many hundreds of them, should be subject to the affirmative or negative resolution procedure? Does she believe that that will be an appropriate use of parliamentary time? If the amendment were carried the effect would be to encourage the central departments to make sweeping, across-the-board delegations to avoid the need to take up parliamentary time on minor matters. That cannot be what the noble Baroness wants. Surely it is better for delegations to be considered carefully and individually tailored to the circumstances of each department and agency.
The implicit worry of the noble Baroness is about the enabling powers under the Bill. I have already tried to explain the limited scope of those enabling powers in terms of the functions which could be delegated. I say to her again that the Bill has nothing to do with contracting out. In that context I find it very odd that noble Lords who usually complain vociferously about government by regulation should now be advocating a vast proliferation of statutory instruments. I cannot believe that the noble Baroness or the noble Earl considers that to be desirable.
There is another, wider point. We should remember that the management of the Civil Service is exercised under the Royal prerogative. The effect of Amendments Nos. 4 and 11 is for Parliament to take a new power to intervene directly in the management of the Civil Service in a way that has never been considered necessary before and to do so in a way that will hamper better management.
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The noble Baroness who proposed the amendment made the point that it was important for the Civil Service staff to know how and where delegations had been made, so that they knew who was responsible for determining their terms and conditions. That is a very fair point and one which the Government accept. We have no doubt about the importance of individuals knowing with whom they have to deal on their terms and conditions of service. The central departments will be entirely open about the process of delegation.
The noble Baroness made the point that it was important for Parliament to give its prior approval to any delegations made by the Treasury or the Minister for the Civil Service. While we can have no objection to Parliament taking an interest in the use made of the powers we are now seeking, the Government cannot accept that it is necessary or practicable for Parliament to give its prior approval to any and all delegations. Delegations will be capable of being amended or revoked at any time. Parliament will be able to test the Government on the delegations that they have made and on the conditions that have been attached to them. So Parliament and others will have ample opportunity to make their views known on any delegations and to influence the Government's use of the powers that will be granted by the Bill. The Government accept that Parliament, the unions and others may have a legitimate interest in the delegations that are made by virtue of the powers in the Bill.
In reply to the question asked by the noble Earl, we propose to make that information available at regular intervals by publishing lists of the delegations made. The method by which the Government will do that is a matter for further consideration; but there is no wish on the Government's part other than to be wholly open about what they do. In summary therefore, I hope that the noble Baroness will withdraw the amendment in the light of the assurances that I have given.
5 p.m.
Lord McCarthy: The trouble with the Government is that in their attempt not to give us any idea about what they are going to do they caricature the process. Surely it is not a process which is going backwards and forwards. It is not as though the Government will delegate and then draw that delegation back, delegate again and draw it back again. In a concrete case the noble Earl told the House what kind of things would be delegated. He listed some of them again this afternoon. In effect they are one-offs. The Government will give heads of agencies the power to determine grading structure and they will not take it back subsequently. They will give them that power. They will give them the power to introduce performance-related pay, to determine age limits on recruitment, and so on. Those things will not flow backwards and forwards like the tide. There will be one or two occasions when they provide for what those delegations will be in the main agencies.
We on these Benches, through the amendment, seek to know how we are to find out precisely what the Government propose. We suggested that it might be done by the normal procedures of a statutory order. If

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the Minister says that that is not right, how is it to be done? At the end of his speech he said that the Government will enable it to be tested. He said that they would publish something to indicate what they were doing. Will that be a regular publication? In what sort of detail will it go into? Shall we know before this Bill has gone through its various stages exactly what the Government propose as an alternative to the proposal of my noble friend?
Lord Boyd-Carpenter: The noble Lord overlooks the complexity of the public service. It may well be the case that there will be a considerable number of quite small delegations. If so, solemnly to provide that a statutory instrument will have to be laid and be approved by both Houses would be a very cumbrous way to proceed. Moreover, there is great force in what my noble friend the Minister said; namely, that if that is insisted upon, a considerable temptation is offered to the departments to take much more sweeping powers of delegation in order to be quite sure of not having to come back again and again.
It is also the fact that if one does not have this provision for a statutory instrument Ministers can always anyhow be held to account if they do anything which Members of this Chamber feel is inappropriate. Ministers have to answer Questions in either Chamber. Members of this and of another place will be well aware, particularly perhaps through the trade unions, of any transaction which appears to be excessive or improper in any way. The Minister can be called to the Dispatch Box and forced to answer Questions about it. Therefore, it seems to me not only unnecessary to put this provision into the Bill but also an extremely cumbrous and difficult way to proceed.
Finally, there is the point not touched upon by the noble Lord of the delay that it will cause. For example, if a delegation takes place at this time of year, when there is no time for a statutory instrument to be brought before Parliament until, say, towards the end of October at the earliest, it will delay changes which flexibility may indicate ought to be made and made quickly. To justify such a situation of delay it must be shown that it is necessary to impose this restriction. For my part, having listened to the debate, I do not believe that it is necessary. I hope that my noble friend will continue to reject the amendment.
Earl Russell: It may be helpful to the Committee for me to say that on these Benches we entirely accept the noble Earl's answer, which satisfies us.
Lord Houghton of Sowerby: Before my noble friend makes further observations, I suggest that the power of a Minister to do as he thinks fit is comparatively rare in our legislation. It is a statutory power—to do as he thinks fit. Clause 1(2) shows how wholesale is that power. It states that he may:
"to such extent and subject to such conditions as he thinks fit, delegate the function to a servant of the Crown of such description as he may specify".
That is an absolute power given to the Minister subject to any challenges—I am not very clear as to what they are—against the misuse of power or where his "thinking fit" may have been without thought or
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without fit. There is a challenge in Parliament if one can find the basis for it. I wonder whether the Minister might consider some other form of check on the use of those absolute powers by a Minister. There are the Public Accounts Committee, the Audit Commission and various forms of check upon the use of power. There is not the slightest doubt that constant challenge to the power of Ministers or of bureaucracy is one of the conditions for the survival of our democracy; otherwise one has dictatorship. Many Ministers who believed that they could do as they thought fit would soon be in a dictatorship. We have to beware. We are the guardians of good legislation. Other noble Lords are much better hands at deciding what is good legislation than I am. However, the provision strikes me as being too unusual to pass without question.
During the past 18 years in your Lordships' House I can recall only one other piece of legislation in which such words have been used. I refer to the power given to the Home Secretary under the Dangerous Dogs Act. That was a scandalous piece of legislation. But a provision giving the Minister powers to act "as he thinks fit" without some check upon his action—even if such check is the requirement that he consults, as provided in the Dangerous Dogs Act—should be looked upon with disfavour. I defer to what my noble friend on the Front Bench says, but to allow the legislation to go forward in the terms that the Minister described would be unwise.
One must bear this factor in mind. When seeking enabling powers, the strong urge is to ask for as much as one can attain. I have never heard of any civil servant saying to a Minister, "That is going too far". When seeking enabling powers one grabs what one believes one might need and leaves the legislature to put in the limitations on the use of such power. That is the point of view from which I consider the issue. I hate the words "think fit" in any legislation, especially in the hands of Ministers. After all, they are political animals.
There is a disturbing aspect in this provision. It goes further than increasing the flexibility of administration. The provision gives power to do things which hitherto have required oversight of Ministers' actions. Ministers ought to be prepared to submit to some requirement which enables the watchdogs of Parliament to pick up such actions during the course of their examination.
Baroness Turner of Camden: I thank the Minister for his response to the amendment. It was originally intended as a probing amendment to find out what means there would be for scrutinising the way in which the legislation was being applied. I am grateful for his assurance that it is intended to make available information on delegations through lists. That is extremely useful.
I accept that provisions via statutory instrument are not perfect. However, far more complicated questions have sometimes formed the basis for such procedures. Such procedure is sometimes quicker than having to rely simply on Parliamentary Questions. In view of the statement that the Minister made, I shall withdraw the amendment at this stage. We may wish to come back at Report stage to consider whether we

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can have the provision in the Bill to which the Minister made reference. That would allay some of the fears that have been expressed to us. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
5.15 p.m.
Earl Russell Earl Russell moved Amendment No. 5:
Page 1, line 12, at end insert ("and may at any time revoke that delegation").
The noble Earl said: The amendment raises a small but important point as to whether delegation once made can he revoked. The Minister told us that there had been no pilot scheme. He explained carefully and persuasively why that was so. We cannot and should not complain of that. However, since that is the case it necessarily means that whatever is first provided in the Bill will to some extent be of an experimental character. Not every delegation will necessarily be absolutely perfectly judged the first time. No political circumstance is eternal. Therefore, no delegation which is appropriate when introduced will necessarily remain so. The Minister will relieve us considerably if he explains that a delegation once made is not irrevocable and can be revoked when circumstances seem appropriate. I beg to move.
Earl Howe: I well understand the noble Earl's point. As he might have expected, I asked my officials to seek appropriate legal advice. I can assure the noble Earl that parliamentary counsel advise that the power of revocation is implicit in the power of delegation. The amendment is therefore unnecessary.
Delegation is to a marked degree different from a transfer of functions order through which the functions once transferred can be taken away only by a further transfer of functions order. Delegation is a much more flexible instrument.
On a more general note, it would create an unhelpful precedent to insert an explicit power on the lines of the amendment. I am not sure that the noble Earl wishes to do so. But if we were to do so it might call into question other statutes in which the power is not made explicit, or it might suggest that there is something novel about the power of delegation in this Bill which requires such explicit provision. In the light of legal opinion, I hope that the noble Earl will agree not to press the amendment.
Earl Russell: I thank the Minister for that reply. It was extremely helpful. He said what I hoped to hear. In those circumstances I am happy to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 6:
Page 1, line 12, at end insert ("and after consulting those trade unions recognised as representing members of Her Majesty's Home Civil Service in the government department, agency or organisation concerned.").
The noble Baroness said: At Second Reading, and again today, great anxiety has been expressed on these Benches at what we regard as a failure to consult the recognised trade unions before the Bill was printed and in advance of Second Reading in this House. I am
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grateful to the Minister for the assurances that he has given today. However, it is clear that the Bill is part of an ongoing government strategy in line with the philosophy of so-called decentralisation. That is apparent from the material sent with the Notes on Clauses in which there is reference to the development of the agency system. The Minister has referred to that again today. Clearly the Bill may involve substantial innovations in the way in which the work of some Civil Service departments is carried out. If that were not so, it would scarcely have been necessary to have legislation.
As we all know, the Civil Service employs large numbers of people, many with professional qualifications. They are represented by unions which have long been recognised for the purposes of consultation and collective bargaining. There is no gainsaying the fact that the way in which the Government have proceeded with the Bill—they introduced it in the wake of a speech by the Minister which was widely reported, and which gave the clear impression that it was the Government's intention to turn the Civil Service upside down and to create situations in which senior civil servants would have to compete for jobs with people from outside the Civil Service—has led to enormous suspicion on the part of the unions representing people working in the Civil Service. We have been assured today that there will he consultation; that there never was any intention that there should not be. I believe that it would be a good idea to write that into the Bill. The Civil Service is a public service. Generally speaking, I believe that we in this country are well served by it. However, if reforms are necessary it is essential that they should be effected in consultation with, and preferably with the co-operation of, those whose job it is to provide the service. I beg to move.
Earl Howe: The Government fully accept that the unions and staff will need to know with whom they are dealing on matters relating to the terms and conditions of the staff whom they represent. Accordingly, the present arrangements for consulting the unions before discretions are given to the departments and agencies will extend also to delegations.
However, we do not believe that it is right to place such arrangements on the face of the Bill. The Bill is about the management of the Civil Service. Surely it is a proper duty for management to decide by whom particular management powers will be exercised. To put a requirement on the face of the Bill that Civil Service unions must be consulted before a delegation of powers can be made would be to give them a statutory role in determining who manages the staff. That is without precedent; no other trade union has been given such a role; nor have the Civil Service unions ever held such a role.
The proper way of dealing with the matter is on the basis of the undertaking that I have given; that the Government accept the need of the Civil Service unions to know when powers are being transferred from one level of management to another and to be

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given the opportunity to express any views that they may have both on the delegation and on the conditions that may be attached to it.
They have consistently been given that opportunity in respect of discretions, and continuation of the present arrangements will ensure that that still occurs. I hope that the noble Baroness will accept that assurance and will agree to withdraw the amendment.
Lord McCarthy: Did the Minister say that the present arrangements for discretions will be extended to delegations?
Earl Howe: Yes, I did.
Lord McCarthy: The Minister has already admitted that the arrangements for consultation on the Bill leave a great deal to be desired. I thought that he also said that he intended to improve them. However, his comments suggest to me that the present arrangements for consulting the unions about discretions, since the Bill is far more important than discretions, leave a great deal to be desired. Will the Minister say that he intends to improve those arrangements too?
Earl Howe: As I said in my opening remarks before we went into Committee, we must distinguish three kinds of consultation. The first is consultation about the Bill itself. I have acknowledged that, with hindsight, that could have been done in a way which suited the unions rather better.
Consultation on discretions is a different issue. We have regularly consulted the unions when discretions have been made. I was seeking to say only that the same procedures will continue when and if delegations are made. I hope that that reply clarifies the issue.
Baroness Turner of Camden: I thank the Minister for his assurances. I do not intend, to press the amendment but shall read closely in Hansard what he said. I am glad that the Minister has assured the Committee that the Government's policy is to ensure that unions are consulted and that that will be done on delegations as well as on discretions. On the basis of those assurances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 7 and 8 not moved.]
Earl Russell Earl Russell moved Amendment No. 9:
Page 1, line 18, leave out subsection (4).
The noble Earl said: I am mindful of the Committee's time but I hope that I shall be forgiven if I spend a few minutes explaining the amendment. The issue is a little complicated and I should not wish to mislead the Committee. The amendment deals with the Carltona principle; that by which the Minister is accountable for the actions of a junior civil servant of whom he may never have heard. The principle was made famous through Crichel Down.
It was perhaps parodied on another occasion by the affair of Jimmy Carter's signature. During the presidential election campaign of 1976 Jimmy Carter was horrified to discover that not all letters from the President were signed or even seen by the President. He rashly promised that he would sign them all
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personally. After his election his staff, with great labour and trouble, finally persuaded President Carter that the task would take him precisely 24 hours a day. That is why the Carltona principle is good and necessary.
The effect of the Bill is to extend the Carltona principle to acts committed in the name of a person who is not the Minister. Perhaps I may give an obvious example; the head of the benefits agency may commit actions for which the Secretary of State for Social Security is accountable. In that case it is sensible that that should be so. But if, for example, the deputy keeper of the public records should perform actions which concern us, it is not as obvious to me that the noble and learned Lord the Lord Chancellor should be held responsible.
There are difficulties about the extension of the Carltona principle in this way. It appears to me that what the Bill is attempting to do is in danger of leading to one or other of two rather unfortunate situations. First, it may make the Minister accountable for actions over which he has no control. No Minister likes that. When Ministers are put in that position they may be expected to make efforts to increase their control over actions for which they fear later to be held accountable. Therefore, we might obtain out of the actual operation of the Bill an extension rather than a decrease of centralisation. That would defeat the Government's objectives and would not he welcome on these Benches.
The alternative effect, which I am not sure I should welcome, would be to end accountability to Parliament for the agency function or whatever it might be. There may be cases in which that effect would be necessary. It has been clear for some time that ministerial responsibility covers a wider area than most Ministers are in practice capable of answering for. But that is a large nettle indeed and I believe that it is one that needs grasping by a rather larger and more leisurely prepared Bill than the one now before us. The issue also needs to be discussed by people with the kind of administrative experience to which I can make no claim whatever.
I am not opposed to the intentions of the Government's proposal, but I wonder whether the clause requires a little more thought to be given to it before it leaves this Chamber. I beg to move.
Earl Howe: As the noble Earl has explained, the effect of the amendment would be to prevent persons, other than Ministers to whom the Carltona principle would still apply, from authorising others to carry out a function which had been delegated to them. In practical terms it would lead to one of three results. The first possible result would be that delegations which would most appropriately be given directly to agency chief executives or to other officials would instead have to be given to departmental Ministers in order that local managers would be able to carry out the functions on the Minister's behalf. The Carltona principle applies to departmental Ministers but not to civil servants.
The second possible result of the amendment would be that delegations would have to be made directly to the lowest operational level at which the function was

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to be carried out. For example, a delegation allowing managers to make local arrangements for part-time or home working might need to be made to the manager of each separate office of the benefits agency rather than simply to the agency's chief executive. The third possible result of the amendment would be that agency chief executives would need personally to carry out every management function delegated to them.
The whole thrust of the Bill is to allow central departments to make delegations flexibly: that is, to tailor individual delegations to the needs and capabilities of particular departments and agencies; to ensure that responsibility for management powers is taken at the most appropriate level; and to ensure that the holders of those powers are held directly accountable for their operation.
The amendment would frustrate those aims. It would mean that in some cases responsibilities would be held in the centres of departments when they would more appropriately be exercised by agency chief executives. In other cases responsibilities would need to be given to individual local office managers by the central departments. That in turn would cut across lines of accountability through chief executives or through departmental Ministers. They are lines of accountability which will otherwise be much more effective. In fact, the amendment undermines and frustrates accountability whereas I assume that it aims to safeguard it. In the light of what I have said, I hope that the noble Earl will reconsider the amendment and will not see fit to press it.
5.30 p.m.
Lord McCarthy: While the Minister has answered the arguments for the amendment—and I suspect that the noble Earl, Lord Russell, may withdraw it—as far as I can see, he has shown no understanding of the problem which prompted it.
In a way this matter goes back to Amendment No. 4. Once the Minister disappears, unless we know clearly who is responsible for carrying out the function, we know no more about what happens to it. If that individual, whom we do not know, can delegate the function to somebody else, whom we do not know, and that person can then delegate it to someone else, whom we do not know, then there is an infinite process of delegation. That is the problem. We know who are the Ministers and, therefore, under Crichel Down, we can assume that it is their responsibility; but we do not know who those persons are. Perhaps on Report the Minister will get to the heart of the problem which lies behind the amendment.
Earl Russell: I thank the noble Earl for his reply. He has explained extremely clearly why I would never have dreamt of pressing the amendment. However, there is an underlying problem here; namely, what effect the Bill will have on accountability to Parliament.
I do not know what the Government should do in that regard, but before the Bill leaves us I should be grateful if we could know a little more about what they are doing and what will be the effect of the Bill on accountability if the matter is left as it stands.
Earl Howe: I need clarification from the noble Earl as to what he is asking me. If he is asking me how accountability will manifest itself once the Bill becomes law, I should say to him, as I said earlier, that lists of the delegations will be published. That will put all delegations into the public domain. It will be possible for Ministers to answer to Parliament about those delegations and the way in which they have been handled.
On the other hand, if the noble Earl is asking how accountability will manifest itself if the Bill does not become law, I am not sure that I have a ready answer. So far accountability extends only to the Treasury and the Minister for the Civil Service. In general terms delegations have not been made because the Bill has not been made law. The most that we have are discretions. Therefore, as I understand it, the Treasury and the Minister for the Civil Service are accountable to Parliament.
Earl Russell: I am concerned about the effect of accountability when functions are delegated to an agency. Accountability as regards agencies is something which we have not yet got right. Functions are delegated to somebody over whom the Minister has no control but if the Minister is still accountable for those functions he is in something of a dilemma. However, if the Minister is not held accountable because he does not control the person, then Parliament is not able to hold anybody to account for those functions. There is a difficulty here, but I do not know what we should do about it.
Earl Howe: I now understand the noble Earl's question. Of course, the Minister will be answerable to Parliament on the delegations that he has made. If it turns out to have been misplaced in some way, the Minister will have to answer to Parliament for that.
The noble Earl assumes that the delegation will be complete, without strings or conditions attached. In the early days when the Bill becomes law that may not happen. Very strict conditions may be attached to a delegation; for example, a delegation may be time-limited or limited to a person rather than the holder of an office. In a real sense there will be accountability right up to the Minister, if it is a Minister, who has delegated. I hope that I can perhaps clarify what I have said at a later stage or by writing to the noble Earl. However, he has raised a useful point which we shall wish to pursue.
Baroness Seear: Before the noble Earl sits down, I am not happy about this. As I understand it, the whole point of delegation is that more power to make decisions is being passed to the person to whom the delegation is given. Is there not a real problem about accountability to Parliament at the end of the day? If the person to whom the function is delegated does something discreditable or wrong, will the Minister still be answerable in the way that he was in regard to Crichel Down? If that is the case the Minister has responsibility without authority, because he has delegated that authority. I should not like to be the Minister—not that I ever shall be—who has delegated authority but who, in reality, has no hope of

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controlling what the person is doing to whom he has delegated the function. If the Minister is not answerable, all parliamentary control has gone.
Earl Howe: We have all heard of cases where the chairman or chief executive of a public company has resigned because of the actions of one of his subordinates, actions which he may have known nothing about.
I make this distinction. Delegation is entirely different from abrogation. Delegation implies that you still retain accountability in the sense that you are answerable for the delegation that you have made and you are ultimately answerable for the actions of your subordinates.
Earl Russell: I thank the Minister for the trouble he has taken with this. I am not convinced that he is right and I am not convinced that I am right. I am grateful for his assurance that he will think further about this matter and I shall try to do the same. We may have to return to this matter but, meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 10 and 11 not moved.]
Clause 1 agreed to.
Clause 2 [Power to authorise exercise of functions without approval etc.]
[Amendments Nos. 12 and 13 not moved.]
Clause 2 agreed to.
Clause 3 [Corresponding Northern Ireland legislation: parliamentary procedure]:
On Question, Whether Clause 3 shall stand part of the Bill?
Baroness Turner of Camden: I gave notice to oppose the Motion that Clause 3 stand part of the Bill because I should like to ascertain a little more from the Government about what they have in mind.
There are some questions which I should like to put to the Minister before I decide whether or not to proceed with my opposition. For example, if Clause 3 remains in the Bill, will the remit of the Parliamentary Commissioner for Administration extend to the organisations headed by a servant of the Crown? Secondly, for the purposes of Article 3(a) of the Fair Employment (Specification of Public Authorities) (Northern Ireland) Order 1989, will organisations headed by servants of the Crown be regarded as public authorities in that context?
Those are issues which I understand relate quite specifically to Northern Ireland and I should be grateful for a response from the Minister.
Earl Howe: The purpose of Clause 3 is to simplify the procedure required to keep the provisions in respect of the Northern Ireland Civil Service in line with those for the home Civil Service. It will avoid the necessity for a repetition of the proceedings on this Bill on a separate Northern Ireland Order in Council. The first point to note is that the clause restricts the scope of a Northern Ireland order dealing with Civil Service management functions to measures which correspond directly with Clauses 1 and 2 of the Bill. Like those clauses the Northern Ireland order which would be
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made under Clause 3 would be of an enabling nature only. The Government see no distinct issues in respect of the Northern Ireland Civil Service on the substance of the Bill which would justify separate debate. On that basis the negative resolution procedure is entirely appropriate.
The noble Baroness asks what the effect would be if Clause 3 were not in the Bill. My understanding is that home civil servants who happened to be working in Northern Ireland would be covered by Clauses 1 and 2. The Northern Ireland civil servants, if they were to be brought within the scope of the Bill, would require affirmative resolutions through Parliament.
With regard to the noble Baroness's second question, I shall, if she will forgive me write to her. I hope that the noble Baroness is not unhappy about the scope of the Bill extending to the Northern Ireland Civil Service, which is central to the clause.
Baroness Turner of Camden: I thank the Minister for his response and shall await with interest his letter in regard to my second question. I am grateful to him also for what he said. At the beginning I said that my Motion was simply to enable me to ask some questions. It is not my intention to proceed with it. I therefore beg leave to withdraw the Motion.
Clause 3 agreed to.
Clause 4 agreed to.
House resumed: Bill reported without amendment.

Criminal Justice Act 1991 (Contracted Out Prisons) Order 1992
5.43 p.m.
Earl Ferrers Earl Ferrers rose to move that the draft order laid before the House on 21st February be approved [14th Report from the Joint Committee session 1991–92].
The noble Earl said: My Lords, the Criminal Justice Act 1991 enables the Government to sign a contract with the private sector for the management of new remand prisons. One contract has already been signed, and Her Majesty's prison Wolds started taking prisoners in April.
The purpose of the order before your Lordships today is to extend the application of the 1991 Act so that similar contracts can be signed for the management of new prisons—and only new prisons—which will hold sentenced prisoners. The Government have always made it clear that, if we bring in private sector management to the prisons, there must be suitable safeguards, controls and accountability. Those are provided in the 1991 Act so that the well-being of prisoners who are in the hands of the private sector contractors should be assured.
I thought your Lordships would want to know what those safeguards are. First, there is a legally binding contract between the Government and the contractor which specifies tightly the standards of the service which the contractor must provide. It also specifies the cost at which he will do that.
Secondly, there is to be a controller. He is a Crown servant, a governor grade who is a member of the Home Office Prison Service. He—or she—will be

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based at each privately managed prison and his or her job is to make sure that the contract is being correctly carried out. Any disciplinary proceedings against prisoners which may prove to be necessary will be undertaken by the controller and not by the private sector director who will be responsible for the management of the prison. The controller also has the task of investigating any allegations which may be made against staff of the prison.
Thirdly, the prison has a Board of Visitors in the normal way. Their independence and public-watchdog role is just the same as it is in any other prison. Fourthly, Her Majesty's Chief Inspector of Prisons can visit the prison at any time, just as he can with any public sector prison. Fifthly, a prison, which is privately run will be run in accordance with the Prison Act 1952 and the Prison Rules.
A year ago, we were speaking of the provisions of the Criminal Justice Act in theoretical terms. We now have behind us the experience of having invited tenders, and of having signed a contract for one prison, and from that we have learnt that the private sector has a great deal to offer. It is in the light of that experience that the Government have decided to make use of the power in the 1991 Act to extend the use of the private sector to a new prison which is holding sentenced prisoners.
Wolds Prison, which will hold an unsentenced population of 300, is unique in the prison service. It is the only prison ever to have been built specifically for remand prisoners. There is no other establishment like it. The Government are, therefore, keen to broaden the test for the private sector by inviting competitive tenders for the management of a local prison.
On 5th December 1991 it was, therefore, announced that competitive tenders would be sought for the management of Blakenhurst Prison. This is at present being constructed near Redditch in Worcestershire, which, in modern parlance, is more usually described as Hereford and Worcester. It will be a local prison with a capacity of 649 prisoners and it will hold, like any other local prison, remand and convicted prisoners and sentenced adults.
With the issue of the invitations to tender for Blakenhurst on 15th June, it was possible also to publish the operational specification for the prison. A copy of that specification has been placed in the Library of the House. It gives a clear indication of the standards which we expect to see achieved by the prison management. I expect that some noble Lords may have taken the opportunity to look at it. If so, your Lordships will see that we are looking for a regime which maintains security for the public. Contractors must produce proposals which will cover a number of points. They will have to provide arrangements for maintaining and monitoring security at all levels. That covers physical means, management systems and procedures and, most important, personal vigilance. They will have to provide high standards of health, safety, food and hygiene. They will have to provide medical care, which will be particularly closely scrutinised by the
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Government. Suicide prevention is an important aspect of that, and will probably involve voluntary agencies such as the Samaritans.
There will be a carefully monitored initial reception procedure. The process of assessing prisoners, particularly those who will spend some considerable time at the prison, will be important. It is envisaged that the sentenced prisoner's time in prison will be determined by means of an agreement between the prisoner and the management. That will set out for all parties their understanding of the goals and the activities which have been agreed in order to ensure that the sentence is time which is spent constructively.
The contractors will have to prepare for early release. That will be an important part of their duties. They will have to provide at least six hours of education and six hours of physical education each week for each prisoner. They will be asked to provide opportunities for prisoners to engage in productive activity for at least seven hours a day. They will be urged to link up with local industrial and commercial interests and to try to involve those local interests in such a way that prisoners can be paid for their work at something which may approach normal pay rates. That is so that prisoners have an opportunity to provide some support for their family, as well as for victim reparation. It is expected that prisoners will be out of their cell all day. Certainly, a cell-free period of 12 hours a day must be achieved. It is expected that there will be generous provision of telephones, letter-writing facilities and visits, so that family ties can be maintained.
Many of these proposals are in place at Wolds for remand prisoners, and the Blakenhurst specification will extend these high standards to sentenced prisoners. The fact is that these new prisons will be operating to standards at a level to which the existing prisons can only aspire.
The Prison Service carries out a very difficult task in often very difficult circumstances. As a result of the report of Lord Justice Woolf, the service is making considerable efforts to improve the standards to which it operates. Work on a code of standards is in hand at present.
There is room to pursue the Woolf recommendations; and to bring in the spur of competition, and to bring in new ideas and new ways of doing things in order to assist in the process of raising standards all the way round.
The experience of the Wolds tendering exercise showed that the private sector has those new ideas. It has the imagination to look at things afresh, and it has the freedom to consider new procedures and management methods and, at the same time, it has shown that it understands the complexities and the difficulties which are inherent in running a prison.
A new prison provides a perfect opportunity for seeing if we can extend these new ideas further. It is right to explore all the options which are available to provide the most effective prison care system for the future. I believe that contracting-out offers fresh opportunities, and it should offer the opportunity to improve the quality of life for the prisoners who are in

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our care. It is for these reasons that I commend the order to your Lordships. I hope that it will receive your Lordships' approval.
Moved, That the draft order laid before the House on 21st February be approved. [14th Report from the Joint Committee session 1991–2].—(Earl Ferrers.)
5.52 p.m.
The Earl of Longford: My Lords, I thank the noble Earl who, in his usual graceful way, has unfolded a lovely picture of privatisation. He has given us the idea that the experience of the Wolds reinforces his own inclination towards privatisation. I do not know how many Members of your Lordships' House sitting here or elsewhere have actually visited that centre. I felt it my duty to make the very arduous journey there. I am now speaking from a first-hand study of the Wolds.
Nothing at the prison would convince any fair-minded person that new lessons had been learnt. The noble Earl has set out the theory, but that is very different from what goes on. I am not saying that theory is denied by the experience and I am certainly not saying that it is confirmed by it. For example, the noble Earl did not mention the fact that there have been three quite serious disturbances at the Wolds. Three disturbances within three months is quite good going. That brings the average up to that of a prison filled with difficulties.
We must not simply say that the Wolds is privatised and therefore it is a better place. I shall come back to this again at the end, but in my view privatising prisons is obscene. It may be said that I went with a closed mind. I retain sufficient academic scepticism to disbelieve even my own theories and certainly those of anyone else. Perhaps I may just convey an impression of the Wolds to the House. When I visited there were about 100 prisoners out of 300 who were due to arrive. I believe that the operational staff will number about 100 when they are all there. In total there will about 170 staff. They do not come from places where they would have had experience. At least half-a-dozen out of 100 have had some experience of running a prison. The others are completely new to it and they are novices. The deputy director was one of the half dozen. I spent the morning with him and I found him to be a most enlightened man. I hesitate to quote the things he said because they might not help his career.
He had had considerable experience of the Prison Service and he was one of the few who had. He had been a deputy governor. He admitted that there were certain advantages at the Wolds. He said that there were more flexible working arrangements. That arises from the fact that there is not a trade union to deal with. Those Members of your Lordships' House who dislike trade unions will say, "What a heaven on earth; a place without any trade unions! That is the kind of prison that we want". I do not know whether many noble Lords will be surprised to hear that there have already been three disturbances in three months and already they may be feeling the breeze a little.
I am not one of those who believe that you can permanently run any state institution without a trade union of any kind. However, there are some
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advantages. For example, it is possible to employ a full-time staff at the weekend. That is an advantage. Apart from the deputy director and others, I talked to two other members of the staff in quite responsible positions. One had been a physical education teacher at a private school. He had also taught a little French. Another member of the staff was a junior management consultant. They are the people in responsible positions in this prison.
It is far too early to say whether the prison will work out well. It is far too early to say that these people will be able to control prisoners, re-educate them or do anything else. It is all in the melting-pot. It is all in the eye of the noble Earl at the moment. It should be understood that it is extremely early. It is rather absurdly early to say that experience of the Wolds gives any extra reason for privatising prisons.
If anyone should ask me why I call the privatisation of the prisons obscene, I would try to put it briefly. When we take it on ourselves to deprive any human being of liberty we are taking on a very heavy responsibility. The state cannot abdicate and abandon that responsibility to profit makers. The noble Earl may have said at the beginning, because I was a minute or two late, that the Wolds is owned by an international security company. Like other international security companies, it is in it for the profit. I certainly do not believe that it is right, moral or decent to hand over the responsibility which belongs only to the state to such a body. I do not say that it is better or worse than any other international security company. However, they are the kind of people to whom we propose to hand over citizens whom we have taken responsibility for incarcerating. I have said in this House more than once that to hand over prisons and to privatise them is obscene. I repeat that now with more emphasis after the visit which I suggest other noble Lords should imitate.
5.58 p.m.
Lord Windlesham: My Lords, when the Minister of State at the Home Office introduced this order in another place late last night he described it as rather a technical order. Obscure as it may be as a legislative provision, because of the way in which the change has been made, we should make no mistake that it is a turning-point in English penal policy. Moreover, it has been reached with remarkably little public debate. There was no mention of contracting out in the Green or the White Papers which preceded the Criminal Justice Bill in the last Session.
When the Bill was published, the power to contract out was limited to new prisons which would hold remand prisoners only. The extension of that power to new prisons for convicted and sentenced prisoners came at the Report stage in the House of Commons and followed from amendments that had been tabled in Standing Committee by a Government Back-Bencher. The convoluted wording of what is now Section 84 of the Criminal Justice Act 1991 is witness of the problems experienced by the draftsman in trying to fit this extension within the ambit of the original clause. The section prescribes that no extension of contracting out beyond remand prisons

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can be made without the specific approval of both Houses by way of the affirmative resolution procedure. Hence this order in your Lordships' House today.
The Minister of State at the time, Mrs. Rumbold, speaking on the Criminal Justice Bill in the House of Commons last year, was pressed to say what were the Government's intentions on privatisation. She explained that the proposal was to "experiment"—a word used by the noble Earl, Lord Ferrers, again in our debate this afternoon. The experiment was to be confined to a single remand centre on Humberside which was under construction at the time. During the Commons Report stage of the Criminal Justice Bill on 25th February 1991, Mrs. Rumbold stated:
"The Government are taking the first step in considering contracting out a remand prison. We believe that this opportunity will not easily arise again… If, and only if, the contracted-out remand centre proves to be a success we might move forward towards the privatisation of other parts of the prison service".—[Official Report, Commons, 25/2/91; col. 720.]
I was interested to hear what the noble Earl, Lord Longford, said about Wolds Remand Prison because I, too, have had an opportunity to visit it. It became operational in April of this year, when the first inmates, remanded in custody from two Crown courts—Doncaster and Sheffield—were received. As the noble Earl told us, it is still operating at well below its capacity, which is for approximately 300 inmates. I was impressed by what I saw. I too formed a good impression of the director, who was formerly a governor in the Prison Service. I also had an opportunity to meet the Home Office Controller, who is a Crown servant responsible to the Secretary of State. Earlier in her career she had been an assistant governor in the Prison Service and she now has the responsibility for monitoring the contract on site, and for the disciplinary powers that are normally exercised by a governor in a Prison Service establishment.
I found that standards were high—as they should be in a brand new institution and one which is only little more than one-third full. The standards are written down, contractual obligations that have been agreed between the Home Office and the company which is providing the management service. They cover such matters as visits, integral sanitation in single or double cells, exercise, hygiene, and a number of the other matters that were itemised more fully by the noble Earl in his opening speech.
It is all a far cry from the squalor and humiliation that exist in the local prisons where a large majority of untried persons on remand are held. I have argued before, in this House and elsewhere, that one of the fundamental flaws—perhaps the biggest single flaw—that could be put right in the prison system, and the main cause of overcrowding, is the fact that between 20 and 25 per cent. of the overall prison population is made up of persons who are being held on remand awaiting trial. Some of them will be acquitted. Some will receive non-custodial sentences. They are being held in custody to protect the public. They are detained for reasons of prevention, not to be punished. It is totally wrong that we should have allowed ourselves to drift into a situation in which
1102
such people are held in circumstances which are virtually identical to those of convicted prisoners who are serving their sentences as the punishment imposed by the court, and sometimes worse.
There has been a strong case for separate provision being made for remand prisoners so that they are no longer held in local prisons. That would allow Prison Service staff to concentrate on what they are trained to do, which is to hold in secure conditions sentenced prisoners. Remand prisoners should be held in separate remand centres. I shall not repeat that line of argument today. Although it was not the only factor, it was one of the factors that led to the original proposal that there should be an experiment at one remand centre. I should have welcomed it if the experiment had applied to more than one remand centre. We are now going much further down the road of contracting out, and in the process moving away from that degree of separateness of status for remand prisoners. That is a matter of regret.
It is impossible to say whether the experiment at The Wolds is successful or not. It has been operational for a few weeks only. How can there be any realistic evaluation of success or failure? To claim, as Ministers now seem to be claiming—I refer both to the noble Earl and to Mr. Lloyd last night in the Commons—that the tendering exercise for The Wolds is a success in showing what the private sector has to offer is quite a different matter. The Home Office has had to allocate broadcast franchises, and a number of your Lordships know what a gap can open up between promise and performance.
What seems to have driven policy forward is simply the fact that another new prison is nearing completion. This time, it is a large establishment with a capacity of 650 at Blakenhurst near Redditch. It is said that it is too large for remand prisoners only; hence the need to fill up the rest of the space with sentenced prisoners. The noble Earl, Lord Ferrers, said just now that the experiment was being widened by adding Blakenhurst, a local prison holding both remand and sentenced prisoners, to The Wolds, and that as a result the experiment could be evaluated on a wider front. The noble Earl's opening speech corresponded closely with what Mr. Lloyd said last night, except for the fact that I did not hear the noble Earl say what I noticed Mr. Lloyd say, to the effect that from now on, as it reaches completion, each new prison will be subject to competitive tenders from the private sector, and possibly to tenders from the Prison Service as well.
This is all a curious way to make a major departure in public policy. I must admit that it leaves me in two minds. If, as a consequence, higher standards resulted across the prison system I should not be alone in welcoming that. It would be a great prize, and one we should work for. The idea of enforceable standards laid down by contract, within the accountability developed in the Criminal Justice Act, is one that holds out promise for the future. Certainly, there is opportunity for further public debate.
6.10 p.m.
Lord Harris of Greenwich: My Lords, not perhaps for the first time, I find myself in almost complete agreement with the noble Lord, Lord Windlesham. I have made my views on the matter quite clear. I favoured the idea of an experiment when Mr. Hurd first indicated that that was his position. I was concerned, as was the noble Lord, Lord Windlesham, when this rather strange amendment was pushed through the Commons and a major change in the Government's intentions took place while the Bill was being considered, as a result, I believe, of Back Bench pressure. The issue then came before this House. It is instructive to consider what the noble Earl, Lord Ferrers, told us was the Government's position on the matter.
We discussed the issue of the privatisation of prisons on 23rd April last year. The noble Earl referred to the new Wolds Remand Centre in Humberside. He went on to say:
"If a suitable tender is received that prison may be contracted out. No new remand centres are being built or planned. Therefore, in regard to contracted-out remand centres, that will be the only one for the foreseeable future. At present there are no plans to contract out prisons for convicted prisoners or for existing establishments".
It should be borne in mind that those words were uttered only in April of last year. The noble Earl added:
"If we decided to go down that road we should first wish to see how well the contracting out at Wolds had gone, and whether there were any lessons to be learned from that".—[Official Report, 23/4/91; col. 211.]
How could any lessons have been learnt in an establishment which was only opened in April and which has had at best one third of its CNA occupied by remand prisoners? The noble Earl has to justify, as I am sure he is anxious to do, the relationship between the speech he made last April and the Government's position which he expressed from the Front Bench today and which, as the noble Lord, Lord Windlesham, indicated, was expressed in the House of Commons yesterday. That is the first matter.
I certainly should be grateful for any information that the noble Earl would like to give us on how well the Wolds experiment, as it was described by Mrs. Rumbold, the noble Earl's former colleague, in justifying the Government's position to the House of Commons, has gone. What kind of analysis has taken place in regard to what has developed at Wolds since April this year? Can the noble Earl tell us, from the basis not of the tendering exercise—that is not what the noble Earl said last year—but on the basis of what has actually happened at Wolds, how he can justify widening the procedure to include a new establishment?
When Mr. Hurd indicated his position on the matter I did not find myself in agreement with the noble Earl, Lord Longford, whose position I respect and understand, who said that he was wholly opposed in principle to the project. I could not possibly take that view if remand prisoners were to have far better facilities than would otherwise be the case. Those of us who know the conditions in which remand prisoners are held in gaols in this country would find it difficult to oppose the experiment as a matter of principle. But
1104
we are not discussing a single experiment. We are talking about extending it, and substantially extending it. I have to point out that the noble Earl's speech today cannot be related to the speech he made in April of last year.
There is another consideration. I wonder whether the noble Earl will tell us what is the Government's true position. Those of us who read the Guardian of 2nd July will have seen an extremely interesting interview by John Carver, the home affairs correspondent of that newspaper, with the present Home Secretary, Mr. Clarke. Mr. Clarke said a large number of things with which I found myself in complete agreement. But the article stated:
"Turning to the Home Office's responsibility for prisons, Mr. Clarke disclosed that he was considering extending privatisation from new jails to existing establishments, presently staffed by the Prison Officers' Association. He recognised the strains this could cause in his relations with the POA".
That is one of the most profound understatements I have read for a substantial period of time.
As I have pointed out in the House on a number of occasions, some branches of the POA have behaved with disgraceful irresponsibility in recent years. Their attitude has been wholly indefensible. But having said all that, I do not believe that we should take this massive step in the dark without clear evidence as to the benefits which have been secured as a result of the Wolds experiment. There is now an onus on the noble Earl to explain clearly how he can relate what he said in April of last year to what he said today.
6.17 p.m.
Lord Richard: My Lords, I listened with great sympathy to the speeches of the noble Lords, Lord Windlesham and Lord Harris of Greenwich, and of my noble friend Lord Longford. I agreed with almost every word that they said. We are now in a very strange position. Blakenhurst is due to open its gates to prisoners next spring. It is a brand new category B prison. It was built at taxpayers' expense and has cost us £50 million. It is designed to hold more than 649 prisoners. It will operate as a local prison and will therefore hold convicted as well as unconvicted prisoners. The Government are proposing to hand the prison over to a private contractor.
Like the noble Lords, Lord Windlesham and Lord Harris of Greenwich, I should like for a moment to look at the history of this process. It is instructive not only in relation to government penal policy but in relation to the way in which the Government have gradually—almost imperceptibly—moved on this issue from the state that they were in as recently as four or five years ago to the state they are in now. It began in 1988 with a consultation process about prison privatisation. There was the publication of a Green Paper entitled Private Involvement in the Remand Sector—only the remand sector. It argued the case for a limited experiment with privatisation confined to the remand sector. It ruled out privatisation for prisons holding convicted prisoners. That was in 1988—not so long ago. It stated:

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"Because of the different purpose of remand as opposed to the sentence of imprisonment, and the character of the remand regime, the running of the remand centre by a private company would raise fewer difficult issues of principle".
The distinction is clearly made between remand prisons and prisons holding convicted prisoners, a point made with some force by the noble Lord, Lord Windlesham.
When the Criminal Justice Bill first entered the House of Commons, the clauses relating to prison privatisation were confined to the area of newly built remand prisons. The experiment was to take place at the Wolds, a remand prison which accepted its first prisoners as recently as last April. Even while the Bill moved through the parliamentary process and the Government accepted some Back-Bench amendments extending the Home Secretary's powers to privatise any category of prison, the then Minister in charge of prisons, Mrs. Rumbold, reassured Parliament on 25th April 1991 (at col. 720 of Hansard) that further prison privatisation would go ahead, if, and only if, the contracted-out experiment at the Wolds proved to be a success—not, if, and only if, the tendering process at the Wolds proved to be a success; but if, and only if, the contracting-out experiment proved to be a success. At the time, senior civil servants said that a proper assessment of success at the Wolds would take no fewer than three years. But prisoners first arrived at the Wolds in April. I assume that the assurance means what it says. When Ministers give assurances as specific in character as that, one assumes that they mean what they say, that they mean to bind the Government and that, if the Government are re-elected, they mean to bind their successors. Therefore, I make that assumption of good faith on the part of the Government at the time that the assurance was given.
How can one conceivably say that one is in a position to judge whether the contracted-out experiment at the Wolds, to use Mrs. Rumbold's phrase, has been a success or a failure? Prisoners only arrived there in April. If that assurance means what it says and if it is still valid—if it is not valid, then it is incumbent upon the Government to tell us why they are withdrawing it—it cannot be squared with government policy as expressed in the order.
It is quite extraordinary to note that last December the Government announced that they planned to privatise Blakenhurst. No formal consultation presaged the Government's change of heart on the principle of handing over convicted prisoners to the private sector. There was no consultation, and everyone is now presented with the order which, I believe, opens the doors extremely wide.
What about the Wolds? Let us look at the Wolds experience and the contracting-out experiment to see whether we can draw any possible lesson from it which will help us in relation to Blakenhurst. The Wolds was built at public expense at a cost of £38 million. I suppose that that is a similarity between the two prisons. It was handed over to Group 4 to run. The contract struck between Group 4 and the Home office guarantees prisoners—that is, at least on paper—the kind of prison conditions and activities that prison
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reformers have unsuccessfully campaigned for on behalf of the the state prison system for a decade or more.
However, despite the excellent facilities that were handed over to the private contractor running the Wolds, prison privatisation has not exactly got off to a very auspicious start. As the Minister mentioned in the other place last night, since it opened in April, there have been three serious disturbances. They have occurred despite the prison holding just one-third of the prisoners that it will hold if, and whenever, it reaches full capacity. But it does not stop there. We are asked to judge whether the contracting-out experiment is or is not a success.
A shroud of secrecy surrounds the whole operation at the Wolds. For example, we have been denied information about the cost that Group 4 is charging the taxpayer to run the Wolds. I should have thought that that was rather a basic piece of information upon which we could judge whether the contracting-out experiment will or will not be a success. But we cannot get it. Parliamentary Questions relating to costs and related profit margins have been rebuffed on the spurious grounds of commercial confidentiality. I hope that tonight the Minister will be able to lift the veil of commercial confidentiality just a little and tell us just how much Group 4 is actually making out of the contracting-out experiment at the Wolds.
The Crown controller installed in the Wolds to monitor performance and report back to the Home Office has yet to publish a public report. Indeed, the first disclosure that there was anything wrong at the Wolds was made by the Yorkshire Post on 4th June and related to a disturbance which took place on 28th May. Therefore, information which might enable us to come to a conclusion as to whether the contracting-out experiment is or is not a success is not exactly flowing out of the prison.
The Government have said that any extension of privatisation of prisons would be conditional upon a full assessment of the Wolds experiment. With the greatest respect, it seems to me that the noble Earl has come here tonight in an attempt to persuade us that really what they were talking about was the success of the tendering experiment—presumably, the way in which the tenders are put in, the way in which the Government consider them and the way in which they are then accepted. However, we do not know the details because of the doctrine of commercial confidentiality. If the Government are really telling us that that is what Mrs. Rumbold and indeed the noble Earl had in mind last year when they talked about a contracting-out experiment in relation to the Wolds, it is a bit like Alice: words mean really what they want them to mean. The prison at the Wolds is, as yet, only one-third full; and, indeed, will not reach capacity until the autumn.
I am afraid that the Government have clearly reneged upon their promise to be cautious. Instead, they have chosen to pursue their dogma with, I think, unseemly and potentially disastrous haste. Perhaps I may echo the words of my noble friend Lord Longford. In my view, prison privatisation is wrong in principle. I believe that the state should retain direct

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responsibility for imprisonment which is an eminently sensitive and often dangerous task. The cost of crime and the dispensation of justice ought to be a social cost borne by all members of society.
However, privatisation will create a vested interest in high crime rates and full prisons. I am bound to say that I think the word "obscene" is not too strong in this respect —in fact, it was used by my noble friend—if one imagines that, as the crime rates go up, the directors of Group 4 rub their hands and say, "Jolly good, the Wolds will be fuller and Blakenhurst will have more prisoners. We shall make more money out of it". I am bound to say that I find that unethical. In my view, it is unethical that the shareholders of private security firms should profit from punishment handed down by the state.
As I see it, the other problem is where the policy is designed to lead. I believe that the Minister in another place last night let the cat somewhat out of the bag when he said:
"As I said, the order empowers the Government to contract out the management of new prisons. Naturally, the occasion is Blakenhurst and I have concentrated on our plans for that establishment. However, I want to make it clear that we expect to invite private sector tenders for each new prison that opens after Blakenhurst". [Official Report, Commons, 6/7/92; col. 122.]
Therefore, if the policy is carried through and if the Government mean apparently what they say they mean, we shall find ourselves at the end of the day with a two-tier prison system. If what the Government tell us about how marvellous the private prisons will be comes to pass, we shall have one set of prisons: the private ones in which prisoners are treated well, humanely and in ways which prison reformers have for many years been urging the Government to treat all prisoners; and we shall then have the mass of prisoners housed in old Victorian prisons which were totally condemned by the Woolf Report.
I must tell the Government that that seems to me to be a recipe for potential danger. They are playing with fire. I say that because the man who is in the old Victorian prison and locked up for 22 hours a day will not take it kindly if someone convicted of a comparable crime and sentenced to a comparable term of imprisonment is sent to one of the new privately run show-pieces that the Government propose to establish. Moreover, who will decide which convicted prisoner goes to which prison? Who will decide the way in which prisoners are moved from the good prisons—that is, the privatised ones about which the Government are so proud —into the Dartmoors, the Wandsworths and the Pentonvilles? If ever there was a situation in which the Government were playing with potential fire, it seems to me that this is it.
I have to tell the Government that I believe they have reneged upon the assurances that were given to Parliament during the passage of the Criminal Justice Act 1991. I also have to say to them that the privatisation of the prison service in relation to convicted prisoners is of a totally different character to the possible privatisation of a purpose-built establishment and facility for remand prisoners.
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Finally, if the Government are going down that road, then to create a two-tier system in our prison service is fundamentally dangerous and foolhardy. They would do far better to concentrate their efforts and energy upon implementing the provisions of the Woolf Report, which relates to the mass of prisoners, and not put them into the provision of one or two show-piece prisons which, in the end, will prove to be more trouble than they are worth.
6.30 p.m.
Earl Ferrers: My Lords, I always view following the noble Lord, Lord Richard, with a certain amount of apprehension, because his powers of advocacy are such that he can make a nonsense out of anyone's argument. He has done his best this evening to make a nonsense of the argument for the order which the Government put forward.
Lord Richard: My Lords, it is a bit of a nonsense.
Earl Ferrers: My Lords, the noble Lord is good enough to agree with me on that point. I wonder whether I can encourage him to agree with me on a few of the other points. I find the debate a little trying in some ways as, over the years, when I have had the privilege of standing at this Dispatch Box, and before, one has heard nothing but the castigation of all governments over the standards of our prisons. Everyone has said that the conditions are awful; that the prisoners should be treated better and given better conditions.
Along we come with a proposal which gives, and will give, prisoners better conditions, standards, education, time out of their cells, opportunities to earn money, and yet noble Lords say that that is a retrograde step in so far as it was handing prisoners over to the private sector. I do not accept that. We are trying to accept that we have prisoners who have to be kept in prisons and that the standards in those prisons must be high. Whether that is to be done by a private firm or the prison service is relatively immaterial. The important point is that the standards should be high.
I do not see any reason, in principle, for saying that it is only the prison service that can produce those high standards. It is that service which has been criticised by noble Lords in the past. We are trying to ensure that the standards will be even higher than they have been, and that has proved to be the case. In so far as the system that we are encouraging and have seen at the Wolds is producing higher standards, I should have thought that that would have met with the accord of your Lordships and would not—in the words of the noble Earl, Lord Longford—be considered obscene.
The Earl of Longford: My Lords, I am surprised that the Minister believes in the Wolds experiment, which he has no doubt studied at first hand. Has he been there?
Earl Ferrers: My Lords, no.
The Earl of Longford: My Lords, he has not been there. I suggest that the Minister has a good look. That is enough.
Earl Ferrers: My Lords, I realise that the noble Earl is delighted at having been to the Wolds and seen what is happening. I am glad that he has. That only makes me more surprised to know that he considers it obscene, because that is not the impression that we have gained. The noble Earl and the noble Lord, Lord Richard, said that there had been incidents at the Wolds. There have been two passive sit-downs.
Lord Richard: My Lords, three.
The Earl of Longford: My Lords, there have been three incidents.
Earl Ferrers: My Lords, there have been two passive sit-downs and one sit-down. There is a difference between a sit-down and a passive sit-down. The noble Earl seems to think that is funny. A passive sit-down is when someone sits down and does not do anything. A sit-down is when one sits down and—
The Earl of Longford: And what, my Lords?
Earl Ferrers: —and causes some trouble, my Lords. As the matter is causing such enormous jocularity, I cannot see what the noble Earl is fussing about. Obviously the incidents are not causing too much anxiety.
The Earl of Longford: My Lords, perhaps I may explain what I am laughing at. I did not know one could do many thousands of pounds worth of damage while sitting down.
Earl Ferrers: My Lords, I was not there—no doubt the noble Earl was—to see how that peculiarity came about. However that may be, there were those three incidents: two of a less substantial nature and one of a small nature. That averages three such incidents in three months which is the average for Prison Service establishments. Of course, the noble Earl is well aware that the start of a prison is always a difficult time.
My noble friend Lord Windlesham said that this was a change in the penal system. Of course it is. I do not deny that. But for ages noble Lords have been asking for a change in the penal system. They have been asking the Government to try to find ways of encouraging, improving and uplifting standards in prisons. We are now doing so. I return to the point that I do not believe that there is anything intrinsically sacrosanct about the Prison Service being the only body which can run a prison. That has been shown to be the case.
The noble Lord, Lord Richard, said something which I found to be curious: that it is bad that Group 4 should have a vested interest in crime rates and the profits to be made from crime. That is an extreme view. He is well aware that there is a job to be done. If prisoners are to be looked after by a security firm or other company that does not mean that such companies profit from crime or become excited because the crime rate is going up. That was an extreme exposition by the noble Lord, and one that is unusual for him.
The noble Lord then said that there was a two-tier system: the better system and the less good system. He thought that it was bad to have a two-tier system and
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that it would be better not to have the better system so that all prisoners could be in the worse system. I find that a hard view to follow. Obviously we must try to raise standards. In so far as this policy helps to raise standards, then it is a good thing.
My noble friend Lord Windlesham and the noble Lord, Lord Harris of Greenwich, asked why we had to go ahead so quickly with Blakenhurst. There is encouraging evidence from the Wolds tendering experience and from what is being done at the Wolds. Those who have tendered have undertaken to deliver high standards, and that must be better for the prisoners.
The noble Lord, Lord Harris of Greenwich, asked what analysis there had been of what was happening at the Wolds. He castigated me for saying something in April last year which he believed to be directly opposed to what is happening now. That is not so. I admit that there has been a movement in thought and approach but there is nothing contradictory in what I said way back in April with what is happening now. Of course we had to have the experience of the Wolds, of tendering and of contractors wanting to take on the job and of doing it.
A Home Office controller is based full-time at the Wolds. The noble Lord, Lord Harris, asked what analysis there had been. She monitors performance against the contract. She is there daily. She establishes that the contractor is delivering the standards required by the contract. She has found that to be successful. The noble Lord, Lord Richard, castigated the Government once more—he has been doing well in castigating the Government this evening—over being secretive about the price of the tender. He was not born yesterday. He knows that the Government do not say what the tender prices are.
Lord Richard: My Lords, why not?
Earl Ferrers: My Lords, because future tenderers will know what others tendered.
Lord Richard: My Lords—
Earl Ferrers: My Lords, I shall give way but the noble Lord is well aware that the Government do not say what prices have been tendered.
Lord Richard: My Lords, perhaps I may make two points for the Minister to consider. First, we are not asking people to reveal their tender prices at the time that the contract is being negotiated. We are asking merely how much the taxpayer will have to pay Group 4 for running the prison. That is an entirely different thing. Secondly, if the Minister cannot disclose that on the grounds of commercial confidentiality, does he not realise that that, in itself, is a damning indictment of the policy that the Government are pursuing? We should know those facts.
Earl Ferrers: My Lords, the noble Lord, Lord Richard, says he does not want to know how much they tendered for but that he simply wants to know how much it cost the Government. I cannot see any difference between the two. What I can tell the noble Lord, and I know this will satisfy his deep curiosity, is that the price given by the contractors for the Wolds

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is less than it would have cost if operated by the Prison Service. The noble Lord asks, "How do we know that?" I can tell the noble Lord that, although I am not going to divulge to him the price, it is a great deal lower than it would have been. Perhaps we can move on after that completely unnecessary intervention.
My noble friend Lord Windlesham said that he felt it was not possible to say that the Wolds has been a success. I accept that it is early days, but the fact is that it has been running and that to date it has been shown to be a success. We believe that where a new prison is being built it is right to give the private sector the opportunity of tendering for it—tendering not to make money but to ensure that the facilities which the prison is offering to prisoners are better and cheaper than they could have been. If that is so, it must be to the benefit not only of the Government and the taxpayer but ultimately to the prisoner as well.
I believe it was the noble Lord, Lord Harris of Greenwich—I may be mistaken but I think it was he—who quoted the speech of my right honourable friend the Minister of State in another place. He said that we are proposing to invite private sector tenders for any new prison which will open after Blakenhurst. That does not mean to say that a private contractor will necessarily always get the contract. It may well be that the Prison Service will tender and get the contract. We are trying to provide the best service and one which will give the prisoner the best form of life in his surroundings in the most cost-effective way. I hope that will prove to be the case. The noble Lord, Lord Harris of Greenwich, looks agitated and so I will sit down to allow the noble Lord an opportunity to speak.
Lord Harris of Greenwich: My Lords, I am never agitated when the noble Earl is speaking. I merely wanted to draw his attention to a rather significant fact. He has omitted to give any reply to this remarkable interview given by the Home Secretary in the Guardian newspaper on 2nd July. That indicated he was considering extending privatisation from new gaols to existing establishments. Is that the position and, if so, could we be given a little detail about this?
Earl Ferrers: My Lords, if that were to happen it would be necessary to produce a new order because at the moment the Act does not permit that. If my right honourable friend feels that such action would be correct for the future an order will be produced, but no order is being produced at the moment so he cannot extend privatisation.
I am grateful to your Lordships for taking part in this debate although I am bound to say that I would have wished for a little more encouragement, particularly from those who have for so long wanted to try to increase the standards of the Prison Service. Nevertheless, I hope that your Lordships will give this order your approval.
On Question, Motion agreed to.

Social Fund
6.44 p.m
Baroness Hollis of Heigham Baroness Hollis of Heigham rose to ask Her Majesty's Government when they will publish the Social Policy Research Unit's research on the Social Fund; and whether, in the light of the Social Security Advisory Committee's report The Social Fund; a new structure, they will restructure the Social Fund.
The noble Baroness said: My Lords, the Government in 1988 introduced the Social Fund to replace one-off payments for cookers and the like to families on income support. The aim was to cut expenditure, to increase local office discretion and to target help on the neediest. It should be need-led not demand-led, said the Secretary of State. So loans displaced most grants, and loans now represent 70 per cent. of the budget. Local offices were given cash-limited budgets and their discretion was enhanced by abolishing independent rights of appeal.
Every professional agency and every charity working with families and children warned the Government. Never has a fund been so closely monitored for its effects on the poorest and neediest. Indeed, never have there been so many reports: from the CABs, from the Children's Society, from the local authority associations, from the Family Welfare Association, from the CPAG, from the Rowntree Trust, from the Social Security Research Consortium, from the Public Accounts Committee, from the Government's National Audit Office and, earlier this year, from the Government's own Social Security Advisory Committee.
Never have there been so many reports of such unanimity. What do they all say? They say that the Social Fund has been a disaster, even though it represents only half of one per cent. of the social security budget. It has indeed cut expenditure: after loan repayments, it is down to a third of what it was. However, it has not helped those in need at the time of their need. My criticism of the Social Fund is that it has met one objective—cuts—precisely by failing to meet the other, which is targeting help on those most in need. Had the Government listened in 1988 much misery and hardship would have been avoided, and had the Government listened in 1988 this debate and many others before it would not have been necessary. What further evidence do the Government need? Will they tell us?
I do not know what the York Social Policy Research Unit report, which is mentioned in the Question, will say, but the Minister does, because he has been sitting on it for some time. That is presumably because it damns the Social Fund still further. I understand that it is due to be published on Thursday. Will the Minister answer me just one question? Given that the Social Fund has saved money on single payments, what evidence is there that the money is going to people in the greatest need? And does the York report show that this is happening? I press the Minister to answer that question, because after all he knows the answer to it.
Expenditure on the Social Fund has been cut. Single payments in 1985–86 amounted to £334 million; the 1992–93 budget, after the pre-election bonus, was £302 million gross but only £130 million net after the repayment of loans is included. Those are, quite simply, cuts because most people in need are refused help. For community care grants the refusal rate is 73 per cent. and rising; for budgetary loans the refusal rate is 44 per cent. and rising. Even for those who need a crisis loan, often simply because their benefit is paid two weeks in arrears, the refusal rate is 17 per cent. and rising.
Even worse, such refusals are too often "a lottery"—not my phrase, but that of the Government's own Social Security Advisory Committee—because local office budgets are cash limited. If your cooker, your marriage, your partner, or your job expires, make sure it happens in September and not November. Equally, if as a single parent your wheelchair gets stolen and you live in the North-East you will have it replaced by the Social Fund; if you live in the South-East you will not. It is welfare by calendar, welfare by geography and welfare by chance, but not welfare by need.
Perhaps people are being refused help because they really do not need it. Is that true? Those on long-term subsistence level benefits experience routine poverty and are unable to afford, for example, to replace the cooker when it breaks down. For social security benefits to be adequate to cope with replacements of equipment and such extraordinary expenditure, benefit levels would have to be at a much higher level than this Government feel they can afford. Many other applicants need help when they face a life crisis: births and deaths, moving home, ending a job, losing a partner, or when the house is burgled or burnt down. Their expenditure increases at just the time when their resources have diminished. Their need too is surely undeniable.
Finally, there are those like ex-offenders and the young homeless who are waiting for their regular payments but are utterly destitute because they are paid two weeks in arrears. Does anyone doubt their destitution? We see it around us, and yet half of all pensioners and one-quarter of the sick and disabled who have applied for grants have been refused. Also, 80 per cent. of the unemployed and 20 per cent. of the single parent families who have applied for loans have been refused.
Let us look more closely at the reasons for refusal. A quarter of the refusals were decided because the applicants were not on income support or had not been on income support for six months. A 19 year-old girl, raped by her stepfather, was rehoused as an emergency by the local authority in a totally empty flat. She sleeps on the floor because she has not received income support for six months. A client with multiple sclerosis was discharged after two years in hospital with no furniture of his own but was refused help from the Social Fund because he was on invalidity benefit. In some cases that benefit is only a few pence higher than income support.
Another quarter of the refusals were decided because the applicants were deemed not to have high enough priority. Families and the single drop off the
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list when local office money runs out. A family with six children, including a pregnant 17 year-old, after two years spent in bed-and-breakfast accommodation, was offered housing by the local authority but was refused a start-up grant for furniture from the Social Fund because it was not considered a high enough priority. That Yorkshire family is currently taking it in turns to sleep in the two beds it possesses.
A single homeless man was allocated a council flat but was refused both a grant and a loan for furniture because the officer considered a single man could live in a hostel and therefore did not need a flat. The officer also considered that the man could eat out and therefore did not need a cooker. An ex-offender was refused money for clothing when he returned home to find that his ex-wife had disposed of it. His probation officer now believes he will never be interviewed for a job.
Even where applicants are in a high priority group, such as the disabled, they can be refused help for what officers regard as non-essential items. A tetraplegic young man was rehoused after a year in hospital and two-and-a-half years in residential care. He was refused a grant for a fridge-freezer, which would have reduced his need to shop as shopping for him was almost physically impossible, on the grounds there was no indication that,
"without a grant you would have to enter residential institutional care".
Inquiries about grants are regularly fobbed off by staff who prefer to talk about loans. If grants are pursued, staff warn—I believe that is the polite word—of delay. Worst off are those who do not qualify for a grant and are too poor for a loan. Some 27,000 people, the poorest of the poor, were refused help for their poverty on grounds of poverty. A 20 year-old pregnant woman with a nine-month old child was refused a crisis loan because she could not repay it even though her husband had deserted her taking the benefit money with him. Until regular benefit was paid—it took a fortnight—she survived, pregnant and with a child in her arms, largely by begging.
The Social Fund has constructed a policy of defer, deter and refuse. Only a quarter of those in need applying to the Social Fund for grants, and only half of those applying to it for budgetary loans, are helped. However, their distress and destitution do not disappear. How could that be otherwise? They still need a cooker and bedding. What do they do? For some their destitution is displaced on to social services and charities.
At a meeting of 36 charities convened in March by the Family Welfare Association it was found that half of the people in need it had helped had been refused help from the Social Fund. The association was providing income support because neither the state nor local authorities would do so. Indeed the association had had to close its lists for eight months as it was besieged by those denied help from the Social Fund.
For others their destitution was displaced into debt. The National Audit Office has reported that two-thirds of all families with children applying to, and being refused by, the Social Fund are in debt.

1115
Rent, fuel and loans all make a multiple debt the repayment of which pushed those families still further into destitution from which only a Social Fund grant would have relieved them. However, that was refused.
Destitution can disappear into the dodges of the immoral economy, for example, thefts from washing lines or shoplifting to order, and into the street markets of secondhand goods where people buy back what was stolen from them in the first place. That is why the report of the Government's own Social Security Advisory Committee, which calls for a restructuring of the Social Fund, is so significant.
The report states that families and others on benefit need mandatory start-up grants when they move into their home for the first time. Secondly, the report calls for more grants and less loans and for easier repayments on loans. The report states that the Government should especially reconsider paying benefits two weeks in arrears as that generates the need for crisis loans, thus putting a claimant into debt before he even starts.
Thirdly, the Government's own advisory committee insists that the Social Fund budget is inadequate and fails to meet legitimate need. Those are the words of the Government's own advisory committee, not mine. The report states that while an element of discretion is sensible, the present Social Fund is a lottery and,
"the element of chance is unacceptable".
For the longer term, the Government's own advisory committee would like to see the Social Fund extended to others on low income, for example those on family credit and on housing benefit. Do the Government accept the report of its own advisory committee? I repeat my earlier question to the Minister. Does the York research, on which the Minister has sat for so long, confirm that those in need are not being helped as they should be?
The Rowntree Trust states that social work in the 1990s should be about care in the community, child protection and tackling young offenders. The Social Fund is deforming those aims. It ensures instead that social work is about containing petty criminality, debt management and aiding families in financial stress.
I have tried to make just one simple point which is that the Social Fund is failing to help those in legitimate need. The Social Fund's net discretionary expenditure is a third of what it was because it helps with grants only a quarter of those who need them. It does not alleviate deprivation and therefore people go cold, hungry, homeless or into debt. Will the Government restructure the Social Fund?
6.57 p.m.
Lord Beaumont of Whitley: My Lords, this is the second day running on which we have debated the reforms which are necessary to obviate the worst miseries caused by extreme poverty in this country. Yesterday we discussed the plight of those unfortunates with children who live in bed and breakfast accommodation. It was splendid that your Lordships firmly recorded their opinion on that matter. Today
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we are discussing the plight of those faced with special or unexpected calls on what may be referred to, not very laughingly, as their resources.
I shall spare your Lordships a repetition of my short recital of yesterday on the duty of government to relieve extreme poverty and on the duty of the Church to campaign for such relief, as I am still under the dwindling illusion that almost everyone is in agreement in principle with that. In saying that, I take great pleasure in welcoming the right reverend Prelate the Bishop of Durham to our debate tonight. I first heard him speak at the opening conference of Church Action on Poverty. I have been associated with that body ever since. The speech of the right reverend Prelate was wonderful and it set the whole conference alight. It moved Church Action on Poverty to do some serious work. Let us hope that the speech of the right reverend Prelate tonight will have a similar effect on the Government.
The problem occurs when we come to the practical implementation of the necessary measures for helping people in debt. The Government seem to be so frightened that a few people will undeservedly find a way to benefit from any reforms that they become paralysed and unable to do anything. However, it is only fair to say that what is needed in this particular instance is not just a minor reform but rather a complete change of emphasis. There needs to be a change of emphasis from loans to grants.
The case for loans can be and has been well argued. It is a case against pauperism and against dependency. It is a case worth supporting when pauperism and dependency are avoidable. But our present economic system is such that a large number of the poor are necessarily dependent and necessarily pauperised. It is most important to stop that, but there is no danger of avoiding it by giving grants.
To digress, but not too far, one might think that we had learned a lesson from the way in which we had worsened the situation of the third world by a policy of loans. How much better and less expensive it would have been to have had a policy of outright grants in that field.
This need for grants is greatest in meeting the one-off needs which are experienced by any family in crises or even in the course of ordinary life. All of your Lordships are used to such crises, but most of us have enough reserves to enable us to cope financially with the daughter getting married, the husband falling ill, a burglary or—dare I mention it—the demand from Lloyds. However, we are talking of those who, often through no fault of their own—and I remind your Lordships and the Government that unemployment now and in the foreseeable future is not avoidable in certain parts of the country—have no resources, no cushion of any kind and who, if they are pushed by demands which their weekly dole is unable to meet, are driven into deeper debt, sometimes into crime and even to suicide.
Charities cannot meet that need. The noble Baroness has already mentioned the experience of the Family Welfare Association and its report on this matter. Charities rightly exist to deal with the unusual cases; here we are talking about the usual, basic cases.

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For such persons it is vital that we establish a system of grants, which are theirs by right as citizens of this country. The Government's own Social Security Advisory Committee's report goes a long way towards the establishment of such a system. We must hope for acceptance of that by the Government today.
7.3 p.m.
The Lord Bishop of Durham: My Lords, I wish to emphasise to the Minister who will reply on behalf of the Government and to the Government that the matter of reconsidering and at least considerably re-ordering the Social Fund is a matter of very deep significance in the life and cohesion of our country and society.
When the proposals for the Social Fund were in Green Paper form, and subsequently on their way to becoming the legislation which emerged from 1986 onwards, our General Synod Board for Social Responsibility, on behalf of the Church of England, commented among other things:
"We are concerned about the use of the Social Fund to meet special needs. Cash limits will introduce an arbitrary factor in its operation and there would be no appeal. It will mean that one claimant may qualify for assistance at the beginning of the financial year, but another, in exactly the same circumstances, fail at the end simply because the money has run out. This seems to us a potentially unjust system which will create hostility and incomprehension."
The report of the Social Security Advisory Committee, and much other evidence, to some of which the noble Baroness referred, surely shows those fears to be justified by what has happened and what is happening in practice.
The report also pointed to what it called the alienation and indignity which many claimants experience in their progress through social service offices. Again, I fear, that continues to be true. Of course, it is important to emphasise that, as that report pointed out and as I know very well, that is not the fault of the social security staff but, as the report states, of a system which devalues those who receive state benefits.
That is the underlying point—the devaluing of those who receive state benefits. It seems to remain true, despite the issue of a Citizens' Charter, with supplementary charters, including one for those in receipt of benefits. The way the Social Fund operates, the way it is so seriously cash limited, and the way in which very poor people in desperate circumstances are forced to turn to it, does not suggest that those people are what one might term chartered citizens. The point I wish urgently to press upon the Government is: please at least heed the recommendations for a new structure for the Social Fund urgently and seriously. I suggest that any government needs to consider the effects of social security payments in general and of the Social Fund regulations and resources in particular with a proper mixture of compassion, control and respect for citizenship.
Behind the statistics, the directions and the financial decisions, as we have already been reminded, are people who in the vast majority of cases are in great need of compassion, even if it has to be limited by statistics and resource availability. Surely anyone who is in direct touch with social workers, clergy and
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active local citizens on so many housing estates and inner city areas, knows that behind the requests for a replacement for a cooker that has broken down or a pair of shoes that have been ruined is real and persistent misery, frustration and dull despair. Life in concentrated areas is very tough indeed.
A few days ago I attended a visit by a distinguished and gracious lady to an estate in my diocese. As she left the community centre she walked across the road and stopped to speak to a builder working on the building site opposite. The following conversation ensued. First bystander, somewhat wryly: "Oh, now she's talking to one of the ordinary people"—people like myself having been left on the other side of the road. Second bystander, like a flash: "Oh no, he's not ordinary, he's got a job". I think it very important not to be sentimental about that but to be aware that ordinariness for very many people is simply something about which most of us hardly have a clue.
Therefore, it seems to me that it is essential to remind those in power how great is the need for sensitive compassion and respect for the citizenship of all. Of course, it must go with control. We do not have limitless resources and we do not want people to be encouraged in dependence. However, so many people need a boost up, not a put down if they are to develop in responsibility and self help. I must testify to the immense resilience of so many poor people in pretty desperate circumstances as they struggle to make something of their lives. So surely the Government must let control be informed by compassion. Let it also be directed by some strong sense that all those people, too, are citizens, citizens who have rights as such to be given some chance of decency and self help when they are caught up in groups or areas of deprivation and difficulty.
I do not wish to take up time by citing facts and cases, though as I speak I can recollect seeing many faces and hearing many voices concerning these matters. The documentation on the need for change and expansion is surely well provided, and it is reflected also in the advisory committee's report. Therefore, I simply ask the Government to approach the matter of restructuring the Social Fund as a serious and urgent invitation to their compassion and as a challenge to them to take the charter of citizenship with full seriousness so that the controls can be opened up, resources enlarged and opportunities given for a compassionate response which will enable more poor and deprived people to know that they, after all, are also citizens. Especially I appeal for easing up on the matter of loans and especially crisis loans, so that desperate people are not pushed into more misery.
Such an approach of compassion to control for the sake of citizens would surely be a great contribution to enabling many of our poor to become what they so clearly desire: citizens who are active contributors to rather than receivers from our society.
7.10 p.m.
The Earl of Longford: My Lords, the noble Lord, Lord Beaumont, said how much he was looking forward to the speech of the right reverend Prelate. He can now look back on that expected pleasure. I hope

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I do not exceed my standing when I say that most of us in this House would like to see him in the Chamber more often. We realise that he has some way to come but all the same in these days of modern travel we should like to see more of him. I think his bold spirit is indeed what is needed occasionally in this very mature place. I hope that he will, indeed I believe that he can, take it as the opinion of most of us in this Chamber.
I was told many years ago when I joined this House that there was only one rule, which was never to speak more than once in a day. I have already made one speech today and even asked a Question, which aroused a certain amount of interest. So I am banned from any further oratory. However, I have got a new average for a short speech. I notice that I spoke yesterday but for only two minutes. I shall not take much longer than that today, and hope that I shall not be in the position in which Professor Laski found himself when the then Mr. Attlee wrote to him and said, "A period of silence on your part will be welcome". Noble Lords may remember that famous message.
I speak to curry favour with the noble Baroness. There are worse reasons than that for speaking. Certainly I have been remarkably homeless for long enough. On the other hand the homeless have a great champion in her and in other speakers. So I do not think that many words from me are necessary.
I should like to give noble Lords one example from the New Horizon youth centre, with which I have been associated for 20 years, and ask your Lordships to reflect on it for one moment. In the autumn of 1991 New Horizon successfully placed a young homeless man aged 20 in a self-contained flat made available through the Department of the Environment, for the department's homelessness initiative. The young man had previously been staying in a hostel in central London. He was unemployed. His new home was an unfurnished one bedroom flat. New Horizon helped him to apply for a community care grant from the Social Fund but he was refused on the grounds that he failed to meet the criteria. New Horizon then helped him to appeal, as he clearly fitted what were understood to be the criteria—the one criterion being people without a settled way of life undergoing resettlement. His appeal was in fact refused on the grounds that people coming from care backgrounds would be given priority. He therefore lives in his new flat, which is empty except for a sleeping bag on the floor.
That is a case where a certain judgment was delivered about the priorities. It is easy enough to discuss priorities and no doubt they could be much improved. In my eyes the rearrangement of priorities only carries one a certain distance. I agree with those who think that as long as there is a cash limited fund, much need will be denied and in many cases much cruelty inflicted. I personally think that the fund has reached a position where a completely new start has to be made. I hope I have not said anything which will lose me the good will of the noble Baroness, Lady Hollis.
7.15 p.m.
The Countess of Mar: My Lords, the noble Baroness, Lady Hollis of Heigham, has chosen an appropriate time to ask her Question. I am grateful that she has done so. Doubts were expressed, before the Social Fund replaced the single payments scheme, that funding would be insufficient to meet the needs of those most in need. Those much scorned doubters have sadly been proved right in their prognostications, as the report of the Social Security Advisory Committee so clearly demonstrates.
The report is to be welcomed. It highlights the arbitrary nature of the Social Fund and the need for an adequate budget, though the committee stresses that throwing money at the problem will not provide all the solutions. From its inception, distribution of Social Fund loans and grants has been haphazard, dependent upon the size of the local budget and the time of the financial year. We all know that the needs of the poorer members of our society cannot be programmed to occur at specific times in a specific locality. The planners have got it wrong and even after four years' experience they have not managed to right the wrongs. The committee has made some very constructive suggestions which would go some way towards making the distribution of loans and grants fairer.
The fact that community care grants are discretionary undermines the community care policy objectives. There is an absence of a clear right to help when setting up a home on moving from institutional or residential care into the community. The SSAC's recommendation that grants should be mandatory in particular circumstances is to be commended, but I should like to add a word of caution. Before the amount of a mandatory grant is specified, the Department of Social Security should adequately research the cost, for example, of setting up home with minimum standard requirements. The fixing of the maternity grant at £100 without any allowance for increasing costs of providing for a new baby is an example of the failure of the fund to meet basic needs. Secondhand clothes and equipment are not easy to purchase, even with £100. It strikes me that the committee's recommendation of £500 for the community care grant sets the target too low. It is important that purchases of appliances such as cookers and fridges are made with guaranteed safety; and that guarantee does not come for a few pounds.
The recommendation for mandatory grants is limited, especially as all other circumstances are to be dealt with by loans. The stress on loans and the stipulation that a substantial part of the loan should be paid off before another is considered may well force applicants to live without essentials or force them into the hands of loan sharks.
If the committee considers that the cost of providing a bed to replace a cot for a child of 18 months or more should be met by a grant, I wonder why they do not include the cost of bedding. There is also the recurring problem of replacement clothing for those who, because of particular illnesses or disabilities, wear out their clothes far faster than the average person.

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Only last night this House debated the effects that homelessness has upon families. Would the Minister be prepared to take up the suggestion that loans should be given to enable clients to pay rent in advance, so that they can escape the horrors of temporary accommodation such as we heard about yesterday? He spoke about the action being taken by housing associations to provide low cost accommodation for the homeless. That is another way in which they can be helped. He could also help the young, single homeless, who do not appear in the statistics and about whom we are very concerned.
The power given to Social Fund officers to use their discretion when deciding whether or not to award a grant or a loan puts the officers in an invidious position. Criticism has been levelled at them for being unnecessarily harsh in their refusals. They have an extremely difficult task to perform. Dealing with individuals who are distressed and very vulnerable is never too easy, as I am only too well aware for I receive a considerable number of letters from people who believe that the system has dealt unfairly with them. To have to face a daily barrage of criticism from disappointed applicants must make a difficult task soul-destroying. Does the Minister consider that a system of entitlement to loans of particular amounts for particular needs would work more effectively and be seen by applicants to be fairer than the present system, where loans are awarded at the discretion of officials according to the level of their local budgets?
The noble Baroness, Lady Hollis, also asked when the research on the Social Fund by the Social Policy Research Unit will be published. The Minister will recall that, in his reply on 30th January this year to my Question for Written Answer on the same subject, he could not say when the report would be published. In view of the length of time that has elapsed, perhaps I may ask him whether there is any foundation to the rumours that the draft report was so damning that its authors were asked to rewrite it in less critical terms.
I have moments, albeit very brief moments, when I feel sorry for the noble Lord, Lord Henley. With increasing frequency he must stand at the Dispatch Box to defend the indefensible. I am concerned that the noble Lord may not be aware that in his stalwart defence of Government policy he does not always afford to noble Lords who have taken part in debates the proper answers to their questions and on occasions is very close to treading on the hem of discourtesy.
The noble Lord knows that I have tried to deal with the matter privately. I believe that he should know that noble Lords who take part in social security debates do so because they have a genuine anxiety for, and a good knowledge of, their subject. To come away at the end of a debate knowing that one has been given short shrift is not satisfactory. I have chosen my words very carefully and use them with the kindest of intentions. I hope that the noble Lord, Lord Henley, will take heed.
7.20 p.m.
Baroness Hilton of Eggardon: My Lords, it is a tribute to the importance of the Social Fund as a topic that so many speakers have chosen to speak today. I
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am grateful to my noble friend Lady Hollis for raising the issue. I am not an expert on the social security system but it is clear from other speakers that the Social Fund has been a disaster. We have heard about the iniquity of providing loans in crisis to people who are on marginal incomes. I wish to reinforce the practical problems of running cash limited budgets when one is dealing with emergencies.
I had experience over many years of dealing with police overtime budgets and of trying to fit them into situations which one could not anticipate over a financial year. When one is dealing with the unpredictable, trying to cope with a cash limited budget does not work. One cannot spread the allocation evenly throughout the year. Crises do not occur according to regular seasons. Inevitably one either overspends at the start of the year, leaving nothing for later police emergencies such as public disorders, a murder inquiry or whatever, or one underspends carefully at the start of the year and therefore retains a lump sum at the end of the year. One is then obliged to dispose of that lump sum by spending it at that stage on items which may seem trivial or inappropriate for fear that one's allowance will be withdrawn the following year and that one will receive a lower cash limit. That lumpiness of expenditure inevitably produces the lottery effect that one has in the Social Fund. Rules are applied unfairly and unpredictably, and in the eyes of the applicants the scheme seems totally without rules or logic. The system is thrown into total disrepute.
Even if one applies objective criteria to the situation, the lack of consistency in the system inevitably makes it disreputable to the outsider. I therefore support the recommendations of the Social Security Advisory Committee that mandatory grants should be available for a very restricted range of people in particular situations. One can achieve the same financial rigour by applying clear rules as one can by applying cash limits. But people would know what those criteria were. They would know what the rules were. One would not have the effect of a lottery and uncertainty. People would not feel that someone else down the street had been treated more fairly than they were.
There are clearly situations such as setting up a home or coming out from institutional care in which people need mandatory assistance to obtain furniture, a stove and so on. It is important if we treat, for example, community care as a reality that a person should be given the wherewithal to stand on his own two feet so that he does not end up either returning to an institution or on the streets as a vagrant, prostitute or beggar. Similarly, in relation to domestic emergencies, which one cannot predict, there should be mandatory grants for people who have had their houses burnt out or flooded, or whatever. With tight, clear rules one can achieve the same degree of financial control as by having cash limits.
Cash limits may be appropriate for discretionary grants and lesser emergencies. But the concept of loans is suspect when one deals with people at the bottom end of the income gradient. I urge the

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Government to restructure the Social Fund in line with the advisory committee's report and the recommendations of the other speakers tonight.
7.25 p.m.
Lady Kinloss: My Lords, I welcome the Unstarred Question of the noble Baroness, Lady Hollis. After reading the report of the Social Security Advisory Committee, The Social Fund: a new structure, perhaps I may say that it is a grave matter and of considerable urgency. The Social Security Advisory Committee recommends that a non-repayable grant should be linked to certain defined circumstances. I shall return to that point.
The present discretionary criteria are so strictly applied that only an immediate threat of loss of independence would qualify for a community care grant. Surely that is against the Government's policy of general community care, allowing more people to live in the community. I shall confine my remarks to a few points. I have grave misgivings as to the wisdom of granting loans to persons who are obviously already in reduced circumstances and would find repaying a loan a severe financial burden. They need a non-repayable grant, at least where it can be shown that it will relieve great hardship.
Until 1988, through the single payments scheme, help with the cost of deposits was available to people claiming supplementary benefit. However, under the Social Fund—which replaced the single payments scheme—help with deposits and premiums was specifically excluded. Therefore when the size of deposits was increasing sharply, help with deposits was withdrawn completely.
CAB evidence indicates that those two policies together are causing severe difficulties. A CAB in Sussex reports on a client who had been illegally evicted after harassment and violence from the landlord. He moved into bed and breakfast accommodation with cooking facilities for residents. But the client did not have any utensils. He applied for a loan from the DSS and was told that he could afford a can of coke, could he not, and that he could cut off the top and use it as a saucepan in which to heat food. But how does one cut the top off a tin without a suitable utensil? I realise that the officers are hard pressed but I find it hard to believe that anyone could give such a callous and unkind reply to someone who was already in considerable distress.
The suggestion made by the Social Security Advisory Committee in its report The Social Fund: a new structure, that the award of a non-repayable grant should be linked to defined circumstances, is to be warmly supported. Some circumstances that are listed are the setting up of a new home, a new move from institutional care and domestic emergencies. There are very strong arguments also for the provision of a proper bed for a child at the age of 18 months. It is vitally important that a growing child should be properly supported in bed. Likewise, there are strong arguments for grants for starting work when otherwise an individual would be unable to accept the offer of a job. Such payments depend on actual events
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and could be made mandatory and non-repayable. Will the Minister say whether daily travel costs to a job for at least a week will be met until a wage has been earned to enable fares and other needs to be met? There are also other considerations for some types of work, such as protective clothing or the acquisition of special tools. Those items all need to be paid for. If necessary, receipts could be required where a grant has been given or help has been supplied from the Social Fund.
The CAB has evidence that some of its clients are considered too poor to repay loans from the Social Fund. Therefore they are not given loans despite the fact that there is clear evidence of financial hardship. A clear case is cited in a report in Manchester. A 24 year-old client has no furniture in a rented home. She cannot afford a Social Fund loan because she is too poor on income support to repay the loan. But how does she acquire even the minimal amount of furniture that she needs? It is surely illogical for the Social Fund to fail to help the very people whose needs it was designed to help. Therefore will the Government consider a restructured Social Fund in the light of all the evidence of hardship? Research by the National Audit Office indicates that there is a growing number of people nationwide who are falling deeper into debt to the Social Fund, including those with multiple loans.
Perhaps I may ask the Minister to consider all those matters with sympathy and understanding. I ask too that loans should no longer be made to people who cannot be expected to repay them—rather, ought they not to be given outright grants? What may have been a right decision in 1989 is not necessarily right in 1992.
7.30 p.m.
Lord Pitt of Hampstead: My Lords, I too thank my noble friend Lady Hollis for introducing the debate. I remember that when the Social Security Bill, which set up the Social Fund, was going through this House noble Lords criticised several aspects of it. Many of us said that the idea of meeting social needs with a cash-limited budget was bound to cause real hardship and would not be workable. We also begged—I put it as strong as that—the Government to accept that the accent should be on grants rather than on loans. That suggestion too was rejected. We also tried to obtain the re-imposition of the independent review which was being withdrawn by that Bill. Many of us said that those in the poorest sections of the community would suffer most from the introduction of the Social Fund.
We received great reassurance on all counts. However, our point about a cash-limited budget was borne out because whether people receive a grant depends on where and when they apply. If they apply for a grant in an area which has already used its budget or if they apply late in the year, they will not receive it. I was glad that my noble friend Lady Hilton dealt with the question of what happens when one has a cash-limited budget.
All those points were made when the Bill was passing through this House. However, Ministers and their supporters proceeded to ride roughshod over the suggestions of Members of this House. The truth is

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that we have been proved right. I hope that the Government will realise that they have made a mistake and be big enough to say, "We got it wrong and we shall change it".
The Social Security Advisory Committee has given the Government a chance to change the situation because its recommendations will help. I hope that the Government will take them on board. I should like to go further than the recommendations. I believe that the statement that some people are too poor to be helped indicates the complete failure of the Social Fund. In saying that some people cannot be given a loan because they cannot repay it, the Government are saying that they are too poor to be helped. None of us would turn against a poor person in need merely because he could not pay us back. However, on our behalf the Government are doing just that. That is the most disgraceful side of the issue.
In consequence, people who could be housed if they were correctly helped are being allowed to be homeless. It is absurd to suggest that they cannot be given a loan in order to pay rent in advance. By lending them money the Government will enable them to take a home. Many landlords now ask for rent in advance. We all know that because it is the world in which we live—in fact, it is the world of which Members opposite are proud. That being so, we must understand that the way to help poor people who wish to move into such housing is to lend them money to pay their rent in advance. The refusal to do so is the quintessence of stupidity.
There are also those who are just above the level of family support but who are just as much in need as those who are in receipt of family credit. In that respect I go beyond the recommendations of the Social Security Advisory Committee because I believe that they too should be considered. In addition to accepting the committee's recommendations I hope that the Government will accept that discretionary grants should be available to people in that position.
In introducing the Bill, John Major said that there should be a residential discretion to give grants which will ensure a decent life in the community for the most vulnerable groups. I hope that his Government will act in that spirit. The committee's recommendations need to be put into action as does the possibility of making grants in the way that I have outlined. The ability and the power to wipe off the loans if people have difficulty in repaying and then to give grants should be part of the system. Although we need to increase the budget, it is important that there should be a contingency fund centrally and locally so that those in need can be helped. I hope that we shall hear an encouraging answer from the Minister.
7.38 p.m.
Earl Russell: My Lords, I too thank the noble Baroness, Lady Hollis, for introducing this important and timely Question. I am looking forward to hearing my noble kinsman's reply. I have often had occasion to admire the courage with which he stands up to the hordes who come after him on this subject. I am reminded of a verse that used to be recited to us at school. It described how:
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"In days of Roman cricket
How well Horatius kept the wicket".
In this profession we make our wishes to each other at the beginning of the Summer Recess rather than at the New Year. What I wish for my noble kinsman over the Recess is better policies to defend.
The Government have been a little unwise, from their point of view, in delaying the report of the Social Policy Research Unit's research on the Social Fund. We know that it was in the hands of the Minister before 11th May but we do not know how long before. On 8th June the Minister's right honourable friend Mr. Scott told my honourable friend Mr. Kirkwood that the report would be published before the Recess. It is a pity that it has not been published just a little more before the Recess so that it was available for this debate.
The reason why I say that the Government have been unwise is that the delay may well give rise to suspicions that may be quite unfounded. It could lead people to wonder whether the research is a great deal more critical than it perhaps turns out to be. It may lead people to wonder whether it has been more carefully edited than is the case.
In that context, the Government were unwise not to accept the amendment to the Health and Medicines Act 1988 which urged them to abandon the rule that academic research should not be published without the prior consent of the Secretary of State. We have an example here which illustrates why that rule may diminish the credibility of the academic research, and may do so undeservedly for all we know.
I should like also to ask my noble kinsman whether the Secretary of State has considered the effect on the finances of the University of York. Every university now is financed through the research assessment exercise in proportion to its publications, so that every publication means money. For that publication to be counted for the research assessment exercise, the Secretary of State would have had to write to the University of York by 30th June to say that it had been accepted for publication. I should be glad to know whether he has done so.
I turn now to the formal business of the Social Fund. One of the major disagreements between us, which needs exploring more than it has been, is what proportion of need we think arises in the form of single emergencies giving rise to a need for single payments. Last year the Social Fund accounted for 2.7 per cent. of the total social security budget. I shall ask whether there are any noble Lords in this Chamber for whom, in their last year's budget, emergencies, accidents and casualties amounted to as little as 2.7 per cent. of their spending. I do not regard myself as a particularly unfortunate person but for my part the figure was rather nearer 10 per cent. in what was not an extraordinary year.
I am very much in agreement with the opinion of the seventh report of the Social Security Advisory Committee that the budget is inadequate. This year it is £302 million, should like my noble kinsman to clarify how that is calculated because I am not sure

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how recycled money—repayment of loans fed back into the fund—is calculated. Is the recycled money included in that £302 million or is it additional to it?
The Child Poverty Action Group has described that process as recycling money from one set of income support recipients to another. That is accurate. It gives rise to a considerable burden of debt, as has been mentioned. It means that people are borrowing privately in order to repay Social Fund loans. Therefore, I ask my noble kinsman whether he will add one more to the qualifying purposes for a Social Fund loan: the repayment of Social Fund loans.
Following the remarks of my noble friend Lord Beaumont of Whitley, I ask him further whether the Government have learned anything in that context from the problem of rescheduling third world debt. Do the Government see any sense in the principle of proportioning the total size of the budget to the total pool of people who have to draw on it, because the number of people on income support has risen most remarkably. It seems to continue to rise and with more people demanding money from the fund, inevitably there will be less to go round.
I ask my noble kinsman to think again about the rates and period of repayment. Many people find it cheaper to borrow money through catalogues at greater ultimate cost because the payments are spaced out longer in more manageable, immediate instalments. I take what I admit is an extreme example. A citizens' advice bureau in Cheshire found somebody repaying £13.57 per week from benefit of £33.60, leaving him £20.30 on which to live. I do not believe that my noble kinsman will say that that is adequate.
The problem of deductions exacerbates that further. There is a rule that deductions should be restricted to 15 per cent. but as my noble kinsman explained to me in a Written Answer on 20th May, for which I thank him, that excludes gas, water, electricity and overpayment of benefit. I regret that I was not able to speak in the debate initiated by my noble friend Lord Ezra last week because I should have said a good deal about deductions of benefit, particularly for repayment of water charges. If people on benefit are finding that their utility bills are increasing as fast as mine they are probably in great difficulty; and that seems to be the case.
I agree with what has been said by the noble Lord, Lord Pitt of Hampstead, that it is curious to say that people are too poor to be helped through the social security budget. I had supposed that the basic purpose of the social security budget was to relieve poverty. I have never heard from any government spokesman any coherent justification of why it is right to have a system in which people are said to be too poor to benefit from the social security system. I cannot get my mind round that. It does not make sense.
We have gone into the problem of variable entitlements in different parts of the country on previous occasions. I give a couple of examples of the kind of thing which happens. In the office in Edinburgh East Lowlands the budget has been overspent by 11 per cent. The result is that there is
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nothing available from the Social Fund for heaters, pots and pans, crockery, essential home repairs, pushchairs or prams, fridges, washing machines, tables or chairs or utility reconnections. One wonders exactly what is available from the office in Edinburgh East Lowlands.
Another Scottish CAB found a family of two parents and six children playing box and cox at the task of sleeping in two beds. I thought that we were rather more concerned about child abuse than that. It seems a most unsatisfactory arrangement. I agree with the Social Security Advisory Committee that that type of variation between areas must be regarded as unacceptable.
Even more importantly, I believe that the system creates a bottleneck. It is making it much harder than it needs to be for people to climb out of dependency on benefit and to get back in employment. The Prime Minister, speaking to the Adam Smith Institute on 16th June, said that he wanted the state to offer a hand up and not a hand out. I have no problems with that statement; I agree with it entirely. However, I do not see how the Government's policy is providing that.
Paragraph 46 of the Social Security Advisory Committee's report states:
"We have found, particularly in Northern Ireland, that the lack of adequate cash can preclude a person from taking up a job offer".
Surely that is the opposite of what we should all be working for. That is why I agree with what the noble Lady, Lady Kinloss, said about work related expenses—tools, uniform and travel for interviews. Surely those are practical matters with which to help people. I agree also with what the noble Lady and the noble Lord, Lord Pitt of Hampstead, said about deposits.
It is a familiar and sensible remark: no home, no job; no job, no home. That produces people like the person found by a citizens' advice bureau in north London who was sleeping on the streets with no income but the income support personal allowance. People cannot obtain employment while they are in that situation. They cannot climb out of that situation until they have access to housing. That means they need a deposit. The Government are therefore forcing people into dependence upon benefit, which is the opposite of what we all want and of their declared policy.
However, the Government are right that there is such a thing as a dependency culture. However, they do not understand what it is. There are few people who want to be on benefit. In a dependency culture one ceases to have hope, one ceases to think, like the person mentioned by the right reverend Prelate the Bishop of Durham, who said he was not normal, he had a job.
When one loses hope of getting out of a situation, that is the time to begin adjusting to it—a process the 17th century described as "kissing the rod." That is what a dependency culture is. It is what happens to people if they are not given a decent opportunity to leave the benefit situation and obtain work. To stop the dependency culture we need more hope, which means more opportunity. In that context I cannot think of anything more likely to increase the dependency culture than the rule that one cannot

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obtain help from the Social Fund until one has been on benefit for 26 weeks. Anyone who knows anything about unemployment knows that one's best chance of obtaining work occurs in the first few weeks before the rot of discouragement has set in. The 26-week rule tells people to, "depend a little longer, please." In fact it is encouraging the dependency culture.
I make only one final point. My noble kinsman will undoubtedly raise the question of cost. I agree that he is right to do so. One must calculate the cost and the cost-effectiveness of a new scheme. One place where he could easily look for the money is the rule of paying income support in arrears. That places a quite unnecessary strain on the fund. In a Written Answer yesterday— for which I thank him—he said that that was taking £7.6 million out of a budget of £302 million and 20 per cent. of the budget for crisis loans. That is a wasteful use of money. We should save it.
7.53 p.m.
The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley): My Lords, I am grateful to my noble kinsman for finding some savings for my right honourable friend. I am sure that he will take note of those comments.
My noble kinsman and the noble Countess, Lady Mar, praised me for defending what the noble Countess described as the "indefensible". I have no problem whatever in defending the social security provisions and social security system that exists in this country. In terms of the safety net provisions built into our social security system, we probably have the most comprehensive in the European Community. Of that there is no doubt.
As I mentioned yesterday, our social security system costs £70 billion a year. That amounts to expenditure per week of £25 on every man, woman and child in the country. Most importantly, it is a social security system that costs each individual taxpayer and national insurance contributor £10 per day. Those are large sums of money. It is right that we should always bear in mind the cost of any new provisions suggested for the social security system.
I note also the accusation made by the noble Countess, that I treated her with less consideration than she deserves. On these occasions and on general social security debates I attempt to answer as many of the more important points as possible. But it is important to bear in mind the constraints of time. However, on the occasions when I do not answer noble Lords or the noble Countess herself, I hope that I shall be able to write to them on some later occasion.
Many hard cases have been cited. I do not intend to deal with any of the individual cases mentioned. It would be wrong to do so. But it is always easy to find emotive examples; that ignores the good points of the fund and the large number of people the fund has helped since it was started with awards to over 5½ million different people and expenditure of over £1 billion.
I should say also in response to the right reverend Prelate the Bishop of Durham, who said that it is a system which devalues people on state benefit, that we share his concern for the individual. The fund, like the
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rest of the social security system, is geared to encouraging individual responsibility; hence, income support plus loans allows those on income support to budget like other people. In specific circumstances grants are on offer where other external events intervene.
It has been the nature of successive schemes for meeting exceptional needs to attract a degree of attention and controversy which is in marked contrast to the necessarily limited role of such schemes in the overall provision of social security benefits. That indicates to me both the importance of the subject, particularly to those who are eligible to receive those payments; and at the same time the difficulty of managing a scheme of this nature, which is at the extreme edge of the social security system, making payments for unusual and exceptional needs by means of discretionary and difficult decisions. Meeting the needs which do not fit into the regulated structures is even more difficult than addressing the general problem of providing for regular needs.
The Social Security Advisory Committee's report—referred to by many noble Lords—looked in detail at the current scheme, the Social Fund, and has made many valuable points. As I said last March in response to a Question from the noble Baroness, Lady Jeger, we welcomed the report, particularly its endorsement of many of the principles on which the Social Fund rests; and its acknowledgement of the excellent service which Social Fund officers provide. We must take into account the Social Policy Research Unit report before we can respond in detail to the report of SSAC.
When the fund was established, it was clear that it would be essential to have reliable and detailed information about how it was operating. Many statistics are collected by the Department of Social Security, and those provide the essential information needed to monitor how the fund is operating on a day-to-day basis. But the knowledge that that basic information would need to be supplemented, to help us evaluate the new policy approach in 1989, prompted us to commission the Social Policy Research Unit to carry out that major research study. The aim was to provide us with a detailed and statistically valid source of information, which could be used to assess the general impact of the new Social Fund scheme. After thorough planning, the main fieldwork was carried out in a sample of 39 office areas involving nearly 2,000 respondents in the summer of 1990, and an exhaustive analysis of the research data was conducted throughout 1991. That has been a detailed and extensive study, yielding a wealth of data. The findings are correspondingly complex, and the report will clearly need to be thoroughly examined.
The noble Earl, Lord Russell, is aware that I replied to him in the form of a Written Answer to announce that we will publish the report following examination by Ministers. The noble Baroness, Lady Hollis, claims that the report will be published on Thursday. I cannot comment on that. But I can reassure the noble Baroness that it will be published as we promised before the Summer Recess.
The noble Countess, Lady Mar, claimed that the SPRU report was allegedly so damning that it had to

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be rewritten. I can assure her that the production of the report has gone very smoothly. The research done has been conducted by an independent—I underline that word "independent"—body; namely, the Social Policy Research Unit at York University. We shall publish its findings in full.
My noble kinsman asked whether my right honourable friend the Secretary of State had written to the university allowing it to clear the report for publication so that it could be included in the returns of the research assessment exercise. Clearance has been given for the report to be published, but I regret that I cannot tell my noble kinsman whether that has enabled it to be included in the returns for the research assessment exercise. So far as I am aware, that will be a matter for the university to arrange. I understand the importance that he attaches to that point from the point of view of York University.
In considering both the SSAC and the SPRU reports, if I may refer to them by their initials, and the many others which have been written about the Social Fund, we must not forget that it was introduced because previous schemes had failed. It has always been—
Baroness Hollis of Heigham: My Lords, I thank the Minister for giving way. I am not sure whether he is leaving the actual detail of the SPRU report which we are awaiting, but, if he is, will he be so kind as to answer the question which I repeated twice? Will he comment on my suspicion that the SPRU report will find that the Social Fund expenditure is not helping the most needy?
Lord Henley: My Lords, I made it quite clear that the report is about to be published. I do not intend to comment on it before its publication. The noble Baroness will have to wait for its publication, which, as I have said, will be before the Recess.
Perhaps I may continue with the reasons for the introduction of the fund and the fact that it was introduced because all previous schemes had failed. It has always been an extremely difficult job to find an effective but simple system for meeting exceptional needs at the fringes or edges of the social security system, and we were pleased to note that the Social Security Advisory Committee acknowledged that in its report. I believe that it has also been generally recognised that the old single payment system was open to abuse: for example, too many single payment awards were going to a small and disproportionate minority of those who were eligible. As I said in response to a Question last March, about 80 per cent. of the money was going to about 17 per cent. of eligible claimants.
A system for helping people on the lowest incomes with exceptional one-off expenses has to be fair both to the people who use it and to others on lower incomes who have to manage without extra help. We believe that the Social Fund has achieved both these aims by encouraging people to manage on their income support with the help of interest-free loans when they have exceptional and large expense which is difficult to cope with. What is more, the repayable
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loans, together with the budgetary framework of the fund, have succeeded where previous schemes have failed in helping large numbers of people with their most essential one-off needs while keeping public expenditure under control.
I do not accept, as has been suggested by the noble Lord, Lord Beaumont of Whitley and others, that the solution to this problem is the conversion of loans into grants. The cost of, in effect, reverting to what was the old single payment scheme would be enormous. I suspect that it might be as much as £172 million just in the first year. That is only the beginning of the replacement of loans with grants and that would inevitably lead to the growth in expenditure which we experienced under the old system.
There is clear evidence that the fund is providing extensive help for those people who need it. As I said earlier, since the start of the scheme, nearly 1 million non-repayable community care grants have been awarded and over 4.5 million interest-free loans. The total cumulative expenditure, including the regulated maternity, funeral and cold weather payments, now exceeds £1 billion. The initial budget of the discretionary part of the scheme for 1992–93, set at £302 million, is almost 32 per cent. more than the original 1991–92 budget. Expenditure on this part of the scheme has increased by 35 per cent. in real terms.
I give an assurance to my noble kinsman that these are gross figures and not the net figures which he was thinking of. The important thing about those figures is that the money is being recycled. It can be allowed to reach more and more people. I fail to see how, as my noble kinsman put it, anyone can find it cheaper to repay a commercial loan than the interest-free Social Fund loan. Does my noble kinsman wish to intervene?
Earl Russell: My Lords, I believe the explanation is simple, is it not? There is a longer period of repayment.
Lord Henley: My Lords, I simply do not accept that. If there is no interest to pay, then in the end it is going to be cheaper. The noble Baroness and others quoted the SSAC report and referred to the Social Fund as being a lottery. Again, that is something I dealt with during Questions last March. By definition the fund is meant to respond to individual needs. The whole point of it is that it is not meant to be a regulated scheme. Total consistency is only possible in the kind of system that we had under the single payments scheme. That scheme was abused and many needs were not met. One needs to allow discretion to individual Social Fund officers so that they have flexibility to meet the needs which are most pressing.
The noble Baroness also asked what evidence there was that money was going to those with the greatest need. Again, one of the main achievements of the fund has been to set responsive, discretionary decision-making within a budgetary framework which ensures that the highest needs are met. Again, that is unlike the old scheme, which operated under rigid, inflexible rules.
The noble Lady, Lady Kinloss, and others, observed that there was little help with job offers. I believe the claim was that some job offers were being

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forfeited because of the lack of financial assistance. We believe that it is more appropriate for the employer, rather than the state, to help the newer employee with work related expenses such as tools, clothing or fares to work. Many of the more responsible employers do that. The Social Fund is mainly intended to help people who have to continue to manage on income support rather than those who are about to start or return to employment.
We have made a commitment to pilot a number of back-to-work bonus schemes in certain inner city areas for the long-term unemployed in an attempt to provide additional assistance in getting people back to work. The noble Countess, Lady Mar, talked about the inadequacy of the maternity payment. It is intended only as a contribution towards the expense associated with a baby and we believe that £100 is a reasonable contribution from the state. However, it is an event which, in normal circumstances, can be planned for and help is often given by the wider family. Also, help is available in the usual income support rates and the extra premiums available on the birth of children.
The noble Countess and, I believe, the noble Lord, Lord Pitt of Hampstead, asked for help for people in terms of rent in advance. At the moment the fund can already help people with loans for rent in advance. But what it does not provide help for is deposits or what used to be called "key money". In the past, as many noble Lords know, that system was grossly abused. Landlords and tenants colluded to obtain money and costs certainly were spiralling.
As I mentioned at the start, it must be remembered that the Social Fund is only a small part of the Government's benefit provision. Weekly income-related benefits such as income support, housing benefit, community charge benefit and family credit, are the main ways in which the Government help people who have insufficient resources to meet their living expenses. One of the main aims of the 1988 reforms was to encourage people to budget for regular
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living expenses such as food, fuel and clothing, and for the replacement of household items out of their weekly income without extra help from public resources. Our monitoring of the scheme suggests that people are generally managing on their benefit and very few grants or loans are used for food or other everyday needs other than in a crisis.
We have focused more resources on the income support schemes since the research for these reports was carried out. In April 1992 income support rates were increased by 7 per cent.—that is nearly 3 per cent. more than the retail prices index over the same period. On top of this, the premium for older pensioners was raised at a cost of £60 million in a full year. In November all pensioner premiums will he raised again at a cost of £305 million in a full year. Furthermore, from April 1993 income support recipients will no longer be required to contribute to local taxation. That will mean that income-related benefit levels will be at least £1.40 per week higher for single people and £2.80 per week higher for couples than the annual benefit increase they would otherwise have received. That measure alone is estimated to be worth around £700 million at the 1992–93 benefit rates.
I appreciate the various concerns that all speakers have raised. I understand their concern that additional information on these issues should be made available soon and, more particularly, that the SPRU report should be published as soon as possible. As I said, I can assure the House that Her Majesty's Government have not delayed publication. Arrangements are well in hand to publish the SPRU's report on the Social Fund before the Summer Recess.
The noble Baroness, Lady Hollis, said that the Social Fund has a policy of "defer, deter and refuse." On the contrary, I should like to say that the fund is flexible, fair and focused on exceptional circumstances.
House adjourned at eleven minutes past eight o'clock.