Lords Sitting of 8 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 Owen
The Right Honourable David Anthony Llewellyn Owen, having been created Baron Owen, of the City of Plymouth, for life —Was, in his robes, introduced between the Lord Diamond and the Baroness Stedman.
Lord Amery of Lustleigh
The Right Honourable Julian Amery, having been created Baron Amery of Lustleigh, of Preston in the County of Lancashire and of Brighton in the County of East Sussex, for life—Was, in his robes, introduced between the Lord Mowbray and Stourton and the Lord Wyatt of Weeford.

Personal Statement by the Lord Jenkins of Putney
Lord Jenkins of Putney: My Lords, I beg leave to make a personal statement. First, I must apologise that on Monday 22nd June, in my initial Question at col. 338, I inadvertently but wrongly used the word "Congress" on the subject of the resolution which was carried by the House of Representatives of the United States approving a one-year moratorium on nuclear testing. The resolution was carried by 237 votes to 167, a majority of 70, as stated in the Congressional Record (H4173) and not by a smaller majority.
The Bill containing the measure still has to secure the approval of the Senate, as I made clear in a supplementary question. However, whether or not the description by the Herald Tribune of the majority as "overwhelming" is accepted, there is nothing hypothetical or subjective about the matter which now awaits consideration in the Senate. I thank noble Lords.

NHS: Essential Small Pharmacy Allowances
3.4 p.m.
The Countess of Mar The Countess of Mar asked Her Majesty's Government:
Whether they will increase the essential small pharmacy allowances sufficiently to encourage pharmacists to open shops in all areas where there are dispensing doctors.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege): My Lords, the Government have no plans to increase the essential small pharmacy allowances.
The Countess of Mar: My Lords, I thank the noble Baroness for that reply. But how does she equate her reply with the one given to the noble Lord, Lord Hatch, on 3rd June? At col. 887 of the Official Report she stated:
"When the family health service authorities make a decision on an application they have to hear in mind the crucial policy of separating diagnosis and prescribing from dispensing because"—
and she stated this twice in answer to the noble Lord, Lord Hatch—
"that reduces the conflict of interest which potentially exists when one person both prescribes and dispenses".
In the noble Baroness's reply to me on the same day she stated:
"When we have both doctors and pharmacists prescribing it is important that we have an integrated service".
If pharmacists are to prescribe as well as dispense one will have a potential conflict of interest. Have Her Majesty's Government any plans to eliminate the present conflict of interest between pharmacists and dispensing doctors and the often bitter territorial disputes which there are at present under the Clothier regulations and which indeed existed prior to them?
Baroness Cumberlege: My Lords, the Government have no such plans.
Lord Mackay of Ardbrecknish: My Lords, is my noble friend aware that the position in Scotland seems perfectly satisfactory? Prescribing doctors operate only in areas which could not possibly sustain pharmacies. That seems a perfectly sensible way to conduct affairs in those rural areas. Will my noble friend further assist me by explaining why doctors who live in areas where there could be pharmacies appear to wish to become pharmacists as well as doctors? At present many doctors say that they are so overworked as doctors that they do not wish to give their patients a 24-hour service.
Baroness Cumberlege: My Lords, in answer to my noble friend's first question, I believe that in many areas, including this area, England has a lot to learn from Scotland. As regards my noble friend's second question, I agree with his sentiments. However, I believe that there are particular rural areas where it is essential to try to provide a pharmacy. I am surprised that some general practitioners feel that they should be in on this service where there is no necessity for that.
Lord Hatch of Lusby: My Lords, is the Minister aware that the passage from the Answer that she gave me on 3rd June, quoted by the noble Countess, Lady Mar, namely,
"the conflict of interest which potentially exists when one person both prescribes and dispenses",
has been bitterly resented by the Dispensing Doctors' Association, which has written to me about the matter? Will the noble Baroness take this opportunity to withdraw what was, after all, at least a slur on the honesty of doctors? Furthermore, will she say whether

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the Government still believe in a maximum of choice for patients in dispensing? If so, should not dispensing by either pharmacists or doctors be carried out without any preference for one or the other?
Baroness Cumberlege: My Lords, the question of a conflict of interest arises because part of the income of dispensing doctors is related to the level of drugs that they prescribe and dispense. I am not saying that general practitioners are not providing a good service —in some areas they are absolutely essential —but I believe that in this case there is a potential conflict of interest.
Lord Carter: My Lords, will the Minister tell the House what is the relative income of the dispensing doctor and the non-dispensing doctor? She referred to their income so presumably she has the figures available. Secondly, will she say whether the freedom to provide services given to GP fundholders extends to providing dispensing services?
Baroness Cumberlege: My Lords, in some cases general practitioners can double their income from dispensing. With regard to GP fundholders, it would depend entirely on the area in which they were practising and on whether there was no possibility of a pharmacy in that rural area.
Lord Hatch of Lusby: My Lords, may I quote to the Minister from the letter which I received from the Dispensing Doctors' Association—
Noble Lords: No. Order!
Lord Hatch of Lusby: My Lords, I received it following the Answer given to me on 3rd June. As I have told the noble Baroness, the Dispensing Doctors' Association bitterly resents the slur which her words cast upon its members. Cannot she now remove the slur, or does she maintain that certain doctors are dishonestly dispensing in order to line their own pockets?
Baroness Cumberlege: My Lords, I have never claimed that there is dishonesty among dispensing doctors and in the practices under which they operate. I refute that suggestion. However, I hold to the tenet that where one person is diagnosing, prescribing and dispensing there is a potential conflict of interest.
Lord Winstanley: My Lords, will the noble Baroness clarify a previous answer that she gave? She told the House that some dispensing doctors could double their income as a result of dispensing. Does she mean their gross or net income? Does she mean that their profit on the dispensing is equal to their income from practising?
Baroness Cumberlege: My Lords, that is the case.
Lord Mackie of Benshie: My Lords, will the noble Baroness resolve the question by simply stating whether the amount spent on drugs where the doctor prescribes is larger or smaller than the amount spent when the pharmacist prescribes?
Baroness Cumberlege: My Lords, there is an issue here as regards value for money. It certainly costs the state more when a GP prescribes and dispenses. The total cost per item is greater for dispensing doctors. More items per person are prescribed by dispensing doctors, and in terms of remuneration the total cost —and that includes allowances and fees per item—is greater for dispensing doctors.
The Countess of Mar: My Lords, will the noble Baroness say why dispensing doctors' salaries are often clawed back so that they may be equated with prescribing doctors if she says that dispensing doctors make so much more money than prescribing doctors?
Baroness Cumberlege: My Lords, that is an extremely technical point and I shall write to the noble Countess on it at a later date.

European Social Fund Payments
3.11 p.m.
Lord Desai Lord Desai asked Her Majesty's Government:
Whether any progress has been made in speeding up payment by them of European Social Fund payments to agencies.
The Parliamentary Under-Secretary of State, Department of Employment (Viscount Ullswater): My Lords, the employment department continues to make significant improvements in the speed with which European Social Fund grants are paid to project sponsors once the money has been received from the European Commission. All outstanding 1992 first advance claims for national programmes have now been paid.
Lord Desai: My Lords, I thank the Minister for that Answer. Does he not agree with his right honourable friend the Chancellor who said during his Budget speech that businesses not paying their bills promptly was one of the great causes of distress? Is it not the case that there have been long delays in making the first advance payment while there was a dispute between the Government and the EC about such matters? Will he assure us that prompt payment will be made in the future?
Viscount Ullswater: My Lords, I recognise fully the difficulties which late payment creates for any sponsor. Of course, that is particularly damaging to the voluntary sector groups which have no other sources of funding. However, my officials make every effort to give the payments priority once the money has arrived in the United Kingdom. It is an extremely bureaucratic system and it is up to the European Commission to make certain that the money arrives in this country as quickly as possible.
Baroness Turner of Camden: My Lords, is the Minister aware that delays in that area can put training programmes at risk and that for some organisations it puts them in real difficulty? One organisation in contact with me has said that,
"the interest charge on the £1 million we are owed for training programmes we established from 1 January, on the basis of government grant promises, is mounting daily".

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Can anything be done about the interest payments?
Viscount Ullswater: My Lords, I am afraid to say to the noble Baroness that the answer is no. The rules of the European Social Fund do not allow the European Commission to reimburse applicants or member states for interest charges. Sponsoring organisations understand the system before they enter into it.

Treaty of Maastricht: Article 3b
3.14 p.m.
Lord Bruce of Donington Lord Bruce of Donington asked Her Majesty's Government:
What legal advice they have received on the interpretation of Article 3b, proposed by the Maastricht Treaty as an addition to the Treaty of Rome, and its enforcement.
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, as the noble Lord well knows, it would not be customary to publish detailed legal advice given to the Government. The interpretation placed by Her Majesty's Government on Article 3b, as with the interpretation of any other text, is to give the full effect to the words used in the article.
Lord Bruce of Donington: My Lords, I am most grateful to the noble and learned Lord for that completely unambiguous Answer. Is the noble and learned Lord aware that for the past six months Her Majesty's Government have been claiming Article 3b, as incorporated into the Treaty of Maastricht, as their greatest victory, justifying all the other clauses which have a rather adverse effect upon the United Kingdom?
Is he further aware that under Article 177a of the Treaty of Rome, the Government have the full right to ask the European Court for a ruling on the interpretation of the law? Will the noble and learned Lord indicate whether Her Majesty's Government, in circumstances of considerable controversy, have yet taken the precaution to seek a ruling from the European Court?
The Lord Chancellor: My Lords, it would be fair to say that, as is the case in courts of law in this country, it would be inadvisable to pose to the European Court hypothetical questions. Therefore, if necessary, it would be appropriate to seek a ruling on the matter if and when the subject became a live one in a particular case.
Lord Hailsham of Saint Marylebone: My Lords, does my noble and learned friend agree that the real question about Article 3b is not primarily a legal one, although there may be difficulties of interpretation, but whether we are better off with it in than out of the treaty as it is to be amended? Does he agree with me that we are better off with it in?
The Lord Chancellor: My Lords, my noble and learned friend asks me an important question. I believe that, in order to answer it, one must have an
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appreciation of what Article 3b means. I believe that I have such an appreciation and, on that basis, I answer his question in the affirmative.
Lord Stoddart of Swindon: My Lords, I shall have to reflect on that. However, is the noble and learned Lord the Lord Chancellor aware that on 1st July a French official said to the Independent newspaper that in his view subsidiarity is a federalist concept? Is he further aware that, during the progress of the Single European Act, we were told that it was merely a matter of freeing trade? Under that Act we have now found that it is possible for the Commission to decide and to legislate on a wide range of issues, including employment and taxation. Should we not beware as regards Article 3b that we are not caught out again?
The Lord Chancellor: My Lords, I have no particular responsibility for advice tendered by French officials. However, it is true that a wise federation would adopt the principle of subsidiarity in distinguishing between its legislative organs as, for example, on the one hand the organ of the federation and, on the other, the organ of the individual states. However, the principle is not confined to a federal situation and I believe that it is a principle which applies perfectly well in the community of nations which we have in Europe. I believe that the application of that principle will protect, so far as that is appropriate, against the kind of situation which the noble Lord, Lord Stoddart of Swindon, has in mind.
Lord Renton: My Lords, I fully accept what was said by my noble and learned friend Lord Hailsham in his supplementary question and the answer given by my noble and learned friend the Lord Chancellor. However, is my noble and learned friend aware that doubts have been expressed as to the definition of subsidiarity and as to whether the courts, in applying that term, will find themselves unable to modify the Treaty of Rome, the 1972 Act and the Single European Act in the way that many people have been led to hope will happen? Therefore, will he take steps during the time of the UK presidency of the Council of Ministers to have that doubt resolved?
The Lord Chancellor: My Lords, it is possible to express doubts about most legal texts but that specific text is one which can give rise to practical precautions. During the United Kingdom presidency we intend to take forward a programme for ensuring that in the legislative procedures of the Community due regard is had to that principle, and that either action will not be initiated or, if initiated, will not be carried on unless it accords with it. In the longer term we intend to look at existing legislation from that point of view to see whether or not it offends against that principle. I believe that it is a principle which is perfectly enforceable by the European Court of Justice, as it enforces other principles of general application.
Lord Cledwyn of Penrhos: My Lords, can the noble and learned Lord confirm that the concept of subsidiarity is now to be reviewed by the Commission, together with all existing European Community legislation, in terms of the redefinition of that

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concept? If so, does he not agree that it is a huge task which will take a considerable time and can he give the likely timescale?
The Lord Chancellor: My Lords, the question is not so much one of reviewing the definition as one of seeking to put it into practice. The first step is to put it into practice in relation to proposals for legislation. I understand that that is what is being developed. Practical effect will therefore be given to the principle in relation to forthcoming proposals for legislation. The intention is that a report on that aspect will be prepared in time for the Edinburgh Summit towards the end of the year. It is an important place and therefore it will be a important summit.
With regard to existing legislation, as the noble Lord, Lord Cledwyn, said, it is a much larger task and will take longer. We hope considerable progress will be made on that matter in the course of 1993.
Lord Marlesford: My Lords, is my noble and learned friend aware that there are real fears that the admirable principle of subsidiarity will be misused by certain countries to introduce regulations which will erect new non-tarriff barriers, thereby vitiating the whole principle of the Community? Is my noble friend confident that during the United Kingdom presidency the definition will be defined in such a way that that does not happen?
The Lord Chancellor: My Lords, again, it is possible to misuse even the best principles. I do not believe that it is possible to erect the kind of difficulties referred to by my noble friend on the basis of the subsidiarity principle. The principle allows action to be taken at Community level where that is necessary to attain the objectives of the Community, and therefore if necessary to overrule obstructions that individual member states may seek to erect to prevent the attainment of those objectives.
Lord Stallard: My Lords, does the noble and learned Lord the Lord Chancellor agree with the sentiment expressed by the noble Lord, Lord Mackenzie-Stuart, in his letter to The Times? He said that the wording of Article 3b is "gobbledegook".
The Lord Chancellor: My Lords, I must sayzx that I understand the article better than the letter. To satisfy myself on that point I looked at one of the Oxford dictionaries—I felt that that was an authority which your Lordships may find acceptable. It defines "gobbledegook" as,
"Pompous or unintelligible…jargon (probably imitation of turkey cock)".
As I read the article over to myself I do not believe that I was emitting sounds that could possibly be regarded as an imitation of a turkey cock.
Lord Jenkins of Hillhead: My Lords, will the noble and learned Lord accept that, while I feel some doubt in regard to his proposition that important summits necessarily take place in important places, he has nevertheless given a series of answers of remarkable wisdom and clarity in relation to the obfuscating nature of the subject?
The Lord Chancellor: My Lords, I am extremely grateful to the noble Lord, Lord Jenkins of Hillhead. I believe that it is an extremely important subject. Obfuscation does not serve our national or Community interests.
Lord Bruce of Donington: My Lords, is the noble and learned Lord aware that the Question on the Order Paper does not deal with the interpretation of the word "subsidiarity", to which a good deal of attention has been directed? It refers to the area within which subsidiarity should apply. Will the noble and learned Lord re-examine Article 3b in the light of my remarks? Will he accept from me also, with the greatest possible respect, that I cannot share the sentiments uttered by the noble Lord, Lord Jenkins of Hillhead, in regard to the answers of the noble and learned Lord?
The Lord Chancellor: My Lords, there can be little doubt that the Question asks,
"what legal advice they [Her Majesty's Government] have received on the interpretation of Article 3b"—
to which my answers were directed—
"proposed by the Maastricht Treaty as an addition to the Treaty of Rome, and its enforcement".
It is the prerogative of the noble Lord, Lord Bruce, to disagree with the noble Lord, Lord Jenkins of Hillhead. However, the noble Lord, Lord Bruce, will understand on which side I stand.

Alcohol Sales to Under-18s
3.26 p.m.
The Viscount of Falkland The Viscount of Falkland asked Her Majesty's Government:
Whether they are satisfied that the law forbidding the sale of alcohol to young people under 18 years of age is being rigorously enforced.
The Minister of State, Home Office (Earl Ferrers): My Lords, chief officers of police, the courts and licensing justices have all been reminded of their wide powers to prevent disorder, breaches of licensing law and drunkenness. It is for chief officers to determine the operational priorities of their forces.
The Viscount of Falkland: My Lords, I thank the noble Earl for that reply. However, is he aware that the all-party group on alcohol misuse received worrying reports from various quarters, including voluntary agencies and the brewing industry, that the law is being widely flouted, particularly in pubs? It appears that in certain areas the police are aware that young people—not only those of borderline age but also those clearly below the age of 18—are being served alcohol and the police are using their discretion in deciding whether or not to prosecute. Has the noble Earl had any conversations with the Association of Chief Police Officers on that point?
Earl Ferrers: My Lords, I am aware of the views of the all-party group. It is always difficult to ensure that in all cases where the law is broken people are prosecuted. I have not had contact with the Association of Chief Police Officers on the matter. If the noble Viscount or the group with which he is

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connected wish to communicate their views to the police, they can do so directly. It is not for Ministers to tell the police how to carry out their operational functions.
Lord Molloy: My Lords, is the noble Earl aware that the police find the situation difficult? They seem to believe that most youngsters below the legal age purchase their alcohol from off-licences. All the off-licence people can do is try to guess and assume that the young person has the right to purchase what they are asking for. The same thing applies to the police when they arrest or threaten to arrest one of those youngsters. It is a great problem for the police. We should not be critical of them. They are doing their best. Will not the Government try to help them in asserting the law of the land?
Earl Ferrers: My Lords, it is always difficult to tell how old a person is. In 1988 the offence of knowingly selling to a person under the age of 18 had the word "knowingly" removed. It is therefore an offence to sell to a person under the age of 18. Various pubs operate a system where youngsters must carry a proof-of-age card, and that is to be encouraged. In the end it is difficult to determine exactly how old a person is but the offence was nevertheless created.
Lord Dormand of Easington: My Lords, while recognising that it is a difficult problem, is it not obvious that the law is not being enforced, not only in pubs, as the noble Viscount, Lord Falkland, said, but also in supermarkets? I hesitate to put the proposition forward but as everything else seems to have failed, will not the Government look at the possibility of increasing the penalties imposed on those people who sell alcohol to under-age youngsters?
Earl Ferrers: My Lords, I did not have any information to suggest that it was the supermarkets who were in difficulties as regards breaching the law. I remind the noble Lord, Lord Dormand of Easington, that the maximum penalty for these offences is £400. That is going to rise to £1,000 from 1st October of this year. If the offence is committed by a publican, he can have his licence revoked or it will not be renewed. If he is found on a second occasion to have committed the offence, his licence can be forfeited.
Lord Mason of Barnsley: My Lords, does the noble Earl agree that if the Home Office were to introduce a mandatory national identification card scheme starting at the age of 16 years, that would help to solve the problem?
Earl Ferrers: My Lords, if we were to introduce a national identity card scheme, I believe that it would be for purposes rather wider than under-age drinking.
Baroness Masham of Ilton: My Lords, does the Minister agree that many young people use pubs as meeting places? Does he believe that there are enough alternatives for young people to get off the streets and to meet? If not, can he do something about that?
Earl Ferrers: My Lords, I am not quite sure what the noble Baroness wants me to do in order to
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encourage young people to get off the streets and to go into other places of refreshment. Certainly there are places for young people to go. We are considering issuing a consultation paper on two possible changes in the law along the lines of the measures which are already in force in Scotland. One would be a system of children's certificates to allow children under 14 years of age to accompany adults into the bars of suitable licensed premises under certain conditions—say, for a family meal. The other would be a new category of licence for continental cafe-style premises, which I am sure would find favour with the noble Baroness, into which accompanied children under 14 years of age might also be admitted in certain circumstances.
Lord Richard: My Lords, in view of the likely decision of the European Court on Sunday trading and the status of our laws in that respect, perhaps I may ask this question. Does the Minister agree that in the case of the sale of alcohol to young people under 18 years of age, just as in the case of lawbreaking by the supermarkets, if there is a law on the statute book, then it should either be enforced or changed, but not just ignored?
Earl Ferrers: My Lords, the law may be what it is; but it is impossible to enforce it in all circumstances in the same way as it is difficult to catch every person who exceeds the speed limit who happens to drive a motor car. The offence is created and it is then up to the prosecuting authorities and the police to take such action as is necessary. I sometimes believe that some noble Lords and others will not be satisfied until half the country is in the police force and the other half is in gaol.
Lord St.John of Bletso: My Lords, does the noble Earl agree that most young people are totally ignorant about the different levels of alcohol in most beers? Can he say whether there are any remedies being undertaken for changing the situation, and to inform young people about the levels of alcohol in beer?
Earl Ferrers: My Lords, I believe that I am correct in saying that the alcohol content has to be put on the article which is being sold. Normal beer has an alcohol percentage of between 3 per cent. and 5 per cent.; strong lager has an alcohol content between 7 per cent. and 8 per cent.; wine is about 11 per cent. and the alcohol content of spirits is between 25 per cent. and 40 per cent. The alcohol content of low-alcohol drinks is from 0.05 per cent. to 1.2 per cent. Your Lordships may think that that would taste very agreeable. Those who are in doubt as to what the alcohol levels are will doubtless read Hansard and inform themselves.

Business
3.34 p.m.
Lord Hesketh: My Lords, after the short debate on job losses in manufacturing industries and before the short debate on the future of the professions, my noble friend Lady Cumberlege will, with the leave of the

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House, repeat a Statement that is to be made in another place on The Health of the Nation White Paper.
My Lords, with the leave of the House, I should like to say a word about the two debates standing in the names of the noble Lords, Lord Dean of Beswick and Lord Rodgers of Quarry Bank. As the mover is allowed 15 minutes, and the Minister should rise to reply not less than 20 minutes before the scheduled end of the debate, in the case of the short debate in the name of the noble Lord, Lord Dean of Beswick, this means that all other speeches should be limited to a maximum of 14 minutes and in that of the noble Lord, Lord Rodgers of Quarry Bank, 11 minutes. If any noble Lord were to speak at greater length, he would be doing so at the expense of subsequent speakers in that debate.
In taking the opportunity to remind your Lordships that when 11 minutes is indicated on the digital device in the House the 12th minute has been entered into, it may be for your Lordships' interest if I give an explanation of the further inconvenience as regards the gothic timepiece that is of the analog variety in the House.
On further investigation it appears that a number of clocks in your Lordships' House of a traditional nature confirm the prejudice of the ghost of Tompion. The mechanical devices were ripped out of them in 1946 and a central battery system installed. Furthermore, the fact of the matter is that these batteries are so rare that replacements have had to be acquired from the Home Office. Your Lordships may also be interested to know that for the period from 1946 until very recently these clocks were preserved and looked after by two directly employed clock keepers. Unfortunately, one has recently retired and the other is on indefinite sick leave. Thus in the period of the Summer Recess a replacement system is to be installed which should ensure that, rather than indicating midday or midnight, there will be for your Lordships' convenience an accurate representation of time as it exists.

Hereditary Peerages
3.36 p.m.
Lord Diamond Lord Diamond rose to move, That an Humble Address be presented to Her Majesty praying that Her Majesty may be graciously pleased to allow that Her undoubted Prerogative may not stand in the way of the consideration by Parliament during the present Session of any measure providing for an amendment of the law relating to hereditary peerages that may be introduced.
The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Although this is a formal matter perhaps it will be for the convenience of your Lordships if I say a word in explanation of the background. I hope to introduce in the autumn a short, one-clause Bill providing that a hereditary Peer may, if he so desires, petition Her Majesty to amend the Letters Patent creating that
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peerage so as to permit it to descend to the eldest child, whether male or female. Second Reading will provide the occasion for full debate on the substance of the Bill. That will be after the Recess. The Motion now before the House is, I am advised, a necessary preliminary. It seeks a consent which, I understand, is nowadays regarded as a formality. I commend the Motion to the House.
Moved, That an Humble Address be presented to Her Majesty praying that Her Majesty may be graciously pleased to allow that Her undoubted Prerogative may not stand in the way of the consideration by Parliament during the present Session of any measure providing for an amendment of the law relating to hereditary peerages that may be introduced.—(Lord Diamond.)
On Question, Motion agreed to, and it was ordered that the Address be presented by the Lords with White Staves.

Manufacturing Industry: Job Losses
3.38 p.m.
Lord Dean of Beswick Lord Dean of Beswick rose to call attention to increasing job losses in manufacturing industries; and to move for Papers.
The noble Lord said: My Lords, in opening the debate perhaps I may first express my pleasure and satisfaction at being successful in the draw in order to debate this subject which, I am sure your Lordships will agree, is extremely important in terms of maintaining our standard as a leading industrial nation in the world and also in helping us to maintain our present standard of living and to improve it if possible.
In speaking today on this subject I have a feeling of déjà vu. The last time that I spoke in a debate on the subject was before the general election. Although we have had a general election, nothing has altered other than that things have become progressively worse. I remind noble Lords that on 5th February of this year I tabled a Starred Question in which I asked the present Minister about the loss of jobs in the manufacturing sector over the past three years. He gave me two sets of figures because I do not think that those for the last year were quite complete. They showed that from November 1989 to November 1990 job losses in the manufacturing sector numbered 94,000. In the following year, November 1990 to November 1991, the figure had risen to 350,000, which in terms of accelerating the total was a 400 per cent. increase. I submit that that is startling and alarming by any standards.
At the same time the Confederation of British Industry issued a report showing that, unless things started to alter, in the first quarter of this year there would be a loss of 70,000 jobs. I do not have the figure for the first quarter but I understand that it is not very far short of that mark. I was therefore rather surprised when I received a brief from the CBI in my mail on Monday morning which tried to impress upon me the fact that things are getting better when every denominator from every other source indicates quite

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clearly that they are getting worse. I asked myself, "What is the CBI up to?" I believe that it has a national responsibility to mirror national concerns and to deal with them instead of simply acting as a nodding donkey for the Government.
There is no question at all about the fact that what the CBI said during the election and during the period when I was asking those questions conflicts with what it is saying now. I am almost reminded of the little boy in Holland who put his finger in the dike but the holes kept appearing until he ran out of fingers—and the CBI is running out of excuses. That is the situation with the CBI. Bearing in mind the fact that two or three months ago it was saying exactly the opposite, I do not think that the brief that it is now sending out has any credibility. As I have said, things have not changed, other than to get worse.
There was a debate on this matter in another place the other day. It began with an excellent speech by the Labour Party spokesman on industry who gave such a catalogue of figures showing the adverse situation that has developed that the new President of the Board of Trade and Secretary of State for Trade and Industry, the right honourable Mr. Heseltine, admitted twice in his opening remarks that we are in a recession. Before that people were talking about a "slump", not about a recession, but Mr. Heseltine has now admitted fully that we are in a recession.
If noble Lords want to know about the type of recession that we are now bumping along in, perhaps I may remind the House that when I asked my original question about job losses, the Minister said that the figures had been exacerbated by the transfer of jobs from the manufacturing sector into the service sector. That may have had a minimal effect, but it cannot in any way be a major cause for that alarming increase in the figures. It is not only Ministers but Government Back-Benchers also who say periodically, "Well, in a time of technological advancement, we are bound to shed jobs". Some figures have been sent to me by my union, the Amalgamated Engineering and Electrical Union (the AEEU) which has done a first-class job producing a national report on job losses in the manufacturing sector. I advise noble Lords—whatever their political persuasion—to get a copy of this report and to read it.
The House will understand if I refer only to the two areas of the United Kingdom with which I have had personal contact. I shall speak first about Yorkshire and Humberside. The report lists 32 firms which have shed a total of 2,665 jobs. I found it alarming that quite a high proportion of those firms are in industries which should be expanding. They are not the old smoke-stack industries that are disappearing. The companies include British Aerospace and BP to name but two in Yorkshire. I cannot go through the full list, but there are others. I should now like to consider the North West because I am basically a Mancunian and spent my years in industry working in factories there. That area has recently lost 4,378 jobs in 33 industries including plastics divisions, the Ford Motor Company, British Aerospace and Delco Electronics. Those are all industries that are not going out of
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existence because they are dated; they are industries which should be expanding and providing jobs for our young people.
What are we doing for our young people? According to all the figures that have been produced, training places are not being taken up and are not successful. The malaise affecting young people is extremely damaging and its effect is being shown in the disturbances in some of our cities. I should like to give your Lordships a little example from very close to home about the problems facing our young people. By virtue of the introduction of Short money under the last Labour Government, the group of Labour Peers in your Lordships' House is now able to employ three young researchers. Naturally, as they progress they move on into better jobs. Some go out into the television world or the world of journalism. We have just lost the services of a very able young woman.
As I understand it today from my noble friend Lord Graham of Edmonton, we have had over 200 applications for that one job in this establishment. Although it is reasonably paid, it is not over-paid because even with Short money we do not have the money for that. An overwhelming number of those youngsters—in fact all of them—are products of higher education. In some cases they have struggled to get good degrees and a proper education. We can only appoint one person, so what happens to the others? A significant point that must be made is that we are facing a tragedy of enormous proportions when that type of thing is happening.
At the time of the general election there was a hiccup upwards and we were told that the motor car industry was lifting out of its recession. But no such thing has happened. One of the main motor companies has sent me some figures today which show that the industry is slipping back and that it will continue to do so—to the point, I understand, at which it is considering further decreasing the cost of its cars so that it can get rid of this year's lot before next year's are ready for registration. One might say that that is a good thing for somebody who wants to buy a motor car but it is not a good thing for the industry or for continuing employment, especially when one realises that the motor car industry is one of the biggest employers—if not the biggest—in the manufacturing sector.
It may well be that the Minister or a Member from the other side will quote certain figures to try to debunk what I am saying today. Tomorrow, however, the Labour Party will publish a very detailed factual document on what has really happened in the employment sector in a general sense. I should like to quote from an extract in The Times of 6th July, which stated:
"Britain is near the bottom of the international league table for job growth, Labour said yesterday. Releasing new figures, the Opposition said that during the first 18 months of the recession, only Finland out of 15 industrialised countries had suffered a bigger slump in its employed labour force. The number of Finns in work had fallen by 8 per cent while Britons fell by 5 per cent. Britain had also fared badly across the 12 years of Tory government. The number of people in work had increased by only 3 per cent, compared with 20 per cent in Portugal, 19 per cent in Canada and 18 per cent in the United States. Only France had done worse than Britain".
It also quoted the words of Mr. Henry McLeish, a Labour employment spokesman in another place. I submit that that state of affairs is simply not good enough and that what remedies the Government are trying today to try to put right this terrible situation are not working and will not work satisfactorily.
Since the Conservative Party's election victory of 1979 it has used the trade union movement as a whipping boy every time it is in trouble. Conservative Governments have introduced a succession of measures in Parliament that have literally sterilised the unions in terms of their ability to act on behalf of their members. There are now further proposals to deny the unions the present facility of collecting union fees at the place of employment. The Government are even going to try to monkey about with that. I say to the Minister—and I hope that he will convey this to his colleagues—that the trade unions have had to learn a bitter lesson, and it may be the case that part of it was necessary. But the fact is that over the past few years industry and government have had the complete co-operation of the trade unions, although, as I understand it, the Government have locked them out of the decision-making process.
My own union has had a history of balloting for almost everything. It has adopted a new feature in order to compete with our opponents. I refer to single union arrangements in places of employment. It has agreed to a number of such arrangements in order to destroy demarcation disputes. It has made various agreements with Japanese companies. They are working well. The leaders of my union deserve credit. Instead, they and other union leaders appear to be whipping boys for the Government.
The building industry, which may not be thought of as part of manufacturing industry, is also in decline. The number of repossessions of owner-occupied houses is increasing despite anything the Government have done. That is happening because of the number of people being made unemployed in the manufacturing and building sectors. It is absolute madness economically to let that continue.
I intended to say a few words about the retention or otherwise of the European fighter aircraft but my time is nearly up. Before doing anything drastic such as doing away with the aircraft I hope that the Government will consider carefully the ramifications that such a decision may have. Once a project team in that sector is dispersed it never gets back together. That would be a waste of some of our finest talent.
I am not alone in thinking that the exporters of this country often do not get a fair deal in competition with our opponents when they are vying for contracts. I ask the Minister whether it is not time to look at the Export Credit Guarantee Scheme to see whether we can speed it up and be more generous so that exporters in this country—certainly on contracts where large expenditure is required at the initial stage—are given a chance to compete on level terms with French, German and other foreign competitors. Unless we do that we shall continue to decline.
I have had my 15 minutes. I am grateful for the opportunity of opening such a debate and I look
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forward to hearing the contributions of other noble Lords so that we may come to some conclusions that may assist the situation. My Lords, I beg to move for Papers.
3.54 p.m.
Lord Rochester: My Lords, I am sure that the whole House will be grateful to the noble Lord, Lord Dean of Beswick, for having introduced the debate at such a timely moment. We must all be concerned about the extent of current and prospective job losses in manufacturing industries. On these Benches I propose to deal with the employment aspect of the Motion, in what I hope will not be thought too narrow a way, and my noble friend Lord Ezra will speak later on the economic and industrial issues that the Motion raises.
Within the employment field, like the noble Lord, Lord Dean, at one point in his speech, I think I can best contribute to the debate by relating the Motion to the part of the country where I live—Cheshire. I am sure the noble Viscount, Lord Ullswater, will agree that the bodies best able to assess local labour markets are the training and enterprise councils set up by the Government with that purpose in view. I have it on the authority of the chief executive of the North and Mid-Cheshire TEC—NORMID TEC for short—that in that area major industrial companies, many of them household names, are continuing to reduce their workforces and that at least for the next few years there will be no respite from that process.
The most startling example of what I have in mind concerns the company for which I worked for nearly 30 years, ICI, where up to as many as 18,000 jobs are now at risk, largely at Runcorn on Merseyside. I want to use the opportunity provided by the debate unashamedly to draw the attention of the House to the gravity of this problem. In doing so I no longer have a financial interest to declare, but your Lordships will understand how deeply I feel about the potential loss of so many jobs. Threatened with closure are altogether four plants producing chlorine and caustic soda. Together they provide 7,000 jobs, the majority at Runcorn. A further 3,000 people are directly involved in the business as contractors, and 8,000 others work in associated downstream activities.
Chlor-alkali and derivative products in the United Kingdom have a sales value of about £750 million per annum in the domestic market and export sales of about the same amount. The total effect on the country's balance of payments is thus about £1,500 million per annum. Large quantities of electricity are used in production, equivalent to about I per cent. of total United Kingdom electricity demand and accounting for more than half the total cash costs of manufacture. The Merseyside operation alone uses as much electricity as the whole of the city of Liverpool.
Following privatisation of the electricity industry, ICI has since April 1991 been faced with increases in electricity prices of more than 30 per cent. That does not sound to me like a true market. It has suddenly put the company at a severe disadvantage in relation to its major competitors in continental Western Europe and the United States, where electricity price levels are between 45 per cent. and 85 per cent. of present UK

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prices to ICI. The company's cost base is internationally competitive in all respects except electricity costs. Substantial investment is now needed to underpin existing operations and for selective expansions. Those investments simply cannot be justified at today's electricity prices.
Those prices should be viewed alongside the massive increases in profits recently recorded by the electricity producers and regional distribution companies, not to mention the salary increases that their executives have seen fit to award themselves. So while overseas producers are reinvesting in their assets, ICI may be forced into the plant closures I have described. I believe that this threat is a real one and I fear that unless some remedial action can be promised, the company could begin to withdraw progressively from Chlor-alkali production within a few months.
ICI has been involved in lengthy discussions with the electricity generators and the Government, but has so far been unable to gain what it regards as realistic prices for the business. The problem has arisen from the radically different electricity pricing structure that was implemented at the time of privatisation. The overall costs incurred by the generators and distributors have scarcely changed since then. As with any complex new structure, the electricity pool price mechanism is understandably experiencing teething problems, but there has been a reluctance to implement the changes that are now clearly required.
If your Lordships will forgive me, I should perhaps outline in a little more detail the fact that the Runcorn site buys power from ICI's own power purchasing subsidiary, Impchemix —a member of the electricity pool. I understand that the company's move to set up Impchemix followed a suggestion from the noble Lord the Leader of the House when he was Secretary of State for Energy in the other place. The suggestion was that large electricity users unhappy about prices should go and compete in the market. But Impchemix must still buy from the pool where prices are so much higher than under the pre-privatisation tariff.
At this point I should say that I was interested to read an article in today's Financial Times which stated that OFFER, the electricity industry watchdog, yesterday proposed a new pricing formula which, if implemented, would result in a substantial reduction in the National Grid company's charges. As I understand it, under the formula National Grid would have to keep prices to three percentage points below inflation. That might permit very large industrial consumers to make savings, but they would be small in relation to ICI's needs. In any case, it remains to be seen whether National Grid will accept the new formula. If it does not, perhaps the noble Viscount, Lord Ullswater, will confirm that the matter would then be referred to the Monopolies and Mergers Commission.
In my view, there is now an urgent need for the Government to re-examine the pool price mechanism and to reconsider the way in which costs are allocated to uniquely large feedstock users of electricity. I feel sure that if such a re-examination could be offered, ICI, for its part, would be happy to collaborate and,
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within the flexibilities available to the company, tailor its demands so as to minimise the costs incurred by the generators, transmitters and distributors of electricity.
I am well aware that, in general, the Government are unwilling to intervene in the workings of the commercial market. But this case involves one of the country's greatest wealth creators and exporters, and an acknowledged leader in the fields of industrial relations and training. It will be a tragedy for the Merseyside area—and, indeed, for the whole country —if ICI is obliged to withdraw from chlorine and caustic soda production. That is why I have deliberately highlighted that case, though clearly other major energy users share the view that current electricity prices are having the effect of making British industry uncompetitive in Europe.
When the noble Viscount replies to the debate—and I have, of course, given him notice of the matter that I shall now raise—I hope that he will be able to tell me that there may be some way in which my anxieties, and those of many others, can be relieved. In the last resort, it seems to me to come down to the question of the value that we place not simply on employment protection but also on this country's long-term international competitiveness.
For the rest, I should like to suggest a few ways in which more jobs in manufacturing industry might be created in the region about which I have been speaking. In my view, when recovery comes, it must be investment led, not consumer led. That could be done as the CBI advocates—so it does not always agree with the Government—by taking steps to stimulate investment in the infrastructure, thus providing sorely needed work for the construction industry, as the noble Lord, Lord Dean, advocated.
Further investment in transport, especially rail transport, is urgently needed, not least in preparatory work for the freight links from the North West to Europe which are essential if the region is to take full advantage of the single European market. Traditionally, many manufacturers in the area have used the Channel and Humber ports for exports and, more recently, the developing facilities at Felixstowe and Harwich. However, routes to those ports are becoming increasingly congested. If the North West is not to find itself isolated on the periphery of Europe, north-south and east-west access by road, rail and indeed air must be improved as a matter of urgency.
I referred earlier to NORMID TEC, the council responsible for training and enterprise in the part of Cheshire where I live. In the report just published by that TEC on its first nine months of operation until 31st March this year, the chairman has written:
"We need more funding flexibility from Government. If next year does not bring greater Government commitment to the strategic alliance, the TEC will be unable to carry out a business plan in line with its March statement. In addition, many of the board members leading the TEC movement will return to other priorities in life and the TEC movement could wither on the vine".
The noble Viscount would be surprised if, in a debate of this kind, I made no reference to training. I share the anxieties of noble Lords on this side of the House concerning the adequacy of the resources available to TECs to promote training, and

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particularly to fulfil the Government's youth training guarantee to 16 and 17 year-olds. Those anxieties were expressed most recently in the debate on an Unstarred Question only last week. Therefore, I shall not dwell further on the subject on this occasion, except to ask the noble Viscount the following question. Can he confirm the truth, or otherwise, of a report in the Financial Times of 1st July that the Secretary of State has launched an investigation into why TECs are failing to meet the training place guarantee? If the report is well founded, that is an encouraging sign and one which I hope the Minister will be glad to acknowledge.
But increased training, though of crucial importance for the long term, will do little or nothing to create more jobs in the immediate future. That objective could, however, be more readily achieved by placing strong emphasis on the enterprise aspect of the TECs, mainly by encouraging business start-ups and growth opportunities in small to medium-sized companies. I was therefore delighted to learn that during its first nine months of operation NORMID TEC has been instrumental in starting 210 new businesses and that it has set itself the target of at least 370 new starts in the next year. Further, the TEC considers that an important part of its remit is to liaise with other local organisations in providing funding for the counselling and informed advice which play such a vital role in ensuring the long-term survival of fledging enterprises.
But what I think the TEC of which I am speaking would most value—that is, apart from the provision of additional funding—would be the ability to exercise more flexibility than it has at present in using the resources with which it is provided to meet the needs identified not by the Government nor their agents but by the TEC itself. In his reply, I hope that the noble Viscount will indicate that both he and his department have sympathy with that aim and that they will do all they can to help achieve it.
I conclude by simply expressing the hope—as, indeed, did the noble Lord, Lord Dean—that the debate will help in some small way to alleviate the serious problem to which the Motion has called our attention.
4.9 p.m.
Lord Joseph: My Lords, I am glad to take part—I hope constructively—in the debate initiated by the noble Lord, Lord Dean, and to recognise, as I start, that suggestions for economy in any of our services, such as were identified by the noble Lord, Lord Rochester, are highly relevant to the competitive economy which we need to reduce unemployment.
Examination of the proposition put forward by the noble Lord, Lord Dean, would be more usefully considered under several different headings. First, there is the loss of jobs due to what used to be the serious British problem of overmanning. That was the responsibility of management as well as the trades unions, and the blood letting of the early years of the
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1980s did at least, with great misery, squeeze out some of the overmanning that had, until then, crippled our competitive performance as a country.
In addition to the job losses due to overmanning, or —dare one put it—as a result of bad management. there are the constant, always to be expected, failures of firms, large and small, in manufacturing and services.
In that context I must acknowledge that it is a tragedy that the Conservative Governments of which I was, until 1986, a member, misjudged the strength of the boom in the second half of the 1980s and thus had to introduce high rates of interest to reduce inflation with the consequences that we all recognise and deplore today. It is true that most of our main markets went down the same path and now suffer from recession which limits the exports that we would otherwise make to them.
It is ironic that today there is announced an examination, at the behest of Her Majesty's Treasury, of the performance of the profession of economists in forecasting. The National Institute of Economic and Social Research has this very day published a report which I am eager to read. It examines the lessons of that failure in economic forecasts. It is a lesson which. I am sure, will be taken on board by the Treasury which, after all, initiated the research. I had believed that only Professor Tim Congden had identified, early on in the mid-1980s the dangers that this country's economy faced, but perhaps there were others.
There is not much comfort for Her Majesty's Opposition from what I have just acknowledged: namely, the Tory Government's failure to recognise the strength of the boom in the mid-1980s, because —I make, I suppose, a partisan point, but only to protect my flank after my candour—Her Majesty's Opposition were at that time pressing the Government to lower interest rates further, when the real need, as we now see with hindsight, was to raise them.
I come now to a third category of the unemployment which the noble Lord. Lord Dean, rightly deplores. Even in a healthy economy there will always be job changes. Jobs will always be lost, but —this is the huge difference—at the same time jobs to which people can move will be being created. They will not always be in the same place or in the same skill; but there will be new jobs. What we all deplore now is that there is not the normally-to-be-expected birth of new jobs in anything like the numbers needed to balance the loss of existing jobs.
There are some encouraging signs. I do not want to exaggerate them. There is the revival of the car industry under the management of the Japanese. They are welcome here with their management skills. I recommend that noble Lords look at that remarkable book—I shall declare an interest in a moment—The machine that changed the world—which introduces the concept that after the craft production of the centuries leading up to the 19th century, and after the mass production of the late 19th century and the first three-quarters of this century, the Japanese have introduced lean production (lean manufacture) which puts all competitor countries and all managements in services as well as manufactures on their guard to look

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at the economy of labour at every stage from marketing through design, through manufacture and all the rest of the processes.
I have to declare an interest merely because my stepson wrote one of the chapters in The machine that changed the world. It is a graphic and vivid portrayal of the remarkable initiatives in their manufacturing skills that the Japanese have taken. The blessing of the Japanese coming here is not just that they revived the main factories involved, but they had benign repercussions in the sub-contracting world—subcontractors both British and from elsewhere. Of course there is not nearly as much as we should like, but there is new home-grown enterprise as well, although all new investment is now hindered by the squeeze of the banks which have their own problems caused by their past mistakes with which to deal.
There is a deeper problem preventing the creation of new jobs in the United Kingdom that all parties in this House and another place need to face. We have to ask ourselves where jobs come from. I believe that the answer is that whether they are jobs involved with machine tools or heavy equipment, and whether they are bought for investment or consumption, jobs come from customers. Jobs come from customers at home and abroad. Unless we satisfy customers with the value for money of our production of goods or services, we shall not hold the jobs. That is true of public sector jobs as well as private sector jobs, because public sector jobs are paid for out of taxation on private sector jobs. If private sector jobs do not yield enough employment and dividends to produce good taxation, there will not be the money to pay for many public sector jobs. The two are linked, and all depend upon customers.
Who creates the perceptions that this or that market of customers is ill-served at the moment and could do with new products, new variants of existing products or better products or services than are now on offer in terms of value for money? I believe that individual is underestimated in our society. He is of course the prime mover. The French have a word for it which we use (the entrepreneur). We can call the function that of barrow boys or barrow girls, but they are the prime movers.
The noble Lord, Lord Dean, would have made an even more effective speech if he had identified the fact that in this country, perhaps more than in our rival countries, we have discouraged that character, that job creator—the entrepreneur. The entrepreneur is not deeply loved. We have to explain to people why he or she is so important. I shall argue today that one of the main obstructions to enterprise (to risk taking) is something that could be altered if we were to recognise the damage that it does. I am talking about capital gains taxation.
I do not believe that any noble Lord will disagree that people who create jobs take risks. They invest their time and energy. They often leave existing jobs. They say to their wives, "We must mortgage the house". They take great risks. They give up their company cars, their pensions, their monthly or weekly cheques, and they take risks. They do not all do it for money. They have other motives; but probably all of
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them, to some extent, do it for a money reward. With that money reward, in the rare cases where that risk comes off—noble Lords will be aware that most entrepreneurial efforts fail—the risk taker finds that there is a terrible penalty to be paid through capital gains tax.
I admit that recent Chancellors of the Exchequer, including Mr. Norman Lamont, have mitigated the tax, and that there is a new base of 1982 values which is indexed for inflation. But, on the other hand, my noble friend Lord Lawson raised the capital gains tax from 30 per cent. to 40 per cent., I believe most unwisely. That capital gains tax produces a big figure. I believe that the figure is £2.5 billion for the most recently published year, but that is a trivial fraction of this country's total tax revenue. I believe that it is between 1 per cent. and 2 per cent. So I am not asking for something unimaginable when I say that it should be reduced sharply or abolished. There are many arguments for and against it. I shall not bother the House with them today. I believe that it is an important factor in discouraging risk taking.
Let us look for a moment at our competitor countries. The US, Australia and Spain have rates of capital gains tax either similar to ours or above ours. Japan, however, has a rate of 20 per cent. with an option for the payer to pay only 1 per cent. of the proceeds of sale of the asset. France has a 16 per cent. rate, ours is 40 per cent. Germany has a heavy rate for short-term gains, but nil for any gain realised after six months. In Belgium, the Netherlands and Italy there is no capital gains tax. Thus, I suggest that the Government could consider abolishing the tax, or reducing the rate or moving to a short-term rate with no capital gains tax when the asset is kept for more than a limited time.
I am not saying that this is the only factor that will bring about the harvest of new jobs to balance the loss of jobs. There are numbers of cultural factors that governments—no matter how much they wish to— cannot quickly or easily alter. For example, there is a tendency for the most talented people in our country —and I do not mean only those who are academically talented, but those who possess shrewdness in terms of the market—to be urged to take salaried jobs and not to take risks. I tremble to think what will happen to our entrepreneurial capacity when the Conservative Government carry out their project to double the proportion of our population going on to higher education. Whether it is snobbery or ignorance, there is a tendency in higher education to urge people into what are thought to be more "respectable" activities. I say nothing against those activities. People are urged into the professions such as the Civil Service, professional services, social services and academic life itself, neglecting the fact that all these careers depend on the prosperity that comes from manufacturing and services.
Of course, there are reasons against bright people going into industry. Until recently, there was Luddism. Thank God, there is less now. There are all kinds of mismanagement. Some of our companies are the best in the world in the terms of management, but some are less than ideal.

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Thus those who worry about unemployment—and I do not doubt that your Lordships do—should, when considering how to deal with it, contemplate the action I suggest. What I say would be true, I believe, whether or not we had joined Europe and the exchange rate mechanism. We need it if we are to prosper with relatively full employment as a country. I argue that all parties need to recognise the central importance of the entrepreneur. If we can, we need to convince the country that the cultural hostility to entrepreneurship is self-damaging. We also need to abolish the capital gains tax or to shift to a short-term tax only, as in Germany.
All I am saying is relevant to the services as well as to manufacturing. The subject of entrepreneurship and how to encourage it is important, recognising that few of the risks that entrepreneurs take succeed. We need many risk-takers so that there will be a good enough birth-rate of small firms to give us a yield over time of the medium sized firms which are so sadly lacking in this country. Some of them will grow into multinational giants employing scores of thousands of people.
Of course, training and investment are important; so are research and development, education and management. But the capital gains tax should be altered. It would not be a panacea, it would not work overnight, but it is an important part of the answer to the Motion of the noble Lord, Lord Dean.,
4.24 p.m.
Baroness O'Cathain: My Lords, one of the strangest things about your Lordships' House is that the words "my noble friend" do not necessarily mean what they seem. I was asked by a friend, who has extended great friendship to me since I joined this House, to take part in the debate today. I hope that we shall still be friends when he hears what I wish to contribute to the debate—though I am unable to call him "my noble friend".
I am grateful to the noble Lord, Lord Dean, both for his instigation of the debate and for asking me to participate, because I believe that it is important that we refocus on the job losses that have occurred in manufacturing industry, not from the narrow view of this sector in isolation, but from the viewpoint of the economy as a whole.
When I first joined manufacturing industry in 1966, there were 9 million people employed in it. In the sector in which I worked, the motor industry, there were 858,000 people employed. The comparable figures in 1990 were 5.1 million in manufacturing industry and 248,000 in the motor industry. On the face of it, that is a huge reduction.
The numbers for 1966 masked low productivity, bad working conditions, and, most destructive of all to our international competitiveness, appallingly bad labour relations. I can truthfully say that although everyone employed in manufacturing industry was a "worker" (or pretended to be), there was precious little mutual respect. Fresh from university, new to
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this country, I found it pretty difficult to accept that no one on the shop floor had a good word to say for management and vice-versa.
We all know what happened. There was an even further deterioration in Britain's industrial position. To give one example, output per man in the car industry was five cars per annum compared with Japan's 23. No wonder that we were heading fast down the slippery slope to becoming an "erstwhile industrial country".
However, the rot stopped. New attitudes prevailed. People began to accept that management did not have the monopoly of all the good ideas. Unions accepted that they could not condemn their members to boring, repetitive jobs with antiquated work practices which had resulted in a low wage, non-competitive industrial sector.
In 1966, car output amounted to 1.6 million units, produced by a workforce of 858,000 people. In 1990 the comparable figures were 1.3 million units produced by a workforce of 248,000—a huge increase in productivity. New investment in technology in the intervening 24 years led to this increased productivity and resulted in an improvement in the working environment, but it was inevitably accompanied by job losses. However—and this is most important—that very investment led to a great increase in jobs in the service sector.
The old industrial classifications can no longer be examined in isolation. So many jobs previously classified as manufacturing are still being done, still exist, but are now called something different. I feel sure that the job losses which are causing anxiety to the noble Lord, Lord Dean of Beswick, are nothing like as numerous as a bald examination of the figures suggests.
Let me just give an example from my current area of activity. The Barbican Centre has about 1,000 people employed on site, yet the Barbican Centre staff —that is those who are paid directly by the Corporation of London which owns, funds and manages the centre—number just over 200. The remaining approximately 800 include self-employed maintenance men, contract cleaners, contract caterers, security guards employed by a contract security firm, contract telephonists, self-employed stewards, and so on. All these people would previously have been classified as employees of the Barbican Centre. If one takes the narrow classification, it looks as though job losses of about 80 per cent. have occurred. The reality is that as many people as before—or almost as many —are employed at the centre, but not registered as such.
Of course, I am not saying the experience of the Barbican Centre is mirrored absolutely in manufacturing industry. I am sure that it is not. What I should like to suggest is that the same tendency occurs to give short or long term contracts to groups of individuals who in turn will operate in a position of service to the sector. Yet these people do not appear in the manufacturing industry statistics.
Perhaps we should press for a total overhaul of the statistical service. As soon as I say that, I fear that there will be groans all round. In principle, it might

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not be a bad thing; but in practice it would be an exercise with little benefit to anyone other than the economists employed to undertake the task, and of course it would be a very expensive undertaking.
It appears that the message of the fundamental change in the structure of the whole labour force in this country has still not got through to some people in the House. It would not matter too much if ignorance of the change stopped at the doors of the Palace of Westminster; but I fear that debates like this can cause several problems if the facts were misrepresented.
Problem one: a superficial examination of the figures could lead people to believe that British industry is in terminal decline. This is not so. But this in turn could discourage customers from buying our goods. Who wants to back an industry in terminal decline? British industry is internationally competitive to an extent that I wish it had been in the 1960s and 1970s.
Problem two: bad news stories about a so-called massive decline in British manufacturing industry could cause a marked reluctance for our young bright school-leavers and graduates to consider the sector as an employment opportunity. This would be a disaster, as the manufacturing sector needs all the brains it can get. This point has been made much more eloquently by the noble Lord, Lord Joseph.
Problem three: international investors could give Britain a wide berth when deciding where to locate their future manufacturing facilities, to the detriment of Britain's strong geographic and financial position vis-a-vis the European Community.
For these three considerations and many more, would it not be better if we all tried to see the job losses in manufacturing industry for what they in part are; namely, a transfer of work from the narrow manufacturing industry classification to the service sector? The figures support this. In 1966, of a total workforce of 26.2 million, manufacturing industry employees totalled 9.1 million and service industry employees 1.6 million. In 1978, of a total workforce of 26.3 million, manufacturing accounted for 7.3 million and services 1.5 million. By 1990 there had been a fundamental shift: the workforce totalled 28.5 million, manufacturing industry 5.1 million and services 15.9 million. These statistics are probably indigestible but the percentages are easier to digest.
In 1966 manufacturing accounted for 35 per cent. of the workforce and the services sector 6 per cent.; in 1978 the comparable percentages were 28 per cent. and again 6 per cent. In 1990 the percentages were 18 per cent. and 56 per cent. Added to this, the self-employed category had increased by 94 per cent. from 1.7 million in 1966 to 3.3 million in 1990. Of course, I am not claiming that all the increases in the service sector and self-employed categories are replacing the job losses in manufacturing, but I suggest that a large proportion are.
Finally, we must be realistic and admit that there was a major problem in keeping large numbers employed in huge manufacturing sites on low wages in low productivity and repetitive jobs, while our competitors were achieving great increases in
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manufacturing productivity. We are not, nor do we want to be, a low-wage, low-expectation, industrial economy—no other developed western economy is. We now have a manufacturing sector that is lean, efficient and meeting delivery schedules that would never have seemed possible when I first joined the sector in 1966. I hope that through this debate we become more supportive of the sector and do not talk ourselves into a downward depressive spiral.
4.33 p.m.
Lord Desai: My Lords, we are grateful to my noble friend Lord Dean of Beswick for having initiated this debate. Already we have heard some excellent contributions and before I make my own I must say that I am an academic with no experience of either manufacturing or government but I hope to talk in fairly general, but I hope analytical, terms about the problem at hand.
There are clearly some short-term aspects of the problem which I shall mention quickly now and come back to later. We are in the middle of one of the most serious post-war recessions. It is going on much longer than we expected and it is costing a lot of jobs, not just in manufacturing but all around. One of the factors which motivates concern on the part of the noble Lord, Lord Dean, and many others is not just that there have been losses in manufacturing but that the jobs which have been created elsewhere are not sufficiently well paid to enable us to relax and say, "Well, there are jobs".
For a number of years we have slipped back from a full employment position. Whereas in the 1960s we would have thought of a 2 per cent. unemployment rate as full employment, now we would be lucky to get a 6 per cent. unemployment rate. That is a long-term structural shift in the context of which the short-term problems are somewhat severe. However, we have to admit that manufacturing sectors in all economies are shrinking. That is the nature of manufacturing. Productivity has grown all round the world, and to some extent we can produce the same manufactured goods with fewer workers. That has to be welcomed: we cannot say nay to it.
The concern is that somehow here the shrinkage of the manufacturing sector is greater than it has been in other countries. I do not want to give statistics but that is a problem I want to turn to because, as the noble Baroness, Lady O'Cathain, said, there has been a growth of productivity and we have a leaner manufacturing industry. However, I think it is leaner and somewhat smaller than used to be the case. Productivity growth there has been, but the overall growth rate has not kept pace. Although we had a spurt of rapid growth between 1981 and 1988, overall in the past 15 or 20 years—I cannot be too exact about this—the growth of the economy has not been commensurate with the growth of productivity so we now have a manufacturing sector which is smaller than one would ideally wish.
In spite of the growth in other sectors such as services, we still have an economy where insufficient jobs are being created and we have to consider why that is. The reindustrialisation of Britain, as it was

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fashionable to call it, has been going on for about 20 years. First of all, after the oil price rise we had a shift of products from here to elsewhere. Many activities went over to the third world, to Eastern Europe or elsewhere. We have had big import penetration and a problem of a declining export share. That decline has been halted lately but we still see that the British economy has a perpetual balance-of-trade problem which we have to cope with again and again.
In the past we have coped with that problem by successive devaluations, and one has to admit that the problem persists and successive devaluations cannot be the answer. The solutions must be structural ones and one cannot just rely on perpetual devaluations. Given that we have faced such crises since 1973, as many of your Lordships will be aware, the whole nature of manufacturing has changed from what used to be called the old Fordist technology to a new and more flexible technology, and that technology increasingly requires a workforce which is much better skilled and educated than we used to have. Normally the ideal was that a school-leaver went into manufacturing at 15 or 16, and those who stayed on went into the so-called better jobs, as the noble Lord, Lord Joseph, has said.
We can no longer afford that. The people who left school at 16 will not get jobs in manufacturing: I do not know where they will get them, but they will not get them in manufacturing because manufacturing needs now a whole new range of highly skilled and education-intensive jobs. For that kind of manufacturing industry we have to prepare ourselves in advance, both with the good training of our school-leavers and the perpetual retraining and re-education of those who are already in manufacturing jobs. We must constantly retrain and give sabbaticals to manufacturing workers. I enjoy sabbatical leave in my own job and therefore I believe everybody should have a sabbatical year, even manufacturing workers, so that they can retrain and recharge their batteries. Unless we have such a flexible, highly educated workforce we shall not be able to maintain even such a manufacturing sector as we have.
There is a problem resulting from the shift away from the UK in the 1970s, followed by the second shock of the decline of the Fordist technology and the emergence of new technology. For a long time we were not so much a high wage economy as a low wage, low productivity economy. The combination of low wages and low productivity meant that our unit labour costs were much higher than elsewhere. Some of that was no doubt due to overmanning, bad management and the wrong choice of product, but it was also due to the fact that in the 15 to 20 years after the Second World War, while our current rivals were engaged in reconstructing their economies, we had an easy time in export markets. While we had an easy time in export markets, roughly between 1945 and 1965, we did not sufficiently renew our capital equipment and invest in new technology. Therefore, we suffered a severe shock when our rivals—Germany, Japan and other countries—recovered and started competing with us. I
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believe that we have to go that far back to trace the roots of our manufacturing decline, without in any sense minimising the short-term factors.
Because we were a low-wage, low-productivity economy, attempts were made in the 1980s to reduce overmanning, as the noble Lord, Lord Joseph, and the noble Baroness, Lady O'Cathain, mentioned. There was an immediate rise in productivity. However, we did not change the educational and skill basis of our manufacturing. Therefore we are not now a high-wage, high-productivity economy; we are somewhere in between. We have not been able to produce the new generation of manufacturing products, which are research and development intensive. Although I admit to comparative ignorance in this respect, by and large what we are doing is producing the goods which we used to produce but with fewer workers. What we are not doing is producing new goods and new services, in which the market lies. The markets in advanced capitalist economies will lie in a variety of new products, as the Japanese have demonstrated with a number of electronic products. The goods which we used to produce, and which we still make with high productivity, are goods which newly industrialised countries in the third world are better able to produce. They have naturally lower wages than we do and we shall not be able to sustain our advantage in those activities.
In the manufacturing sector there will be further job losses as some activities face greater competition. Therefore, we have to continue to add new manufacturing activities where the new jobs will be created. In that respect we have to consider strategies in terms of encouragement through taxation and other policies to direct investment into manufacturing or policies regarding the supply side of the labour market.
As many noble Lords have pointed out, we have a much greater flow of direct investment from Japan, America and other countries. I believe that we have to say clearly that we welcome that. We live in a global economy. It is not possible to shield the UK from world market forces. Indeed, if we are interested in job creation rather than specifically jobs created by British employers we have to welcome job creation from wherever it may come. So long as they are good manufacturing jobs and high productivity jobs involving good labour relations—and many Japanese companies have demonstrated some tremendously innovative aspects of labour-management relations —we should welcome that.
There is direct investment from all over the world which is creating jobs. Of course there is anxiety that companies which come may leave quickly. Therefore, we have to devise a set of policies which will encourage job creation in manufacturing industry both by British employers and by other employers. However, a policy of merely inviting direct investment and perhaps keeping the lid on the growth of earnings will not be sufficient to halt the shrinkage in the manufacturing sector, despite the growth in productivity. There are some initiatives taking place, but in many respects we need a much greater presence in basic research and

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development which will identify where the next generation of products will come from. There is a great deal of such investment in Japan, we hear, in the new generation of computers and new materials. We must employ our scientists, who are very good—some of them in basic research and some in applied research —to look 10 or 15 years ahead and tell us what those products are likely to be.
Of course it is a risky business; no one either in the private or the public sector can predict the outcome. However, unless we look that far ahead and experiment with new lines and introduce pilot projects, either in the public or the private sector, and unless we train the labour force which will come on stream at that time in the appropriate skills for the task, I believe that we might be discussing this subject again in five years' time; and that would be a tragedy.
4.47 p.m.
Lord Mackay of Ardbrecknish: My Lords, it is always a pleasure to follow the noble Lord, Lord Desai. Indeed, he and I might be forgiven for thinking that every time we put our names down to speak in a debate the mysterious powers who draw up the list of speakers always put us one after the other. Usually they put the noble Lord first. The reason for that will immediately become obvious when I say that I should follow the confession with which the noble Lord began his speech by confessing that I was not involved in industry; nor, your Lordships will be pleased to hear, have I been an academic economist.
When I decided to take part in the debate for which the noble Lord, Lord Dean of Beswick, has kindly provided the opportunity, I read some papers and newspaper articles by economists. In such cases I find that if I have a 50 per cent. scoring rate in understanding them I am doing pretty well. I managed that scoring rate with one economist and thought that I might take part in the debate.
As I read some of the papers which I accumulated three questions came to my mind. What is manufacturing industry? Who is counted as working in manufacturing industry? Is the movement in the size of the labour force, either down or up, a true measure of the prosperity of manufacturing industry?
The noble Baroness, Lady O'Cathain, dealt with that point in some detail and I was very interested to listen to her. While the statisticians may define manufacturing industry rather more tightly than the public definition, there is a general view, at least in Scotland and I suspect in other parts of the United Kingdom with a similar industrial history, that manufacturing industry inevitably means a great deal of sweat, toil and tears on the part of those who work in it, is usually very dirty and usually involves knocking the blazes out of sheets of steel to create something else. For many decades that would have been a very good definition of manufacturing industry. No doubt noble Lords could, like myself, take people round their own areas and name some of the places which have disappeared from the map, places which employed very many people in just those kinds of manufacturing industries. From that we
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could easily conclude that manufacturing industry in the United Kingdom was in serious decline and even in some parts of Scotland in terminal decline.
But that is not the whole of manufacturing industry. It may be a small part of it but there is a lot more to manufacturing industry than just that. For example, the noble Lord, Lord Rochester, drew our attention to one narrow part of one of the important manufacturing industries; namely, the chemical and pharmaceutical industry. It is well worth saying that that is not in decline. In fact the United Kingdom chemical industry had a trade surplus in 1991 of £3 billion. Output over the past 10 years has increased by 45 per cent. Two of the top 10 pharmaceutical companies in the world are British. In fact those two companies produce on a world scale some of the most important drugs which are widely sold around the world. Indeed, we are the third largest exporter of pharmaceutical products.
Another terrific growth area in manufacturing, especially in Scotland, is in electronics and computers. Fifty per cent. of all personal computers sold in Europe are manufactured in the United Kingdom. That is not a sign of terminal decline in a manufacturing sector. IBM personal computers alone are worth £2 billion in export value to this country.
Greenock is a town which in many ways epitomises the change from the old to the new industries. According to the last statistics that I saw, IBM employed something like 3,000 people in that town. National Semiconductors, which is also there, employs around 1,500 people and has just announced another 250 jobs. That is a considerable number of people. But I suspect that people who are driving past Greenock en route to their holiday may look at the rather sad sight of Scott Lithgow's yard which is all but empty and think that manufacturing industry had gone from that part of Clydeside. But it has not. It has changed. However, I suspect that for the people who are employed in the new industries in many ways that employment is a great deal better, more pleasant and probably much better paid. We have to be very careful when we define manufacturing industry.
The computer industry brings me to my second question: who is counted as working in manufacturing industry? With regard to the computing industry, it is easy to see that the people who manufacture the hardware indeed work in manufacturing industry. But are those who produce the software without which the hardware cannot be made to work working in manufacturing industry? I do not know the answer. Perhaps my noble friend will help me when he replies.
Perhaps we can go a step further. Are the people who sell and those who teach others to use the computers working in manufacturing industry? Without them the whole exercise would be pointless. There may be many more people working in manufacturing industry than we count. The noble Baroness, Lady O'Cathain, mentioned the way in which contract cleaners are counted. For example, consider an industrial commercial manufacturing plant. If the cleaning or catering is contracted out, do those people suddenly drop off the manufacturing list count? I understand that they do and I suggest that in

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that case the manufacturing list count is not a very sensible figure. It certainly cannot be considered to be a good thermometer of the health of British manufacturing industry. Perhaps we should look at some other factors in the health of British manufacturing industry.
I have already mentioned the strength of the pharmaceutical industry and the electronics industry. In general, our share of world manufacturing trade has risen over the past three years. I understand that we export a larger percentage of our gross domestic product than do the Japanese. That is not the sight of a manufacturing sector in terminal decline.
With regard to cars, we are seeing the rebirth of the British car industry. I regret that it is not driven by British manufacturing itself and has to be driven by assistance from the other side of the world. But it is being driven and motor cars are being exported. Car exports from the United Kingdom were up something like 50 per cent. in 1991 from 1990. Production forecasts for cars made in the United Kingdom show an increase of 50 per cent. before the end of the century.
There is one interesting statistic which in a way has turned on its head over the past 10 years the whole way in which one looks at the production of television sets. We have a trade surplus in televisions. Our production of televisions doubled in the 1980s. Television exports are up something like 10 times. I hope that with those examples I have illustrated to your Lordships that all is not, as some people try to pretend, doom and gloom in the manufacturing industry.
The noble Lord, Lord Dean of Beswick, quoted my right honourable friend Michael Heseltine in the other place in the debate on Monday when he accepted that there was a recession in the United Kingdom. The noble Lord did not go on to point out that my right honourable friend also said that there was a similar recession in Canada, Germany, Switzerland, Australia, New Zealand and certainly the United States. We all know that, and that the considerable recession in the United States endangers the re-election of President Bush. We have a problem of mild recession here but we must not ignore the fact that it is a problem shared by other countries around the world. One can only hope that the G7 leaders have perhaps taken some steps to bring a little life back to the world economy.
One certainly hopes—the hope has been expressed frequently in your Lordships' House of late—that the United Kingdom presidency of the Community can drive the Uruguay Round and the GATT negotiations to a successful conclusion. But what can governments do? There is some feeling, which is perhaps stronger on the Benches opposite, that if only governments intervened more all would be well. In my lifetime I have seen governments do a lot of intervening. They are very good at identifying sunset industries and pouring lots of money into them. I must say that it can be for the best of all possible reasons. Often those sunset industries employ vast numbers of people and
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to see those companies go down means that considerable numbers of people are thrown on to the unemployment heap.
I do not think it is nearly so easy for governments to pinpoint the sunrise industries. My noble friend Lord Joseph in his interesting speech told us clearly that the people who will identify the sunrise industries are the entrepreneurs. Last October, the CBI in a paper called Competing with the World's Best from the Manufacturing Advisory Group said:
"It has become quite clear in recent years that Central Government cannot and should not be in the business of picking winners".
That is not to say that central government should do nothing. Central government have roles to play and they should play them. I welcome the announcement last Friday by Michael Heseltine of what he intends to do with the Department of Trade and Industry. He does not intend to make it interventionist. He intends to try to make it a vehicle to help industry develop and expand and perhaps even to help the entrepreneurs mentioned by my noble friend Lord Joseph.
I especially believe that we need the new industrial competitiveness division which he intends to set up. I understand that that division will look at and guard against anti-competitive legislation and anticompetitive action both in the EC and outside it. Perhaps I may tell your Lordships of a rather worrying piece of anti-competitive action which I should like to draw particularly to my noble friend's attention. I understand that the European Commission proposes that shipyards in the former East Germany should receive subsidies of something like 36 per cent. on the price of building a new ship. In the, remainder of the Community that subsidy varies from 9 per cent. to 13 per cent. It looks as though shipbuilding demands are beginning to increase around the world. What chance of success does the United Kingdom have if the Japanese and Koreans subsidise their industries and within the Community there is some preferential subsidy? I am naturally interested because at Kvaerner and Govan in Scotland we have one of the few remaining major shipbuilding yards in the country. It has been doing well. I should like it to do much better. I should not like to believe that it was failing because of unfair competition.
The Department of Trade and Industry proposals go in the right direction. The taxation policies of the Government have certainly gone in the right direction. Low inflation is essential for business and commerce, as is some certainty about exchange rates. So long as we are not too pessimistic and do not paint a pessimistic view to the remainder of the world we can have every confidence in our manufacturing sector.
5.1 p.m.
Lord Alport: My Lords, I join in thanking the noble Lord, Lord Dean of Beswick, for giving us an opportunity to discuss unemployment in industry. I hope that noble Lords will forgive me if I interpret the Motion in a somewhat wider sense. I have to confess that, unlike my noble friend Lord Mackay and the noble Lord, Lord Desai, I am not an economist. I am certainly not an industrialist. I am simply a retired politician.

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The loss of jobs in manufacturing industry can be properly assessed only if it is considered in relation to unemployment as a whole. The most surprising aspect of the last general election was the fact that unemployment was not made a central issue in the campaigns of any of the parties. Yet it is from unemployment and the fear of unemployment that most of the social and economic problems that we face are derived. I refer to the decline in consumer demand, increased Government expenditure, falling industrial output, house repossessions, mortgage arrears, crime, homelessness and the pervasive sense of insecurity and pessimism which characterise the mood of Britain today.
I shall not worry your Lordships with too many statistics. However, as has already been said, between March 1991 and March. 1992 employment in the manufacturing industries fell by 300,000. Between 1979 and 1987 unemployment rose from under 4 per cent. to 11 per cent. and, after a decline to about 5.5 per cent., is now nearly 10 per cent. Noble Lords know that the figure is now over 2.7 million on the present statistical basis; and on that basis it will reach 3 million in six months' time. That is the equivalent of about 4 million on the statistical basis used in 1979. The cost to the Exchequer is between £350 million and £400 million for every 100,000 out of work or about £12 billion a year. According to the press, the Government are considering ways in which to reduce that huge cost by cutting some unemployment benefits.
The means test, civil unrest and poverty are too depressingly familiar to those of us who have lived long enough. Those are factors that we promised ourselves would never occur again. Of course there is a difference between this slump and the great depression of the 1930s. The social security safety net is much more effective, and training schemes are designed to take many young people off the streets. But those are palliatives. They do nothing to solve the real problem.
There is no substitute for a job which enables men and women to earn an income from employment with which to meet their needs and those of others who may be dependent on them. It was assumed in the early 1980s that job losses in manufacturing industry could be absorbed by the expansion of employment in service industries. That always seemed to me to represent the belief that we could have a prosperous economy based on taking in our own washing. It is our ability to manufacture, export and sell, and the skill of our industrial management and workforce which makes economic progress possible.
There is no alibi in the belief that the British do not work as hard as the Japanese or are not as well trained technically as the Germans. Nor is it sufficient to argue that unemployment is also a problem of other industrialised countries, as my noble friend Lord Mackay suggested. What is missing today is public recognition by the Government that unemployment is the major issue which the country faces, and a commitment by them to use all the resources at their disposal to provide jobs.
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The attack on unemployment must be the Government's first priority with the manufacturing base as a starting point. I believe that the construction industry offers the most effective point of entry. Action on public works, transport, housebuilding, cleaning up the environment—"priming the pump", and "a new deal" are familiar slogans to my generation—represents a combined effort between the Government, industrial management and trade unions. All those factors may mean higher taxation. But I would rather see money spent on getting men and women into work than the borrowing of billions of pounds to support increasing thousands on the margin of poverty and desperation.
Such action will mean much courage on the part of government. It will need the abandonment of the laissez-faire policies of the past decade—that decade of debt—and the belief that such problems can be solved by some form of financial legerdemain.
Someone said to me today, "I'm glad that I lived my working life when I did because then there was hope". People feel instinctively that reliance on market forces is not, and never was, enough to cope with the present unemployment situation. The initiative lies with the Government and Parliament. I hope and believe that under the Prime Minister's leadership a new drive will be undertaken and that if we have to live through another winter of discontent the spring of revival and declining unemployment will not be far behind.
5.8 p.m.
Lord Ezra: My Lords, the time has now come for this very interesting debate to draw to a close. We are much indebted to the noble Lord, Lord Dean of Beswick, for having introduced the Motion and for so clearly stating the problem. He reminded us that over the past year about 350,000 jobs have been lost in manufacturing, far in excess of the previous year. Unfortunately this trend looks likely to continue. While no doubt some of that job loss may lead to leaner, more efficient operations, a large part of it undoubtedly is due to businesses having to go out of work into bankruptcy, unable to cope with the present recession. Therefore such job loss is a serious problem.
Noble Lords who have spoken in the debate have each made an important contribution. My noble friend Lord Rochester referred specifically to the problems in Cheshire with which he is familiar, in particular to ICI at Runcorn and to the problem which that major chemical manufacturer faces as a result of the substantial recent increase in electricity prices. This issue will no doubt be dealt with when the noble Viscount, Lord Ullswater, replies. He also drew attention to the problems of the TEC in that part of the world. It was set up with the objective of stimulating effective training by involving practising industrialists. However, the scheme seems to have run into serious difficulties as a result of lack of sufficient funding.
The noble Lord, Lord Joseph, speaking from his great experience in government, drew attention to the

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key role of the entrepreneurs and the need to stimulate them. He also spoke of the inhibiting impact of the present level of capital gains tax.
The noble Baroness, Lady O'Cathain, from her business experience, told us that she considered that there was a leaner, more efficient manufacturing sector. She is absolutely right. There have been great achievements in British manufacturing and there are companies which are competing successfully on the world stage. However, the problem is that there are not enough such companies and that their totality does not represent what we need to re-establish our trading position. I shall deal with that matter later.
The noble Lord, Lord Desai, with his academic experience, thought that, although manufacturing employment throughout the world had shrunk in recent years, the shrinkage had been taken too far. He drew particular attention to the need to put more resources into training and education.
The noble Lord, Lord Mackay, strenuously rebutted any thought that British industry was not performing effectively and efficiently. He identified the role of central government as being one of guidance in creating the right framework and not one of intervening directly. He supported the recent measures announced by the President of the Board of Trade for getting closer to the industrial sector.
The noble Lord, Lord Alport, emphasised the key importance of the unemployment problem. He considered that we had not paid sufficient attention to that problem which is now having a wider social economic impact than we may have realised.
So all in all we have had a most considered and important debate on the subject. Perhaps I may add a few thoughts of my own. Undoubtedly there has been a considerable improvement in the efficiency, leanness and effectiveness of many sectors of British industry. By way of example, I refer to the coal industry with which I was associated for many years. As a result of world developments, it is going through great difficulties. However, during the past five years its productivity has improved enormously—indeed, at a faster rate than I thought possible when I was involved. That is a remarkable achievement, and there are other industries which have done the same.
I believe, however, that for one reason or another we have allowed our industrial capacity to diminish below desirable levels. That problem was alluded to in the report on overseas trade produced in 1985 under the distinguished chairmanship of the noble Lord, Lord Aldington. That was the first year in which we began to show a deficiency on our manufactured trade balance. The report made many recommendations on how the problem could be dealt with. Unfortunately those recommendations were not sufficiently pursued. In subsequent years we have seen a substantial increase in the deficiency of our visible trade balance. Even now during a recession, when one would have thought that the balance would have evened out and that there would have been less demand for imported goods, we still have an annual rate of deficiency on our trade balance of approximately £13 billion.
That suggests that, in spite of the undoubted
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achievements and in spite of undoubted successes in the export market, we need to stimulate our economy not only to overcome the present recession but in order to look to the long-term and the size of the industrial base that we should be creating.
I now wish to make a few suggestions. First, we need to look at the level of investment. If there is inadequate investment in the future of our manufacturing industries we shall not have the quantum of manufacturing capacity that we need. The latest CBI report on manufacturing investment shows that, compared with the previous year, the level of investment in manufacturing industry in 1991 fell by no less than 15.5 per cent. That is an enormous fall at a time when we should be building up. The prospect for 1992 is that there will be a further fall, which it puts at 3 per cent. but now admits that that is likely to be exceeded.
The question of what can and should be done about that is immediately raised. Is it an area in which government should intervene? There is a way in which government can do something about the problem; they can increase investment allowances. For many years that proposal has been put forward from all sides of the House. I believe that the time has come when it should be looked at again. We cannot allow our manufacturing industry to be starved of investment.
But the solution cannot be left only to government and I wish to refer next to the financial institutions. Their record of lending during the past decade shows that, while lending to manufacturing companies increased by a little less than half, personal lending increased by six and a half times and loans for property by more than eight times. Those ratios demonstrate clearly why we got into the difficulties of overheating during the late 1980s. I should like to believe that the financial institutions have learnt by that lesson, will be changing those ratios substantially, and will do everything that they can to increase their lending to manufacturing.
I wish to raise the well-worn topic of the infrastructure, which has been debated time and time again. The infrastructure must play a key role in enabling manufacturing and industry in general to operate successfully. The elements of the infrastructure which are crucial in this regard are education and training on the one hand and transport on the other. At present the Government are devoting a large part of public funds to those areas. However, they face a situation in which there is likely to be retrenchment because of the growing level of the public sector borrowing requirement. We are moving up to a figure of approximately 5 per cent. of GDP, which is a good deal higher than in recent years.
However, is that the right way to look at the matter? Although we have a public sector borrowing requirement which is the equivalent of 5 per cent. of GDP, private savings have escalated to 11.5 per cent. of GDP. I suggest that when we talk about the cash flow of the nation we must include both the private side and the public side. If private individuals are now saving to that extent, it is appropriate that the public sector should be expanded somewhat more than is the

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case at present. When the private sector starts spending substantially again, the situation could be changed. However, if both the private and the public sectors cut back, the result will be that we could get into a deflationary spiral and all the elements about which we are worried—continuing unemployment, a lack of industrial capacity and so on—will continue.
Therefore, I should like to believe that we shall have a reassessment of the relationship between public spending and private saving and that we should take it in its totality. We need a better infrastructure now to stimulate the recovery. We need it to help us to diminish the level of unemployment. That could be money well spent. Later on this evening I shall ask an Unstarred Question about investment in the Underground system and its extension. That is extremely relevant to the point that I am now making.
In conclusion, I believe that this has been a very important debate which has enabled noble Lords who participated to make extremely valuable contributions. I have tried to add my own. We now face a situation in which major decisions must be made. Like the noble Lord, Lord Mackay, I am pleased that the President of the Board of Trade is now taking a more pro-active role as regards the DTI. I hope that the points which have been made in the debate will be very seriously taken into account in that role.
5.21 p.m.
Baroness Turner of Camden: My Lords, we are all grateful to the noble Lord, Lord Dean of Beswick, for introducing the debate. Manufacturing is vital for everyone. Of course other sectors of the economy —for example, financial services, distribution and public services—are necessary too. We could not do without them. However, to a large extent they are dependent upon our capacity to produce. The wealth created by manufacturing industry helps to pay for essential public services, as the noble Lord, Lord Alport, has already pointed out.
Moreover, manufacturing industry can help to fill our trade gap. The balance of payments crisis is largely caused by the largest share of our domestic market being taken by imported goods. Often those are goods which years ago were manufactured in the UK; they no longer are. That is largely attributable to the policies followed by the Government, particularly from 1979 to 1982. At that time there was much talk of creating a fitter, leaner industry. It certainly is leaner. Many jobs were lost. Whether it is fitter is a different question. It is certainly much smaller.
At that time the Government seemed to think that we could get by on services alone. It was in that sphere that the new jobs would be created. Indeed, for a while it seemed that there was something in that, at least superficially. There was the City "big bang" in the late 1980s and suddenly the future seemed to be in the hands of young men and some women, although not so many, who sat surrounded by VDUs yelling incomprehensibly into several telephones at once. It was just like the film "Wall Street". Those days are over and the euphoria has gone. Some of our largest and most respected financial institutions are now facing difficulties.
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In the City in the 1970s and early 1980s, when I was a union negotiator in that area, there were no involuntary redundancies. When a large company wanted to update its technology, redundant staff were redeployed or in some cases took early retirement on good financial terms. However, mass redundancies have now been taking place in some major financial institutions. One of our great banks—the Midland —has been at the centre of a takeover struggle, with thousands of jobs at risk. Even a national institution like Lloyd's now has its problems.
Some of us feared that that was likely to happen; namely, that the boom was artificial and could not last. However, over the decade we listened to a succession of Ministers extolling the virtues of government policy, claiming that it had brought unprecedented prosperity to the British people.
We hear the same story nowadays when there are record levels of unemployment. I have sometimes whispered to my colleagues on the Front Bench when sitting through some of those orations, "Do they really believe it?" However, I suppose it depends where you are in the social spectrum. Those years have been all right for some. The gap between the weekly incomes of the richest 10 per cent. and the poorest 10 per cent. has grown in Britain during the 1980s. In the two years 1967 and 1978 the gap was much the same —about 10 to one. However, by 1988 it had widened to nearly double what it had been in the 1960s and the late 1970s. Between 1979 and 19N8 the number of people with incomes of less than half the average had doubled to 10 million.
Unemployment was particularly severe in manufacturing in the early 1980s at a time when we were getting leaner and fitter. As a number of noble Lords have said this afternoon, matters have not improved. According to the latest figures I have, the number of employees in manufacturing industries in Great Britain stood at 4,532,000 in April 1992; that is a fall of 16,000 since the previous year.
Therefore, the decline continues and it is accelerating. There are particular problems in certain industries. The noble Lord, Lord Rochester, referred this afternoon to ICI. It would certainly be a disaster for that area if anything were to happen to that major and important company.
The CBI, the TUC and the Engineering Employers' Federation all stress the need for increased investment. The Engineering Employers' Federation in its recent submission prior to the Budget said, quoting from an earlier report in 1986:
"The recent growth of demand in the UK economy…has been largely in increased consumption rather than investment. Given the existing low levels of investment in the UK compared with those of our main competitor economies, the weakness of UK investment is a warning of future problems. Any country which fails to invest adequately or fails to balance its foreign trade may be able to enjoy a temporarily high level of consumption which eventually must be reduced as capital is consumed and as foreign debts have to be met".
The Engineering Employers' Federation says that it is still concerned that UK industry's investment levels are not only lower than those of its major competitors but are falling further behind.
It goes on to say that in the wake of the North Sea oil boom the UK manufacturing sector has become

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efficient but too small, which is a point already made in this debate by a number of Lords. It says that UK manufacturing no longer has sufficient capacity to meet the demands of economic growth. From 1987 to 1989 demand grew strongly in the UK, but too much of that demand could be met only by imports instead of UK production. It says that the present recession is largely a consequence not of demand growing too fast but of the economy's inability to supply that demand.
That analysis is remarkably similar to that of the TUC. In its 1992 Budget submission the TUC says that the first step must be to restore investment levels, not only to make good the cut-backs of the past but also to begin to match the investment levels of our major competitors. Compared with 1979, investment in German and French manufacturing was over 50 per cent. higher in 1990 and investment in Italian manufacturing over 20 per cent. higher. In contrast, investment in British manufacturing barely reached its 1979 level by the late 1980s and is now in sharp decline.
Both the TUC and the Engineering Employees' Federation are in favour of tax allowances; and I was interested to hear that the noble Lord, Lord Ezra, made that point this afternoon. The TUC believes that a new tax incentive should be introduced, initially as a counter-cyclical measure limited to two years. The House of Lords Select Committee on Science and Technology has called for allowances of 150 per cent. in the first year for R&D spending and at least 100 per cent. for training.
We then have the problems which are likely to arise in the defence industries. We have already seen that 40,000 jobs are dependent upon the European fighter aircraft. Around 760,000 civilians earn their living from defence work, of which 140,000 are employed by the Ministry of Defence. The remainder work in the private sector for primary suppliers such as British Aerospace, GEC, Rolls-Royce and their subcontractors. Footwear and food and clothing manufacturers all have a direct interest in the defence business. It has been estimated that around 425,000 people are directly dependent on the spending power of defence industry employees.
In those circumstances it is vital that the Government should take the initiative in attempting diversification programmes. The workforce involved is highly skilled but the spin-off from R&D is less than in some other developed countries. The Government's Advisory Council on Science and Technology (ACOST) addressed the lack of spin-off in its report, Defence R&D—A national resource. It said that the UK is less successful than some other countries in bridging the military/civil divide largely because it has inadequate institutional arrangements to encourage cross-fertilisation. Diversification is essentially about how we deal with the so-called "peace dividend" without further harm to manufacturing industry and without further levels of unemployment. It is a separate and complex subject and is perhaps worthy of a full-scale debate on its own at some time in the future.
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It seems to me to be crazy for any government to close down the NEDC at this time. It is the only forum of its kind bringing together Ministers of the Crown, employers and trade unionists in an entirely co-operative and non-confrontational way. It is not accurate to say that it has accomplished nothing. I draw attention to an excellent article appearing in the Guardian on 29th June, when details of some of the initiatives for which NEDC was responsible were given. They include using its status to bring together universities, suppliers and big users to accelerate the pace of technology transfer in electronics. There is also its initiative in bringing together 80 medium-sized chemical companies in order to attack the difficult Japanese market. And there are many more.
Nor does it appear that the Secretary of State contemplates any successor body. I should have thought that this Government—indeed any government—would welcome that forum as a sounding board for ideas, if for nothing else. Its termination seems to be most inappropriate and is bound to send out the wrong signals to people working in that field, particularly in fairly small companies which can do with whatever help is available.
In the meantime I return to what I said in opening. I thank my noble friend for introducing the debate. I hope that the Minister will not tell us again that everything is fine. We have heard one or two contributions to the debate which seem to indicate that a number of noble Lords believe that everything is the best it possibly can be. But I would point out that recently information was issued in regard to the position of the UK within G7—the world economic league. It appears that our recent performance was the poorest in G7. There was a fall of 2.4 per cent. in GDP last year and that may be followed by a further contraction in 1992. It is reported that since the summer of 1990 the recession is the longest since the 1930s. Over I million people have been added to the list of unemployed in two years.
We face an extremely serious situation. I await with interest to hear what the Minister says this afternoon.
5.33 p.m.
Viscount Ullswater: My Lords, we have had an interesting debate and, as the noble Lord, Lord Dean of Beswick, said, we have visited this subject before. The fall in manufacturing employment is not a new phenomenon. Employment peaked as far back as 1966 and has been on a downward trend ever since. I have spoken those words before. The decline is by no means unique to the United Kingdom. Employment in manufacturing has declined since the late 1960s in most major Western industrialised nations. In the United Kingdom most of the job losses in manufacturing occurred during the last recession. To some extent that was inevitable given the general inefficiency of the sector and the need for restructuring. My noble friend Lord Joseph drew attention to what he called the serious problems of overmanning in the 1970s. Jobs in manufacturing are still falling but the rate of decline is easing.
Unlike noble Lords opposite, I do not take the pessimistic view that current job losses are a reflection

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on the underlying strength of our manufacturing industry. Manufacturing industry has had some remarkable successes over the past 10 years or so and still accounts for broadly the same proportion of GDP as it did at that time.
The 1970s left our economy, and manufacturing in particular, inefficient and burdened by restrictive practices. During that period UK manufacturing output declined in terms of its share of total output. After the shake-out of the early 1980s there was an impressive turnaround. Looking across the economic cycle from 1979 to 1989, there was a period of strong growth in manufacturing activity. Manufacturing output and exports grew by more than either France or Germany and manufacturing productivity grew faster than any other G7 country. Even during the recession manufacturing industry has had some substantial successes.
For example, in the automotive industry productivity increased dramatically between 1981 and 1991 by more than 80 per cent. The noble Baroness, Lady O'Cathain, gave us a number of statistics to support that fact. I should say to the noble Lord, Lord Dean, that the sale of new cars in June of this year was 4.4 per cent. higher than in June of 1991, the third consecutive month showing a year-on-year rise. However, in the first half of 1992 as a whole new car sales were 4.1 per cent. lower than in the same period last year.
That indicates that the productivity of our car industry has considerably increased. During the same period output in the pharmaceutical industry increased by 90 per cent. The pharmaceutical industry has had a trade surplus every year in the past decade; the surplus is growing and in 1991 stood at £1.3 billion. My noble friend Lord Mackay of Ardbrecknish drew our attention to that excellent state of affairs.
Electronic consumer goods were another successful sector. In real terms the value of television sets exported was almost nine times higher in 1991 than in 1981 and the United Kingdom had a trade surplus in television sets last year up to £440 million from £259 million in the previous year. That was another point made by my noble friend Lord Mackay.
That is what I mean when I say that manufacturing is in a healthy state. It does not assist the manufacturing sector for noble Lords opposite to insist that it is not. In my travels around the country I speak frequently to leading industrialists and manufacturers. I can assure the House that, far from being pessimistic, the people most closely involved are optimistic about the future. Manufacturing industry seems set to have a healthy future. In the year to April manufacturing productivity rose by 4.9 per cent.—the best annual growth rate since before the recession. Manufacturing output in the three months to April was 1 per cent. higher than in the previous three months.
Of course the speed at which the recovery will impact on manufacturing will depend partly on individuals realising that jobs will be created only if
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the goods we are making remain competitive. For that to occur it is essential that we do not pay ourselves more than we can afford.
Important though manufacturing is—I recognise that it is the subject of today's debate—we must not lose sight of the importance of the service sector. During the past 10 years more than 2 million jobs have been created in the service sector. Those jobs should not be undervalued. They were created in response to the needs and demands of our society. Some of the decline in manufacturing employment can be accounted for by the reclassification of certain jobs. I must agree with both the noble Baroness, Lady O'Cathain, and my noble friend Lord Mackay, who drew our attention to that and explained some of the details.
Many jobs that were previously carried out by a manufacturer's own employees have been contracted out to organisations in the service sector and are therefore now classified as jobs in that sector. Even so, jobs in the service sector have been increasing steadily and they now account for over two-thirds of all employment. This changing distribution of employment away from manufacturing and towards the services is a trend shared by all Western industrial nations, as I believe the noble Lord, Lord Desai, drew to our attention.
He also said that that was not satisfactory because the jobs did not pay as much in the service sector as they did in the manufacturing sector. He said that the jobs were not as rewarding by moving them into the service sector. I have to say to him that those people who work in the service sector consider that their jobs are just as rewarding as those in manufacturing industry.
Nor should we under-estimate the contribution of small firms, whether in manufacturing or the service sector. Although individually small firms make only a limited contribution to the economy, their collective contribution is substantial because there are so many of them. Between 1985 and 1989 firms employing fewer than 20 people created over 1 million new jobs— more than twice as many as larger firms. Small firms will have a crucial role in creating new jobs as we emerge from the current recession.
It is something of a cliché that signals are mixed when the economy is about to recover. None of the published data tells us what is happening now; rather it is backward-looking. It is only after some time that we can look back and realise that recovery has been underway. There are now encouraging signs that the worst is over. Manufacturing output is growing, confidence is high and inflation and interest rates are lower.
It is clear that the continuation of the recession in the UK has been due in part to the slow-down in the world economy. Last year the American, Canadian and German economies were all in recession, and other economies in continental Europe and Japan experienced a slow-down. Now some of those economies are growing again, adding to the prospects for a UK recovery.
According to a recent EC Gallup survey, consumer confidence in the economy is now beginning to rise

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and business confidence is also increasing. The CBI quarterly Industrial Trends survey shows that there has been a sharp rise in confidence: it is now at its highest level since 1988. Expectations of improving output have been backed up by better orders and deliveries. This survey is backed up by others; for example, those carried out by the Institute of Directors and the Association of British Chambers of Commerce, which show a similarly encouraging picture.
All recessions attract a great deal of attention, and they deserve to because of the great difficulties people face during any period of economic downturn. But the underlying state of the British economy is sound, and if we look back over the lifetime of the Government we can see the improvement in the supply performance of the British economy which has resulted from our coherent framework of economic policies.
As a part of this framework, we have tried to ensure that the tax burden does not stop firms employing people. In too many countries the level of taxes and the regulation involved in employment means that employers are wary of increasing employment and taking on new staff. In the United Kingdom the Government have done their best to reduce the tax on jobs. The result is that it costs less to employ someone in the United Kingdom than in almost any other major EC country. Our labour costs in manufacturing are less than two-thirds those of Germany.
The noble Lord, Lord Desai, said that we were a low-wage, low-productivity economy. I do not believe that that is now the case. I agree with him that, with these lower costs that I have identified and its excellent industrial relations record, it is hardly surprising that the United Kingdom is now the most favoured European location for internationally mobile investment. In 1988–90 the United Kingdom accounted for 46 per cent. of United States and 48 per cent. of Japanese inward investment to the European communities. I, and I believe my noble friend Lord Joseph, would welcome that investment.
According to a survey published this year by the German Chamber of Commerce, the United Kingdom is also the most favoured location for German investment in Europe and is second only to the United States for German investment worldwide. The noble Lord, Lord Rochester, and I would agree that one of the surest ways in which we can maintain the competitiveness of our industries is to maintain a flexible, highly skilled and well-motivated workforce. We must ensure that people are able to adapt to new working environments and that they have the necessary skills and expertise to be able to meet the many diverse demands of the next century, enabling the United Kingdom to compete in the world economy.
The Government believe that this cannot be achieved unless all sectors of the community are involved in training. Government, employers and individuals form a partnership, with each party having an important role to play. The Government's role is to create the climate and framework to encourage
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training and direct funding support where it is most needed. I must say to the noble Lord, Lord Ezra, that although there is a recession, which we accept, the Government are still spending over £2 billion this year on training. The role of the employers is to upgrade the skills of the employees and to make the necessary investment in training. It is up to individuals to take greater responsibility for their own training and development.
But I am also very aware of the difficulties faced by all those who have lost their jobs. I can assure your Lordships that no one in government under-estimates the problems that unemployment can cause. That is why we are doing so much to help unemployed people get back to work. I am pleased to be able to say that just under half of those becoming unemployed leave unemployment within the first three months and just under two-thirds of all those becoming unemployed leave unemployment within six months. All in all, the Employment Service placed 1.332 million unemployed people into jobs in 1991–92. The target for 1992–93 is to place 1.425 million unemployed people. That would represent 5,632 unemployed people being placed into jobs every working day. Those who have still been unable to find jobs after six months are entitled to extra help from the Employment Service. They will be invited to attend Restart interviews to discuss job search methods, to assess any further future needs and to discuss the training or employment opportunities that are available to them.
Nearly 1 million places will be available on government employment and training programmes in 1992-93, an increase of 100,000 on last year. This substantial and comprehensive package means that more practical help and advice are now available than ever before to unemployed people to get a job. My department has issued an information pack entitled Local Action for Employment—Tackling Joh Losses, which sets out the way in which the Employment Service and the training and enterprise councils can assist companies declaring redundancies. The Employment Service regions and some TECs have developed tailor-made support to assist with planned, large-scale redundancies.
Before I close I should like to deal with some of the individual points which were brought up by noble Lords. The noble Lord, Lord Dean of Beswick, apart from the matters which I have already mentioned, said that this Government always turn to the whipping boy and to the trade unions. I believe that he then said that the trade unions have learnt a lesson which perhaps they needed to learn. I say to the noble Lord that we must learn by experience from the past few years. In the 1970s an average of nearly 13 million working days were lost each year because of industrial action. During the past four years the days lost have averaged fewer than 3 million, which is less than a quarter of the 1970s figure. There were more days lost in 1979 alone than in the seven years 1985–1991. That indicates what kind of improved industrial relations we now have.
The noble Baroness, Lady O'Cathain, also indicated where we needed to move from in the motor car industry. I think that I have demonstrated that that has improved quite considerably.
Baroness Turner of Camden: My Lords, I am grateful to the noble Viscount for giving way. Can he tell us how many working days are now lost through unemployment as compared with industrial strife in the 1970s?
Viscount Ullswater: My Lords, I am not sure that those two things are sequiturs. What is important is that if we are losing jobs through strikes, that is costing not only the industry, but the country a great deal of money in terms of exports.
The noble Lord, Lord Dean, also quoted the Henry McLeish article on unemployment. I must advise the noble Lord that, however we measure it, during the economic cycle there has been an increase of 1.5 million jobs between the peaks of 1979 and June 1990 or, if we look at it the other way, there has been an increase of about 2 million jobs between the troughs of March 1983 and the situation as it is now. Between 1979 and 1989, UK employment grew faster than the European Community average.
I should like to deal with one particular point made by the noble Lord, Lord Rochester. He said that, in his opinion, the TECs were best placed to assess industry's local employment requirements. I agree with him. He quoted the experience of the NORMID TEC during the nine months in which it has been operating. We are satisfied that the Government's objectives and guarantees as they relate to the NORMID TEC area can be honoured within the terms of the agreed contract.
The noble Lord brought to the attention of the House the problems that are facing ICI at Runcorn. There is no doubt that it is a difficult problem. Average industrial electricity prices have fallen in real terms in each of the last five calendar years, but I recognise that prices for a small number of very large consumers, including ICI, have risen. These received preferential terms under the nationalised industry arrangements and, to some extent, these price rises are the inevitable result of moving to a market-based system. I understand that DTI Ministers have recently had talks with ICI and others about electricity prices and are considering this particular matter. We have established a competitive market in electricity. We expect large consumers, including ICI, to use their considerable buying power in the market to negotiate the best possible deals. If ICI believes that the market, including the pool arrangement, is not operating properly, it can take that up with the independent regulator who has all the necessary powers to take action.
The noble Lord also drew attention to an announcement by my right honourable friend the Secretary of State for Employment. She announced this week that she was putting in place new measures to establish an improved system for monitoring the number of young people covered by the YT guarantee and seeking a place on it. That is not an expression that the guarantee has failed; it is a continuing expression of the Government's commitment to that YT guarantee.
In a wise and thoughtful speech my noble friend Lord Joseph brought to our attention the question: Where do jobs come from? He drew our attention to
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the fact that, of course, they come from customers both at home and abroad. To get customers, we need entrepreneurs. I think that my noble friend Lord Mackay of Ardbrecknish would call them the "sunrise industry makers". My noble friend indicated that many of these failed, but I very much agree with him that we need a culture in which entrepreneurs can thrive. He directed our attention to the discouragement that capital gains tax causes entrepreneurs when they come to pass on their businesses. I have a great deal of sympathy with what my noble friend has said and intend to pass on his comments to my right honourable friend the Chancellor of the Exchequer.
My noble friend Lord Mackay of Ardbrecknish asked three questions: what is manufacturing industry; who is involved in the industry; and is a measure of it the employment that it provides? He also drew to our attention the role of the electronics industry and quoted examples from Scotland. I must comment on the success that Scotland has had in that industry. My noble friend demonstrated that manufacturing industry was changing and has changed from the old image of metal-bashing that he painted for us. He also drew our attention to the fact that the classification of jobs has somehow answered the third question that he posed.
My noble friend also made us aware of one of the difficulties that we face in Europe. We must make sure that we are not in an anti-competitive situation with, say, the East German shipyards. We must take care, through the Commission, that we maintain the level playing field that we hear so much about.
My noble friend Lord Alport raised the scare of unemployment benefit perhaps being cut. I can say to him that that is pure speculation. There is no intention to do so, but the Government have done a great deal to improve the infrastructure in this country and to commit a great deal of money to it. I believe that that was one of the ways in which my noble friend wanted the Government to make certain that we tackled unemployment. He suggested that we make that investment. The Government have announced some £30 billion of total capital expenditure, including £16 billion over three years on roads and public transport. That is the way in which the Government are playing their part in making certain that this country's infrastructure is not neglected.
The noble Lord, Lord Ezra, drew our attention to the problems with our trade balance. The total deficit for 1991 as a whole was £5.2 billion, down from the £16.1 billion in 1990. As a share of GDP, the deficit is now just over 1 per cent., compared to 5 per cent. at its peak in 1989. The United Kingdom's share of world trade is estimated to have risen in 1991 for the third year running after decades of decline.
The noble Lords, Lord Ezra and Lord Rochester, and the noble Baroness, Lady Turner of Camden, said that we needed an investment-led recovery and called for a change in the rules on investment allowances. I must advise them that increased allowances would distort investment decisions and lead to lower quality investment. It is better for business—not government —to decide how much to invest and on what, based on commercial considerations rather than on the

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availability of tax breaks. The noble Baroness will understand that existing capital allowances are already on average more generous than the strict system of commercial depreciation. The 1984 business tax reforms led to a substantial reduction in the rates of corporation tax. Tax cuts mean that more profits are retained for investment. The reduction in the main corporation tax to 33 per cent. for 1991 will boost companies post-tax profits, help cash flow, encourage profitable investment and increase incentives for overseas firms to invest in Britain. That, I believe, is the way to set about it.
The noble Baroness also brought our attention to the problems facing the defence industry. Indeed, what she says is correct in many instances and, I believe, has already been taken up by a number of firms. I refer to the idea of diversification. Many companies have responded to the effects of the reduction in defence spending and the MoD's increasingly rigorous procurement practices. For instance, Redifon Limited has reduced its dependence on defence from 70 per cent. to less than 50 per cent. It determined to identify new markets for its electronic communications system, equipment and services. The Dowty Group set out to identify a product sector technology judged to provide an opportunity for growth and has reduced the military application of its business from 52 per cent. to 33 per cent. Businesses should look to their commitment to the defence industry and should also look to how they can diversify for the future.
"Employment cannot be created by Act of Parliament or by government alone. Government policy will be directed to bringing the conditions favourable to the maintenance of a high level of employment … But the success of … [this] … policy … will ultimately depend on the understanding and support of the community as a whole and especially on the efforts of employers and workers in industry; for without a rising standard of industrial efficiency we cannot achieve a high level of employment combined with a rising standard of living".
Those words, which come from the 1944 White Paper on Employment Policy (Cmd. 6527), are equally relevant today.
As I have mentioned in your Lordships' House before, the Government's role is to create the right economic and financial conditions in 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.
I referred earlier to the health of the manufacturing sector. It is healthy.
Lord Dean of Beswick: My Lords, there are only a few minutes left and the Minister has spoken for nearly half an hour. Is he going to talk out the debate and not allow time for the usual courtesy of a very brief reply?
Viscount Ullswater: My Lords, I am finishing immediately.
Noble Lords have mentioned an export led recovery. I should like to finish by reminding the House that between 1988 and 1991 we attracted nine times more inward investment than Germany, five times more than Italy and three times more than
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France. Exported goods account for more than 18 per cent. of the United Kingdom's GDP, compared with 9.6 per cent. for Japan and 7.1 per cent. for the United States. These are impressive statistics and grounds to be optimistic about the future.
6.3 p.m.
Lord Dean of Beswick: My Lords, I thank all those who have taken part in what has been an important and impressive debate. I am sorry that the Minister appears not to have heeded some of the suggestions that were put forward. The Government could be accused of wallowing in complacency. In his reply the Minister said that we were going to turn the corner. I remind the House that in an economic sense the Government have turned more corners than there are in the Pentagon but we are still in trouble. The prophecy coming from independent sources—not political sources—that there will be a further 20,000 job losses every month this year in the manufacturing sector does not bode well for the country. The defence that there has been a transfer of jobs into the service sector has been overstated. I have a list which I can give to the Minister of 20 high-tech industries that are shedding jobs now and will continue to do so.
The Minister referred briefly to my point about the trade unions. I pointed out that the record of the trade unions had become immeasurably better and that they were working more than ever in a constructive way. I asked why the Government were considering further legislation to deal with the trade unions when it is completely unnecessary.
The noble Lord, Lord Mackay, made great play of the fact that the computer industry is doing well. Two years ago the Government, by a deliberate act of philosophical brigandage, sold off an industry which is related to the computer industry. I refer to the selling off of Inmos to Thorn EMI, which then sold it to a French company. At that time the adverse balance of payments regarding the industry was more than £2 billion. I understand that the figure has grown larger since. We should ensure that jobs stay here and are not exported for profit.
We have had an excellent debate. I have no doubt that we shall come back to this matter. The Government have had two very good sailors on board today—the noble Baroness and the noble Lord, Lord Mackay. If the Government are not careful, they may in an economic and industrial sense be like John Paul Jones and start to fight when the industrial and economic ship has sunk. That is my worry and I think that the Government would do well to heed some of the advice that has been given today from this and from their own side. I hope that we are wrong and that jobs will be saved and manufacturing industry will continue to expand. But on the figures quoted today there is no way that the manufacturing base is expanding. It is contracting to a dangerous extent.
However, we have had a good debate. I once again thank all those who have participated in it. I have no doubt that we shall return to the subject in the not too distant future. My Lords, I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

"The Health of the Nation"
6.8 p.m.
Baroness Cumberlege: My Lords, with the leave of the House, I shall now repeat a Statement which is being made in another place by my right honourable friend the Secretary of State for Health on The Health of the Nation. The Statement is as follows:
"With permission, Madam Speaker, I should like to make a Statement about better health.
"I am publishing today a White Paper The Health of the Nation. Copies have been placed in the Vote Office. Last June my right honourable friend, now the Chancellor of the Duchy of Lancaster, published a Green Paper on the same subject. Since then we have consulted extensively.
"We made it clear both before and during the general election that a White Paper on health would be one of the first priorities of the new Conservative Government. Today we honour that pledge.
"The Government are committed to improving the health of the nation. The White Paper is the latest—but not the last —step in our strategy.
"The response to the Green Paper was impressive. More than 2,100 individuals and organisations responded directly. There has been a wide and productive debate—at specially organised conferences and workshops, in newspapers and journals, and on television and radio.
"This response reflects the growing interest in health matters as a whole. Members of this House will know that people have become more conscious about what they eat, about how much exercise they take and about how they can generally improve the quality of their lives by becoming healthier.
"We wish to build on this healthy trend. No responsible government can be a disinterested observer of an unhealthy nation. There is an enormous cost to both the National Health Service and to our economy of avoidable illness. The cost includes working days lost and expensive treatment given. We should prevent illness wherever we can. Prevention is better than cure. We will be able to target health resources where they are really needed.
"We are spending record amounts on the National Health Service. We must use these resources to improve health as well as health care. We are seeking to improve the quality of life—and of individuals' lives—in the most cost-effective way.
"Our central message emerged from the consultation exercise on the Green Paper—the very wide backing for the overall strategic approach it proposed. There is support from among policy-makers, practitioners and politicians of all parties. The World Health Organisation welcomed our strategy, describing it as a model other countries might follow. I am particularly pleased to launch the White Paper just one week into the United Kingdom's presidency of the EC.
"At the heart of the White Paper is the setting of targets in key areas. We have selected five areas.
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They are coronary heart disease and stroke, cancers, mental illness, HIV/AIDS and sexual health, and accidents.
"In each of these key areas we have set challenging but achievable targets. In some areas they are tougher than proposed in the Green Paper. Targets include: 40 per cent. reductions in death from coronary heart disease and stroke by the year 2000; a 30 per cent. reduction in death from lung cancer for men by 2010; reducing from one-third of the population to one-fifth the number of people who smoke by the year 2000; and cutting childhood accidents by a third by the year 2005.
"Our task was to choose areas of greatest concern: where there is the most serious avoidable loss of life or handicap and where most work needs to be done and can be done. The department's chief medical officer has been closely involved in the work. We have drawn on a wide range of medical and other expert opinion.
"Other areas do not cease to be important. In some cases well-developed initiatives to improve health already exist. For example, I announced last week that we have now achieved our 90 per cent. national target for immunisation against childhood diseases. We are now working to a new target of 95 per cent. by 1995.
"In other areas more development and research will be needed before national targets can be set. What we are proposing are not short-term measures. The strategy will grow and develop. To provide the knowledge and methodology for that to happen the research and development strategy launched by my department in April 1991 will play a crucial role.
"The White Paper identifies other possible target areas for the future. That underlines the fact that it represents a beginning, not an end.
"I hope that the House will recognise and welcome the strategy. Coronary heart disease and strokes are the biggest causes of premature death and disability in this country. We have made considerable progress. There is scope for more. Cancers account for a quarter of all deaths. Many of them can be prevented. Mental illness affects millions of people, with a high cost to the nation. There is still too often a taboo associated with it. Accidents are the most common cause of death in people under 30. Often they can be avoided. AIDS is the most significant new threat to public health this century. In improving sexual health generally lies the greatest scope for preventing HIV infection and the spread of that terrible disease.
"We need targets for three reasons. They give us something real at which to aim. They provide a common focus for action. They allow us to measure progress.
"To be respected, targets have to be tough. To be credible they have to be realistic. It would be folly to set a target so far out of reach that we will never get there, or one which is simply the extrapolation of existing trends.
"Our comprehensive approach is unique. We have identified the broad strategies and the

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practical machinery needed to achieve targets. Everyone is involved. The White Paper is more than just the work of the National Health Service, vital though that is. It takes in the activities of every department in Whitehall. It is for private companies and voluntary bodies; for local authorities as much as health authorities; for employers and trade unions; for organisations of every kind; and for individuals of every age.
"Working together, forming healthy alliances, is one of the central messages in The Health of the Nation. The White Paper demonstrates the Government's commitment by: first, addressing a range of health issues which go well beyond the responsibility of the Department of Health; secondly, highlighting the central role of the Cabinet Committee, set up by my right honourable friend the Prime Minister, to oversee the development and implementation of the strategy. No other country has set up a similar structure at such high level to take forward a health strategy; and thirdly, setting out a range of actions to improve health which only government can take.
"While recognising the role of others, the National Health Service must be at the centre of the strategy. The publication of the White Paper today marks a major new landmark in the development of the NHS. It is the next logical step in the process of health reform. It provides new opportunities to raise our sights beyond the provision of health care —important though that is—to health itself.
"The National Health Service was founded to secure improvement in the physical and mental health of the people and the prevention, diagnosis and treatment of illness. That was enshrined in the 1946 National Health Service Act. This strategy carries those principles forward in a programme of work which will take us well into the next century.
"The health reforms have enabled health authorities to take a more strategic look at the health needs of their local population. The priority areas we have selected and the targets we have set match local needs and concerns. The NHS Management Executive will require health authorities to build the target-setting approach into all levels of local activity. The strategy will become central to the work of the NHS.
"The NHS must also lead by example. It must be a healthy employer. Its I million employees must themselves play a part, helping themselves, their families and friends, as well as the patients they care for to improve their health. We shall engage all NHS staff in making their own workplace a healthy place, both for themselves and patients. The NHS Chief Executive is working with the Health Education Authority to launch a special initiative on this later in the summer.
"By many reckonings we are healthy. In 1991, for the fourth successive year, perinatal and infant mortality rates fell to their lowest ever recorded levels. Our immunisation rates are high. We are the first country in the European Community to establish national screening programmes for breast
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and cervical cancer. Life expectancy has risen by three years for men and two years for women in the past decade.
"We have been adding years to life. The health strategy is about adding life to those years. Ultimately, it means too adding even more years to life. No one doubts that there are areas where we can grow healthier as a people. The White Paper has identified those key areas. It has proposed real action for improvement.
"The ideas in this White Paper will take root and grow. We have the potential to take this country to the top of the health league. I commend the White Paper to the House."
My Lords, that concludes the Statement.
6.18 p.m.
Lord Carter: My Lords, I should like to begin my remarks by thanking the Minister for repeating the Statement which was made earlier in another place. Obviously we all welcome anything which improves the health of the nation. I should like to say at once that the setting of targets is an excellent idea and we welcome the clear focus in the White Paper on preventable diseases, reproductive health, mental health and accidents.
Perhaps I may first deal with the targets. Can the Minister say how the targets were arrived at? Was it on the basis of a clinical analysis, medical forecasts or estimates of acceptable cost? As for coronary heart disease, the aim of the "Look After Your Heart" programme strategy produced in 1990 by the Department of Health and the Health Education Authority was a 25 per cent. reduction in premature deaths from coronary heart disease by the year 2000. The Green Paper published last June suggested a target of a 30 per cent. reduction and the White Paper now has a target of a 40 per cent. reduction.
We welcome that increase in the target which presumably resulted from the consultation process. The strategy document for "Look After Your Heart" estimated that cigarette smoking accounts for at least one-fifth of deaths from heart disease and that 80 per cent. of heart attacks in men under 45 years of age are thought to be due to smoking. The cigarette smoker faces two to three times the risk of having a heart attack than a non-smoker. The BMA points out that 450 of our children start to smoke each day. Despite all that—and this is the great disappointment of the White Paper—the Government still refuse to introduce a ban on tobacco advertising. The Minister said that 2,100 individuals and organisations were consulted. How many of them supported the Government's views on tobacco advertising? I am sure that it is no more than an unfortunate coincidence that a major tobacco company made 2,000 of its poster sites available to the Conservative Party in the general election. If further evidence is produced—if, indeed, any more is needed—to show that a ban on tobacco advertising would reduce smoking, will the Government introduce such a ban?
The biggest omission in the Statement and the White Paper is the reluctance to recognise and admit the crucial link between health and social conditions.

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We all know that poverty, bad housing and low incomes are major factors contributing to the poor health of large sections of the population. Do the Government accept that there is a link between those factors and the health of individuals? The Minister will find the statistical evidence for such a link in Appendix F paragraph 16 of the White Paper.
I turn now to AIDS and sexual health. We all of course welcome any initiative which will improve sexual health. The Minister mentioned in the Statement the importance of research. It is a truism that no one dies of AIDS but that death comes as the result of a variety of infections to which the AIDS sufferer succumbs. Vast sums of money have gone and are going into finding a cure for AIDS but there is little research into the treatment and the management of the conditions which may cause the death of those with AIDS. Will the Minister comment upon that disparity in the research?
There is a conflict throughout the White Paper between diagnosis and prescription. Paragraph 23 of the Statement states:
"The White Paper demonstrates the Government's commitment by … setting out a range of actions to improve health which only government can take".
That of course is correct. The White paper contains a proper emphasis on a healthier diet. Will the Government now reintroduce nutritional standards for school meals, which they scrapped? Paragraph 15 of the Statement states:
"Our task was to choose areas of greatest concern: where there is the most serious avoidable loss of life".
The White Paper refers also to targets for the reduction of alcohol consumption. Does that mean that the Government now accept the case for random breath testing? Paragraph 8 of the Statement states:
"We should prevent illness wherever we can. Prevention is better than cure".
We obviously all agree that people should be encouraged to keep a check on their health. Will the Government now scrap charges for eye tests? The rise in teenage pregnancies is obviously worrying. Will the Government now restore the cuts in funding which have led one health authority in four to cut their family planning sessions in the past six years, some by as much as half?
As I have said, the diagnosis contained in the White Paper is good. We can all welcome the setting of targets, the proposal for a powerful Cabinet Committee and the emphasis placed on healthier living throughout the White Paper; but, as I have said, I fear that in many areas the prescription is in direct conflict with many government decisions affecting health which have been taken in recent years. We all hope that the White Paper demonstrates a change of heart by the Government. It sets out some clear objectives. We all hope that those objectives will be achieved.
Lord Winstanley: My Lords, on behalf of my noble friends on these Benches, I must hasten to join the noble Lord, Lord Carter, in thanking the Minister for repeating the important and interesting Statement. Perhaps I may also thank her for giving us so much homework. Even the summary runs to 34 pages, and therefore we are provided with enough interesting
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reading material to keep us all busy until the long Recess is over. I look forward to studying it with the care that it clearly deserves.
Let me say at once that I agree with every word of the Statement. Having said that, I must also say that that is not saying much because most of what it says has been well known in the medical profession and outside it for many years. The White Paper inevitably consists of many platitudes and truisms, but what is helpful is that it collects in one place all the evidence which shows clearly how true the truisms are so that it is readily available to us all. That is of help to those of us involved in health education should we need to argue and discuss these matters with people who are not as ready to accept them as we are.
As I say, most of these things are known. Some years ago I had the honour to be invited by what was then the Health Education Council to edit a book on its behalf. Noble Lords will be aware that when one is invited to edit a book, that really means that one has been invited to write the book. One consults a great many people who help but one finishes up writing it. The book was called A Guide to Better Health. If I were to look back at it I should find that many of the things it said are now repeated in the White Paper. There is nothing wrong with that. The White Paper provides all sorts of evidence. The book was circulated widely but, frankly, I doubt whether it had much effect. Everyone agreed with it. Everyone already knew what was necessary. The problem then was—it still is—how to persuade people to heed the advice which everyone knows is wise.
What do we learn from experience? It was Bernard Shaw who said that the only thing we learnt from experience was that we never learnt anything from experience. During my lifetime there has been one period during which there has been a remarkable improvement in public health. That was during the latter years of the Second World War when everyone led a healthy life. No one could eat too much of the wrong food because they could not obtain it. They could eat enough of the right food because they could obtain it: we had rationing. We took plenty of exercise because we had no petrol. No one but a lunatic would recommend a third world war as a remedy for the present state of public health, but that underlines a real problem: how do we persuade people to heed the advice?
I join with the noble Lord, Lord Carter, in saying how right the Government are to set targets and to have specific aims —aims which are capable of fulfilment. In many ways your Lordships' House shows the way ahead. The fact that so many noble Lords appear to live for ever is not due to the fact that they have healthy lifestyles. I would say that the reverse is true. What is true is that noble Lords had healthy lifestyles when they were children. They had good diets; they lived in good housing; and they took plenty of exercise. One was made to take plenty of exercise. I am all for that, but the most important part of targeting is that the Government should as far as possible focus their efforts on youth. That is the time when people can develop sensible, healthy eating habits and take exercise.

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By the time people reach our age it is too late. The one way to get rid of smoking—I am all for banning advertisements—is to ensure that people never start. Once one is faced with nicotine addicts, which is what such people are, it is difficult to get rid of the habit. We get rid of them because they pass away in the fullness of time. But the fact remains that it would be infinitely better if people never started smoking. We are not having much success in preventing children from starting to smoke, which is what we must do. I hope that these commendable efforts will as far as possible be directed at youth, because that is where the hope lies. We must persuade young people to take plenty of exercise, to eat plenty of the right food and not too much of the wrong food, and so on. If they follow all those simple rules which are set out in the White Paper, the battle will be half won.
There are many aspects to this subject. I do not want to comment upon them in detail. AIDS was mentioned, and that issue was taken up by the noble Lord, Lord Carter. The White Paper, which summarises much information, refers to the way in which we have conquered pulmonary tuberculosis. At the start of this century pulmonary tuberculosis was the main cause of death; it was known as the "captain of the army of death". Now it has virtually disappeared. What caused that? Two things: first, a vast improvement in housing, sanitation and such things; secondly, the development of chemotherapy. Once cases were under treatment, they ceased to be infective.
I have supported everything that the present Government have done so far on AIDS. They have taken the right steps. But the real hope lies in the discovery of a therapeutic agent which, once the patient is on it, renders that patient non-infective to other people. That is where results will come.
Epidemiology is not an exact science. We constantly hear of exceptions and I can remember an old man who reached the age of 100. He was asked, in an interview on television, to what he attributed his age and he replied, "I've no idea". Looking back, the only thing he could think of was that he could not remember ever having taken any exercise.
We cannot argue from the particular to the general. Noble Lords will remember Lord Shinwell who reached the age of 100. After his presentation, during Question Time in your Lordships' House which dealt with the sponsorship of tobacco, he said, "I have been a regular smoker since 1894". We cannot argue from the particular to the general; we must take the kind of evidence which is well summarised in the White Paper and learn the lessons which we have all known for a long time. Somehow we must get people to follow the advice which we all know is right.
I am glad that at long last the Government have recognised that it is not just a matter for the National Health Service or the Department of Health, but for every government department. Accepting that, and accepting the importance of housing and other matters, it seems to me that the Government have at last learnt all the lessons so carefully underlined in the Black Report on health and the disadvantaged. At
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long last, it is clearly accepted in the White Paper that, unless we do something to improve people's living standards in all kinds of ways, we shall not be able to answer all these questions.
The noble Lord, Lord Carter, mentioned school meals. They are important. At the moment far too many children suffer from malnutrition of one kind or another. I regret the disappearance of universal school meals; I did not awfully enjoy them, but in many ways we received the nutrition we needed. I risk the wrath of some of my professional colleagues by saying that I regret that school milk disappeared. I know that many doctors are suspicious of milk; they think that every bottle should carry a government health warning. However, I believe that for young children milk is an important and useful source of nutrition, calcium, vitamins and other nutrients. The cost of restoring school milk to state primary schools is small. I put down a Question on this and the Answer showed that it was minuscule. I believe that the results would be helpful. One matter which we must tackle is youth.
I am so glad that the Government have finally agreed that the subject of health covers all government departments, including local government. The targets that the Government have set are wise. Some of us may last long enough to see whether they will be reached because they continue until the year 2010. Some of us will still be around then. The setting of these targets gives us all an opportunity to monitor progress and to see whether we are succeeding. We have succeeded in meeting many targets in the past, as the White Paper illustrates, and we can succeed in meeting these targets in the future if people will speak for themselves—not just doctors and health departments, but the public as a whole. We must get them to follow the excellent advice set out in the White Paper.
6.36 p.m.
Baroness Cumberlege: My Lords, first, I warmly thank the noble Lords, Lord Carter and Lord Winstanley, for the support which the strategy has received. It has received a welcome throughout the country, from within the National Health Service and, as I said in the Statement, from within the World Health Organisation which cites this strategy as an example for other countries to follow.
The noble Lord, Lord Carter, asked why we should have these particular targets. Three criteria were set out in the Green Paper, The Health of the Nation. The first was that the area should be a major cause of premature death or avoidable ill health; where there was major concern, that area was included. The second was where we knew we could have effective interventions, offering significant scope for improvement in health. The third was where it was possible to set objectives and targets, and monitor progress towards them.
During the consultation period, we received a great deal of advice and help, and much research took place. As a result, not only were some of the targets stiffened, but also mental illness, which had previously not been included in the Green Paper, was included. I know

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that many people and organisations in the country and those involved in the mental health field will be pleased about that.
The noble Lord, Lord Carter, cited how targets had been increased for coronary heart disease, starting with the target of 25 per cent. for the year 2000, progressing towards the 40 per cent. target in the White Paper. It is a challenging target. The 30 per cent. in the Green Paper did not prove to be challenging enough for those in the field. They felt that as a nation we could do better than that. That is why the target has been increased.
The noble Lord raised the issue of smoking and I know that a body of opinion in this country feels that the advertising of tobacco should be banned. Clearly that is something which the Government have considered, but they believe strongly that the decision to stop smoking is a matter for individual choice. The Government's role is to ensure that that choice is exercised on an informed basis, knowing the risks.
Many tools can be used in order to reduce the consumption of tobacco. The price of products is a powerful tool. We know that the real price of tobacco has risen by 43 per cent. over the past 12 years, whereas it increased by only 1 per cent. under the Labour Government. Today a packet of cigarettes costs more in the UK than in any other EC country except Denmark. We know that this policy is effective. We have markedly reduced the consumption of tobacco, which has fallen by one-third over the past 16 years. Our target is to reduce that further by one-third by the year 2000, again a challenging target which we shall set out not only to meet but to beat.
The noble Lord also went on to ask about the links between poverty, housing and health. There can be no doubt that these issues have an effect on health. But the Government have done much in recent years to ensure that the resources available to low income families are increased.
These targets are not aimed purely at areas of deprivation; they go across the board, and we believe that to be right. We know that in inner city areas general practitioners are meeting the targets which have been set for them and which were included in the GP contract. We believe that, with the new management systems we have introduced and that have come through the reforms, we are now much better able to target our resources to ensure that inner city areas become as healthy as other areas.
On the subject of school meals, the strategy ensures that in the future we work closely with other organisations. We do not see this purely as a National Health Service issue. We shall want to work with local authorities in their efforts to ensure that school meals are more nutritious, and that the children eat them. The noble Lord, Lord Winstanley, made the pertinent remark that he did not awfully enjoy them. We know that in the past many school meals were not eaten. But today, with a different style of catering in schools, the cafeteria style where children can choose, the food is eaten.
The charges for eye tests and for some of the national health services that are provided produce a considerable income for the NHS. Free eye tests for
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the country would cost us another £100 million a year. It seems to me correct that those who can afford these charges should pay them, but of course we know that as many as 40 per cent. are exempt from the charges.
The sum of £206 million accrues to the National Health Service from charging for prescriptions. That equates to 9,000 community nurses for a year or 228,000 surgical operations. However, 80 per cent. of all NHS items are exempt from charges. Again, it seems appropriate to me that those who can afford to pay should contribute to the National Health Service.
Finally, I know that there has been concern about the number of family planning clinics that have been reorganised during the past few years. The figure of £100 million is spent on family planning services, and in 1991–92 the Government gave £750,000 to voluntary organisations such as the Family Planning Association. Regional health authorities are reviewing these services and we have made it a priority for the current year that the whole shape of family planning should change. We know now that two out of three women go to a GP for family planning advice. We would want to keep clinics, as they offer a comprehensive service. However, it is important to give choice to women either to use the GP services which we have built up over the years or to use family planning services.
I should like now to take up a few of the points which were made by the noble Lord, Lord Winstanley. I agree that this is not a revolutionary document but it is the first time that we have had a comprehensive strategy with defined targets. It is the first time that the Government have made a commitment across all departments. It is the first time that we have had a Cabinet sub-committee in order to ensure that these targets are monitored and met. It is the first time that we have had a structure and a system that we know can deliver these targets. Therefore from that point of view this is revolutionary.
The noble Lord referred to lifestyles and I certainly would not want to comment on the lifestyles of noble Peers, but I do take the point about the emphasis being laid on youth. Of course in the past, and again at the present time, we are putting more effort into vaccination and immunisation to ensure that we have healthy children who will grow into healthy adults.
We have also targeted specifically in this strategy teenage pregnancies and we have set a target to reduce smoking among the 11–15 year-olds by at least 33 per cent. by 1994. We have set very challenging targets —targets that we expect not only to meet but also to beat.
6.45 p.m.
Lord Boyd-Carpenter: My Lords, first may I thank my noble friend for repeating this very important and far-reaching Statement, to which I think the whole House has listened with the very greatest of interest. May I add that it seemed to do a very effective demolition job on the propaganda which, until recently, used to emerge from certain quarters to the effect that the Government were not interested in questions of health and were indeed damaging the National Health Service. The Statement makes very

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clear the importance that the Government attach to the National Health Service and to questions of national health. Therefore it was very valuable from that point of view.
The effectiveness of the policy seems to be borne out by the figures given by my noble friend for the improved expectation of life. I was very interested to see that the increase in expectation of life has been more for men than for women, but I take it that that is against the background that a woman's expectation of life has been, and still is, rather longer than a man's. Therefore all it amounted to was a reduction in the difference between the two rather than in any victory for the male. Perhaps she could confirm that.
On smoking, I personally very much agreed with the noble Lord opposite when he said that it would be right to ban the advertising of smoking. My noble friend said that people should be left to make up their own minds. Of course that is true, but the making up of one's mind is often very much affected by the advertisements that one reads. Therefore it seems a pity that a practice which does so much injury, and such increasing injury, to health should be able to be advertised, often in most seductive terms, all over the place. I hope that the Government will give some further thought to this, as the view expressed by the noble Lord opposite is very widely shared. At the same time I hope that the Government will consider the suggestion I made a little while ago, that one of the ways of checking the growth of smoking is by a very substantial increase in the tax. Higher taxation, which would make tobacco more expensive, must work in the right direction.
Finally, perhaps I may ask my noble friend one further question. Can she add to what she said about the policy in the White Paper of dealing with AIDS?
Lord Houghton of Sowerby: My Lords, is there not a Standing Order about the length of debates following a Statement? Who is going to protect the next Business? Some of us are waiting for the next debate to start.
Baroness Trumpington: My Lords, I think that my noble friend should continue.
Baroness Cumberlege: My Lords, I should like to thank my noble friend Lord Boyd-Carpenter very much for those comments. He is correct in his assumption that the expectation of life is greater for women than for men, but this is not perhaps a victory for men but rather a victory for both genders, in that both are now living longer.
With regard to reviewing the advertising ban on cigarette smoking, I should like to say that we have proved to be successful in this. Without a ban, our success is the greatest in Europe, except for the Netherlands. We know that our present policy works and is achieving results. But, having said that, a review is going on in regard to the question of advertising, especially with regard to children and smoking.
Lord Stoddart of Swindon: My Lords, I was wondering whether the professionals wished to say something—
Baroness Trumpington: My Lords, would the noble Lord kindly be as quick as he can? We have spent some time on this already.
Lord Stoddart of Swindon: My Lords, we do have 20 minutes for Back-Bench contributions under the Standing Orders, so that we have 16 minutes left. I appreciate that people want to get on with the next business, but at the moment we are on this business. I wish to make a contribution and I am going to make that contribution.
In regard to the Statement, of course everybody believes in prevention, and indeed I do myself. However, we must be extremely careful that obsession with health itself does not lead to a national neurosis. We are coming to a situation where we see in one newspaper that something is bad for you; yet a few days later we see that it has been agreed that the same thing is good for you. Therefore, it is necessary to ensure that people have the right information and are not bombarded with statistics which are sometimes contradictory.
For example, I have read statistics about cholesterol. I am told in one article by a renowned medical person that cholesterol is good for you. On the other hand, another eminent physician tells me that cholesterol is bad for you. One day we are told that butter is good for you and the next we are told it is bad for you.
No, I shall not stand heckling from my noble friend, Lord Cocks. I shall make my points and ask my question. The sooner he behaves himself, the better I shall be able to get on with what I have to say.
I turn to the banning of tobacco advertising. The noble Baroness who read the Statement will be aware that there are several opinions on the subject. Some people, indeed some authorities, believe that banning tobacco advertising increases the rate of smoking. If we ban tobacco advertising in this country we also ban the health warnings which appear on the tobacco advertising. Tobacco advertising is so sophisticated these days that almost all one sees is the message that smoking kills, smoking causes heart disease or smoking causes cancer. There are two points of view and the Government are right to give proper consideration to the matter before introducing a ban on tobacco advertising.
Finally, I want to refer to HIV and AIDS. While I appreciate that the Government must inform the general public about the dangers of AIDS and HIV, believe that they are not doing their duty in that they do not target high risk groups. I sincerely hope that they will do just that and ensure that the public are properly informed about that dread disease.
Baroness Cumberlege: My Lords, perhaps I may deal first with the point made by the noble Lord, Lord Stoddart of Swindon, concerning conflicting advice. I agree that where there is conflicting advice it causes a great deal of unhappiness and distress and people do not know where they stand. We are placing more emphasis on research and development. We think it essential that we get more accurate and better information.

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Due to the efforts of noble Lords in this House a Director of Research and Development was appointed for the National Health Service. The National Health Service has agreed a commitment of 1.5 per cent. of revenue for research and development over the next five years. We need better information, accurate information and the means to put it across to the public.
I very much welcome the noble Lord's support for the Government on the subject of advertising and tobacco. We are reviewing the matter and I am sure that we shall have a debate on the subject in the future.
Perhaps I may say a word about HIV and AIDS. I apologise to the noble Lord, Lord Carter, for not mentioning this before. The Government recognise that it is the most serious public health risk that we face. We have a five-part strategy in relation to AIDS which includes prevention, public education, monitoring, surveillance, research, treatment, care and support, addressing social, legal and ethical issues and also working with our colleagues across the world in international co-operation. As I have said, regional health authorities are reviewing family planning services because we see HIV and AIDS in the context of sexual health. We have set targets in relation to gonorrhoea, which we know is an indicator of what is happening concerning HIV and AIDS. The issue is a crucial one. This is the greatest public health risk we face and we shall ensure that we continue to put substantial amounts of investment into combating this serious disease.
Viscount Caldecote: My Lords, is it in order to make a short point?
Lord Stoddart of Swindon: My Lords, we have 10 minutes!
Viscount Caldecote: My Lords, my noble friend referred to the importance of sexual health. Can she assure the House that moral aspects will not be lost sight of and that the value of self-discipline and self-control will be fully emphasised?
Baroness Cumberlege: My Lords, I agree with my noble friend. It is crucial that AIDS and HIV are set in a moral, family and social context.
Lord Walton of Detchant: My Lords, there are some of us in the medical profession who would have welcomed an opportunity to say rather more on the Statement. Perhaps I may just say that I look forward with great interest to reading the White Paper. I am sure that the members of the medical profession will welcome the objectives and the targets that have been set and which have been so clearly enunciated.
Coronary artery disease and stroke are two of the greatest scourges of the modern world. The incidence of those diseases is far higher in the United Kingdom than in many other developed countries. Curiously, it is much higher in Scotland than it is in England and Wales, for reasons which are not at all clear. The message that an aspirin a day helps to keep the stroke or coronary away has not been promulgated as effectively as it might in preventive medicine. Nevertheless, preventive medicine in screening for
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breast and cervical cancer has been a great success story. The transformation wrought in the treatment of mental disease by neuropharmacology and developments through our pharmaceutical industry—truly the jewel in Britain's industrial crown—have been remarkable. However, there are many points still to be looked at in relation to the community care of those who have been discharged from mental hospitals, despite the fact that their symptoms are well controlled.
We still succeed in providing under the National Health Service what I believe is the best emergency care of any in the world. However, there are anxieties over the role of the medical profession, and not only in preventive medicine and cure, because of the fact that we have the lowest incidence of consultants per unit of population in most specialties in any western country. Those are issues to which I very much hope the Government will turn their attention, bearing in mind their pledge to increase the consultant establishment and at the same time to reduce the intolerably long working hours of junior doctors.
Given those objectives, I believe that the White Paper is admirable. I hope that we can manage to achieve exactly what is set out. The evidence is very clear that in other countries the abolition of advertising of tobacco has reduced smoking by the young.
Finally, I commend to your Lordships' House the report published last week by the Royal College of Physicians on smoking and the young, which contains many important lessons.
Baroness Cumberlege: My Lords, I am grateful to the noble Lord for those valuable remarks. I agree that community care is a huge agenda for the future. I take his point on medical manpower. The noble Lord will be aware that a review is taking place by the Medical Manpower Standing Advisory Committee, which will be reporting later in the year.
Lord Mackay of Ardbrecknish: My Lords, is my noble friend aware that one particular part of her Statement brings me particular pleasure—namely, her report that the immunisation rate has now reached its 90 per cent. target? There is no doubt that the improvement in the immunisation of children has come about because targets were set and, dare I say, because doctors were given financial inducements in their contracts to improve the rate of immunisation.
Therefore, targets are an excellent concept. However, I hope that my noble friend takes on board that one must also identify the target group. In the case of immunisation, for example, there was not much point in targeting your Lordships; it was important to target young mothers. Therefore, as the noble Lord, Lord Winstanley, said, it is important in some aspects to target young people. I hope that my noble friend will do that. I hope that she can assure me that in certain subjects, such as smoking and diet, the Government will target young people in particular. In the case of sexually transmitted diseases such as AIDS, that is the target group, not the general

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population. I hope that my noble friend will ensure that all the advertising and propaganda will be aimed at the target groups who are most at risk.
Baroness Cumberlege: My Lords, I am indebted to my noble friend for that advice. He has my assurance that we shall target the correct groups.
Lord Butterfield: My Lords, I wish to intervene very briefly with two points. First, we must all welcome the White Paper and wish it well. Is there any chance that the very important development of a Cabinet committee concerned with health can be diffused down into other departments and indeed into industry generally? I believe that a wonderful fruit of the White Paper would be a general concern for health among administrators and those concerned with the management of people throughout the country. I hope that they might encourage their workpeople to take more exercise and to be more careful about their canteen food.
My other question is this: can the Minister give me an assurance that those of us who have been interested in independent health promotion research may look forward to a continued interest in the work we do? We would be very anxious to support Professor Peckham in any way we can but we should be most unhappy if there seemed to be a centralisation of attitudes which would prevent research into questions such as "Is cholesterol good or bad?" by people of independent turn of mind.
Baroness Cumberlege: My Lords, the whole essence of this strategy is that we shall be building healthy alliances with all sorts of people across the whole spectrum: healthy workplaces, schools, environment —right across the spectrum. The noble Lord is absolutely right. It is not a health service matter. It is beyond that. With regard to his question on research, I shall take up the matter he raises with the Director of Research and Development.
Lord Cocks of Hartcliffe: My Lords, given the appalling toll of alcohol-related diseases, does the Minister agree that there seems to be some discrepancy in the attitude of those who call for a ban on tobacco advertising but do not couple it with a call for a ban on alcohol advertising?
Baroness Cumberlege: My Lords, I suspect that many of us subscribe to the premise: a little of what you fancy does you good.
Baroness Carnegy of Lour: My Lords, some very important points have been raised about the content of school meals. Can my noble friend assure me that there is no question of the Government returning to the old system whereby schools provided a compulsory menu which the children who most needed the food refused to eat? The children who did not need it were subsidised by those who did and very often the children who needed it most went unfed.
Baroness Cumberlege: My Lords, I agree with my noble friend's views on school meals. There is no suggestion that there should be compulsory menus dictated from the centre.

The Professions
7.2 p.m.
Lord Rodgers of Quarry Bank Lord Rodgers of Quarry Bank rose to call attention to the future of the professions; and to move for Papers.
The noble Lord said: My Lords, I am afraid that my choice of subject this evening and my good fortune in the ballot have led to some uneasiness in the ranks of government. Perhaps I may say as a preliminary that that was certainly not my intention. The difficulty is that this evening I intend to discuss the matter before the House in what I might call generic terms. In view of the number of other noble Lords who intend to speak, I entirely appreciate that it will be difficult for the Minister to deal with all the detailed points that may arise, particularly because they could be outside the scope of her own department. I do not ask for a detailed reply to the points that I may make, though I hope that the noble Baroness will respond in a warm and supportive way to what I and others have to say.
My theme is a generic one. Having spent the greater part of the past five years as director-general of the Royal Institute of British Architects, I shall choose to illustrate my theme and the matters that I wish to raise from my experience during that time. My theme is simply that the self-regulating professions are an essential part of a pluralist society. Although they must change to meet changing needs, they ought not to be diminished, as sometimes they have been, by the actions of government.
The modern professions, as we know them today, are largely a 19th century phenomenon. Medicine and law, which are so well represented in this House, had been long established. But the civil engineers established themselves as a professional body in 1818 and the architects did so in 1834. They were followed by the pharmacists in 1841; and other professions thereafter. They were established—this is an important point to which I wish to return—on the basis of an unwritten social contract. By insisting that their members should be properly qualified and by enforcing discipline, the professions said that they would ensure a service to their clients and ultimately to the public which was marked by competence and quality. In return—this was the other half of the social contract—they would be free from day-to-day interference and not obliged to compete in the commercial rat race.
The rise of the professions has been described as part of the process of the gentrification of the Victorian middle classes. There is something in that. Typically the sons of builders, for example, became architects in the next generation. I do not doubt that there was an element of Victorian hypocrisy in all that. On the part of some practitioners there was not only a search for excellence but for status too, and status sometimes flowed over into unjustified privilege.
But for all that, for more than 100 years the professions have served the country well, maintaining high standards of performance and integrity. It is a good record. They have offered and offer today careers open to talent. They have provided a good service to clients and the public and redress of grievance to those with a complaint against them. If they had not been invented 150 years ago, we should be eager to invent them today. Perhaps I dare say to the noble Baroness that the self-regulating professions were models of what I understand the Citizen's Charter apparently seeks to achieve.
However, in the last quarter-century there has been a dramatic change in the climate in which the professions have been obliged to operate. In the first place there has been a disposition on the part of government to regard them as in restraint of trade and more recently there has been a wish to see them subject to unrestricted market forces. I remember the reports of the National Board for Prices and Incomes in 1967 and 1968 and the report of the Monopolies Commission in 1970. There has also been the growth of the consumer movement, challenging the professions to explain themselves and seeking to test their claims in terms of the quality and the cost of their services.
I do not complain that the professions should be scrutinised by government and their agencies from time to time. I shall return to that point. I welcome the growth of the consumer movement. I have felt myself part of it since I joined the Consumers' Association in its earliest days. I also accept the major changes of the late 1970s and early 1980s that are now part of history. I do not wish to turn back the clock.
The fact is that the social contract of a century ago has been broken, but not by the professions. The question now is how far the process should be allowed to go. Let me repeat and reinforce my argument that the self-regulating professions have clear obligations to satisfy if they are to claim respect and ask to be left alone. Those obligations were well set out by the noble Lord, Lord Benson, who will speak later in this debate, some three years ago in an article in the Financial Times. On that occasion he referred to nine principles. I shall abbreviate and quote from three of them.
The noble Lord said that the governing body of a profession must set the ethical rules and professional standards which are to be observed by the members. They should be higher than those that can be established by the general law. He also said that the rules and standards enforced by the governing body must he designed for the benefit of the public and not for the private advantage of members. He said further that the governing body must take disciplinary action, including if necessary expulsion from membership, if the rules and standards it lays down are not observed or a member is guilty of bad professional work. I refer in an abbreviated form to those three out of the nine principles which the noble Lord, Lord Benson, set down; and I endorse them all.
There is a need for the professions to continue to change and develop. I take for granted, for example, that professional education is not simply a period of
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initial training leading to proper qualifications but of continuing professional development. It is an inescapable obligation on the professions to require that of their members. I also take for granted that in respect of professional conduct and discipline the professions should have a speedy and transparent procedure. There is a strong case that in today's world that should include a lay element. Indeed, I would put new obligations on the professions, for example, positively to encourage women and ethnic minorities. Both are much under-represented in most professions, including architecture.
Professional institutions are not trade unions with obligations only to their members, and they should never behave as though they are. However, in turn governments should recognise that most professional institutions give significant parts of their time and resources to making a contribution to public policy which is not inspired by their members' own self-interest.
In The Times on 3rd February of this year there was a leading article about the professions under the heading, "Professional foul?". If I may say so, it was The Times at its most wilful and confused. The article stated that the professions still occupy what it called,
"an enviable niche in the British class structure".
and that little had changed in the past decade. Indeed, it claimed that Parliament protected the professions from reforms. The article stated that that counts,
"among the more damaging hypocrisies of British public life".
Half-way through the leading article changed tack. It said that great currents were flowing to change the professions. The decline of deference was a factor. So was the European Community's competition policy and, curiously—despite what the leader had earlier said—that the professions were making a major impact within the European Community. The European market was dominated by British accountants, and British architects were not far behind. As we all know, many other professions are actively earning for Britain abroad.
Finally, in the leading article The Times reverted. It said that political parties should not show undue tenderness towards the professions. Hard questions had to be asked and difficult dilemmas grappled with. I refer to the words of the article; they are not mine. A series of leading articles in The Times would now explain the separate professions.
However, the professions came out rather well. They had changed and were changing. For example, architects were closest to a free market profession. That was meant as a compliment by The Times. Restrictive practices had been abandoned. The old days were over. That is close to the truth of the matter. Most professions today are not bastions of privilege. They rarely pursue restrictive practices. They are open to talent and remain committed to providing a service of quality to the public.
Indeed, there is an irony in the fact that we are having this debate. The idea of professionalism is applauded today as never before. Men and women are proud to be called professional in sports, the arts and business. It is a mark of distinction and achievement. In our daily lives we ask for a good professional job

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from those who repair our car or replace our plumbing. Indeed, for much of the time we wish that they were a great deal more professional than they are and that we could turn to a professional body to safeguard our own interests.
The role of the professional institutions is also profoundly interesting to those emerging from centralised and bureaucratic state control in Eastern Europe. Many of the professions have been called upon for advice in establishing or re-establishing their opposite numbers in Eastern Europe. Informed opinion in those countries believes that professional bodies can be an important stabilising factor in society, being neither state controlled nor part of the commercial market.
In November 1990, the Lord Chancellor gave the Hamptons Lecture entitled "Professional Standards in the 1990s". He was mainly concerned with the legal profession and I have no wish to enter upon those controversies today. However, a number of his thoughts were of general application and I do not dissent from one of them. The Lord Chancellor said:
"We start from two broad principles. First, in general, the person requiring the goods and services is the single best arbiter of the goods and services he needs and can afford … Secondly, the person most able to indicate in what ways it is possible to respond to the needs of the customer or client is the person whose job it will be to provide the goods and services sought. This is even more true in the case of the professions, where professional independence has a special role".
He spoke about the importance of maintaining quality. He said:
"The role of Government, I would suggest, should be limited to action when it seems that this balance has shifted too far one way or the other, or where external factors prevent it being struck correctly".
The Lord Chancellor also said:
"It is a fundamental part of the Government's policy towards the professions that they should be self-regulating".
I do not believe that I have quoted the Lord Chancellor out of context. I draw attention to the points that he makes. First, the professional called upon to provide a service is the person best able to judge how to meet the client's need. Secondly, the maintenance of quality in the provision of the service is important. Thirdly, the Government should have a limited role; the professions should be self-regulating.
I refer briefly to the architectural profession. There are no problems of entry to it today. There are more students in schools of architecture than ever before. It is not a secure profession. As many as a third of all architects have been made redundant during the current recession and two out of five are less than fully employed. Many practices, like other small businesses, have become insolvent. It is a poorly paid profession. A salaried architect in private practice is likely to earn between £20,000 and £25,000 a year. In the past year the UK earnings index has risen by 8 per cent., but the average earnings of architects have fallen by 2 per cent., with falls as large as 16 per cent. for sole principals.
I refer to those figures because they are not evidence of cushioned privilege. What is true of the architects' profession is true to a lesser or greater extent of others. Yet at the same time, far from leaving the profession to get on with self-regulation, the Government
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propose to reduce funding for architectural education from five years to four and are considering an end to the protection of title so that anyone may call himself an architect irrespective of training and qualifications. They are opposed to recommended fee scales, although they give clients total discretion to choose, and in the recession fees are rock bottom. In the Local Government Act 1992, the Government are intent on introducing compulsory competitive tendering for architectural services which makes it increasingly difficult for architects to offer a quality service.
Those matters represent an interference in some way with the ability of the architectural profession to regulate itself and to maintain the quality of its service to clients and the public. Through many of those proposals the Government seek to equate value for money with price at the expense of quality on the assumption that cheapest is best and what the public want. It is a short-term policy and strikes at the idea of independent professional judgment in service of the client and public. I do not want to pursue those specific issues now—indeed, there is no time to do so. I merely wish to point out that they show how government action can erode the idea of professionalism despite what was said by the noble and learned Lord the Lord Chancellor.
I do not ask the Minister to answer those specific points tonight. But I ask her to confirm to your Lordships that the remarks of the noble and learned Lord, applied to the professions as a whole, represent the policy of Her Majesty's Government. I ask the Minister to confirm that the professions are indeed the best judges of how to respond to their clients on the basis of their competence and training; that the maintenance of quality in the services that they provide is at the heart of the role of the professions: and that, in the words of the noble and learned Lord the Lord Chancellor, it is a fundamental part of the Government's policy towards the professions that they should be self-regulating.
I repeat that the self-regulating professions have made an immense contribution to the quality of life in this country. They have changed radically in response to the spirit of our times but remain an important element in a plural society. An obligation lies on them to continue to fulfil their part of their contract with society. However, in turn government —I refer to all governments and not specifically to this Government —have an obligation to sustain the professions and to acknowledge the unique contribution that they make to the life of our nation. I beg to move for Papers.
7.23 p.m.
Viscount Chelmsford: My Lords, I am grateful to the noble Lord, Lord Rodgers, for giving me the chance to make a maiden speech relating to the future of my own profession. It is said by many to be the second oldest profession in the world; I refer to insurance. I have had a 40-year career in that profession and have only recently retired.
Insurance is important to the UK if only for the consistent stream of invisible earnings which it has brought. Together with banking, foreign exchange and other commercial activities it has helped regularly

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to plug the gap between the visible exports and imports. We should not be surprised by that. When one considers that the UK is a tiny land mass as compared with our competitors, when one considers our lack of natural resources and our high standard of living, which leads to fairly high labour costs, one realises that we shall always need to survive by the skill of our people. The professions are very much about the skill of our people.
Recently one section of the insurance industry has come under severe difficulties. I refer to the losses which presently exist in the international commercial account. The result is that we are in danger of swinging from invisible exports to invisible imports as we pay out claims to third-party nations. We must decide how important to the nation is the reversal of that situation. I have attempted to analysis some of the problems and to look at possible solutions. I have found seven problems which I wish to discuss tonight.
First, there are problems which can and I am sure will be solved by the industry itself. I shall begin with catastrophes. Between 1987 and 1991 we have had a great deal more than our usual share of catastrophes and they have hurt. What do we intend to do about that? Catastrophes happen and quality insurers survive them. Today the quality insurers continue to survive them. Those who are not have probably let their standards slip.
The second problem that we have at present is poor underwriting, which leads directly from my previous observation. Happily, losses invariably lead to calls for better training and higher standards. That is exactly what is happening in the industry at the present time. For example, Lloyd's has recently had three excellent reports. The first was that of the task force led by David Rowland and recently reports have been published Sir Jeremy Morse and Sir David Walker. All state in excellent prose what we the professionals instinctively knew; that times have been too easy for too long and that a small minority of us have let our standards slip.
I shall now turn to the problems of the industry which the UK alone can never solve. The first may surprise your Lordships. It is sustained low insurance rates. They arise from too much capacity world-wide. There are several reasons for that. The first and perhaps most important is that far too many people become excited about what they can do with premium by way of investment before they must release it for claims. That became a cult at the beginning of the 1980s when investment rates were high and those in this country reached 20 per cent. In some countries that is still an important reason for capacity, particularly in the USA.
Another reason for capacity is the increasing sophistication of other countries in the world. Many countries used to depend on the UK for their insurance. However, they no longer need to do so because they have learnt how to handle their own business. There is a third reason, oddly enough. The loss cycle appears statistically not to hit all countries at the same time. For example, the existing loss cycle hit the UK before hitting other countries. There were two storms in three years each of which was supposed
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to happen only once in 100 years. That hurt us. That hurt has definitely spread to our colleagues on the mainland of the EC, although interestingly it is somewhat disguised. They have mechanisms for not showing the hurt as much. It has not yet spread to the USA despite the many well-publicised bankruptcies of insurance companies. However, the companies that really count in the USA are still making profits.
The next problem relates to comments that I made earlier; it is the growth in other markets. How are we to stay significant when people no longer need us as much. We have for some time recognised that we in the UK will not receive low-risk business from abroad. We are basically underwriters of high-risk business and we try to write a balanced book. We specialise in such things as catastrophe; the catastrophes to which I have referred are hurting some people at present. We like risks which are so big that they need the whole world's capacity. Only when the whole world is needed can we in the UK obtain the rates which we believe are correct.
We are innovative and are leaders in new products. Regularly we rate new products such as the hovercraft, those connected with space, and so forth, without any underwriting experience. In my view, we still have skills in abundance. Another aspect which we are heavily into and which needs considerable skill is retrocessions. "Retrocessions" is a funny word and effectively means re-insuring the re-insurers. The further one gets away from the original risk, the more complex it is, as certain excess of loss underwriters have recently found.
Finally, as regards the problems which the UK cannot resolve itself, there is the plethora of claims arising from past years which we thought were decently put away and buried. When I mention asbestos, pollution and lung disease noble Lords will understand what I am talking about. How is it that when we think that we have got rid of a year we have unreserved claims going back as far as the 1960s and 1970s? There are three steps to that chain. The first is political. It used to be the case that if someone sued you for negligence he had to prove that you were guilty. However, in many cases the burden of proof has reversed. For products, particularly those in the name of consumerism, now if there is a loss, it is up to the manufacturer or the distributor to prove that he was not negligent.
Secondly, there is a legal issue. It used to be that if you were sued for negligence, it was reasonable to state that you had done everything possible to act in the state of the art as it was known at the time. Now using 1992 state of the art we regularly attack people for things that they did in 1970. Thirdly, we have a social problem. It used to be that the exclusion that we put into our policy in 1970 would hold. Today it does not and lawyers explain why what was an exclusion is now a cover. That started with the USA, it spread to the EC, and the UK is edging closely behind them. The United States sees insurance today as a deep pocket which will pay for claims which its society requires and which is powerful enough to make

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recoveries in premiums later. Of course, that is totally different from insurance as it was originally founded in the UK, which was based on the law of fortuity.
I turn finally to two areas in which the UK could help the insurance industry if it believes that the need to continue that invisible export stream is sufficiently important. First, as regards taxing reserves, cases exist where the Inland Revenue has disallowed reinsurance to close on the ground that it represents a carry forward of undistributed profit. Sadly, there is now evidence to prove that those underwriters were not reserving too much but too little.
There is a real need for further liaison and discussion between the industry and the Government on this question. We need much more science as regards our reserves. I give one simple example. Let us suppose that an underwriter writes a catastrophe account where statistically he expects to pay only one claim in 20 years and that claim will be horrific. We regularly tax him for the first 19 years on 100 per cent. profit. If in the 20th year he receives a claim which takes away 19 years' gross premium—that is, before tax—he makes a loss overall, as opposed to a small profit over a 20-year period which he should have made.
That leads me neatly on to the last point which is another area in which we could help the insurance industry if we think it is sufficiently important. Despite everything that has happened, the industry still sees uneven playing fields in the EC. For example, I am told that German insurers regularly receive generous untaxed carry-forward against catastrophe. I am told that over the years that has allowed them to increase their capital base and to use that capital for regressive acquisitions. That certainly puts UK insurance companies at a disadvantage. Of course, it is now too late for us to look for good acquisitions; they have all been taken up within the EC.
When I move to France I find that the French Government have shareholdings in all the major insurance companies. When I think about the possibility of capturing French business from a leading commercial or industrial assurer, I remember that they are highly reliant on the French Government for their business. They are not likely to switch from existing insurance companies in which the government participate to support the British insurance industry. Therefore, we have freedom of establishment but we believe that the playing field remains tilted and worse; today the industry is weak just at the time when it should be strong.
I shall quickly recap. There is no doubt that the industry will turn itself round. It clearly expects to make a profit in 1992, which is a relief. It is tackling the problems of higher standards which it certainly needs to achieve to weed out poor underwriting. It will always have to compete with the rest of the world. It is not for me to say how important the industry is to the UK. I can only draw attention to the industry's track record on its earnings for the country and promote the idea that there should be closer liaison between it and the Government in an effort to continue such earnings for the country.
7.33 p.m.
Lord Howie of Troon: My Lords, as many of your Lordships know, I am a fellow of the Institution of Civil Engineers and, therefore, I am speaking as a member of a profession. I shall speak about civil engineering but I hope to avoid the error of special pleading.
Before I do that, I am extremely pleased to congratulate the noble Viscount, Lord Chelmsford, on his maiden speech. I believe I am right in saying that insurance, banking and possibly shipping are the main elements of our invisible earnings, but I must point out that consulting engineering follows very closely behind, and that is in a profession which consists of no more than 200 member firms. That is something of an achievement.
Before I turn to civil engineering, to which your Lordships know that I am devoted, I should like to make some general remarks about the professions. I remind the House, as I have in the past, of the book The Acquisitive Society which was published 70 years ago and written by Professor R.H. Tawney. Although it is 70 years old, it is still referred to in legal textbooks dealing with professional negligence when an attempt is being made to define "profession". Professor Tawney says:
"A Profession may be defined most simply as a trade which is organised, incompletely, no doubt, but genuinely, for the performance of function. It is not simply a collection of individuals who get a living for themselves by the same kind of work … It is a body of men who carry on their work in accordance with rules designed to enforce certain standards both for the better protection of its members and for the better service of the public".
Professor Tawney goes on to talk about those rules. He says:
"But their object is clear. It is to impose on the profession itself the obligation of maintaining the quality of the service, and to prevent its common purpose being frustrated through the undue influence of the motive of pecuniary gain upon the necessities or cupidity of the individual.
The difference between industry as it exists today and a profession is, then, simple and unmistakable. The former is organised for the protection of rights, mainly rights to pecuniary gain. The latter is organised, imperfectly indeed, but none the less genuinely, for the performance of duties".
Perhaps those sentiments have been rather eroded over the 70 years but they remain central to the idea of the profession.
The important words which are repeated throughout that definition are "service" and "quality". It is impossible to maintain the kind of quality in the profession of architecture, which the noble Lord, Lord Rodgers, mentioned, or in civil engineering under the conditions of compulsory competitive tendering which the Government have imposed upon local authorities. I know that there are limitations to that but nevertheless, we were told not once but several times during the passing of that legislation that the ultimate determinant would be price. I know that the word "quality" was used by noble Lords on the Front Bench opposite from time to time but we always came back to the ultimate determinant; namely, the cost of the service to be offered. That is not a professional way of doing business.
I shall illustrate that by a brief anecdote which is 150 years old. When the great engineer Brunel was

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asked to make proposals for what became the Great Western Railway, he was asked by the promoters what would be the cheapest route. He said, "No, I will not give the cheapest route. I will give you the best route". He did that and it is still there. It may be the long way round, as we all know, but it is the best, smoothest and flattest route in the country. That is what a profession is about: the provision of quality.
However, that needs self-confidence which, of course, Brunel had. It is fair to say that that kind of self-confidence is lacking in the engineering profession today. That is partly a matter of status, the position of the profession in society as a whole and the esteem in which it is held. I would not go on about that but for the fact that just before Christmas the Prime Minister met a delegation from the Engineering Council which was led by Sir John Fairclough, the chairman of the council. The Prime Minister said quite rightly to that delegation that British engineers are not held in the same esteem in this country as are their contemporaries in Germany. That is true. However, the Prime Minister did not stop there. He went on to say that something had to be done about it. I wrote to him asking what that "something" was likely to be so that I could support him and help him if at all possible. Your Lordships will not be surprised to know that I received the kind of letter one usually receives from the Civil Service—it left the matter more or less where it started. Perhaps the noble Baroness, Lady Denton, can revive the subject, find out what the strategy is and see whether it can be implemented.
Peter Lilley, as Secretary of State for Trade and Industry, appeared several weeks ago before the Select Committee on Science and Technology. He said that the Government's assistance to the status of the engineer would be through certain initiatives in the field of innovation in engineering which he had put in train. He felt that if engineers were innovative, status would follow. I wonder how true that is.
One can think of the great suspension bridges of recent years. The designers will scarcely be known to many Members of this House. One thinks of Bernard Wex and Bill Brown of Freeman Fox; as innovators they revolutionised the design of suspension bridges by rethinking the aerodynamics of the suspended deck of the bridge. Their work changed the face of bridge-building in that until the 1960s Americans had led the field world-wide; since then British engineers have led the world.
One thinks of the Forth road bridge, the Severn, the Humber, the Rio Nitero and the Bosporus. They are all British-built bridges, all innovative and none of them has brought much in the way of improved or increased status. One thinks of the explosions in high-tech architecture, which are admirable. We know the names of the architects and greatly admire and praise them. But their work would be less interesting were it not for the work of Peter Rice—I am glad to say that the RIBA recently honoured him with a gold medal; that is a marvellous gesture—Ted Happold, Tony Hunt, Jack Zunz, Frank Newby, Mark Whitby and many more. They are all innovators in structural
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engineering but no increase in status has occurred. The claim by Lilley therefore falls somewhat short of what is likely to happen.
Finally, I mention the Engineering Council. It was set up in the early 1980s, almost exactly 10 years ago, after the report of the Finniston Committee—of which I was a member —on the engineering profession. The Finniston proposals were not fully implemented—members of a committee do not really expect that—but it is fair to say that the Engineering Council failed to deliver what it could be expected to do. The council recognises that and Sir John Fairclough, its chairman, is setting in train an initiative in which the Engineering Council will be "re-hab'd"—rehabilitated—or reorganised, along the lines of self-regulation as the noble Lord, Lord Rodgers, mentioned earlier.
I hope that that reorganisation is successful. However, the Engineering Council needs encouragement from the Government. The best possible encouragement would be an element of funding. I ask only one question. The Design Council, although its work is slightly different from that of the Engineering Council, is funded to the tune of around £6 million a year. That is considerably more than the Engineering Council has received in the whole of its nine or 10 years of existence. Why?
7.45 p.m.
Lord Benson: My Lords, I should perhaps declare an interest. I am a member of the accountancy profession and have been practising that profession for the past 66 years. Around eight years ago my profession set down what it believed were its obligations to the public. It is worth recounting them because they are the foundation on which all professions must be built and on which their futures depend. Moreover, any profession which follows those obligations will have no need to fear the future. The Government can always be satisfied that it is healthy.
The nine obligations to the public are these. First, the profession must be controlled by a governing body which in professional matters directs the behaviour of its members. For their part the members have a responsibility to subordinate their selfish private interests in favour of support for the governing body.
Secondly, the governing body must set adequate standards of education as a condition of entry and thereafter ensure that students obtain an acceptable standard of professional competence. Training and education do not stop at qualification. They must continue throughout the member's professional life.
Thirdly, the governing body must set the ethical rules and professional standards which are to be observed by the members. They should be higher than those established by the general law. Fourthly, the rules and standards enforced by the governing body should be designed for the benefit of the public and not for the private advantage of the members.
Fifthly, the governing body must take disciplinary action, including, if necessary, expulsion from

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membership should the rules and standards it lays down not be observed or should a member be guilty of bad professional work.
Sixthly, work is often reserved to a profession by statute —not because it was for the advantage of the members but because, for the protection of the public, it should be carried out only by persons with the requisite training, standards and disciplines. Seventh, the governing body must satisfy itself that there is fair and open competition in the practice of the profession so that the public are not at risk of being exploited. It follows that members in practice must give information to the public about their experience, competence, capacity to do the work and the fees payable.
Eighth, the members of the profession, whether in practice or in employment, must be independent in thought and outlook. They must be willing to speak their minds without fear or favour. They must not allow themselves to be put under the control or dominance of any person or organisation which could impair that independence. Ninth, in its specific field of learning a profession must give leadership to the public it serves.
It is one thing to define the obligations, it is another to see that they are observed. It is an unending battle for the members of my profession and its governing body to see that its 100,000 members observe those obligations at all times. There will never be perfection but the striving is there.
For my part I believe that on the whole the professions in this country have served the public well. I have only one reservation on that point. But as far as I know all of them seek to improve their standards year by year; to tighten their disciplines and to give better service to the public. The one reservation that I have is that in recent years I believe that some professions have paid too much attention to marketing themselves and selling themselves to the public.
That has been exacerbated—in fact it has been to some extent caused—by the doctrine of government which, as far as I can detect, regards the professions as an undesirable monopoly which must be broken open. These two factors together are unfortunate. I believe that they have damaged the image of the professions. Some of the members have fallen below the standard of professionalism which is necessary for the conduct of their profession. In short, some of the nine obligations are at risk.
If there is time I should like to mention five other subjects. The first is that I do not share the rosy views of the noble Viscount, Lord Ullswater, who in an earlier debate expressed great satisfaction with manufacturing industry in this country. For those who move in the inner circles of industry it is common ground that our manufacturing base is too small and has been diminishing for a long time. The average productivity in manufacturing is below that of our competitors. In that respect all the relevant professions, particularly my own and the numerous branches of the engineering profession, have something vital to contribute. All of them ought to
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concentrate on introducing a much higher standard of professionalism into the management of manufacturing industry than has been the case in the past.
The second point is one which I believe other noble Lords have mentioned tonight. I believe that a professional body, provided it observes the obligations which I have mentioned, should be self-regulating. In my experience the members who are engaged in the cut and thrust of professional practice every day of their lives and in open competition are the persons best fitted to set the standards for the profession and to see that they are observed by all of them.
The third point is that in my view all the professions should be guided by written standards. Several professions have not gone far enough in that respect. I believe that they should close the gaps in their armament. My own has been fairly active in that and has done a good deal. But it is an unending road—we shall never reach the end of it. We have been fortunate in that we have been able to establish an international code of accounting standards. That is a good step forward. It has been a help in assisting international finance and trade.
The fourth point is that everybody makes mistakes and the professions are not free of that. Errors of judgment arise, as does negligence in varying degrees of severity. Negligence must be punished. Of that I have no doubt. But the country is now developing into a litigious society and whenever there is a breath of an error of judgment or negligence actions for damages are immediately launched. Usually they are launched against the professions if they possibly can be because it is known that we are covered by insurance for the most part. These claims have become so extravagant and the legal cost involved in dealing with them so enormous that I believe that in due time they will have to be restricted by statute. If that does not happen we shall not be able to recruit into the professions the quality of person whom we want. Already America has found that it is unable to recruit in some professions for the reasons which I have just given.
The last point is this: I believe that in every profession the citizens should be allowed to join irrespective of colour, creed, class or money. Several of the professions have not been able to achieve that. I believe that they should direct their attention to it very carefully. We have only one bar in my profession and that is this: the standards we set require a certain quality of intellect before a member can join. He must also be subjected to a proper educational and training standard which we have defined. We can do nothing about intellectual capacity because that is a matter for nature. But the training and education which are needed, not for our benefit but for that of the public before we can admit anybody to a profession, must be dealt with in the schools and universities. We have found grave defects in some of those fields which prevent members of the public from joining our profession. We have had a wearying afternoon and my time is up. I shall leave the matter there.
7.56 p.m
Lord Soulsby of Swaffham Prior: My Lords, perhaps I may first offer my congratulations to my noble friend Lord Chelmsford for his thoughtful maiden speech on insurance, which, as has just been said by the noble Lord, Lord Benson, impinges on all of us in the professions. Many years ago we thought in terms of hundreds of pounds and now we think in terms of millions of pounds.
I also express my thanks to the noble Lord, Lord Rodgers, for initiating this debate on the future of the professions, since, as stated in the book written by Lewis and Maud on Professional People:
"To be a professional man or woman today is to live with uncertainty".
There is uncertainty about the role and funding of professional education in the higher institutions. There is uncertainty about the acceptance of longstanding and established ethical standards and guides or codes for professional conduct. There is also uncertainty on the part of women and minority groups in the professions. Recently there has been some uncertainty about the impact of the European Community on the role and work practices and whether they are compatible with the generally accepted duties of a professional person.
I wish to address three issues briefly this evening. The first is women in the professions; the second has been touched on by a number of speakers—namely, codes of ethics and conduct, and the third is education. I am indebted to the United Kingdom Inter-Professional Group—Women's Issues Working Party, for very helpful data on the role of women in the professions. As we know, there is an increasing number of women in the professions. In 1990, of the 10 professions surveyed by the inter-professional group, 17.5 per cent. were women, although their numbers varied very considerably. For example, in engineering only 0.5 per cent. were women, whereas in pharmacy the figure was 40 per cent. In my own veterinary profession, in which I declare an interest, the figure is 26 per cent. These figures have been reached over a period of years. The start was the Sex Disqualification (Removal) Act 1919, which allowed women to join the professions. In the past 20 years the numbers have increased considerably.
The corollary of that is that women are somewhat under-represented on the ruling bodies of their professions. Their representation on the ruling bodies is certainly disproportionate to their numbers. However, the outlook is good. In the undergraduate population of our universities, the numbers of men and women students reading for professional subjects are about equal and, in due course, the proportions will change considerably.
One of the pleasing things about the survey that was undertaken is that sexual—or should I say "gender"?—discrimination is not reported to be a problem in the professions, although isolated incidents do occur and receive the attention of the press. Yet women holding senior posts are few in number both in the universities and in the professions. In my own profession, for example, there is no woman professor. There is only one female Reader in the
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country and only five out of the 54 senior lecturers are women. In the government service only one out of 41 holders of divisional status is a woman. There are no women in the higher ranks.
The conclusion is that, despite good progress and the complete rejection of the concepts which were accepted at one time—that it was a waste of time to train women and that they can contribute only about 50 per cent. of their efforts on their profession—we have still to come to terms with policies that will suit the career needs of women. The major issue now is not recruitment, as was the case at one time, but the retention of women in the professions. Things that must be attended to include maternity leave schemes. In this country we do not do as well as elsewhere in the European Community. The European Commission has proposed 14 weeks' maternity leave on full pay. In this country, the provision is six weeks on 90 per cent. of full pay with a flat rate thereafter. In Denmark, however, it is 28 weeks on 90 per cent. of full pay. We also need more child care facilities so that women can participate more fully in their professions when they have had their children. We must have retraining programmes for women who are returning to their professions following the rearing of children.
I now wish to turn briefly to topics that have been discussed previously—namely, codes of conduct and ethical guides to conduct. Such guides have been claimed to be a form of restrictive practice and self-serving but, as we have heard, such guides and codes must not be assessed against economic criteria, but more properly by the public interest test, which is: do they serve the public interest as well as they should? I believe that they safeguard the public against the unqualified, the incompetent and the unscrupulous and in doing so they are without beneficial economic effect to the professional.
I believe that it would be disastrous to remove from the professions their codes of ethics or written guides to professional conduct. They uphold both the standards of knowledge to be acquired before one can be admitted to a profession and the standards of' conduct and behaviour to be adhered to hereafter. Wickenden, a former president of the Institution of Electrical Engineers, has described them as maintaining,
"Professional status as an implied contract to serve society over and beyond all specific duty to client and employer in consideration of the privileges and protection society extends to the profession".
Retention and recognition of professional codes of practice will ensure that that definition is upheld.
This leads me to a consideration of professional education. A minority in some professions—including my own—has criticised education in the higher institutions of learning by saying that such education is irrelevant to the needs of the practising professional. I sincerely hope that your Lordships will reject such a notion. In my opinion, an advanced level of education is a distinguishing feature of the professional adviser. If that is not accepted, we may all become do-it-yourself experts in due course.
As well as the professional aspect of education, there is also the need for familiarity with liberal education. To my mind, the professional person

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should be as broadly based in the sciences as in the humanities. Unfortunately, the education of professionals has been placed in jeopardy by the inadequate provision of educational grants and services. There is no such lack of support on the part of vice-chancellors of universities, but there is a fear that cost and value have become confused. Individuals may well know the cost of everything but the value of nothing.
Perhaps in this context the professions themselves need to pay attention to their continuing education or continuing professional development. This has already been mentioned. In some professions, it is a mandatory requirement for its members. In others, that is not the case. I believe that in all professions it should be a part of the implied contract to the service of society, and that the individual should keep himself or herself up to date with the developments and advances within his or her specific field. It is the responsibility of the profession to attend to this aspect of education.
8.7 p.m.
Lord Walton of Detchant: My Lords, perhaps I may join with the noble Lord, Lord Soulsby of Swaffham Prior, in congratulating the noble Viscount, Lord Chelmsford, on his lucid maiden speech and in thanking the noble Lord, Lord Rodgers of Quarry Bank, for introducing this topic and for dealing in such an outstanding way with so many of the issues which are relevant to the work of all of the professions. The noble Lord is absolutely right in saying that within the past 20 years or more the professions in this country have been under continuing attack from the media, from the public and, at times and to some extent, even from the Government.
Since I qualified in medicine some 47 years ago, the transformation wrought by research and development in medical practice has been enormous. At the same time we have become increasingly aware that public scrutiny of the practice, procedures and regulation of the work of the medical profession is an important aspect of modern-day society of which we in the profession have to take careful note. The days of paternalism and of "doctor's orders" are certainly long past. The practice of medicine is now a partnership in which the doctor recommends a form of treatment or management and in which it is up to the patient to decide whether to accept that advice.
I believe that the education of undergraduate medical students in this country is still the best in the world, despite reductions in the unit of resource in our universities. It is carefully and continually monitored by an inspection process under the auspices of the education committee of the General Medical Council. Nowadays, half of our medical students are women. The intellect and motivation of both sexes is outstanding. They enter the profession as people of exceptional quality and exceptional dedication. The fact that they continue to practise and to develop so effectively after graduation is a great tribute to the teachers who educate them in our universities and hospitals. We have much more concentration now on
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principles, on the continuing importance of clinical apprenticeship, on problem-based teaching and on the communications skills which are so crucial to the doctor-patient relationship.
But there are clouds on the horizon. The declining recruitment to academic medicine in clinical specialties is a matter of grave concern and one must hope that the annual charade whereby the remuneration of clinical academics lags far behind that of their NHS counterparts is something that will soon become a thing of the past.
We also have in postgraduate education in medicine, in general practitioner vocational training lasting some three years after the statutory internship, a total of 10 years in all before a GP can practice independently in the health service, a programme of training which is the envy of many other countries in the world and which is now being copied in many states of the United States of America, where in certain places the family doctor is almost a thing of the past. Our specialists too are highly trained and the General Medical Council monitors programmes of postgraduate training and of continuing education from the day of graduation up to retirement. But of course the profession is aware of public criticisms and expressions of concern. We hear about poor communication skills. We hear of doctors having little time to talk. We hear of doctors being uncaring, unsympathetic, unkind or unwilling to admit their mistakes; and we even hear the criticisms that a minority of consultants are alleged to neglect their NHS duties for private practice.
Certainly, from my experience in the profession, these are a very small minority. Most NHS consultants are greatly overworked, as I said in the debate on the Statement earlier today, and have intolerable hours. Our consultant establishment in the National Health Service in this country in every specialty falls far below that in other parts of the Western world. Within my own specialty of neurology there are 10,200 neurologists in the United States, 5,000 in Japan, 3,000 in Germany, 350 in Holland, 400 in Finland and 194 in the entire United Kingdom. Only Ireland, with six, fares worse in the developed world. Despite the efforts of successive Secretaries of State, the hours of junior doctors are still far too long. In my day housemen certainly worked impossible hours, but the complexity of modern medicine means that an error in a drug dosage, a misinterpretation of a laboratory result due to fatigue and impaired concentration, can have serious consequences.
It is important that these matters be given considerable attention. There is in the public mind often some confusion between the responsibilities, on the one hand, of the British Medical Association and, on the other, of the General Medical Council. The BMA is a professional association—the doctors' trade union. I, among others, deeply regretted the confrontation which arose between that association and the Government over the NHS reforms. But I believe that the profession and the association have come to terms with the situation and are now determined to build upon what is good and what is beneficial to patient care but to monitor carefully

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those parts of the reforms which they believe may be shown by experience to be detrimental. This new attitude of constructive collaboration is much to be commended and I believe that continuing debate and negotiation will follow.
The BMA does many other things, such as giving advice to the profession on ethics and standards of practice. It also has a Board of Education and Science. Its openness of attitude can be judged from the fact that it has recently commended the proposal that there should be introduced statutory regulation for the osteopathic profession, a topic upon which I had the privilege of introducing a Bill into your Lordships' House a few months ago. I believe that it has now been taken up in another place. This kind of open attitude towards those practising alternative or complementary medicine is one which will continue.
But as the noble Lord, Lord Rodgers, said, the responsibility of self-regulation imposes immense demands on any profession. As Ralf Dahrendorf, now Sir Ralf, said in his Jeffcoat Lecture, the self-regulation of the professions is one of the glories of a learned society. He spoke with authority, then being a German citizen, pointing out that regulation by the state as an alternative was fearful and in his view quite unacceptable. But as the noble and learned Lord, Lord Hailsham, said in his article in the Spectator in 1988, self-regulation must never be allowed in any profession to be a cover for incompetence or unsatisfactory or less than adequate professional behaviour and practice.
I had the privilege of serving for 16 years on the General Medical Council, first, under Lord Cohen of Birkenhead, and subsequently under the most distinguished and elegant presidency of the noble Lord, Lord Richardson. During his day an increasing degree of openness was introduced into its procedures. I was happy during my own presidency of seven years to be able to introduce many more such innovations. These included the establishment of a health committee, under the noble Lord, Lord Richardson, in his day, to deal with doctors who were patently not wicked but who had often in the past come before the disciplinary committee; doctors who were sick and who needed medical help and support.
The noble Lord introduced an increased number of lay members and during my presidency the lay members representing the public interest on that council were increased progressively from seven to nine and then to 11. No decision relating to the registration of a doctor could be taken without the committee in question including in its membership at least one lay member. Increasingly, we introduced new recommendations on standards of medical care which we expected the medical profession to recognise and to follow. More and more of the doctors coming before our professional standards committee—more particularly the preliminary screening committee and ultimately the professional conduct committee—were being accused not of the kind of sexual misdemeanours which are so rare but which commonly hit the public press but were being accused and disciplined because of neglect or disregard of their responsibility to patients.
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Under my distinguished successor, Sir Robert Kilpatrick, a number of things which I hoped to see introduced into the self-regulation of the profession are now becoming a reality. My proposal that a lay screener should be included with the doctors to examine complaints has become a reality; a specialist registration so that the public can determine which doctors have been adequately trained in a specialty has become a reality; and now performance review in order to be able to deal sympathetically but firmly with doctors whose clinical and professional performance falls below an acceptable level is under consultation and it is hoped that it will become the subject of legislation.
Professional self-regulation is, as Ralf Dahrendorf, said, one of the glories of a free society. We must fight to preserve it. But that professional self-regulation must always be achieved with the aid of lay opinion and advice. It is important that all of our professions should, in preserving that self-regulation, be cognisant of the demands and the wishes of society.
8.18 p.m.
Lord Richardson: My Lords, I too am extremely grateful to the noble Lord, Lord Rodgers, for initiating this debate. It has been fascinating to listen to leaders from a whole range of professions defining what a profession is and saying where the professions should go. In particular, I think we were all most interested in the discourse of the noble Viscount, Lord Chelmsford, on the difficulties of an occupation—that is the word he used—becoming a profession. The noble Lord, Lord Rodgers, gave a simple definition; that there should be competence—competence means proper education—and a sense of service.
I do not wish to take up much of your Lordships' time because, in following the noble Lord, Lord Walton, I have little or nothing to say about the General Medical Council of which he gave a characteristically clear and complete account. I should like to make a few simple remarks about the building up of a professional attitude in the only profession about which I know anything—medicine.
I believe that the answer lies in the past, the past's effect on the present and the present's effect on the future. It depends to a very large degree upon selection and initial motivation. Someone who is just put into medicine who does not passionately wish to enter that profession will have a certain difficulty in accepting the very tough compelling requirement to meet the ethos of the profession, and clearly that of other professions.
Selection and inspiration at an early stage and throughout education—for example, undergraduate education—is of paramount importance. It must lead the medical student, and the students of other professions, to accept what has been enunciated over and again this evening; namely, the service. The service that is given to those who require it must take absolute preference over the interests of those giving the service. That is asking a very great deal. But if it is inculcated in the young and becomes part of their everyday assumption as they learn their clinical work, it will be such that they do not say to themselves with

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smug piety, "We must put the patients first"; it will just be there in their being, in their bones and in their breeding. But, nevertheless, it needs much support.
Fortunately, support for the medical profession is very considerable. There is, of course, the support of the subject itself, which is such a fascinating one. There is also the support of the patients because, after all, they are giving their confidence, hopes, anxieties and the care of their most precious possession—their bodies. If that does not have an effect in supporting the ethos of "patients first", there must be something very wrong with the selection and with the unhappy person who is entering the profession and who is wrong to do so.
In addition, there are all sorts of helpful things to support those who, as the years go by, become tired and have to give what is an effort whereas earlier it was so easy. I refer to the great medical institutions like the Royal Colleges which provide a wonderful focal point for communication and for a feeling that it matters very much to have the privilege of being a fellow or a member of such a college. Perhaps most clearly in my mind is the Royal College of General Practitioners. It is a young and extremely successful college and one which is doing an enormous amount to help the general practitioner—sometimes a lonely figure—to follow the basic ethos of "those served must come first".
The noble Lord, Lord Walton, talked about the GMC. In his report on the regulation of the medical profession, Sir Alec Merrison stated that he felt that the GMC should have the contract—"contract" was his word—with the general public and that the contract should be such that, on the one side, the profession was held up by the obligations of the contract and, on the other side, that the general public should feel a confidence that their affairs were properly protected, and that the behaviour and, as the noble Lord, Lord Walton, recently said, the competence—and, indeed, the manners of the profession—should be of a truly professional quality.
I should like to suggest to any group that is considering—and there are several in the pipeline, one of which, the osteopaths, was mentioned by the noble Lord, Lord Walton—becoming a profession that it will be registered and thus controlled by the fear of the sanction of exclusion. It is possible that the GMC, far from infallible of course but relatively ancient (about 150 years and it is still there) could, at any rate, be used not as a model but as something about which to think.
I shall cut short my time and thus ensure some goodwill to all men by expressing my thanks to the noble Lord, Lord Rodgers. I feel very confident about the future of the professions, even if governments do want to dip their toes into our affairs. I believe that they are based on real foundations; namely, the foundations of years and years of thought and experience by people who have been proud to practise.
8.27 p.m.
Lord Colwyn: My Lords, I should wholeheartedly like to endorse the sentiments expressed by the noble Lord, Lord Rodgers of Quarry Bank. At the same
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time, I should like to apologise both to him and to my noble friend the Minister on the Front Bench that, owing to a miscalculation of timing over the Introductions and the Statement this afternoon, I am already late for a previous engagement. However, I promise to speak for only three or four minutes this evening.
Any debate on the professions should highlight the fact that they have a unique and vital role to play within society as a whole. That is derived from the fact that—in itself—membership of a profession does not confer any particular status or standing. However, duty and responsibility are inalienable facets. They transcend market forces. They are owed to every citizen irrespective of age, gender, origin, social or financial standing.
The professions are mindful of those duties and responsibilities. Systems have been nurtured based on self-regulation and independence to ensure that quality of service and successful delivery are of paramount importance. However, the professions have observed with concern the extent to which in recent years economic, social and political factors have undermined that framework. That has applied particularly to those professions whose members derive their income via public funds. Failure to agree the basis of funding for such services threatens to undermine the ability of such professions to honour the duty and responsibility to society. In recent weeks, the actuality of that dilemma has been heightened in the context of my own profession of dentistry.
As I am sure noble Lords are aware, negotiating procedures to determine dental remuneration have become deadlocked. A majority of members of the British Dental Association has voted in favour of ceasing to accept new patients under the National Health Service. The view has been expressed that that decision could mark a watershed in the history of the NHS, indeed, possibly even the point when Beveridge's noble concept of free health care at the point of delivery was irretrievably lost. This is a matter on which history will judge. However, irrespective of the course which the current dispute takes, one cannot fail to be alarmed when considering that such action has been deemed necessary by a profession whose hallmarks are quality of delivery, concern for patient care and cost effectiveness.
It is right and proper that the Government of the day should be mindful of public expenditure. However, it is equally indisputable that the professions who run those services have the expertise to decide how they should be run. Therefore it is the professions that have a central and crucial role to play in determining the financial regimes which are ultimately put in place. The principles of the free market economy, such as performance-related pay, may not always be appropriate in this forum. In particular, if the concepts of the Citizen's and Patient's Charters put forward by my right honourable friend the Prime Minister are to find resonance, the professions and Government must co-operate in a spirit of partnership, drawing on mutual respect and expertise.

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For that reason, I applaud the endeavours of the United Kingdom Inter-Professional Group, currently under the secretariat of the British Dental Association. The group, whose prime objective is to promote an awareness and understanding of the professions, is keen to maintain a dialogue with Government, and in particular those government departments whose activities are likely to have an influence on those of its member professions. I endorse those goals unreservedly and wish the group every success in achieving them.
8.32 p.m.
Lord Ackner: My Lords, I attend this debate essentially at the direction of a Lord Chancellor. I must emphasise the indefinite article. The Lord Chancellor, if he were ever able to conceive an uncharitable thought, might well wish me further. I of course refer to Lord Chancellor Bacon who some 350 years ago said:
"I hold every man a debtor to his profession".
Those, like myself, who for nearly 50 years have enjoyed the fellowship, the kindness, the advice, the stimulus and the satisfaction of a busy career—in my case at the Bar and on the Bench—are very much "in the red". There is however a temptation that having once attained the utmost rung that some may:
"then unto the ladder, turn his hack, look in the clouds, scorning the base degrees by which he did ascend".
I propose to pay off a little of my professional overdraft by voicing my deep anxiety at the deprofessionalisation of the legal profession which is gathering pace. As it accelerates, it involves an ever-increasing shift of power from the judiciary and the legal profession to the Executive. That is a most unhealthy situation.
It is always a great pleasure and an education to hear the noble Lord, Lord Benson, speak, in particular on a matter which is so dear to his heart —the professions. In 1976 he presided over a Royal Commission which in 1979 produced a report with a total of 139 recommendations. It took four years—that is, from 1979 to 1983—for the Government to produce a White Paper (Cmnd. 9077) giving their views on the Royal Commission's recommendations. Under the heading in the first annex "Recommendations which are the responsibility of the Government", the Government's first response to the White Paper related to Chapter 3 of the report entitled "Legal Profession".
The three recommendations to which the Government directed their first response were, first, that the demand for the services of lawyers will grow; the profession should plan accordingly. Secondly, when the decisions arising out of the report have been taken and implemented the profession should have a period of orderly development free, so far as possible, from external interventions. That is because those interventions (Royal Commissions and the like) involve a profession in great costs and are very disruptive. The third recommendation related to a matter essentially concerning the solicitors' branch of the profession.
The government response was in these terms:
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"The existence, strength and vitality of an independent legal profession and public confidence in it are fundamental to our freedom under the law. Responsibility for qualification and admission and for conduct and for discipline, properly rests with the profession and the Government looks to the profession in exercising that responsibility to take steps as occasion demands to secure that its practices and rules properly satisfy public expectation and requirement".
In a second annex to the White Paper entitled "Recommendations which are the responsibility of the Profession" there was included the Royal Commission's own recommendations, inter alia, that the profession bears the responsibilities for ensuring that the quality of its members' work is of a satisfactory standard and that an independent authority, such as a legal training board, should not take over the control of all legal education, the responsibility in that area resting upon the governing bodies of the profession.
Some six years later there was, on this and other matters, a complete volte face by the Government. A Green Paper was published which made no mention of the Government's 1983 White Paper. In due course the Courts and Legal Services Act 1990 became law. As a result, the profession in future is to come under the control of the Lord Chancellor's Advisory Committee, a lay-dominated committee whose members are all appointed at the whim of the Lord Chancellor of the day. That body will effectively dictate, not just the framework and detail of the education, training, standards and discipline of all those who provide legal services in our courts, but the very way in which the services are to operate. In the debate on 25th January 1990 my noble and learned friend Lord Hailsham made the incisive comment:
"The idea that an independent profession should effectively be governed by such a ludicrous body, of which we have seen only too many examples in the past 25 years of my experience of Parliament, is too terrifying to imagine".—[Official Report, 25/1/90; col. 1251.]
It was stressed again and again during the debates that the insistence on the domination of that committee by laymen is but a process by which the Civil Service will exercise control over what has hitherto been an independent and separate part of our national life. Such laymen, it was observed, may simply be the political appointees of the day. In the words of my noble and learned friend Lord Oliver of Aylmerton in the same debate, such a committee is:
"an instrument by which the executive can, in a very large measure, control a legal profession which until now has been self-regulatory, and by which it can, by the creation of new classes of practitioners in the courts, secure an even greater control than it enjoys at the moment over the composition and of course, ultimately, the conduct of the judiciary at all levels".—[Official Report, 25/1/90; col. 1247.]
In one of the debates a very modest amendment was sought which required the Lord Chancellor to appoint the chairman of the committee only after obtaining the concurrence of the Lord Chief Justice; further, that there should be three additional judges appointed to the committee—a presiding judge (a High Court judge who is currently involved in judicial administration); a circuit judge (a judge of the Crown Court and the county court); and a stipendiary magistrate. The noble Lord, Lord Murray of Epping Forest, observed:

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"The people who make the advisory committee work are those who have experience in the legal system. They know what needs to be done and how to go about doing it. No one knows better the needs of lay people than the judges before whom such people appear … I do not see that there is a particular case for a lay majority".—[Official Report, 25/1/90; col. 1243.]
All that was achieved was the appointment of an additional judge, a circuit judge.
In Scotland the ultimate control of matters confided to this advisory committee resides with the Lord President, Scotland's Lord Chief Justice. Your Lordships may not be aware or have by now forgotten, as a result of so much media attention in relation to this legislation being devoted to the issue as to whether solicitors should have extended rights of audience, that the Government have laid down in the Act that laymen, provided they meet certain requirements, shall have the rights of audience—the right to appear in all courts from the lowest to the highest. When I say "laymen" I refer to those who are not lawyers; in other words, those who are neither barristers nor solicitors. The Government in support of this radical proposal produced no evidence that there was any shortage of lawyers properly qualified to serve the public in the courts. Indeed, the proposal in the Bill as subsequently enacted to extend the rights of audience to solicitors was in itself designed to provide a yet further supply of advocates.
A similar proposal was included in the analogous Scottish legislation. In the Second Reading debate on the Scottish Bill, my noble and learned friend Lord McCluskey referred to a lecture given by the distinguished American scholar, Dean Griswoold, who had considered the history of the introduction of laymen into the courts of the United States and the harm done by it. He quoted another distinguished academician, Dean Pound, who said:
"The harm which this de-professionalisation of the practice of the law did to the law, to legal procedure, to the ethics of practice and to forensic conduct, has outlived the era in which it took place and still presents problems to the promoters of more effective administration of justice".
This process of de-professionalisation was carried even a step further. In a clause and a schedule frequently described during the debates as "grotesque" which are now Section 71 and Schedule 10 power has been taken to appoint laymen—I use the term in the same sense as previously—to all judicial positions from the House of Lords downwards provided they have achieved the appropriate rights of audience. At no stage during the debates did we hear any evidence that there was a shortage of properly qualified lawyers to act as judges. Indeed, by extending to solicitors appointments to the judiciary in the higher courts a new supply of judges has been made available by the Act, making this potential dilution of the quality of the judiciary totally uncalled for. Significantly, as with the case of the advisory committee, no such provision appears in the Scots legislation.
I am at heart an optimist. I have a profound belief in the vitality of the legal profession—that is, the Bar, the solicitors and the Bench. I believe that they have sufficient strength to withstand the increasing de-professionalisation which is taking place.
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However, this optimism will not be justified unless there are enough of those who are prepared to stand up and be counted. I am grateful to the noble Lord, Lord Rodgers, for providing me with one such opportunity.
8.44 p.m.
Lord Rea: My Lords, with the leave of the House, I should like to make a few remarks in the gap before the main speakers. I apologise for not putting my name down. I had thought that I would not be able to be present at the beginning of the debate but as it was delayed I was able to hear most of what was said.
As another professional I should like to make a few comments. I feel somewhat inadequate, following the impassioned and extremely well-articulated speech of the noble and learned Lord, Lord Ackner; my words will be fumbling in comparison.
I noted with surprise that there is an important omission from the list of professions represented here this evening; that is education, at all levels from school to university, although my noble friend Lord Walton of Detchant alluded to the teaching of doctors. I feel that a brief word is due on behalf of the teaching profession.
Today there is very low morale in the profession and we may ask why. I suggest it is not only because of the relatively low financial rewards that teachers receive but also because the profession is not being allowed by the Government to be self-regulatory. That is the criterion cited by the noble Lord, Lord Rodgers, in quoting the noble and learned Lord the Lord Chancellor, and it is a fundamental characteristic of any profession.
Occupational stress is not caused by hard work alone but by hard work without autonomy, when the worker works to someone else's rules and end points. I suggest that many aspects of the Government's intervention in education over the past decade can be regarded as interference in areas which should properly have been left in the hands of the profession. I speak here of aspects of the national curriculum, and particularly the laid down requirements for assessment and testing at certain ages. Particularly under criticism here is the testing of seven year-olds which is held up to ridicule by most teachers. They feel that the extra large workload interferes with teaching.
Perhaps I may make a brief remark about my own profession. I do not need to say much because my two noble medical friends who are much more eminent than I have defended the profession's interests remarkably well. I should like to thank my noble friend Lord Richardson for his kind remarks about my own college, the Royal College of General Practitioners.
One reason why complementary medicine, which was mentioned by the noble Lord, Lord Walton, has become increasingly popular is that practitioners in this form of healing can spend more time listening to their patients' anxieties. Many doctors are felt to be too mechanistic in their approach so that they are not aware of the whole person and the interaction between the life circumstances of patients and their symptoms.

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Relevant here is a tip from a wise old physician and I have just been reminded of his advice. He said, "Never examine a patient in your overcoat". That suggests that if a professional gives people his full attention and really listens to them he will gain their confidence and make a much better assessment of the clients' needs. Therefore, litigation will be much less common, thus avoiding one of the saddest spectacles that we see, particularly on the other side of the Atlantic, where one profession is pitted against another. At the same time, the clients' satisfaction will he greater and the job will be better tailored to their particular needs. I shall finish at this point and allow the closing speakers to wind up.
8.49 p.m.
Baroness Hamwee: My Lords, I too thank my noble friend Lord Rodgers of Quarry Bank for introducing this debate and for setting it in the context of the pluralist society. The varied contributions which have been made this evening fully justify his setting the debate in that context.
I should like to mention, if I may, three topics: training, the place of women in the professions and the accessibility of the professions. I am a solicitor and must declare an interest to that extent but my points about training will also apply to other professions. This subject has been touched on by other noble Lords. I believe it is essential that each profession itself should reflect society. The noble and learned Lord the Master of the Rolls recently spoke about the problems of training of solicitors. He said that we must not have a legal profession which is recruited and trained on the basis of a pre-qualification means-test. I believe those words deserve repetition and taking to heart. I do not believe that what I am saying is special pleading on behalf of my own profession because the issues that are raised are of interest and concern to the whole of society.
In regard to the training of solicitors, when they have taken a degree they then go on to take a year—this may vary according to their background—of postgraduate professional education. For that year they are excluded from the mandatory grants system operated by local education authorities, from the student loans system and from receiving tax relief on the cost of training. The discretionary grants which are operated by the local education authorities have reduced very dramatically over the last few years as a result of constraints on local authority expenditure, and therefore on local education authority expenditure. The local education authorities are not required to make grants for postgraduate training.
This means that the trainees have to rely on their parents to fund them. They have to take up what a trainee in my firm referred to as "bar work"—in other words, part-time evening work. I am sure we all understand how that must interfere with the energy that otherwise would be devoted to studies. If they do not do that they have to look for loans. They cannot go to the government student loans service. They need, for this, to go to a high street bank and pay the interest levels that are charged.
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I have talked to trainees in my firm and they have referred to their contemporaries as having taken out loans of £3,000, £5,000, £8,000 and even £10,000. It seems to me that to start one's professional career with that sort of burden round one's neck is no way to begin. There is a new source of funding and, though in a sense it is to be welcomed, it carries within it the seeds of very considerable concern: that is, that solicitors' firms like ourselves are providing funding for our future trainees. In other words, the firm to which a trainee is to be articled will provide funding for the cost of the course and for living expenses.
I say that that system contains the seeds of concern because the firms which can afford to provide that sort of funding are by definition the successful firms: they tend to be large firms in the City. Certainly they are the firms which are profitable; not the smaller firms, nor the firms which operate a large legal aid practice. I think it is a matter of considerable public interest that our profession, like other professions, is not polarised. I believe the funding of our profession by a small number of firms representing a small area of society carries with it a potential problem. I think it most undesirable that we should create a greater polarisation in our society. There is a lack of equality of opportunity as a result of the lack of funding for training. As a result, society suffers.
There is also a danger to firms within the profession which cannot afford to recruit and pay these costs. An alarming number of solicitors' firms, in the current recession, are going to the wall. I think we may be in danger of regressing to a position of 50 years ago, or perhaps more. My father, who is also a solicitor, paid a premium to be trained, and we are in danger of going back in part at least to that sort of situation.
Secondly, I should like to refer to the position of women in the profession. The noble Lord, Lord Soulsby of Swaffham Prior, particularly referred to this. I am sure I do not need to commend to the Minister the work of the Women's National Commission and a report which was published, I think, late last year by the Working Group on Women Returners. It quoted another report, which has itself been referred to earlier, on women in the professions. This came from the United Kingdom Interprofessional Group, whose conclusion was that the professions have not yet come to terms with developing policies which will suit the career needs of women. Very few have specific measures in place which will suit the position of women, particularly those with children, although the position is changing fast.
Comments about women in the professions are not really very different from comments about women outside the professions. It may sometimes be thought that professional women are in a better position and that they are more able to look after themselves. I do not think that is so. In the solicitor's profession, where we are not allowed to incorporate ourselves but have to work in partnership—which has many benefits—the sex discrimination legislation and other legislation does not bite. More importantly, women in a partnership or hoping to go into a partnership do not have the language even to discuss the issue with their

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potential partners. I prepared for my firm our own partnership deed. Because it was not an issue for me, I did not include the topic—I am ashamed of it—and I did not write into the deed a clause about maternity leave.
I should like to take just a moment or two, because it deserves to go on to the record, to mention the conclusions of the Women Returners Working Group in connection with professional bodies. The working group recommended that consideration should be given to whether formal full-time work is essential to fulfil the requirements for work experience in order to achieve full professional status and also as to whether professional career breaks can be allowed while acquiring qualifications. They recommended that professional bodies should find ways of keeping in touch with women members on career breaks and whether they should allow them a reduced membership fee. They also recommended that the bodies should encourage employers to enable women returners to work part time and also encourage them to be flexible on age requirements for posts.
I should like to mention the issue of accessibility of the professions. By that I mean that we should consider whether we as professionals make ourselves accessible to those we should be aiming to serve. The concepts of professionalism are valuable but I believe we risk losing them because we make ourselves exclusive. We use language and jargon which is not always understandable to our clients. Perhaps I may be allowed to use the word "client" to encompass patients and all others who are clients of professionals. The Polytechnic of Central London undertook a recent study of law centres and it compared the work of law centres with that of private practice. Many of the respondents mentioned the negative characteristics of solicitors in private practice, such as excessive formality, a lack of interest and a distant attitude.
As I say, that does not apply so much to law centres and I ought to insert here a reference to the legal aid work carried out by the legal profession and refer to the need for quality in that part of our work as well as in private practice. This echoes what was said by the noble Lord, Lord Howie of Troon. There is concern, which is shared by the Law Society, that the emphasis by the Legal Aid Board on quality is becoming an emphasis on speed and high volume, and that there is a risk of creating a second-class service. Knowing the difficulty that many private practices have in sustaining a legal aid practice—indeed it is almost becoming a separate and discrete area of the profession—I subscribe to the concern that many solicitors who entered the profession are finding that they cannot now serve all their clients.
I have spoken about our language and our inaccessibility. We are sometimes our own worst enemies because we are too conscious of our own status. We should trumpet the benefits of our professionalism and the schemes which our professions run to protect the public if one member of the profession falls short. We should trumpet our sense of duty and service to the community. I understand that over 50 per cent. of all partners in solicitors' firms
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undertake public service work—what those of us who watch "LA Law" would now know as pro bond. That takes the form of work for Citizens' Advice Bureaux, law centres and so on, and the considerable work that is undertaken for local charities and local bodies. We should trumpet what we do in a way which does not alienate the public and does not make some members of our society feel that professionals are only for the middle classes.
9 p.m.
Lord Williams of Elvel: My Lords, the House will be grateful to the noble Lord, Lord Rodgers, for introducing the debate and for raising this important question. We have heard a very distinguished maiden speech from the noble Viscount, Lord Chelmsford, to which I shall return in a minute.
When I received—as I am sure did other noble Lords—several briefings on the debate, I was advised by the Royal College of Nursing that it hoped that its briefing might be of use in the context of what might be a wide-ranging debate. That is only too true; it has been a wide-ranging debate. We have heard the noble and learned Lord, Lord Ackner, give a spirited performance on the subject of the legal profession. We have heard the noble Viscount in his maiden speech deal with the subjects of insurance, the problems of the insurance industry and insurance brokers, and whether insurance is indeed a profession. I shall return to that point. My noble friend Lord Howie of Troon talked about civil engineers, and the noble Lord, Lord Benson, talked about the accounting profession. The noble Lord, Lord Soulsby, talked about vets, and our resident dentist (who, like the British Dental Association, has alas voted with his feet) talked about dentists. Therefore, we have covered a wide range of professions in the debate. I am sure that the noble Baroness will find it difficult to wind up the debate in a manner which covers the subject—the future of the professions.
The noble Lord, Lord Rodgers, posed the question: what is the difference between professional associations and trade unions? He answered that trade unions exist to protect the interests of their members, whereas professional associations have a quite different function. I am not entirely convinced by that particular distinction. I think back to the old craft unions, which insisted on severe standards for their members. For example, the plumbers' union established clear criteria by which one could become a member of that union. When I think of the BMA or the BDA, if I may use all those initials, or indeed of the Royal College of Nursing, I wonder where the difference between a professional association and a craft union in the old sense of the word lies.
If I were to try to define what a professional association is meant to do—and I shall return to the very important contribution of the noble Lord, Lord Benson—I would say that the object of a professional association is to enforce what in the old days we used to call the pre-entry closed shop—an ugly term. In other words, unless one had certain qualifications

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which were established and monitored, one could not practise in the job for which one was recruited. That is known as a pre-entry closed shop.
The pre-entry closed shop poses problems which various noble Lords have described. It also has several advantages, which noble Lords have also described. In favour of the professional association and the pre-entry closed shop is self-regulation. As the noble Lord, Lord Benson, said, it is much better for people who are in the profession itself, or in the craft, to decide whether their colleagues are able and properly qualified to exercise that profession or craft. Secondly, it is voluntary. Nobody has to join the association or the craft union if they do not want to do so. Thirdly, if it is properly run—which is again one of the criteria which the noble Lord, Lord Benson, produced—it will enforce discipline on its members to continue to adhere to the standards on which the professional association has decided.
The argument against the pre-entry closed shop professional association is that it could become a self-regarding coterie of people acting against the interest of the consumer and in their own interests; in other words, preserving a small element of interests which act against the populace at large.
Between the arguments in favour and those against, there is of course a knife-edge balance. Here we come to all the problems which have been raised by the noble and learned Lord, Lord Ackner, the noble Lord, Lord Benson, and other noble Lords. Where the balance tips over in one direction, one is in the business of politics. There may be public discontent. For example, for one reason or another, there is public discontent with a variety of professions at the moment. Conveyancing is one example. In this House we have had many debates about whether solicitors should be allowed to have a monopoly of conveyancing or whether building societies should also be able to do so. That is an example of public discontent which raises political problems, and I apologise to the noble Baroness, Lady Hamwee, if I offend her.
We can also have Euro-directives where the European Community in its great wisdom decides that—for instance, in the case of the accountancy profession—self-regulation along the lines described by the noble Lord, Lord Benson, is not right for Europe and there may have to be in the future (we should have to see whether that happens) a kind of General Medical Council arrangement for the accountancy profession.
There is also the problem of restrictive practices—in advancing the standards of professional associations, associations encourage their members to adopt procedures which disadvantage the consumer, because the consumer cannot go elsewhere. That is a restrictive practice.
Fourthly, as the noble Lord, Lord Benson, rightly pointed out, there is a general problem of a government perhaps deciding that market forces will rule and price is the only thing that matters. That was the point made by my noble friend Lord Howie of Troon. Quality goes out of the window and it is all a question of price.
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The results are that if there is overmuch intervention from government and overmuch litigation in the way described by the noble Lord, Lord Benson, and then the possibility of litigation and statutory intervention, the professions will be diminished. On the other hand, if there is too much encouragement of the professions as a pre-entry closed shop, the interests of the consumer will be disregarded.
I have no particular objection to a pre-entry closed shop. That is the way the political world works. We must recognise that the professions in the future, like the trade unions in the past, will always be on the edge of politics. But if there is a perceived objection to something that surveyors, engineers, solicitors, barristers, judges, accountants, insurance brokers or somebody else are doing, it will become a matter of political discussion. Indeed, it is right that it should do so because we live in a democratic society.
Given that basic fact, it seems to me that there are two principles which should govern our view of the professions. They were put very clearly by the noble Lord, Lord Benson. No professional association is worth anything unless it is rigorous in the maintenance of its own standards and the standards of its members. As the noble Lord said, that rigour should increase from year to year, not diminish.
Secondly—I come back to what the noble and learned Lord, Lord Ackner, said—professionals cannot at the same time be professionals and competitive entrepreneurs. The two occupations do not go together. Quality, as used by my noble friend Lord Howie, in the sense that this is the best way of doing things, is not necessarily compatible with the entrepreneurial spirit about which we hear so much from the present administration. So I believe that the noble Lord, Lord Rodgers, got the matter just about right in his introduction.
When I was an active banker in the City of London, an expression used was, "My word is my bond". I do not believe that anybody in the City of London now would say that. Telephone conversations are recorded now in the City of London. I believe there has been a diminution of that attitude. That is my worry.
The Financial Services Act was designed to make sure, that if there were rules it should be the investor who was protected. I refer again to what the noble Viscount, Lord Chelmsford, said about insurance. In fact, the Financial Services Act has simply imposed a series of almost intolerable burdens on those who have to operate it—the professionals—without protecting the investor. I believe that it has broadly failed. I hate to think that a similar fate could befall all the other professions that we have been discussing this evening.
9.12 p.m.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Baroness Denton of Wakefield): My Lords, I thank the noble Lord, Lord Rodgers of Quarry Bank, for bringing this matter to the attention of the House and for giving us the opportunity to debate this important subject. As the noble Lord suggested, I had some concern about speaking this evening because I feared that the debate would be so wide-ranging (as indeed it was) that I

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might not be able to answer all the points raised. I ask for the forbearance of noble Lords if that is the case. I should like to say what a privilege it was to be in the House for the maiden speech of my noble friend Lord Chelmsford. The professionalism and skill of his delivery certainly disguised the fact that it was a maiden speech.
The professions in the United Kingdom have a long history. They make an important and valued contribution to many aspects of British life, as has been illustrated today by the diversity of the professions to which noble Lords have referred in their remarks.
The professions play an important role in the process of wealth creation upon which this country depends. Professions account for a major source of invisible earnings. Figures for 1991 show that the net overseas earnings from consultants, including the legal profession but excluding the medical profession, were £1,544 million. That is a most significant achievement.
The professional institutions also play a part in representing their professions, co-ordinating views across their membership and in pioneering the development of new standards. Noble Lords may be aware, for example, of the Engineering Council's report on risk and its proposals for a new code of practice. The report follows concern over disasters such as the Clapham rail crash, the Zeebrugge ferry sinking, the King's Cross fire and other incidents. The council is trying to take action to avoid similar disasters in future by issuing the code which should ensure better risk assessment and risk management. That work is a welcome contribution towards putting provisions in place. It tends to indicate that the professionals of engineering and others in technology are the people who will be able to deal with environmental issues.
The future offers challenges and opportunities for the professions. But it is not a time to be resting on laurels. As an example of the challenges, I quote a recent speech by the Governor of the Bank of England at the official launch of the Securities Institute, the new professional body for stockbrokers, asset managers and corporate financiers. Mr. Leigh-Pemberton said that whatever the regulatory regime, the competence and ethics of practitioners are bound to remain the essential underpinning to a sound and honest market. That is a heavy responsibility and one to which attention has been drawn frequently tonight.
I wish to take the opportunity to draw particular attention to the role that the professions can play in assisting the establishment and growth of small firms which provide the seed corn for new employment and for innovation. There needs to be much more effort by the professions to tailor services to the needs of small business customers. Some of the larger accountancy firms have specialist divisions dealing with small business. Solicitors can also offer valuable services which can be particularly useful during the formation of a small company. Many solicitors belong to the Lawyers for Enterprise scheme which offers a free initial consultation for those running young or
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growing businesses together with a clear indication of what further advice might cost. That is extremely important. Not everyone meets on the golf course these days or even knows how to write a brief for a professional. The professionals should listen to their small firm customers and identify their needs.
In particular I ask the banking profession to do that. Last year the Treasury and the Bank of England conducted an inquiry into the relationship between banks and small businesses. As a result, banks were asked to ensure that their managers looked carefully at the needs of small business and to produce voluntary codes of practice. They have since been issued. However, many small firms are still anxious about their relationship with the banking profession. It is important that that situation is monitored and that the banks are fully aware of the ongoing anxiety. Bankers train to high standards and their skills would benefit small firms if shared easily.
The ability of businesses to compete in the marketplace depends on businessmen and women and their advisers having rapid and easy access to the help that they need. My department has announced the intention to pilot between 10 and 15 first-stop shops. First-stop shops will be useful to small businesses and their professional advisers, providing a gateway to the more specialised services offered by TECs, the Department of Trade and Industry, other government departments, venture capitalists and others. That approach will help small business and professional arrangements. In marketing their services, I hope that the professions will be encouraged to look at that principle and to consider whether there might be ways of streamlining delivery of their services. It is important that those shops represent private sectors and professions as well as the public sector work. I am delighted to say that the design profession will be represented in that area. That profession can contribute greatly to wealth creation.
Demographic changes, and changes in working patterns and practices, will affect the future development of all the professions. The professions need to come to terms with developing policies which will suit the career needs of women, provide greater flexibility and cater for late entrants. As was pointed out by my noble friend Lord Soulsby of Swaffham Prior, a report by the UK Inter-professional Group, published in 1990, indicated that very few professions yet have specific measures in place which will help women, in particular those with children, although the position is changing fast. That is not so at the Garrick, I might add, although I am delighted that the proposer of the debate was seen to be supportive of change.
Much remains to be done in the professions, as was identified by the noble Baroness, Lady Hamwee. The substantial resources invested in training professionals will be wasted if women professionals who wish to take time off work to care for their children or other dependants are deterred from returning. Professional women are sometimes assumed to be in a better position than most. However, the Women Returners' Network identified that they lose confidence and that

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they need flexible working hours and opportunities to keep up to date with their profession. Many men as well as women need dual career support.
Professional bodies must scrutinise their practices to ensure that they do not prevent women from qualifying or continuing to practice after a career break. They should do all that they can to persuade employers to adopt measures to assist women returners and late entrants.
Your Lordships have spoken about the challenges facing the professions in the future and of the tensions which exist between the various forces shaping the future of the professions. It is one of the UK's marks of freedom from the continental system that the UK professions have been able to develop associations of professional members without being subject to an ordre of the continental type. Over time self-regulation has come to be backed with registration Acts and Acts setting up bodies such as the General Medical Council, which the noble Lord, Lord Walton of Detchant, knows well. However, the underlying theme has remained that of self-regulation. That underlying theme has been widely praised and sets a worldwide standard. As was said by the noble Lord, Lord Rodgers, that is the ideal.
Yet it also carries with it dangers which occasionally emerge. They are the dangers of restrictive practices, put in hand by oligarchic leaders of the profession. Sometimes such leaders do not recognise the restrictive practices as such; they appear to be part and parcel of the process of professionalism and justified on that account. The opticians' rules against the advertising of prices were a case in point. The opticians believed that it would be unethical for an optician's practice to show prices for spectacles. The result, in a profession widely seen as a retail trade, was a restriction on the effect of competition with the inevitable prevalence of high prices.
There is, therefore, a certain dualism in the UK system of professional self-regulation. The Government believe that the system works best when there are checks and balances, allowing professional self-regulation on the one hand while preventing the development of unnecessarily restrictive practices on the other. The noble Lord, Lord Williams, identified the need to be aware of the dangers of the two sides and the political nature into which they could stray. I stress that the Government are not against professionalism.
The noble Lord, Lord Rodgers, referred to the Hamptons Lecture given by the noble and learned Lord the Lord Chancellor on professional standards in the 1990s. In that lecture the noble and learned Lord stressed the value of professional self-regulation and the need for the professions to combine the maintenance of high standards with responsiveness to changing client needs. He was of course particularly concerned with the legal profession. The noble and learned Lord has not so much intervened directly in that profession as enabled it better to reform itself and provide an incentive for it to do so. The Courts and Legal Services Act 1990, referred to by the noble and learned Lord, Lord Ackner, was a vehicle for those reforms. It is framed in such a way as to bring together
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developmental and public interest elements in the provision of legal services. Therefore, the need for strong professional standards and the necessity for innovation are recognised. The Act established the Lord Chancellor's advisory committee on legal education and conduct as the mainspring of that approach. It has a lay majority and as such views the subjects that it considers—which are at the heart of legal services—primarily from the client's perspective. That is very much in tune with the Citizen's Charter approach. We all wait with interest to see the impact of the committee, which will set a powerful example of the way to encourage the development of professional services without foregoing the protection of the public.
The legal services ombudsman recently published his first annual report. It makes interesting and constructive suggestions to the legal profession's complaints handling bodies.
We are grateful to my noble friend Lord Chelmsford for sharing his knowledge. He emphasised that true professionalism weathers the toughest times. We should not dismiss a whole profession because of the behaviour of a small minority of its members, as the noble Lord, Lord Benson, said. I am sure that my colleagues will know about the issues he raised on the question of European comparability and transparency.
The noble Lord, Lord Howie of Troon, raised the question of price. The belief is that the professional will provide work at a price which represents value for money. The Brunel conversation could still be held today. As a past member of the Engineering Council and chairman of its finance and general purposes committee, I have spent long hours concerned with the status of engineers. I suggest that industry must concern itself more with the status of engineers and let its young people through and reward them accordingly.
The noble Lord raised the question of the £6 million that he believes is given to the Design Council compared to what is given to engineering. I should point out that in 1991–92 £104 million was given in support of innovation, much of which goes towards engineering. The work of Sir John Fairclough tackles the issue at the core.
Of course, we were delighted that the noble Lord, Lord Benson, was able to take part in the debate and all professional organisations owe a debt to him. We support his plea for more professional management in manufacturing. It would be really good to believe that industrialists could be classified as a profession. The noble Lord also drew attention to the challenge that the global nature of business brings to the professions the problem of the increasingly litigious nature of society, where there is much work to be done.
The noble Lord, Lord Walton of Detchant, drew attention to how much doctors have adapted to change and the partnership of the doctor and the patient. He also drew attention to the profession's responsibility to look after its young—junior doctors in this case—and those less fortunate in current times. As the noble Baroness, Lady Hamwee, said, we should recognise how that can help in the pro bono area. I

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know that the support which the professions give to CABs is much appreciated. The noble Lord, Lord Richardson, so elegantly pointed out that being a professional is not an easy task. It brings responsibilities as well as privileges.
I am sorry that my noble friend Lord Colwyn had to leave. Patients currently have high expectations and respect for their dentists. The profession has well earned that respect and I hope that patients will have no cause to change that view over the coming weeks.
The noble Lord, Lord Rea, said that teaching should be a profession and the noble Lord, Lord Rodgers, pointed out that professions are not trade unions. It is important that teaching is looked upon as a profession because that means that both education and teachers are more highly valued. One of the problems which we have seen is that teachers have stopped people from entering the profession by saying that they could do something better. I believe that we have now overcome that hurdle and we should see change.
Completion of the single market brings both new opportunities for UK professions and benefits UK employers and customers of professional services. Noble Lords are aware that last year the UK implemented a Community directive which recognised professional qualifications in the European Community. The effect of that directive is to allow a professional qualified in one member state to be recognised as a fully qualified professional in the analogous profession in other member states. It is thus a great step forward in allowing real freedom of movement to professionals throughout the Community.
We welcome such opportunities. They give qualified professionals the right to practise and use their skills in 19 countries, opening doors to them which in some cases have been closed for centuries. We welcome the competition which those opportunities will bring and which should improve services to the consumer.
I had the privilege of entering your Lordships' House just over a year ago. I continue to be amazed at the combined knowledge represented in the House. Tonight we have yet again seen evidence of that great depth of wisdom. It has become clear that a profession or a code of practice is as good as its members make it or, as the noble Lord, Lord Williams, said, as long as it is properly run. I believe it has been a worthwhile debate. I thank the noble Lord, Lord Rodgers, for making it possible.
9.30 p.m.
Lord Rodgers of Quarry Bank: My Lords, perhaps I too may say how much I enjoyed the maiden speech of the noble Viscount, Lord Chelmsford. I was particularly glad that he referred to the invisible earnings of his profession, which closely matched what was said later by the noble Baroness, Lady Denton, in regard to the profession's wealth-creating record. He said that what the professions had in abundance were skills. In saying that, he hit the nail on the head.
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This evening we have been discussing the extent to which the professions, being self-regulating, may remain free to make their own contributions from their own skills to the quality of our life in this country as well as to the wealth of the nation. The great variety of contributions emphasised how far that will be the case.
Time and the procedures of the House do not allow me to pursue the argument of the noble Lord, Lord Williams, that the professions are no more than pre-entry closed shop trade unions. I doubt whether that is true of many; it is certainly not true of all. However, that argument must be left to a later occasion.
My noble friend Lady Hamwee said that the professions should trumpet their skills. That is absolutely right. The professions should make clear what they contribute to society, how far they have changed, the extent to which they are accessible and the degree to which they recognise that they must continue to make a contribution to their claims to be self-regulating.
I am grateful to the noble Baroness, Lady Denton, for her remarks. In the course of her comments and in particular her reference to the noble Viscount, Lord Chelmsford, I understand that she endorsed what he said. If so, I am well content. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Gas (Exempt Supplies) Bill [H.L.]
9.33 p.m.
Lord Cochrane of Cults: My Lords, I beg to move that this Bill be now read a second time. I must first declare an interest. I am chairman of a small private company which is authorised to supply gas within the meaning of Section 8 of the Gas Act 1986. Gas supply is less than 2 per cent. of our main business, which is that of a caravan holiday park. It is perhaps momentarily interesting, despite the lateness of the hour, to mention that the first production of gas that was proved to work was carried out by my direct ancestor, the ninth Earl of Dundonald, by means which would certainly have been disapproved of by the Health and Safety Executive, had it then existed. I shall not weary the House with the details of that now.
When a Bill is introduced, the first question asked is what it is for. The Bill's Long Title refers mainly to Sections 5 and 36 of the Gas Act 1986. I shall attempt to explain briefly why and how. Should I miss any point in the interests of brevity and the lateness of the hour, I hope that noble Lords will raise the matters in their speech and I shall do my best to explain when I reply.
The general effect of the Bill is to allow gas to be supplied through pipes more readily but just as safely as is allowed at present by simplifying the elaborate and long-winded procedures currently required by the provisions of the Gas Act 1986.
Perhaps I may explain. Section 4 of the Gas Act lays a duty on,

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"The Secretary of State and the director [of gas supply] to secure that persons authorised … to supply gas through pipes satisfy, so far as it is economical to do so, all reasonable demands for gas in Great Britain".
Supply is not as easy a term to explain as one might imagine because there is a second variety, which is self-supply. Supply is in practice the sale of a vapour defined as gas to a third party, and so is a concern of the Gas Act. Self-supply—that is, supplying yourself—is not a concern of the Gas Act and so is not within its scope.
In order to supply gas legally—it is a criminal offence to do it without authorisation—you may obtain authorisation under Section 5, to which I shall return shortly. Section 5 is now very limited in extent. Section 6 of the Act dealt originally with authorisation of very large supplies. The quantity was first defined as 2 million therms, which is a very large quantity, but now that has been reduced to 25,000 therms per annum. The DTI plan further phased reductions in this figure.
Section 7 allows supply by a public gas supplier to any premises in its area. The 1986 Act provides that there is only one such supplier—that is, British Gas plc, whose supply area is defined as the whole United Kingdom. Now, the important part is Section 8, which allows other persons to become authorised suppliers to premises specified in the authorisation, subject to not causing danger to the public, to being financially sound and to having a proper 24-hour emergency service available, together with a right of access to every place supplied.
In practice Section 8 has failed due to the vast bureaucratic effort involved in becoming authorised. There is available an alternative method of supplying gas from cylinders which is, with a technical exception, exempt from the provisions of the Gas Act. So total is the failure of Section 8 that last year at a meeting at the Department of Energy I complained that the authorisation procedures under Section 8 were so complex that breach of Section 4, to which I referred earlier, was occurring. That complaint was upheld by the department's legal advisers. That caused a certain creaking of the floorboards in the corridors of power.
Also Section 8 had entirely unforeseen results. It may be necessary to touch on that later. It caught a lot more than anticipated. To quote from the Ofgas report for 1991, during which year a very modest simplification of Section 8 procedures was made:
"there are a number of statutory requirements governing authorisations which are not within the discretion of OFGAS to change and which continue to give rise to concerns about the bureaucratic burden imposed on independent gas suppliers".
The report goes on to refer to having to get numerous government departments (it states five) to agree to what you are doing and to the existence of overlapping codes of practice for the safe supply of gas.
The overall statutory framework which imposes these burdens is now the responsibility of the Department of Trade and Industry. Ofgas has made direct representations to the department to simplify the statutory requirements for authorisation and the department has considered them. Indeed, that was
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further referred to in a later report. Ofgas said that it must have primary legislation in order to achieve any worthwhile change to the system.
Clearly Section 8 is the cause of major legal administrative problems. The effect has been to slow down and almost to stop the development of the independent gas supply market, which falls into Section 8. Ofgas tells me that it has issued about 313 authorisations, although the operative total, due to its method of counting, which is odd, is somewhat lower. Of these, over half concern LPG.
That has summarised the position. There have been continuing discussions between the Department of Trade and Industry, the Health and Safety Executive and the trade associations. Most importantly in this context, Ofgas itself, which has been closely involved in these discussions, recognises that this Bill is a realistic and sensible way forward from the present confusion.
Now I shall deal very briefly with the provisions of the Bill. It repeals Section 5 of the Gas Act 1986 and then re-enacts it with some additions. These include Section 5(1)(b), which is a purely drafting amendment because it refers to subsections (3) and (4). Section 5(2)(b) is of a similar nature. Section 5(3) is important. It allows propane and butane (commonly LPG) to be exempted from unauthorised supply or, in plain words, it can be supplied legally—so long as it is done safely—without much further ado.
Section 5(4) allows the Secretary of State to exempt others as he and Ofgas together see fit. This will by degrees allow greater competition in gas supply without prejudicing safety. The Health and Safety Executive is confident that it has adequate existing powers for this purpose. I raise this point because it has been drawn to my attention that Section (8) defines safety as one of the pre-eminent requirements, whereas subsection 5(4) does not mention safety. I have taken particular pains to establish the current position with the Health and Safety Executive.
Section 5(5) states that subsection (4) can encompass particular or more general classes of person and that decisions under this subsection are to be suitably published. The rest of new Section 5 repeats the old subsections, with Subsection (3) and (4) becoming Subsections (6) and (7), but it is otherwise unchanged.
Clause 2 of my Bill orders the Director of Gas Supply to keep a register of those authorised under Section 5(4) and under Sections 7 and 8 of the 1986 Act, and generally reflects the later position of the Electricity Act 1989.
In conclusion, this short Bill has the full support of the various trade associations involved in the independent gas supply market. It is welcomed by Ofgas as a sensible way out of the legislative morass of Section 8. Last week, the Director of Gas Supply, Sir James McKinnon, assured me directly of his support for the Bill. I believe that that support may also extend to the Department of Trade and Industry. By releasing the independent gas supply market from unnecessary and complex regulations, much will be done over a period, starting gradually, to widen the availability of piped gas, with its beneficial effects on living

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standards, particularly among isolated and small communities or in the caravan and holiday park industry, which are major users. By virtue of subsection 5(4), it can also open up other parts of the gas market to necessary competition—always, I add, within the control of the Secretary of State. Accordingly, I beg to move.
Moved, That the Bill be now read a second time. —(Lord Cochrane of Cults.)
9.42 p.m.
Lord Skelmersdale: My Lords, perhaps I should begin my speech by saying that I am speaking only because my noble friend Lord Cochrane of Cults wrote to me asking for my support for his Bill. When he has heard what I am about to say, I am afraid that he may regret having whetted my interest. However, the House will be grateful to him for explaining the need for his Bill so clearly.
There is no doubt in my mind that the procedure by which gas suppliers, especially small ones, have to get consents under Section 8 of the Gas Act is a nightmare. Not only do forms have to be submitted to Ofgas but they have to be sent to and approved by the Pipelines Inspectorate and the Gas and Oil Measurement Branch—and my noble friend has told us that yet more organisations are involved. As I understand the matter, they all have different forms for their own unique purposes. It comes as no surprise, therefore, that I have heard from outside the Chamber that it has taken a very long time for my noble friend to get authorisation for a gas supply to his caravan park and that he wishes to simplify the system for future applicants so as to encourage competition in the supply of liquid petroleum gas.
As one of the Ministers responsible for the Oil and Gas Enterprise Bill in your Lordships' House, I most certainly approve of the increase in competition for which the Government are aiming and which this Bill makes easier. That said, however, we must be extremely careful before we approve the method that my noble friend has chosen. His complaint is that Section 8 is too cumbersome and needs to be changed. The first question, therefore, that I must ask him is, why not change Section 8? The supplementary question is, what will happen to Section 8 if the new Section 5 reaches the statute book? Will it wither on the vine, as I suspect?
We also have to be extremely careful when considering the new Section 5(3) from the point of view of safety. As we all know, gas is dangerous stuff whether it is propane, butane or methane. When propane or butane leaks, being heavier than air, they sink and can be trapped under floors, in cellars, in sewers, in telephone ducts and so on, with all the likelihood of an explosion causing damage to other property well after the leak has actually occurred. Unlike North Sea gas or methane from a landfill site, they cannot disperse in the air, so I would argue that they are even more dangerous than North Sea gas. LPG, which is what we are really talking about, also
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has a higher calorific value which means that it provides a greater explosive energy release if escaped gas is accidentally ignited.
In my view, therefore, it remains essential that the prerequisite of getting a licence under Section 8 should remain; namely, that the supplier should be a fit and proper person with the necessary resources, as specified under Section 4(6) of the Act, so that he can re-lay pipes if necessary, provide an emergency service and at the very least cut off the supply when things go wrong. If my reading of subsection (3) is correct, however, all this is swept away. There is an automatic exemption for anyone to supply propane or butane through pipes to any premises. That is a very sweeping power indeed. I believe that there remains a need for what I call prospective assurances.
I assume that once the supply is up and running the situation is quite different, because the installation will, I presume, come under the powers of the Health and Safety Executive. I say "presume" because I cannot imagine my noble friend or indeed the Government deleting the requirement under Section 8(6) (a) to this effect, although the Bill is a little obscure in this respect. Safety then will presumably be ensured retrospectively as it were. I fail to understand though why, over and above my three requirements, Ofgas needs to be satisfied on all the points it expects to be answered before it grants an authorisation.
I have before me Ofgas's form C1/AA headed "Application for Authorisation". As well as asking the obvious questions such as the name and address of the applicant, the site to be supplied and details of the certified engineer, it also asks some curious questions. Question No. 5 states:
"Specify the price you intend to charge users of gas".
Question No. 6:
"Specify any other charge for the provision of a gas supply which you intend to make".
What on earth business are those of Ofgas, especially as far as concerns LPG? They are surely matters of contract between supplier and purchaser. If the purchaser does not like the terms of the contract, he can buy bottled gas in the usual way, or use electricity or, in certain circumstances, coal.
I am similarly confused by Questions Nos. 8 and 9, or rather the absence of a Question No. 9(a) in the same form. Under Section 8(5) of the Act an authorisation shall not be given to anyone intending to supply gas to any premises situated within 25 yards of a relevant main unless the granter of the authorisation has notified the public gas supplier, which is usually, though in future may not necessarily be, as my noble friend nearly said, British Gas, that the new supply will be in excess of 25,000 therms a year, or the public gas supplier has consented in writing to the giving of a supply. Questions Nos. 8 and 9 cover this, but only in part, by asking:
"Do you know if the supply is within 25 yards of a British Gas main? Yes/No
If no, do you wish OFGAS to contact British Gas? Yes/No".
Question No. 9 asks:
"Have you informed British Gas of your intent to supply gas? Yes/No
If no, do you wish OFGAS to do so?".

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For some unknown reason, there is no "Yes/No" against that question.
There seems to be no question of asking whether it is intended supply more than 25,000 therms a year, so I assume that Ofgas does not have a means of getting that information and will contact British Gas whatever is said. I rather wonder how that encourages competition in the gas industry —that is, competition which is in the interests of gas suppliers—because, as my noble friend Lady Denton told us last week, the more competition there is the less regulation there will be. I refer to economic regulation. Safety regulation is a different matter, as I have sought to explain in my worries over the new subsection (3) proposed in the Bill. Can my noble friend the Minister satisfy me that the automatic exemption proposed will be in the public interest so far as concerns safety?
As I said, I sympathise with my noble friend, but I am quite sure in my own mind that the Gas Act as it stands can be operated in a better manner—though possibly with amendment. For example, under the Act it would seem to me to be quite essential that there is only one application form; namely, the right one, as I have explained, which can be copied to all the other relevant regulatory bodies.
I have already mentioned Section 4 of the Gas Act. That, together with Section 16 (which is about standards of quality of gas), constrains the Secretary of State in certain ways that Parliament has required. There are all sorts of other constraints on the Secretary of State in the Act, and it is right and proper that there should be. This House in particular looks very critically at proposals that allow the Secretary of State to do things off his own hat.
Knowing that, I now turn to my noble friend's new subsection (4) which deals with exemptions to suppliers of any form of gas. So far as I can see, those provisions are quite inimical to both the Gas Act and the Competition and Services (Utilities) Act which specifies, as I recall it, fair competition. Moreover, if we enact subsection (4), slightly amended if necessary, to cover suitable persons and safety matters, do we need Section 8 at all? The new subsections (4) and (5) would seem to be a replacement for it.
Instead of an authorisation under Section 8, my noble friend proposes that the Secretary of State should lay an order. But, as I read it, it means that that order—a negative instrument—need only state the name of the company concerned to which he wishes to grant an exemption. It is quite clear that he may make any conditions that he likes, or none. I hope that Ministers in the DTI will think long and hard before agreeing to such a proposal. Although it will certainly increase competition in the gas industry substantially, there is a danger that a future Secretary of State, or a future government, could open up a very tilted playing field indeed. Surely, at the very least, the same conditions should apply to every firm granted an exemption.
I have no complaint about the Bill's new Section 36 which deals with the keeping of a register. As my noble friend said, he has based it on the provisions of Section 49 of the Electricity Act. It seems eminently sensible. There is a saying on the West Coast of Scotland which
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I have quoted before in this Chamber. It goes, "We think better later". The Electricity Act gained Royal Assent some three years after the Gas Act and it is of no surprise that better and clearer thoughts on keeping a register occurred in the meantime, even among those that I gather are now called "the Energy Command" in the Department of Trade and Industry.
I know from experience that it is the most difficult thing in the world to bring Bills before your Lordships' House and have them exposed to the glare of noble Lords. I can assure my noble friend that it is equally difficult to comment on a Private Member's Bill from the Back Benches. My initial reaction to much of his Gas (Exempt Supplies) Bill has certainly been negative, but I recognise that I could just as easily be totally misguided. I shall, therefore, await the other speeches with interest, especially my noble friend's wind-up speech.
9.54 p.m.
Lord Ezra: My Lords, in rising to speak on the Bill, I should like to declare an interest as I am chairman of a firm which is involved in the distribution of gas. I found the explanation of the purposes of the Bill given by the noble Lord, Lord Cochrane of Cults, to be very convincing. There is no doubting the fact that there is a procedure which has to he followed by suppliers of liquefied petroleum gas which is excessively complex. The details of that procedure, which were read out by the noble Lord, Lord Skelmersdale, confirm that fact. It is obvious that it needs to be simplified. Of course, there could have been many ways of doing so. The proposal before us is one of them. It seems to me to be quite reasonable.
However, I thought that the question of safety raised quite properly by the noble Lord. Lord Skelmersdale, had been covered by the noble Lord, Lord Cochrane, when he said that there had been discussions not only with the Department of Trade and Industry and Ofgas but also with the Health and Safety Executive. If those three bodies are satisfied that the safety aspect is taken care of, I should have thought that that would satisfy the rest of us. However, I have been approached by outside bodies which have expressed anxiety about that aspect of the matter. We should take the opportunity, in Committee perhaps, to propose amendments on that point which could reassure us.
The continued existence of Section 8 of the 1986 Act, alongside possible exemptions, will need a little explanation. No doubt the Minister will be able to give her views on that subject. Bearing in mind the complexities of the existing regulations, and the objective of increasing competition within the gas sector, I believe that the Bill is desirable, and I wish it every success.
9.55 p.m.
Lord Williams of Elvel: My Lords, the House is grateful to the noble Lord, Lord Cochrane, for introducing the Bill and for speaking to it so clearly. I tend to align myself with the noble Lord, Lord Ezra. The procedures at present in place are cumbersome and need reform. But—I am speaking in a private

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capacity, because this is a Private Member's Bill and I do not speak for my party—I wonder whether we need legislation of this sort to rectify what seems to be a rather minor deficiency in the Gas Act 1986.
There are some disadvantages with the Bill. As it currently stands, the wording of the Bill, as the noble Lord, Lord Skelmersdale, pointed out, confers wide powers on the Secretary of State to exempt whole categories of supplier from the current regulatory requirements. The implications are wide-ranging for the consumer, too. Those persons who are exempted under Clause 5(3) will be completely outside the current regulatory structure. I put this question to the Minister: if the Government are going to support the Bill and give it a fair wind, do they consider that this is the right way to go about solving what all your Lordships recognise to be a problem? Is there not a simpler way? If there is, should not the Government try to devise one and bring it before your Lordships' House as a government Bill?
9.58 p.m.
Baroness Denton of Wakefield: My Lords, I congratulate my noble friend Lord Cochrane of Cults on bringing forward this Bill which I know relates to a subject dear to his heart. He has made his views known to my department, as well as to the Office of Gas Supply, over a period of some months and I commend him on his tenacity.
The thrust of his Bill very much conforms with the Government's own thinking. As your Lordships will know, we are fully committed to the progressive liberalisation and deregulation of the gas industry. We have made clear our intention to reduce the British Gas monopoly threshold this summer from 25,000 therms to 2,500 therms.
We are very much aware of anxieties within the industry about the burden of complying with the authorisation procedure under Section 8 of the Gas Act 1986. We acknowledge that that is an area which requires reform. As my noble friend has explained, Section 8 of the Gas Act 1986 provides for the Director General of Gas Supply to authorise supplies of gas through pipes to particular premises—that is, a single consumer, or premises of specified description specified in an authorisation. Such authorisations are required by any supplier of gas other than British Gas or a person supplying over 2 million therms a year to particular premises (Section 6 of the Act refers). Prior to the Act, the Health and Safety Executive issued consents, under an agency agreement on behalf of the Secretary of State for Energy, under Section 29 of the 1972 Gas Act, as amended by Section 12 of the Oil and Gas (Enterprise) Act 1982.
The main purpose of Section 8, and the provisions in earlier legislation on which it was based, was to control entry into the piped gas supply market. Caravan sites and holiday parks have been caught by the legislation because the owners have tried to improve the facilities on offer to their customers. As a result, the supply of gas to caravan sites and the like is now generally piped from a central LPG storage unit rather than bottled in order to give customers a
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continuous supply. As a result, caravan sites have the same characteristics as supply systems on a much larger scale and thus now attract the same degree of control.
Both we and Ofgas are aware of the burden that the Section 8 authorisation procedure imposes on these small businesses. They are not after all attempting to set themselves up as gas suppliers, rather the supply of gas is incidental to their main business.
In its 1990 annual report, Ofgas noted that anxiety had been expressed by the British Holiday and Homes Parks Association Ltd. and the Liquefied Petroleum Gas Industry Technical Association about the increasing delays, costs and paperwork involved in the authorisation procedure. Ofgas therefore undertook an internal review of the Section 8 procedures which identified a number of shortcomings which could be resolved by a mixture of administrative and legislative changes. Ofgas has now implemented the various administrative changes, such as a fixed system of charges, which have done much to streamline present procedures.
I am satisfied that Ofgas has done all it possibly can to rationalise the authorisation procedure within the existing statutory framework and I commend it for its efforts. However, I recognise that while its efforts have gone a considerable way towards satisfying a number of the worries voiced, it has not completely resolved all the problems identified with the current procedures. Last summer Ofgas therefore drew our attention to the legislative changes needed to rationalise further the authorisation procedure. In particular, it drew attention to the overlap of safety responsibilities between Ofgas and the HSE under the Gas Act and to other unsatisfactory aspects which would require legislative change.
We have studied Ofgas's recommendations and have concluded that they are eminently sensible. Officials have been engaged in discussions with Ofgas and HSE with a view to making the appropriate changes. Our problem has been in finding a suitable legislative opportunity in which to carry this forward.
The noble Lord's Bill is therefore timely. Clause 1 would give the Secretary of State power to exempt suppliers of butane and propane gas—
Lord Williams of Elvel: My Lords, if the noble Baroness will allow me to intervene, she seems to be speaking very much in favour of her noble friend's Bill. Will the Government adopt it as a government Bill?
Baroness Denton of Wakefield: My Lords, the noble Lord has correctly identified that I am speaking in favour of my noble friend's Bill, I support it.
Lord Williams of Elvel: My Lords, are the Government adopting the Bill? Perhaps I did not make myself clear. Will the Government adopt the Bill as a government Bill and give it the Government's legislative time?
Baroness Denton of Wakefield: My Lords, this is a Private Member's Bill. As I said, it is timely and in line with our thinking and that of both Ofgas and the Health and Safety Executive. However, it is important

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to emphasise that in deregulating this aspect, there will be no diminution in safety standards. Safety will remain of paramount importance.
With that in mind, I am pleased to see that the provisions for exemption are modelled closely on the Electricity Act 1989 and that they would be brought into effect by a commencement order. That means that I can give a firm assurance that the Bill will not come into force until the Health and Safety Executive has had sufficient time to put alternative arrangements in place.
Clause 1 also gives the Secretary of State power to exempt further classes of suppliers from the need for Section 8 authorisation. While we have no immediate plans to utilise such powers at present, it is conceivable that we might wish to exempt other types of gas, such as landfill gas or coke oven gas, at some point in the future, again provided that this can be achieved safely and can be accommodated within the existing system of economic regulation operated by Ofgas.
Clause 2 requires the Director General of Gas Supply to keep a register of those to whom exemptions have been given. This seems eminently sensible.
I am grateful for the opportunity to outline our reaction to my noble friend's Bill. If I may sum up, we welcome the possibility of further deregulation in the gas industry, and particularly the alleviation of a burden upon small businesses, provided that safety can be assured.
Lord Skelmersdale: My Lords, before my noble friend sits down, are we to understand from what she says that the Government see no reason to amend this Bill in any way?
Baroness Denton of Wakefield: My Lords, I have just supported—I am sorry if I did not make myself clear—my noble friend's Bill as it stands.
10.7 p.m.
Lord Cochrane of Cults: My Lords, I thank all noble Lords who have spoken in this brief debate on the Bill which I have introduced. Perhaps I may refer briefly to the remarks that have been made in order of speaking. My noble friend Lord Skelmersdale—and the point was raised by others—asked what would happen to Section 8. The answer I was given when I asked this question was in rather oblique "Mandarin", but I think the effect is clear, if not the reasoning. I was told that if Section 8 were repealed it would destroy the architecture of the Bill. I have to confess that, after close study of the subject, I have not yet identified a gas supplier who would certainly be caught by Section 8 if the new Section 5 is to be enacted, as proposed in this Bill.
I am positively assured, as I will repeat again and as my noble friend on the Front Bench has said, that while anyone can supply gas, at any rate in LPG form, they are encompassed at this very moment by the provisions of the Health and Safety Act in relation to gas systems. If I have failed to answer my noble
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friend's questions, I will read Hansard extremely carefully and will write to him before the House sits again on the Bill. I hope he feels happy with that.
Lord Skelmersdale: My Lords, I am very grateful to my noble friend.
Lord Cochrane of Cults: My Lords, I am obliged to my noble friend. I should like particularly to thank the noble Lord, Lord Ezra, for his unstinted support for this Bill. He has enormous experience in the gas industry, and therefore his support is of uncommon value. I am grateful to him. I think I have already covered his points about safety in my reply to my noble friend Lord Skelmersdale, but if on further reflection it is discovered that some amendment to the Bill is required to tidy things up, I will of course be most willing to consider this extremely carefully. At the moment I am content to rest on the assurance of my noble friend Lady Denton that the Bill is as brightly polished as it can be for the time of night.
I would say to the noble Lord, Lord Williams of Elvel, that it has been repeatedly stated by the Office of Gas Supply that they could not escape from the duties laid on them by Section 8 of the Gas Act without legislation. It is on that basis that I have proceeded with this Bill. I am glad to say that that view is shared by my noble friend Lady Denton. It is not a new decision or a new idea; it has been in common parlance among those discussing Section 8 for some time.
Lord Williams of Elvel My Lords, I am grateful to the noble Lord for giving way. What is the origin of the Bill? We have a Bill which is apparently a Private Member's Bill, on which no noble Lord other than the Minister can speak in an official capacity fLord Williams of Elvel My Lords, I am grateful to the noble Lord for giving way. What is the origin of the Bill? We have a Bill which is apparently a Private Member's Bill, on which no noble Lord other than the Minister can speak in an official capacity for a party, because that is the convention of the House. We have a Bill which the Government apparently endorse lock, stock and barrel without any amendment whatever, cleanly polished, and which will receive full support. What is the status of the Bill? Is it really a Private Member's Bill, or is it a Government Bill which has been handed to the noble Lord to move?
Lord Cochrane of Cults: My Lords, in answer to the noble Lord, Lord Williams of Elvel, I shall say the following. I hope that I am doing so in the correct form and with due regard to the procedures of this House.
I say to the noble Lord, Lord Williams, that the status of the Bill is that of a Private Member's Bill. It is the product of long discussion with the bodies to which I referred in my earlier speech. The drafting has been done by an eminent firm of commercial lawyers in Edinburgh in the firm's capacity as solicitors to the company to which I referred earlier and of which I am chairman. The costs of so doing have been met in equal share by the two principal trade associations in the holiday parks industry. I hope, therefore, that I have convinced the noble Lord, Lord Williams of Elvel, that it is indeed a Private Member's Bill.

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Perhaps I may now refer to the remarks of the noble Baroness on the Front Bench. She has a much better
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script writer than I shall ever have and I thank her very much for her support. I commend the Bill to the House.
On Question, Bill read a Second time, and committed to a Committee of the Whole House.

London Underground System
10.12 p.m.
Lord Ezra Lord Ezra rose to ask Her Majesty's Government whether sufficient is being done to maintain and improve the underground railway system of London.
The noble Lord said: My Lords, tonight I raise a topic which has been debated and been the subject of questions many times previously in your Lordships' House—namely, the present condition and future development of London's Underground. I do so not only because it is the object of keen personal interest to many of your Lordships, who no doubt use it daily to reach this place and on other business, but also because the future of London as a world city, and hence the prosperity of a substantial sector of the nation's economy, depends upon the capital having an attractive and efficient transport system.
The London Underground, which carries more than half of all commuters who come into central London, and whose passengers make over 750 million journeys each year, is a vital part of that transport network. Those of us who have used and observed the Underground over the years have unfortunately seen a steady and discouraging decline in the quality of the system.
I believe that there is agreement on all sides of the House that the Underground has not been particularly well served by successive administrations. For certainly two and possibly three decades post-war, and since the 'sixties in particular, the Underground has been starved of funds for capital expenditure. Fares have in the past been subsidised from time to time, but I am talking here about expenditure on track, trains, signals and civil engineering. The Underground has suffered as much as any industry from the stop-go syndrome which has bedevilled our economy. I seek tonight to gain the Government's commitment to put matters right by backing the present management's endeavours and plans with adequate resources on a continuing basis.
During the 1960s and 1970s passenger numbers on the Underground were in decline and that was used as justification to restrict investment in the maintenance and renewal of the system's most basic assets. But failing to invest in a railway infrastructure is something of a time-bomb: nothing visible happens for a long time and then there is a catastrophic effect. There is a tendency to glorify the quality of Victorian and Edwardian engineering, but sadly, at least on the London Underground, all is not what it appears. The Underground was built for commercial considerations on a basic specification and the assets, which consist of 250 miles of track, 100 miles of which is in tunnel, 1,500 bridges and 250 stations, are in many cases passing or approaching their centenary.
The cost of making good the effects of years of neglect and of achieving an acceptable standard in these areas, deferred for so long, is now both unavoidable and very expensive. The report of the Monopolies and Mergers Commission issued a year ago identified that historic shortfall in investment. Some of the figures are staggering. For example, the
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track requires a minimum of £500 million to be spent over 10 years to bring it up to a standard even as good as that of British Rail, which itself requires a good deal of improvement. A quarter of all escalators are more than 40 years old and require replacement or extensive refurbishment at a cost of upward of £30 million annually. The drainage system, which has remained fundamentally unchanged since its installation and is faced with a rapid rise in the water table, requires expenditure of more than £50 million over the next five years to prevent flooding.
At the same time that the price has to be paid for the years of neglect, passenger numbers on the Underground have increased by 50 per cent. in less than a decade. Today's passengers rightly expect more than an ageing and deteriorating environment which is only gradually being made good. They expect in return for the real increases in fares which they pay, a clean, bright and modern environment with good, clear information and frequent, rapid trains. Most especially they expect to be safe: safe from accident, attack and intimidation.
What has the record been, faced with that history of chronic underinvestment, a heritage of antique and collapsing assets, an unprecedented rise in the number of passengers and faced too with those passengers' expectations of the system on which they travel? Although the prodigious rise in passenger numbers began as far back as 1982, with the Government assuming responsibility for London Transport in 1985, investment during their early years of stewardship extended to only a few projects, such as the Central Line modernisation, which for physical reasons could not be deferred any longer. There was no apparent willingness to increase investment beyond that level until 1988; and then it was not to invest in new capacity and the decaying assets but principally for the measures necessary following the King's Cross fire of 1987.
While those works have certainly yielded a safety benefit, they have not yielded any other tangible benefits. Rather they have inconvenienced passengers by the closure of passages, escalators and ticket halls for their duration. They absorbed much management time, and the lion's share of government investment not already committed to those one or two major projects such as the Central Line renewal were committed to that safety improvement. It is only in very recent times, and particularly in last autumn's public expenditure round, that the Government have seemed willing to give London Underground the volume of extra funds that it needs to attack the problems of shoring up its existing assets and developing the kind of up-to-date innovations that its long-suffering passengers want. There is a great deal to be done, including the increased provision of information, facilities and safety for passengers.
I recently visited London Underground to view some of the new programmes that they are now able to bring forward. Although I went with a critical eye, I was impressed by what I saw. I travelled on a Circle Line train which has been refurbished to meet fire safety standards; and it looks like an entirely new train. Edgware Road Station has had new lifts fitted

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and has been sensitively restored from top to bottom. I heard that the number of escalators not working has now fallen by a factor of three over three years. But, most importantly, I detected a will and an enthusiasm among the managers and staff whom I met to get on with the job and to serve the passengers' needs. I do not believe that always has been a feature of London Transport.
I believe that the Underground is currently running a more reliable service than for many years, despite the plague of security alerts which bedevil it and the fact that only recently has the funding been adequate. I put that new attitude down in part to a change in management but also to the decision of government to begin such adequate funding. Will the Minister assure us tonight that those higher levels of funding announced for London Transport last year were more than just a pre-election boost and that they will be sustained at the level necessary to allow the essential work to be properly planned and executed over the years? That means in round terms £750 million annually being spent on the existing network at least until the end of the decade. Such a level of funding would allow projects that are still currently on the back burner—such as the modernisation of the Northern Line, for which we still do not have a start date—to be activated. That is what is needed if London Underground is to become what so many other cities vying for international trade and finance already have: a modern, efficient and reliable transport system.
I have spent much of my speech talking about the existing Underground system. I believe that that is right because London Underground's first duty is to serve its existing passengers well. However, I also press the Minister on the expansion of the network. In central London, the vast majority of the lines predates World War Two. Only the Victoria and the small appendix of the Jubilee Line have since been built. The Edwardian system is groaning at the seams and while some work can be done to increase the cramped size of stations such as Tottenham Court Road—your Lordships may be interested to know that it now handles more passengers a year than do all the terminals at Heathrow Airport—new lines are needed.
The noble Lord, Lord Clinton-Davis, raised the issue of the Jubilee Line extension in a Question in the House on 11th June. To date nothing has happened in connection with that extension, as noble Lords well know, although the Bill has had Royal Assent and work could begin at once. The scheme has many transport benefits, apart from simply serving the Isle of Dogs. As the Minister pointed out to the noble Baroness, Lady Gardner of Parkes, at least £100 million already spent stands to be wasted if the scheme does not proceed.
The Government run the risk of sacrificing the transport-starved areas of south-east and east London to what appears to be an outdated belief in the private sector as an adequate provider of socially necessary infrastructure. We were told that that line was not being built solely for the private sector's benefit; yet we find that the private sector can hold the whole
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process up. I hope that the Government will feel able to take a wider view, as other projects simply cannot be brought forward quickly to absorb the money set aside for that project. Can we assume that the imminent start of works relating to the extension outside the Palace of Westminster means that the Government's position has changed? Indeed there have been reports in the press of other indications of a possible change in the Government's attitude. We look forward to being enlightened on that matter tonight.
CrossRail, a scheme to relieve pressure on Underground lines by bringing longer-distance commuters directly into central London, is at an advanced stage of planning. I hope that the same delays experienced by the Jubilee Line extension will not affect it.
In east London a scheme to extend the East London line both north and south in very deprived areas could be carried out at extremely modest cost. Will the Minister explain the Government's position on that scheme?
Lastly, the projected Chelsea to Hackney line will certainly be needed if the King's Cross area develops with the Channel Tunnel rail terminal and in other ways. In the 1960s the Victoria Line was almost not built because planners believed that inadequate numbers of people would travel on it. How wrong they turned out to be! The Chelsea-to-Hackney line is needed to relieve not only the Victoria Line but many others too.
We must invest now for the future, both in the Underground's existing system, so that today's and tomorrow's travellers can enjoy the high-quality system that they deserve, but also in future capacity, so that our European colleagues and other overseas investors can have confidence in London and in the rest of Britain as a place to do business. Failure to do so will be a false economy. I look forward to the Minister's reassurance on both aspects of this important subject.
10.27 p.m.
Viscount Cross: My Lords, I shall be brief. I thank the noble Lord, Lord Ezra, for having raised this important matter. As he said, the London Underground system was built largely during the previous century. It is a 19th century concept and in 1992 a great deal of maintenance, improvement and modernisation need to be done. I shudder when I think of the expense and the enormous disruption that will take place all over London should the extension to the Jubilee Line be built.
I wish to suggest as an alternative a concept which might be more appropriate to the coming 21st century. I emphasise that I am being totally serious in suggesting that we should build a monorail at first floor level straight down the middle of Oxford Street. We should allow it to wend its way through the City and to go on to Docklands and Canary Wharf. After that it should cross the River Thames and come back westwards along the south bank. There would be a frequent and fast service of monorail trains and in due course the line would become known as the "Outer

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Circle". Furthermore, it would pay for itself almost straight away because, apart from taking people to and from Docklands and Canary Wharf, it would become an ideal way of seeing the sights of the City of London.
I apologise for having strayed rather far from the Unstarred Question which the noble Lord, Lord Ezra, has placed on the Order Paper. Nevertheless, I commend my proposal to your Lordships.
10.30 p.m.
Lord Bonham-Carter: My Lords, I join with the noble Viscount, Lord Cross, in thanking my noble friend Lord Ezra for raising this subject this evening. As a humble consumer of the services of the Underground, I could not resist taking this opportunity to express some of the many reservations that I have about the service which I receive at present.
My noble friend Lord Ezra spoke about the massive investment which is now necessary for the Underground to provide a decent standard of service to its customers. He seems to me to have made a case which is extremely difficult to refute. When the Minister replies, I hope that he will be able to give the assurances for which my noble friend asked both as regards the Jubilee Line and, above all, as regards the amount of investment required to the end of this century.
However, it seems to me that investment of that size should be well spent. Much of the investment in the past, even though there has not been enough of it, has not been well spent. A number of simple improvements could be made to the Underground which would make travel on it more pleasant and easier than it is at present.
I speak as a regular user. My station is on the so-called renovated Central Line, which needs a great deal more renovation than it has received so far. My station is Holland Park. A few years ago two new lifts were installed at that station. It took them no fewer than two years to instal them in an existing shaft and, presumably, the lifts were largely pre-fabricated. Those lifts have been notoriously unreliable. They were installed all over London. One was out of order this morning and it was also out of order last week. There are 88 steps down to the Underground at Holland Park. A woman with a child who arrives there when the lifts are out of order, unless there is someone to help her, is absolutely stymied. I see no reason why the lifts should be so unreliable. I hope that the new lifts which are being installed at Edgware Road, to which my noble friend referred, are of a different type and more reliable.
There are other silly matters which could be rectified with a little thought, which the management appears not to give to them. I give an example. The stairwell at Holland Park station, to which I have referred, was repainted two years ago. I pointed out to the authorities that they should mend the leaks which destroyed the paint before they repainted it. They told me that they could not locate the source of the leaks. They repainted the stairwell and it is now as squalid as it was two years ago before it was repainted.
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A second point which I should like to draw to your Lordships' attention is that throughout the Underground there is a tannoy system. Either it is a very bad system or the people who use it are not trained to do so. It is almost always unintelligible. Either it is used when the train is coming into the station or the person using it speaks with his mouth too close to the machine so that one cannot hear what he has to say. It would be far better if there were in all stations the annunciators that there are in some stations which tell one when a train is coming. I cannot believe that that is very expensive. However, those annunciators have not been installed regularly or quickly, and I should have thought that that would be one of the first changes which could be made to improve service to the passengers.
The second point is that in all stations there are inevitably a large number of signs pointing to exits and advising passengers as to the whereabouts of platforms for other lines. Those signs are often hung so that one conceals the other. If one alights at Bond Street on the Central Line and wishes to transfer to the Jubilee Line, unless one knows where it is, one cannot see the sign which shows how to get there. That is simply bad and incompetent planning. It does not cost any money to position signs in the right places.
One of the most tiresome aspects of the Underground system is its unreliability. Six years ago I could travel from Holland Park to Westminster in half-an-hour. Today, to be sure of arriving on time, I have to allow three-quarters of an hour for travel. All too often the signalling equipment is out of date or not working. I would far prefer money to be spent on improving the reliability of the signalling equipment than installing pretty tiles in the Underground.
Those are but a few of the small changes which could be made in the way in which the Underground is planned and administered which would make a substantial difference to the comfort of its passengers. I hope that the management of London Underground will pay some attention to those minor and inexpensive suggestions.
10.35 p.m.
Lord Sefton of Garston: My Lords, I do not apologise for not including my name on the list of speakers. However, the House is entitled to an explanation. As the noble Lord, Lord Ezra, said, many Members of the House are keenly interested in this subject—that may he the reason the attendance is so large tonight. However, I do not blame them. I too did not intend to be present.
The Unstarred Question is,
"To ask Her Majesty's Government whether sufficient is being done to maintain and improve the Underground railway system of London".
I understood that to mean the present London Underground system. I never dreamt that under that heading we would be discussing the Jubilee Line. But we are. Perhaps I can explain. When I picked up the Evening Standard this evening it told me exactly what the noble Lord intended to say. I felt I should come along and hear what he had to say about the Jubilee Line. As I suspected, we heard a plea for the extension of that line.

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I understand that the cost involved would be around £1,700 million as a starting figure. I understand also that the Treasury is in some doubt as to whether or not the public expenditure figure should de-escalate. I do not believe there is the slightest chance of the Treasury spending £1,700 million in addition to carrying out all the improvements that we have heard should be carried out to the present system.
Anyone in this city who travels on the Northern Line knows full well the problems that exist on the Underground. If they have only a minimum knowledge of public transport they will realise the cost of putting right that one line. It is not likely to done in the foreseeable future. We therefore come to the question of whether at this stage in our life—contrary to the planned improvements to London Underground that have been referred to and contrary to the Government's desires in regard to the priorities for the transport system—we should engage in the extension to the Jubilee Line.
Let me make one point perfectly clear. I sat through the Committee debates for a long time, and one thing was quite clearly established. London Underground did not consider the Jubilee Line to be a priority. The only reason that the Jubilee Line came into existence was the absurd and chaotic planning situation in London Docklands. If Canary Wharf had never been dreamt up in the mysteries of Olympia & York, we should never have heard of the Jubilee Line extension.
I am clearly satisfied that the actions of the Government, London Underground and the Ministry are of a sufficiently poor standard to warrant some kind of inquiry. When the Jubilee Line extension suggestion was first placed before the Committee in this House we were advised of several courses of action that the Committee could and could not take. One Member of the other place was so misled that she lost an opportunity to debate a certain point in the House of Commons. When it came to this House we were told that the Committee could do X, Y and Z, but when the Committee sat it found that it could not.
We then began a discussion on the actual construction of the line. Two reasons were given by the Minister as to why the Government supported the Bill—and we recently debated the difference between a Private Member's Bill and a Government Bill. But the Government gave two explanations.
The first was that there would be £400 million donated by the private sector. I was told quite clearly and unambiguously that an agreement had been made between London Underground and Olympia & York for it to pay that sum. I questioned that and raised the matter in this Chamber. I suggested to the Minister that there was a possibility that Olympia & York would not pay that £400 million. I was told to withdraw because it was considered a terrible thing to say. Now we know that there was no agreement made and there is no agreement. The Minister is nodding his head. Perhaps he will tell me when the agreement was signed. I shall give way.
There must be some explanation why the Minister was nodding his head. He cannot tell me that there
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was an agreement because there was no such agreement in existence with Olympia & York. Yet I and the Chamber were told that it existed and that the project manager of the scheme had seen the agreement. He knew that there was a time factor involved.
No proper, sensible consideration was given to what would happen to the rest of London when Canary Wharf was built. Nobody examined the planning considerations in order to see what it would do to the City of London or the West End. Now the estate surveyors are having worries about what will be done if Canary Wharf continues. So it leads on and on and we take one foolish step after another to get ourselves into another hole. There is an old saying by someone who is more famous than I am to the effect that if you are in a hole the first thing you do is to stop digging.
Now where are we? Marsham Street civil servants are going to Canary Wharf or somewhere thereabouts, if rumour is to be believed. Marsham Street is to be pulled down. No explanation has been given. The Government have said quite clearly that they have no intention of publishing the report which makes it essential to demolish Marsham Street. The whole rigmarole of the Jubilee Line is confused to such an extent that nobody knows where its influence finishes. It is Marsham Street and civil servants.
The latest we hear may not be true and no doubt the Minister will give noble Lords a true statement of the facts. But I now understand this from a reputable source, I suppose I can call it, because that source could tell me what was being debated tonight when I did not know. The Evening Standard suggests that some of the London developers are going to sell a block of property to the Government for a certain sum. The Government will then accept the money back as part payment of the £400 million unless the Jubilee Line scheme is continued.
I have been seven minutes and I do not want to be as long as anybody else. Do the Government know what is going on? When I came to the House this morning I understood that the Government intended to make a statement about when the Jubilee Line would start. It may be of information to them to know that London Underground has decided that it is going to start on 17th July. That is a very significant date. It is going to start work in Parliament Square and it is already apologising for the delay. I suppose that when all the MPs and Peers have gone home it will start ripping London apart. I wonder whether the Government know that or whether London Underground is a law unto itself.
I am beginning to wonder just how many organisations there are connected with this Government. London Underground goes along in its own sweet way and never even bothers to tell Ministers what is happening. It never tells Parliament what is happening. There is a wonderful exhibition of something on the other side of Vauxhall Bridge which somebody bought for £150 million. That is for a new building which looks like a Christmas cake. I

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understand that MI6 is to be located there. It is amazing that a secret body can be based in a building that attracts attention. It is almost farcical.
But that is not the worst of it. Having bought a brand new building for a government department, the Government are now saying that they will spend £90 million to adapt it to suit that department, which I understand is listed as the Foreign and Commonwealth Office. To me that smells of downright inefficiency, if not of something worse. I think that it is about time that the Public Accounts Committee began to look at these things.
I have a whole list of reasons why I think that the Jubilee Line should not go ahead, but I shall finish on just one and refer to the speech of the noble Lord, Lord Ezra, to sustain it. Of course all the things that the noble Lord said about London Underground are true and we all know the difficulties facing London Underground. If we are sensible people, we know how much money improving it will cost, and we know the kind of economic state that the country is in. I am not blaming anybody for that, but we know the economic state that the country is in and we know full well that we cannot afford to do both things. We cannot afford to bail out the developers at London Docklands and to do all the things that are necessary for the rest of the Underground.
One alternative is to extend the Jubilee Line and to start paying £1,700 million in order to bail out the terrible, stupid decision to plan Canary Wharf when everybody knew that the bottom was dropping out of the property market, but if one does that one cannot do anything else for the Underground. The Northern Line and all the other lines that are complaining will continue to complain, and nothing will be done.
It is time that the Government decided to take stock. They should look at the whole situation and then decide what will be done. We are being led by the nose by organisations that have a self-interest, and we are being led into a situation that will get worse by the day. I think that the Jubilee Line should be stopped.
10.47 p.m.
Lord Underhill: My Lords, despite the lateness of the hour we should express our gratitude to the noble Lord, Lord Ezra, for raising the issue of London's Underground. I shall not say "Despite the lack of interest", but despite the small attendance in your Lordship's House this debate will be on the record and we shall have the Government's reply to the noble Lord's speech and to the speeches of other noble Lords.
I shall not stress the importance of the London Underground because that had been done by the noble Lord, Lord Ezra, but I know that we all appreciate its vital importance to the city and its commerce. I could say that I agree with everything that the noble Lord said and then sit down, but I intend to use some of the many statements that have been made to reinforce what he has said.
The considerable criticism of the deficiencies of the system were first brought out in the Monopolies and Mergers Commission report on the London Underground in June 1991. In this connection it might
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be useful to look at London Underground's annual business plan for 1992–93 so that we can see exactly what it considers to be its duty. Paragraph 6 of the introduction to that plan states:
"LU is committed to providing a Metro System of which London can be proud. The improvements necessary to achieve this require both a high level of investment over a long period and radical changes in pursuit of higher performance standards while maintaining high standards of safety".
The noble Lord, Lord Ezra, referred to the change in outlook in London Underground's management and to the commitment of the staff to the words that I have just quoted. Improvements can be seen in the performance statistics which are issued for each four-weekly period. The noble Lord gave a balanced criticism of the progress being made by London Underground.
As some noble Lords may know, MORI, which is a responsible polling organisation, carried out a passenger survey of London Underground and published a report last October. Although some 54 per cent. of 1,335 users of the Underground at some 31 stations expressed satisfaction with the standard of service, no less than 36 per cent. were dissatisfied. One point which should concern us all is that no less than 47 per cent. of those users expressed their dissatisfaction with London Underground's understanding of what passengers want and only 27 per cent. were satisfied on that matter. MORI asked those users a further question. It asked about their priority option. Seven per cent. thought that the Jubilee extension was a priority. Another 7 per cent. thought that CrossRail was the first priority. But no less than 81 per cent. of users considered that investment of capital to modernise existing Underground services was the priority at which London Underground should aim.
I have referred to the report of the Monopolies and Mergers Commission which was published in June 1991. In paragraph 1.3 the commission concludes:
"The public's perception of an erratic, overcrowded and poorly maintained service in many areas is broadly correct, although the picture for the Underground as a whole is more favourable. For the most part the deficiencies in the levels of service are the result of chronic underinvestment in both new capacity and the replacement and renewal of existing assets, an unforeseen dramatic growth in traffic and the disruption arising from radically improved safety provisions".
I have related that conclusion to London Underground's view on the matter. In paragraph 3.5 of London Underground's company plan published in 1991 I find the following:
"As the MMC concluded, funding issues dominate the debate about the pace of change, and this is ultimately a matter of Government policy. Fares increases have the potential to realise additional funding for investment, and to assist in the management of demand, but they are rightly a factor in wider transport policy, and therefore outside the control of the Company. The same is true of grant funding, in the context of overall Government spending priorities, and the constraints here are reinforced by the strict annual Government spending cycle, and the restrictions imposed by the LRT Act on borrowing".
The noble Lord, Lord Ezra, stressed the point that a good deal of the Underground infrastructure is old. Many parts of it are 100 years old. London Underground has stated that one of its key concerns is the chronic backlog in maintenance and the renewal of basic infrastructure—the rolling stock, signalling,

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the 245 miles of Underground track and the 275 stations. As the noble Lord reminded us, we are told that we need to spend £500 million over the next 10 years merely to bring the track up to standard.
I travel on the London Underground Central Line—not on the western section but on the eastern section—from Mile End out to Essex.
Lord Graham of Edmonton: Loughton!
Lord Underhill: My Lords, I hear my noble friend say, Loughton; but I live in Buckhurst Hill which is part of Loughton.
The sum of £750 million is to be expended on modernising the Central Line. That means new trains and improved signalling and, I hope, new track replacements. I know what that will do: it will make travelling much easier and more comfortable. At present, it is impossible to read a newspaper while travelling between many of the stations because one is buffeted about so much. Moreover, it will also mean an increase in the number of passengers to that line. It will take many people like me, who travel occasionally by car, off the roads and on to London Transport.
In paragraph 3.4 of the Company Plan to which I referred (published in November last), London Underground recognised that future plans will have to take into account a number of transport decisions that have been taken. Reference is also made, first, to the threatened deregulation of London's buses and the effect that that will have, especially as regards integrated ticketing; and secondly, to the impact on wider transport planning should the Government proceed with their intention to set up, on deregulation of the buses, a bus executive, independent of London Transport.
That seems to indicate the hopelessness of a policy which has no single unit controlling London's traffic. The appointment of the Minister of Transport for London (who happens to be the MP for my parliamentary constituency) is not the answer; no one is responsible for working out London passenger transport details. To decide to have a separate bus executive—that is, if there is to be deregulation of buses—with no relationship whatever to London Transport, seems to me to be a major disaster.
There is another point that I should like to add to the questions regarding future policy which will affect London Underground's proposals. It is estimated that, soon after the start of the year 2001, there will be an increase of about 20 per cent. in the number of cars on London's roads. We have to ask: will London Underground be ready with proposals which will help to take many of those cars off the road? I believe that that will only be done by making the Underground system one to which people will readily wish to turn.
The MMC's report which I mentioned refers in paragraph 1.6 to discussions with London Transport and London Underground which revealed a conflict between London Underground's commercial object of generating enough finance to cover operating costs and the funding of renewals and replacements, and the legal obligations to have regard to London's public transport needs. The report comments that to follow
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the market could lead to fares increases which would be politically unacceptable. Those are statements from the MMC's report.
There must be full and comprehensive planning of what is needed for London. In my view, there must be both long-term and short-term planning. In the long term, there must be new lines, bearing in mind the fact—as London Transport has stated quite clearly in the documents to which I referred—that 15 years is needed from conception of a project to its actual completion. There must also be an assurance that, if such plans are to be made and the projects considered, funding will be available for the schemes.
I should like the Minister to report on the position of certain projects. For example, where does the CrossRail now stand? Where does the Chelsea to Hackney line stand? Where does the East London development stand? Moreover, in the light of questions raised by the noble Lord, Lord Ezra, and my noble friend Lord Sefton, we want to know where the Jubilee Line stands. I have a Starred Question down for Oral Answer next Tuesday. That asks about the financing of the Jubilee Line. I shall be interested in what the Minister says in answer to the points raised tonight so that I can follow them up next Tuesday.
Long-term planning must be accompanied by short-term plans for improving the existing system. The suggestion of having long-term and short-term plans accords with London Transport's thinking. The Minister for Transport in London, Mr. Norris, has set out 12 new objectives for London Underground. That requires money; and in setting out his objectives, the Minister gave no indication that the money will be available. It is no use talking about long-term and short-term planning unless money is made available. We need to have the comprehensive planning considered quickly. I hope that the noble Viscount will give the Question asked by the noble Lord, Lord Ezra, careful consideration.
11 p.m.
Viscount Astor: My Lords, I am glad to have the opportunity of responding on behalf of the Government to the Question on this important issue asked by the noble Lord, Lord Ezra. As the noble Lord, Lord Underhill, said, the noble Lord, Lord Ezra, set out clearly the problems facing the Underground. I am pleased that he has also acknowledged the Government's recognition of those problems through increased investment.
London has one of the oldest underground railway systems in the world, as well as one of the largest and most complex. I agree with the noble Lord that such antiquity is a mixed blessing. Many of the Underground's essential assets, some dating from Victorian times, are now badly in need of repair and renewal. As a result, passengers are sometimes less than happy with the quality of service which they receive. The Government, I am afraid, are familiar with the kind of tales told by noble Lords this afternoon, an example was the one told by the noble Lord, Lord Bonham-Carter. Today's Underground is not in perfect health. But I am pleased to be able to tell noble Lords today that the prognosis is extremely

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positive. The Government and London Underground are already working together to bring about radical improvements to the state of the Underground system. We are committed to continuing that process of improvement, and to developing the Underground into a network capable of transporting London into the 21st century.
The Monopolies and Mergers Commission's report on the London Underground mentioned by the noble Lord, Lord Underhill, was published on 5th June 1991. That wide-ranging report identified significant room for improvement in the way the Underground was funded, operated and managed. London Underground took notice. The Government took notice. Following the MMC's report, three key and ongoing initiatives have been set in motion to produce the required improvements: more money from the Government for investment, better efficiency and management through London Underground's company plan, and higher standards of performance through the Government's new quality of service objectives.
Taking increased investment first, last year's Autumn Statement announced a record £3.7 billion of grant to London Transport over this and the next two years—double the amount for the previous three years. The hulk of that will be directed towards investment in the Underground. As a result of those increased resources, passengers can look forward to improvements in the areas described by noble Lords. On stations, London Underground will be embarking upon a comprehensive programme of station modernisation and refurbishment. Some of the first stations to benefit will be 10 stations on the southern branch of the Northern Line. Slightly less obvious, but essential, are the plans which are already under way for the renewal and repair of basic infrastructure such as track and tunnels.
More striking will he the refurbished trains, which noble Lords may already have seen on a number of Underground Lines. I believe the noble Lord, Lord Ezra has been on one. Most passengers have reacted in similar fashion to the noble Lord when travelling on one. They are, indeed, like new. As well as all the trains on the Victoria, Circle, Hammersmith and City and Bakerloo Lines, one-quarter of the Northern Line's trains will be refurbished, along with all the stock on the Metropolitan Line—the latest contract to be let by London Underground. These trains will be safer, brighter, easier to clean and will improve the travelling environment tremendously.
I know that I have not mentioned the Central Line on which the noble Lord, Lord Underhill, travels, but he has an advantage over us. My right honourable friend the Minister for Transport in London is his Member of Parliament, as well as that of the noble Lord, Lord Graham. I hope that they will gain advantages from that in the future.
Following on from this theme of the travelling environment, the noble Lord mentioned that passengers expect to be safe on the Underground. I thoroughly agree and it is a credit to efforts made by London Underground and the British Transport
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Police that crime on the Underground has fallen for three consecutive years, with violent crime dropping by 40 per cent. over this period.
Returning to investment, current major schemes such as the £750 million modernisation of the Central Line and the £72 million reconstruction of Angel station on the Northern Line are progressing well. The first new Central Line train was delivered in May, and part of the revamped Angel will be opening next month, with final completion in the spring. Station capacity schemes planned include Waterloo, King's Cross and Victoria, and passenger information systems, mentioned by the noble Lord, Lord Bonham-Carter, are to be upgraded, with the new dot matrix indicators on the Bakerloo, District and Northern Lines. The noble Lords, Lord Ezra and Lord Underhill, asked for a commitment from the Government that the level of funding announced last year will be sustained. With this year's public expenditure round under way, noble Lords will be aware that there is little I can say on the matter. However, the Government are working with the Underground to produce a strategy for the next 10 years that will bring the decent modern metro that we all want to see.
I now turn from investment in the existing network to say something about the planned investment in new lines, of which the Jubilee Line extension is an excellent example. The Government stand ready to commit £1.5 billion towards the cost of this scheme once the contribution pledged by the private sector is assured. They are prepared to make a significant commitment in recognition of the substantial benefits of the extension which, although many noble Lords will be familiar with them, I think bear repeating.
The 15.5 kilometre extension, with a planned capacity to carry 15,000 passengers in each direction in the peak hour, will provide a fast, direct link from central London to Docklands, thereby facilitating the regeneration of the area. It will, however, as the noble Lord said, do more than that. The extension will provide direct connections to the West End and west and north-west London and improve access to Waterloo and London Bridge. Moreover, it will greatly improve accessibility for those areas south of the Thames which are poorly served by public transport at present. Finally, it will relieve congestion on the roads and existing rail networks.
The Government have repeatedly made clear their commitment to the Jubilee Line extension. They have been ready to provide the sum of £1.5 billion towards the cost of the Jubilee Line extension. Olympia & York had undertaken to contribute £400 million. The Government's commitment is contingent upon this private sector contribution being honoured.
Lord Sefton of Garston: My Lords, twice this matter has arisen in the Chamber. Can the noble Viscount give us the details of the agreement by which Olympia & York gave this undertaking? I asked the question before and did not receive a satisfactory answer. The noble Viscount made the point clearly that Olympia & York undertook to pay £400 million. Can he tell us how it was done?
Viscount Astor: My Lords, I was about to come to that, if the noble Lord will allow me. The Secretary of State for Transport has made clear that he sees no prospect of authorising the start of construction on the Jubilee Line extension unless and until the contributions pledged by Olympia & York are assured. Olympia & York recognises the financial advantages in its development being served by the extension. That remains the case for any subsequent owners of the property.
A schedule of terms was agreed and signed between the Government and Olympia & York in 1989. It was then for London Underground Limited and Olympia & York to work out, settle and put into a formal agreement the details of the railway which would be provided, the precise terms on which Olympia & York's contribution will be made and the rights and obligations of the respective parties. Negotiations on that formal agreement reached an advanced stage but the agreement was not concluded.
Lord Sefton of Garston: My Lords, thank you.
Viscount Astor: My Lords, as we have seen this evening, there are many different views on the Jubilee Line extension. I was most interested in the proposal of a monorail made by my noble friend Lord Cross. It is a concept that is of course overground rather than underground, but I am sure it offers us food for thought.
Of course the Jubilee Line extension is not the only new line in the pipeline. There is also currently before Parliament a Bill to allow construction of Cross Rail. This new rail line, to be operated jointly by British Rail and London Transport, will provide much needed relief of congestion in central London and improve access from both the east and west. When CrossRail opens around the turn of the century it will improve the Underground railway system in and around London significantly. The proposed alignment of the Chelsea-Hackney line which would provide a link between the Wimbledon branch of the District Line and the Epping branch of the Central Line was protected in safeguarding directions issued in February 1991. The Government's position on the East London Line is quite simple: we await an appraisal from London Underground as and when it feels able to include the scheme in its investment programme.
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So far I have concentrated on various aspects of London Underground's investment programme for the coming years. But I am sure that noble Lords will agree that, while it is critically important, investment alone cannot be guaranteed to deliver high quality services. London Underground itself recognised this fact in producing its company plan, alluded to by the noble Lord, which was published in November 1991. The purpose of this plan is to bring about a step change in standards of safety, quality and efficiency on the Underground network, through more flexible working practices and better service management. The plan is due to be implemented by 1995. The Government support London Underground in its efforts as a positive step towards ensuring that the resources which the taxpayer puts into the Underground system are used to best effect. For our own part, we have recently set the Underground 12 testing new quality of service objectives. These are designed to bring about improvements in areas such as peak train, escalator and lift reliability, quality of information on trains and at stations, and staff helpfulness and availability. We have pinpointed aspects of the service most important to passengers, and their views on performance in key areas will tell us how London Underground is performing—the best yardstick there could be. Over the next two years we shall be looking carefully at the Underground's progress in meeting these targets.
The noble Lord, Lord Underhill, asked me about the Chelsea-Hackney line. I cannot give any commitment as to when that line will be built: it will depend essentially on when it can be afforded, although there are also issues of public disruption and the construction industry's capacity to be taken into account when we consider the timing of mega-projects. In the meantime, though, safeguarding will ensure that the route is protected.
In the light of these three strands—increased investment, the Company Plan and performance targets—I am confident that more is being done than perhaps ever before to bring London Underground up to the standard that people expect and deserve. I hope that, on the basis of what I have said this evening, noble Lords will feel more able to share my confidence.
House adjourned at fourteen minutes past eleven o'clock.