Lords Sitting of 5 March 1992

Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Sheffield.): The LORD CHANCELLOR on the Woolsack.

HIV and AIDS: Education in Schools
The Earl of Liverpool The Earl of Liverpool asked Her Majesty's Government:
Whether they consider that 11 year-old children are ready for compulsory and explicit education on HIV and AIDS, as required by the Science in the National Curriculum document 1991.
Baroness Denton of Wakefield: My Lords, the requirement in the revised National Curriculum Science Order is that pupils at key stage three—that is, those children aged between 11 and 14—should study the ways in which the healthy functioning of the human body may be affected by diet, lifestyle, bacteria and viruses (including HIV). Given that HIV constitutes probably the most serious threat to public health this century, it is our view that children should learn about it at an age when the majority are sufficiently mature to understand its implications.
The Earl of Liverpool: My Lords, I thank my noble friend the Minister for that reply. I would be the first to agree with her that this is a subject which, in view of its seriousness, should be taught at schools. However, is she aware that the pamphlet issued by the DES entitled HIV & AIDS: A Guide for the Education Service contains deviant sexual practices of an explicit nature and asks teachers to explain these to children from 11 years of age upwards? I believe that that could have long-term psychologically damaging consequences if taught indiscriminately. Bearing that in mind, will my noble friend consider employing the services of specialist organisations such as AIDS Care Education and Training (ACET) who I believe would be much more sympathetic in teaching this subject? Would it also be possible for the Government to consider raising the age for such education from 11 years to 13 years?
Baroness Denton of Wakefield: My Lords, I stress that the booklet to which my noble friend referred is for guidance only and, as such, would have to cover all aspects of the subject which teachers would need to know. In this instance we must trust the teachers to decide whether the children at the beginning of the period or later on in their years are mature enough.
Baroness Phillips: My Lords, are the Government seriously wanting to defend a pamphlet, whoever has it, which explicitly describes oral sex? Does the Minister agree that that cannot be of any assistance to the subject being dealt with and that it can be totally misunderstood? I suggest that the Government are very unwise to publish this document.
Baroness Denton of Wakefield: My Lords, as I said earlier, this is a virus which can kill. I suggest that it is probably so important that the Government believe that sensible, factual information can do a great deal to protect young people.
Lord Kilmarnock: My Lords, will the noble Baroness accept that many 11 year-olds have already received AIDS education in an informal way through television, newspapers, family and from their peers which has often amounted to misinformation—that is to say, partial information which can lead to misapprehension? Therefore, does the Minister agree that in those circumstances it is better that the children should be taught properly and sensitively by professionals, as the Government propose?
Baroness Denton of Wakefield: My Lords, the noble Lord puts the point with great common sense. I believe that it would help lead to the protection of children.
Lord Elton: My Lords, does my noble friend appreciate that one of the principal reasons why many of us find this document disturbing is that the whole of the information in it is put forward in an entirely amoral context with no element of value-judgment at all? Does she accept that we would be reassured were the subject to be transferred from the science curriculum to the sex education curriculum where the method of instruction and the moral context is quite different?
Baroness Denton of Wakefield: My Lords, I stress that this booklet contains nothing new. It simply brings together and updates the information and advice contained in two earlier booklets which the department published in 1986 and 1987. There is the same opportunity for parents to be involved with teachers and discuss the moral implications of their teaching whether the matter is in the science area or the sex education area.
Lord Ennals: My Lords, does the Minister agree that while sex education should always be conducted in a sensitive way, we have a major problem in that not enough explicit sex education is carried out? Does she further agree that such education is often too late for young people who become sexually active very early? Does the Minister also accept that the position which she has taken is warmly supported by the Family Planning Association, the National AIDS Trust, health education authorities and by all those bodies specifically involved in this problem?
Baroness Denton of Wakefield: My Lords, the Government recognise that schools cannot avoid tackling controversial issues if they are to maintain their responsibility.
Baroness Elles: My Lords, my noble friend will be aware that everybody is conscious of the fact that there are many things that we learn throughout life, but do we have to learn all these things at 11 years of age? I draw the attention of my noble friend to an article which was published in the Sunday Times last Sunday. We all know the dangerous effects of AIDS

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and the suffering that goes with it. Is my noble friend aware that in a recent study of 130 men and women who have contracted HIV there was only one high-risk partner? Does she agree that the danger of HIV has been greatly exaggerated by the DHSS?
Baroness Denton of Wakefield: My Lords, I saw the piece to which my noble friend refers. I state again that young people have to be convinced that the risk of contracting HIV and AIDS is real and that running that risk could all too easily prove fatal.
Lord Stallard: My Lords, will the Minister accept that I agree with her original reply to the Question? Does she recall the official press release made on 20th December 1991 in which the Secretary of State said,
"Outside the statutory consultation process, we received a large number of letters, mainly from minority religious groups, concerned about the inclusion of a reference to HIV in the science curriculum"?
The Minister continued:
"I am confident, however, that the overwhelming body of opinion is in favour of including education about HIV within the National Curriculum and I have retained this reference".
I belong to what the Minister would call "a minority religion" which is called Christian. Is the Minister aware that there are millions of us throughout the country who are very concerned about the approach which the Government have taken to this issue? I believe that those minorities and Christians—
Noble Lords: Question!
Lord Stallard: My Lords, will the Minister accept that I, in common with all those people to whom I have referred, are asking for a debate on this question so that their views can be openly expressed? We should begin that debate as soon as possible. Will the Minister use her good offices to persuade her noble friend the Leader of the House to initiate a debate on a Motion standing in my name on the Order Paper seeking such a debate?
Baroness Denton of Wakefield: My Lords, I am sure that the noble Lord will understand that a debate is a matter for the usual channels. I stress that the department does not believe—although totally respecting the views which have been expressed—that these views are shared by the majority of parents.
Baroness Blackstone: My Lords, does the Minister agree that the document that has been referred to applies to children aged between 11 and 14 and that it is therefore up to the schools to decide at what age, within that age range, this material is introduced? It can be as late as 13 if that is considered appropriate. In the light of the increasing evidence that large numbers of young people are becoming HIV positive, does the Minister also agree that it is vital to protect them at the right age? That may be younger than many of us might feel appropriate. Nevertheless, it is needed and that means this age group of 11 to 14.
Baroness Denton of Wakefield: My Lords, I thank the noble Baroness for that comment which contains all the facts very accurately.
Baroness Faithfull: My Lords, does my noble friend agree that under Section 1 of the Children Act 1989 the welfare of the child is paramount? However, parents also have a responsibility. Are the parents to be consulted as to whether their children should, or should not, receive this education in schools? Should not this be a combined effort?
Baroness Denton of Wakefield: My Lords, I doubt whether many people would disagree that the best way is for parents to educate their children in these matters. However, that does not always happen. Recent legislation provides several ways for parents to become involved and informed about this important aspect of their children's education. In fact, the Government have involved parents considerably in our education policy.

British Rail: White Paper
3.13 p.m.
Lord Stallard Lord Stallard asked Her Majesty's Government:
When they intend to publish the oft-promised White Paper on British Rail.
The Minister of State, Department of Transport (Lord Brabazon of Tara): My Lords, We will publish our proposals as soon as we are ready.
Lord Stallard: My Lords, does the Minister accept that that reply has been going around since last July? When the Government announced their intentions they said:
"We expect to set up our detailed plans in a White Paper this year".
The Minister has just repeated that, and so has every other Government spokesman who has ever spoken on the matter. Can the Minister confirm that that White Paper will not be produced before the general election and that therefore a debate on the wider issues affecting British Rail will not now take place in this Parliament? We shall have a much narrower debate. That is now being initiated by the Government on a botched-up inadequate compensation scheme which will do nothing to cure the problems of under-investment and shortage of staff which are at the core of BR's problems.
Lord Brabazon of Tara: My Lords, of course privatisation raises complex and important issues and we must get these right. That is why we shall not be rushed in this matter or risk getting things wrong simply in order to meet particular dates. As I said in my original Answer, we shall publish the White Paper as soon as we are ready. That may be before or after the election.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that railway nationalisation has proved most unfortunate and has produced a service quite inadequate to the needs of the country? Therefore, radical changes are urgently required, which many of us hope will soon be forthcoming.
Lord Brabazon of Tara: My Lords, as we have said, we are firmly committed to privatising British Rail. We believe that privatisation will bring better services for rail users.
Lord Clinton-Davis: My Lords, does the Minister recognise that his Answer was virtually the most garbled railway announcement that one could ever imagine? If I may borrow that elegant word from Mr. Christopher Patten, it is a real "whammy". Is it not clear, as nearly all sections of the press have agreed—Conservative, Liberal and Labour—that this much-heralded White Paper has not appeared and has become derailed because of the deep divisions within the Government as to the directions in which they want to go on privatisation? Would it not be infinitely preferable if the Government were to concentrate on two essential issues? First, providing investment funding for British Rail as an integral part of economic and environmental policy and, secondly, eliminating the growth distortions of competition between road and rail.
Lord Brabazon of Tara: My Lords, I do not know how the noble Lord can describe my announcement today as garbled considering that I did not even make an announcement. As I said, we believe that privatisation is the way forward for the railways. In the meantime, the noble Lord refers to investment in the railway system. That is at its highest level now than for 30 years. It is considerably higher than it was in the period of the last Labour Government.
Lord Mackay of Ardbrecknish: My Lords, does my noble friend agree that anything that opens up the railways to competition will greatly improve services to consumers compared with what consumers have come to expect from British Rail over many years? Does he further agree that anybody who has any doubts about the benefits of competition should look at what happened in the air services when the British Airways monopoly on internal routes in this country was broken and British Midland and other airlines had an opportunity to compete and improve services to customers?
Lord Brabazon of Tara: My Lords, my noble friend is absolutely right to draw the parallel with the opening up of the internal air services, particularly on the Scottish routes. Competition is the answer. It invariably produces a better service. That is one aspect on which we shall need to concentrate in these proposals.
Lord Cledwyn of Penrhos: My Lords, given the importance of the White Paper to the infrastructure of industry in this country and to the future of railways, can the Minister say what consultation is taking place before the White Paper is published? For example, are the local authorities in England, Wales and Scotland being consulted? Are the various trade unions which are affected being consulted? Is the CBI being consulted? Is the Minister aware that we believe that consultation is essential before the White Paper comes into the public domain?
Lord Brabazon of Tara: My Lords, consultation can take place on the proposals which are put forward in the White Paper, after it comes into the public domain. Legislation will be required to carry most of those proposals forward. That is when consultation should take place.
Lord Marlesford: My Lords, does my noble friend recognise that there are sound commercial reasons, which should have nothing to do with party politics, for privatising British Rail, the chief of which is probably to give British Rail access to the capital markets? Without that access I, for one, cannot see them getting the investment that is needed.
Lord Brabazon of Tara: My Lords, my noble friend makes a good point. One of the advantages of privatisation is that the future company, or companies, would have the ability to raise capital from whatever source they chose.
Lord Stoddart of Swindon: My Lords, as I understand that the noble Lord cannot give full details of the White Paper, can he at least give the House an assurance that the track, the signalling and the policing of the railways will remain under a single authority?
Lord Brabazon of Tara: My Lords, I am afraid that the noble Lord will just have to wait and see.
Lord Clinton-Davis: My Lords, does the Minister recognise the significance of the point made by my noble friend the Leader of the Opposition? In the circumstances, would it not be far better if we were to have a Green Paper rather than a White Paper so that these issues may be properly discussed with all-important interests?
Lord Brabazon of Tara: My Lords, there will be plenty of opportunity to discuss all these matters in due course.
Lord Bruce of Donington: My Lords, is not the Government's principal problem in answering the original Question on the Order Paper that they have not yet decided whether or not to privatise all White Papers?
Lord Brabazon of Tara: My Lords, that is a different Question from that on the Order Paper.

Noise Levels and Damage to Hearing
3.18 p.m.
Lord Gisborough Lord Gisborough asked Her Majesty's Government:
To what extent the noise levels of discotheques and personal radios are likely to cause permanent damage to the hearing of the young and not so young; and whether this will result in any additional costs for the National Health Service.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Hooper): My Lords, repeated exposure to loud noise can cause damage which may manifest itself in later life. That could result in additional costs to the National Health

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Service, although it is difficult to assess what they might be. For that reason we consider it important to educate people, especially young people, about the possible dangers.
Lord Gisborough: My Lords, I thank my noble friend for that Answer. Is she aware that some nose and ear specialists consider that the noises at discos are nothing less than disastrous in that they can affect people's future hearing ability? Does the Minister agree that it is right that the Government should issue recommended maximum decibel ratings in order to avoid the situation where employees are returning to previous employers claiming damages for deafness when it was partly self-inflicted at discos?
Baroness Hooper: My Lords, I recognise that there is anecdotal evidence in this respect. The Health and Safety Executive is currently consulting on a draft guide to safety at pop concerts which includes recommendations on limiting sound levels for audiences. That is likely to be taken into account when, for example, discotheques are being licensed. The difficult aim is to balance people's right to enjoy leisure activities, which have some risk, with the need to make them aware of the risks and safety standards.
Lord Carter: My Lords, is the Minister aware that it is estimated that up to 100 young people a year have their hearing impaired as a result of attending pop concerts? An article in the British Medical Journal pointed out that continual exposure to noise during these leisure activities is said to be equivalent to an 80 decibel noise level over a working life time. The noble Baroness referred to proposals in a guide. Is it not possible to deal with this problem by using the provisions of the Control of Pollution Act 1974 or those of the Local Government (Miscellaneous Provisions) Act 1982, which controls the licensing of public entertainment?
Baroness Hooper: My Lords, on the latter point, there is no doubt that, as a result of the work being carried out by the Health and Safety Executive, these factors will be taken into account in terms of licensing and it will therefore be possible to tie them in with the existing legislative restrictions.
In terms of the estimation of the damage being caused, we are fully aware that the Royal National Institute for the Deaf and the National Deaf Children's Society have produced studies on this subject and have issued information and leaflets about it. The National Deaf Children's Society produced a report in 1990 identifying potential risks. We have been active in co-operating with them, particularly with the RNID, and they are publicising the possible dangers. We are currently promoting with them a pilot project in Nottingham targeted specifically at school children.
Baroness Masham of Ilion: My Lords, is the Minister aware that loud music at discos encourages the taking of the so-called disco drug, ecstasy, which is now on the increase and is very dangerous? What are the Government doing about this?
Baroness Hooper: My Lords, that is a separate question which I should be very happy to answer if the noble Baroness cared to put down a question on the subject.
Baroness Gardner of Parkes: My Lords, can the Minister confirm that in the Royal National Throat, Nose and Ear Hospital we have an outstanding audiological centre in this country? Can she say what information is being given to people about Walkman radios? If they listen through only one ear, that will at least protect the other half of their hearing.
Baroness Hooper: My Lords, I must say that I was not aware of that. I understand that some manufacturers, including Sony, already issue printed warnings with personal stereos and are voluntarily looking more closely at the hearing safety aspects. This is clearly something that the Government are pursuing in connection with consumer protection measures.

Future of the BBC
3.22 p.m.
Lord Judd Lord Judd asked Her Majesty's Government:
What arrangements are being made for a full and open public inquiry into the future of the BBC before any policy options are prepared by government as a basis for consultation.
The Minister of State, Home Office (Earl Ferrers): My Lords, my right honourable friend the Home Secretary intends to publish a discussion document this year about the future of the BBC. We hope that there will be full, public discussion on the subject. We intend to consult as widely as possible.
Lord Judd: My Lords, does the Minister agree that the BBC is not just another public service but one of the nation's finest assets? Would he therefore agree that its quality, rugged independence and integrity must at all costs be preserved? If that is to happen, does he agree that there must a full public debate before the parameters concerning its future shape and status are decided? Is the noble Earl aware that there is growing anxiety about the plethora of working parties—some indeed in the Home Office—on the future structure, shape and content of the BBC? Can he reassure the House about exactly what is happening?
Earl Ferrers: My Lords, for the reasons which the noble Lord, Lord Judd, gave, the Government will produce a discussion document and will invite as much opinion as possible before any decisions are taken. I understand that 15 task force reports are the result of the first phase of the BBC's task force. In the next few months the BBC will be drawing up its own ideas about its future. It aims to publish its proposals later in the year and its document will be an important contribution to the public debate. But I understand that the director general has made it clear that there is a lot of work still to be done.
Lord Morris: My Lords, in considering the future of the BBC, will Her Majesty's Government bear in mind the considerable distress that has been caused by the BBC's apparent inability to so arrange its affairs that only a very small minority can witness the stirring events that now unfold in the Antipodes? Furthermore, can my noble friend at least persuade the BBC to express to the Government of Australia and to its Prime Minister in particular our deepest sympathy in their suffering?
Earl Ferrers: My Lords, that is just about as far away from the Question as one can possibly get. I can only tell my noble friend that the programming arrangements are a matter for the BBC.
Lord Jenkins of Putney: My Lords, considering the document which the Government intend to publish, are they proposing to take any action that would enable the BBC to avoid having to broadcast such quite dreadful stuff as it had to broadcast on Radio 4 immediately after the news this afternoon? I refer to a Conservative political broadcast which plumbed new depths.
Earl Ferrers: My Lords, I am delighted that the noble Lord, Lord Jenkins, heard that. I am sure that he was better informed as a result of it. What is put on by the BBC is a matter for the BBC and it is not the Government's intention, either by this document or any other—if the noble Lord, Lord Molloy, can contain himself for half a minute—to tell the BBC what to do.
Lord Molloy: My Lords, does the noble Earl agree that when people from the Commonwealth and other countries, particularly the United States, stay here for a few weeks they are very impressed by the way in which the BBC is managed and by the way it which its programmes are shown to the general public? We should be proud when Americans, Australians, New Zealanders and people from Germany and France are remarkably impressed by the British Broadcasting Corporation. The only thing that spoils the whole show is that they cannot understand why we have such a biased press.
Earl Ferrers: My Lords, I agree with the noble Lord that the BBC has a high standing both in this and other countries. We hope that that will continue.
Baroness Macleod of Borve: My Lords, can my noble friend assure the House that in future the BBC licence fee will not automatically rise without public consultation on the excess amount being sought over value for money?
Earl Ferrers: My Lords, it is at the moment the intention that the fee should increase only in accordance with the Retail Prices Index. We shall review the BBC's progress in improving efficiency and developing other sources of income before setting the 1994 increase.
Baroness Birk: My Lords, in view of what the Minister has said, can we still be confident that the Government will continue to support the BBC as the cornerstone of public service broadcasting as they set
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out in the White Paper preceding the 1990 Act? I ask this question particularly in view of the recent statement of the Home Secretary, with its implied threat, that,
"The BBC has got to be very careful indeed over the next eight to 10 weeks".
Earl Ferrers: My Lords, I do not think that there is any implied threat there. With regard to the substance of the first part of the noble Baroness's question, she need have no fear provided the present Government continue in Government. If she decides to help in that case she will be satisfied.
Lord Annan: My Lords, can the noble Earl give an assurance that the financial contribution from the Foreign Office towards the World Service will continue, since this service is very highly prized and one of the jewels in the BBC's crown?
Earl Ferrers: My Lords, I fully accept the importance of the BBC World Service but the whole of the future of the BBC will come up for consideration when its licence and charter agreement come to an end in 1996. I cannot go beyond that.
Lord Judd: My Lords, does the noble Earl not agree that his answer is difficult to reconcile with a situation in which the BBC has already indicated that it is cutting 3,000 jobs and is proposing changes covering 40 per cent. of studio facilities and outside broadcast capacity encompassing six studios, three film stages, nine outside broadcast units, eight single camera units and 71 edit suites? With all the rest that is going on, does this not suggest that a great deal is to be decided before the public debate has begun? Is that not totally unacceptable?
Earl Ferrers: No, my Lords. I do not think so. The BBC is bound to have to take decisions during the course of its period of licence. There are another four years yet to go. One cannot expect an organisation to be fossilised for that period of time. The BBC is quite right to take such action as it thinks is necessary, which is quite separate from viewing the future of the BBC and the way it will go after 1996.

Business
3.30 p.m.
Lord Hesketh: My Lords, it may be for the convenience of the House to know that the Committee stage of the Competition and Service (Utilities) Bill will be adjourned at about 7.00 p.m. for about one hour and that during the adjournment the Committee stage of the Social Security (Mortgage Interest Payments) Bill will be taken.

London Local Authorities Bill [H.L.]
Read a second time, and committed to a Select Committee.

Coal Industry Bill
3.31 p.m.
Lord Cavendish of Furness: My Lords, I beg to move that the Bill be now read a third time.
Moved, That the Bill be now read a third time.—(Lord Cavendish of Furness.)
Lord Dormand of Easington: My Lords, I shall not detain the House for more than a few minutes. I hope that your Lordships will not agree to the passing of the Bill. This Bill, and indeed the totality of the Government's policies on coal, do not recognise a matter of fundamental importance; namely, the security of supply. The latest figure that I have seen on reserves in this country shows that there are 4.2 billion tonnes of marketable coal, and yet we continue to increase imports of coal. Some of those imports come from South Africa and Colombia, which dump coal—that is, dump in the economic sense—to gain foreign exchange, but an increasing amount comes from Germany, which, against all EC regulations, subsidised its coal industry to the tune of £3.5 billion last year.
Are the Government saying that those sources of supply will last forever and that, if they do not, we can always reopen our closed pits? Surely they know that that cannot be done. Are they also saying that the new buying spree on gas fired power stations will meet any problems which arise? They know that the same arguments I have just used will arise again on such a proposition. There are many countries which envy our coal reserves and which would not think twice about ensuring a continuous supply from indigenous sources.
In their economic thinking on the coal industry, the Government have not looked at the wider implications in relation to manpower. Thousands of miners have lost their jobs and the social implications of that are enormous—as I know only too well, having represented a mining constituency in another place. But let us consider also the economics of the situation. Every unemployed worker who does not find another job costs the taxpayer £8,000 a year in social benefits and lost tax revenues. I remind your Lordships that in the coal industry the figure will be higher because of the special redundancy scheme that operates in the industry.
It is certain that at some time in the future people will look with incredulity at the burning of coal in its present form. The chemical content of coal and the liquefaction of coal, will be the basis of future action with coal. We could be in the position of sitting on millions of tonnes of raw material and not be able to do anything about it.
There are other matters concerning coal which ought to be exercising the Government's mind rather than the largely irrelevant issues contained in the Bill. However, I have to admit that this is not an
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appropriate time to deal with them. Fortunately, this Government are in their death throes. A Labour government will ensure that the important issues—that is, not simply the ones that I have mentioned, but others too—will be dealt with properly and successfully.
Lord Cavendish of Furness: My Lords, it comes as a tiny bit of a surprise to me that the noble Lord, Lord Dormand of Easington, should speak on the Bill. One must ask oneself where the noble Lord was when we had the Second Reading debate.
Lord Dormand of Easington: My Lords, I can reply specifically. I was on a parliamentary delegation to Moscow and Kiev. I thought that that was a good reason for not being able to be here to speak in the debate.
Lord Cavendish of Furness: My Lords, I am not sure that the matters raised by the noble Lord, Lord Dormand of Easington, are relevant. However, I shall read carefully in Hansard what he said and reply. It is a shame—and, indeed, it is not the way that the House should work—that such issues should be brought forward. The Bill is relevant. It is extremely important, as many of his noble friends agreed when we discussed the Bill in the House.
On Question, Bill read a third time.
Lord Cavendish of Furness: My Lords, I beg to move that the Bill do now pass.
Moved, That the Bill do now pass.—(Lord Cavendish of Furness.)
Lord Stoddart of Swindon: My Lords, I would not have risen to speak but for the remarks just made by the Minister. He seemed to imply that my noble friend Lord Dormand of Easington had no right to raise such matters at this stage of the Bill's proceedings. I should like some assurance—that is, if it can be given by anyone—that any Member of this House has the right to raise any matter on any Bill or topic at any stage during its passage through the House. That is what I have understood to be the case until now. If the noble Lord has anything different to tell me, I am quite sure that I, and other Members of the House, will be interested to hear it.
Lord Cavendish of Furness: My Lords, the noble Lord, Lord Stoddart of Swindon, is perfectly right. His noble friend was absolutely within his rights to raise such matters. I merely said that I was surprised. As I have to speak, I should like to take the opportunity to thank those noble Lords who consistently took part in the debates on this important Bill throughout all its stages. I have in mind my noble friends Lord Campbell of Alloway and Lord Cockfield, and my noble friend Lord Haslam, with his great experience. The noble Lord, Lord Ezra, also contributed considerably to the Bill. Other contributors were the noble Lords, Lord Dean of Beswick, Lord Jay, Lord Rochester and Lord Desai. I am grateful to all of them for taking part during the various stages of the Bill.

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I should also like to say that the Bill was concisely worded and well drafted. I should like to thank the Department of Energy and also the officials who supported me during the progress of the Bill.
Noble Lords: Lord Donoughue!
Lord Cavendish of Furness: My Lords, I am sorry; of course, I had the noble Lord, Lord Donoughue, on my list. Although he was not present consistently throughout the Bill's stages, he played a very important part. I should also like to congratulate him on his contribution because I believe that it was the first time that he has taken a Bill through the House. I also thank him for his consistent courtesy throughout the proceedings. I commend the Bill to the House.
On Question, Bill passed.

Community Care (Residential Accommodation) Bill [H.L.]
3.35 p.m.
Read a third time.
Baroness Brigstocke: My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(Baroness Brigstocke.)
Baroness Phillips: My Lords, perhaps I may take the opportunity to congratulate the noble Baroness on this excellent Bill. I wish it well. I could not be present for the Second Reading debate, because it took place rather late at night. But this is a splendid effort. I know that the noble Baroness cares very much about such matters.
On Question, Bill passed, and sent to the Commons.

Licensing (Amendment) (Scotland) Bill
Lord Macaulay of Bragar: My Lords, I beg to move that this Bill be now read a third time.
As I said when moving the Second Reading debate on 14th February, the Bill is supported across party lines and is of considerable importance to the licensed trade and licensing boards in Scotland; and also to the members of the solicitor branch of the legal profession engaged in working with the boards. The Bill remedies significant difficulties recently encountered and effectively reintroduces the single stage transfer of a licence while retaining the temporary transfer provision of Section 51 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990. The Bill is universally welcomed in Scotland. I therefore commend the Bill to your Lordships.
Moved, That the Bill be now read a third time.—(Lord Macaulay of Bragar.)
On Question, Bill read a third time, and passed.

Offshore Safety (Protection Against Victimisation) Bill [H.L.]
Read a third time, and passed, and sent to the Commons.
Aberdeen Harbour Order Confirmation Bill
Read a third time, and passed.

Tourism (Overseas Promotion) (Wales) Bill
3.40 p.m.
Lord Thomas of Gwydir: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, on behalf of my noble friend Lord Crickhowell, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Lord Thomas of Gwydir.)
On Question, Motion agreed to.

Local Government Bill [H.L.]
3.41 p.m.
Baroness Blatch: My Lords, I beg to move that the Commons amendments be now considered.
Moved, That the Commons amendments he now considered.—(Baroness Blatch.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
AND MOTION MOVED ON CONSIDERATION OF COMMONS AMENDMENTS
[The page and line refer to Bill 49 as first printed by the Commons.]
COMMONS AMENDMENT
Clause 1, page 2, line 7, at end insert:
`(2A) The Secretary of State may by order made by statutory instrument vary the period for the time being specified in paragraph (b) of subsection (2) above so as to fix the latest time for the publication of information in accordance with that paragraph at any such time, within the period of nine months after the end of the financial year in question, as may be specified in the order; and a statutory instrument containing an order under this subsection shall be subject to annulment in pursuance of a resolution of either House of Parliament.'.
Baroness Blatch: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 1. This amendment is in response to a proposal made in another place that the Government should look at providing a means of varying the period given to authorities for the publication of information on standards of performance under Clause 1.
As a large part of this information will necessarily be based on accounting information, we believe that it makes sense to give the same period of time for bodies to publish this information as is given for publishing their accounts.

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At present it is a requirement of the current accounts regulations that accounts are published within nine months of the end of the financial year. The Bill provides that, similarly, bodies have nine months to publish the performance information required by directions. As amended, it would also allow for this period subsequently to be altered by means of statutory instrument, as is done with the regulations on accounts. I believe that this change will provide a sensible degree of future flexibility, consistent with existing provisions, together with appropriate parliamentary control. I hope that the House will agree the amendment.
Moved, That the House do agree with the Commons in their Amendment No. 1.—(Baroness Blatch.)
On Question, Motion agreed to.
3.45 p.m.
COMMONS AMENDMENT
Clause 8, page 8, line 12, leave out from 'make' to end of line 14 and insert 'such provision in relation to proposals for the carrying out of work to which this section applies as he considers appropriate for facilitating or requiring separate procedures to be followed for'.
Baroness Blotch: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 2. Your Lordships will recall that when we considered the Bill in Committee an amendment moved by the noble Lord, Lord McIntosh, was made to Clause 8. That amendment was, as I argued at the time, misconceived. It had the effect of removing the power to amend the existing competitive tendering arrangements to allow for the special nature of professional and technical activities and in its place created what was in effect an unusable power to make blanket provision applying in a like manner to all compulsory competitive tendering activities. I made it clear to your Lordships' House that the Government would seek to restore a measure of flexibility at a later stage of the Bill's progress.
Flexibility has been restored by these amendments. But we have listened carefully to the arguments made against the scope of the original Clause 8 and, as amended, it now has a much more limited application. As introduced in this House, Clause 8 contained a wide-ranging power to amend the 1988 Act as the Secretary of State saw fit in connection with an order under Section 2 (3) of that Act adding a professional, financial or technical activity to the list of CCT activities. It did not limit the scope of that power to any particular purpose.
These amendments, however, create a power to make provision only for separate evaluation by local authorities of cost and quality. In other words, when compared with the original Clause 8, they narrow down the scope of an order under this clause to one purpose: ensuring that we will be able to address the particular concerns relating to the evaluation of quality in professional services. Subsection (5) provides that incidental, consequential, transitional and supplementary provision may be made, and that power includes the power to amend the 1988 Act. But such amendments to the 1988 Act may only be made
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in connection with setting up the separate procedures for evaluation of cost and quality to which I have referred. The power is therefore much more limited in scope than the power in the Bill as originally introduced.
The issue of quality does need to be dealt with differently when we consider the professional services. In the case of the existing manual and direct services which have been exposed to competitive tendering, it is possible for local authorities to set out the level of quality they require—for example in terms of frequency of collection of refuse, or the standard to which cleaning work has to be carried out—in the specifications they draw up for tenderers. Provided a contractor can meet those specifications, the award of the contract can then be on price alone. If a local authority decides that a contractor would not be able to meet the specifications it may rule its bid out, although it would of course need to be able to defend that decision and prove if necessary that it was not anti-competitive. But the question of proof here is much clearer than in the case of professional services and therefore less capable of obfuscation by recalcitrant local authorities.
In the case of professional services, it might be possible for a firm to demonstrate that it could meet specifications—for example, to provide a legal advice service to given deadlines—but for that firm nevertheless not to come up to the standards of professional service a local authority quite legitimately required. For example, the staff used to provide the service might not be sufficiently qualified, or might not have sufficient experience in particular areas, or in the case of architectural services the firm might not be able to demonstrate any experience of designing a particular type of building. It is right that in these sensitive areas local authorities should be able to reject bids which for one reason or another fail to reach the required standard in terms of professional capability.
However, in allowing local authorities these safeguards, we need to ensure that those who would seek to avoid the discipline of competition are not enabled to reject bids on the grounds of spurious—but subjective, and hence largely unchallengeable—grounds of quality. The issue of quality needs to be dealt with openly, clearly and fairly if private sector contractors are to have sufficient confidence in the integrity of the tendering process. Our consultation paper, Competing for Quality: Competition in the Provision of Local Services, suggested that separate evaluation of cost and quality might be achieved through a "double envelope" tendering system. The consultation period on our proposals closed at the end of January. We have now received, and indeed are still receiving, many responses and we are in the process of reading and noting the comments made. We will consider carefully all the representations made on professional services, in particular the suggestion for a double envelope tendering system, before deciding how to proceed.
Some of the proposals in the consultation paper—for example, the extension of CCT to new activities—can be introduced under the existing legislation. Some, such as double envelope tendering, or other

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methods of separating the evaluation of cost and quality which have been suggested by respondents, would depend on powers under this Bill. But I should make clear that this clause, with the amendments now before us, contains no great advances in principle on the existing legislation. The 1988 Act itself, as noble Lords will recall, contains provision for the Secretary of State to amend by order, subject to affirmative resolution, the list of CCT activities in Section 2(2). That power extends, by virtue of Section 15(8) (a) of that Act, to making certain amendments to the Act in connection with an extension of CCT.
So the principle of extending the statutory list of CCT activities by order has already been accepted, and the principle of making necessary minor adjustments to the legislation has also already been granted. What this clause does is to provide the flexibility which may be necessary to make use of the existing powers in a prudent way in the case of professional activities. The nature of any use of the powers in Clause 8 is clear; it would be to provide for separate and unambiguous treatment of the difficult question of quality in professional services. As I have pointed out before, Parliament would have the opportunity, through the affirmative resolution procedure, to exercise proper scrutiny over any use of the powers.
If your Lordships accept our arguments on the need for separate consideration of quality, and accept that the procedure for such consideration should be capable of being tailored for each new professional service made subject to CCT, then it follows that the House accepts the substantive purpose of Clause 8, which is to allow for those concerns of quality to be appropriately addressed, service by service, in the tender evaluation procedure.
Clearly, there is a strong possibility that the separate evaluation procedures to be established under Clause 8(1), service by service, may not be compatible in all respects with the detailed requirements of the CCT regime set out in Part I of the Local Government Act 1988. Such a conflict between two legislative provisions would not be acceptable. Those detailed requirements were set out on the face of the 1988 Act (although I think the Donoughmore committee would have had no trouble with them had they been left to secondary legislation). Given that potential for legislative conflict, and given the need for separate procedures which are sensitive to the requirements of each new professional service to which CCT is extended, it is therefore not merely convenient to government, but essential to the purpose of Clause 8 that the Secretary of State should have a power to make such incidental and conseqential changes to the 1988 Act as are necessary to remove any conflict. I should stress that any such changes would be purely for the purposes of extending CCT in an appropriate way to the service or activities to which an order under Clause 8 referred; it would therefore not allow the executive arm the power to amend the provisions of the 1988 Act as they apply to the existing activities to which CCT applies or to any new non-professional services.
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In view of the narrower scope of this clause, and the need for special treatment of the issue of quality in these services, I have no hesitation in commending the Commons amendments to your Lordships' House, and hope that it will agree with them.
Moved, That the House do agree with the Commons in their Amendment No. 2.—(Baroness Blatch.)
Lord McIntosh of Haringey: My Lords, in speaking to the Motion, That the House agree with the Commons in their Amendment No. 2, the Minister appeared—unless I misunderstood her—to be speaking also to Commons Amendments Nos. 3, 4, 5 and 6. She referred consistently to "these amendments". Will she make it clear whether she was speaking to all the amendments to Clause 8 or merely to Amendment No. 2?
Baroness Blatch: My Lords, I apologise most profusely to the noble Lord. I was speaking to Amendments Nos. 2, 3, 4, 5 and 6. I apologise for not saying so to the House. I also understand that the noble Lord knew that that was how the amendments would be taken. That was my understanding before I came into the Chamber.
Lord McIntosh of Haringey: My Lords, there is the classic phrase, "I think I could have been told". I had no idea that such an arrangement had been made.
Baroness Blatch: My Lords, then I have been misled, and I shall sort that out, but I apologise most profusely to the House. If the noble Lord wishes to deal with Amendment No. 2 only, when we reach the other amendments I shall take it as read that I have addressed them all.
Lord McIntosh of Haringey: My Lords, all I wanted to know was whether I needed to deal now with my Amendment No. 6A, and it seems that I do. The Minister seems to have spoken to the whole group of amendments, and so it is appropriate that I give notice that it is my intention to move Amendment No. 6A when Amendment No. 6 is reached, and I shall speak to it now.
It was not my intention to challenge at length amendments made by another place to our amendments relating to CCT. It has always been my view that, when such decisions are made by another place on a majority vote, we should not, unless there are issues of constitutional importance, seek to challenge the decisions of the elected Chamber. I must say that I was sorely tempted when I heard the Minister's defence of the quality provisions now being made in Clause 8, in particular, when she referred to architectural services. When she said that, I thought to myself that the decision as between one architectural practice and another was likely to be made on the qualifications of the staff rather than on the quality of the design. That struck me as an extraordinary state of affairs. But that is what the Government have always intended to do under the double envelope procedure. They have stuck to their guns on the matter, through thick and thin, against the united opposition not just of the architectural profession—it might be thought

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that architects had a professional interest in protecting themselves—but of all those who use the architectural profession. After all, we all use the architectural profession, because we live in and see the buildings that its members put up.
I should have thought that it was the merest common sense to make it possible for the choice of one architectural firm, approach or design as against another, to be made on the basis of the quality of the design rather than on the qualifications of those involved in producing it. That leads me to ask the Minister whether Clause 8, as amended by the Commons, will permit competition, for example, on a fixed-price basis. It does not appear that she has made any provision for that possibility in the amendments that she is now commending to the House.
As I say, the substance of the Commons amendments are not so much our concern; what is our concern, and the reason why I propose to move in due course that this House do disagree with the Commons in their Amendment No. 6 is that Amendment No. 6 revives, in another form, the Henry VIII clause with which your Lordships rightly disagreed in December of last year. It is not exactly in the same form, as I shall explain.
The original Clause 8(1) enabled the Secretary of State to
"make such modifications of Part I of the 1988 Act (Competition) as he thinks fit for the purposes of. or in connection with, any order under section 2(3) of that Act".
That is the section which extends the list of services subject to compulsory tendering, where it was applied to professional services. Clause 8(2), as originally drafted, extended the range of such an order under the Bill to cover procedures concerning the quality and cost of services. The Bill's practical effect would have been that Henry VIII powers—in another words, power to amend primary legislation by regulation made by the Secretary of State—could be applied, first, to the extension of CCT to new professional services; and, secondly, to the procedures under which those services were put out to tender which were to be separate as to the assessment of quality and the cost of bids. Commons Amendment No. 6 brings back, although in a different form, the second of those Henry VIII powers. It expands the scope of the power under the present Clause 8(4), which is to make incidental, consequential, transitional or supplementary provisions.
It is common to have such tidying-up provisions, and I would not object to such tidying up provisions; but specifically and deliberately the Commons have chosen to add to the tidying-up provisions the power,"to modify any of the provisions of Part I of the 1988 Act",as it says,
"for the purposes of, or in connection with",
the new tendering procedures. That amounts to the creation of a new power. It is a new power for the Secretary of State to alter the import of Part I of the 1988 Act. The wording is less provocative than that used in the original provision, but its practical effect is to restore the most important part of the Henry VIII power to which your Lordships took objection in December of last year. If that were not so, surely the
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Government would have been satisfied with the tidying-up provisions which already exist in Clause 8(4).
It must be asked why the Government have seen fit to return to that contentious constitutional matter—not constitutional as between the two Houses, but constitutional as to the framing of legislation—and under what conceivable circumstances the Government believe that it may be necessary to use such a power. I use the word "necessary" advisedly, because the noble and learned Lord, Lord Simon of Glaisdale, rightly reminded the House on the previous occasion when we dealt with the Bill that the distinction that the Donoughmore Committee drew was as between when a Henry VIII power was necessary and when it was merely convenient to government. I suggest to your Lordships that this is an occasion on which the Henry VIII power is merely convenient and ought not to be agreed to.
4 p.m.
Lord Renton: My Lords, the noble Lord, Lord McIntosh, is fully justified in asking us to consider whether the introduction or extension of a Henry VIII power should be approved by your Lordships' House. I am one of those who lean against the use of Henry VIII powers, but we have to face it that the alternative in some circumstances to using such a power is for the government of the day to come back to Parliament to ask for primary legislation. If the matter is of great importance, it is right that the government of the day should do just that or if the Henry VIII power which it is intended to use covers a wide scope of legislation.
However, it follows not only from the speech of my noble friend Lady Blatch but also from that of the noble Lord, Lord McIntosh of Haringey, that the use of the power is intended to be on a narrow point and a technical matter; namely, the procedure for competitive tendering. I am no expert on building contracts, but it is a matter of common knowledge that with them practice varies from business to business and from time to time. It is surely in the public interest that, if it is found that a relatively minor modification of the law is required in order to enable public works to be completed expeditiously, the Secretary of State should have that power to amend the statute in the narrow way.
It is a narrow way because Amendment No. 6 states:
"the power conferred by virtue of paragraph (a) above"—
and I assume that that means paragraph (a) of Clause 8(5) rather than paragraph (a) of Clause 8(1)—
"shall include power for the purposes of, or in connection with, any separate procedures for which an order under this section provides, to modify any of the provisions of Part I of the 1988 Act".
If it were a power to amend any of the provisions of Part I of the 1988 Act—which is an important piece of legislation—in a broad sense, I should be fully in agreement with the noble Lord, Lord McIntosh, and support his amendment. However, frankly, when we find that it is only for the purpose of a power to make an order under the section dealing with competitive tendering,

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"to make incidental, consequential, transitional or supplementary provision",
surely it would be right to say that this power should be granted to the Secretary of State. For that reason, despite my normal prejudice against the use of Henry VIII clauses, I feel that on this occasion the other place was fully justified in supporting the Government in asking for the amendment.
Lord Simon of Glaisdale: My Lords, the noble Lord, Lord McIntosh, has explained clearly how the provision fits into the Bill. On the last occasion, with his encouragement, I endeavoured to set what was attempted in the original form of the Bill in its constitutional and historical setting. On this occasion I shall not attempt at all to go over the ground that has been covered so well by the noble Lord but deal with the matter in its current constitutional setting.
The noble Baroness and the noble Lord, Lord Renton, are quite right and justified in saying that the provision now brought back to your Lordships' House is much narrower than the one originally framed. There are two points to be made on that. First, that fact abundantly justifies the action your Lordships took, carrying by a majority against the Government the exclusion of the wide Henry VIII provisions. Your Lordships are once again vindicated as the watchdogs of the constitution in a real sense today. Your Lordships are nobody's poodle these days. Unless you perform that role it will not be performed at all.
Secondly, the pattern that we see here is recurrent: namely, an attempt to take the widest powers that can be thought of in favour of executive action. Only when an objection is raised, only when there is parliamentary difficulty, does the department consider whether it needs the wide powers or whether it could frame narrower powers. That is the main constitutional background.
There is also this point. Not for the first time your Lordships have heard the word "flexibility". It comes up every time a Henry VIII provision is discussed before your Lordships. Of course it is more flexible for a civil servant by a stroke of the pen to change the law than to go through the age-old traditional and proved parliamentary processes. Of course it is. It was more flexible when Henry VIII did it; it was more flexible under the Stuarts. No doubt during the great period of parliamentary supremacy in the 18th and 19th centuries some flexibility was sacrificed in the good cause of constitutional propriety. That constitutional propriety was designed for the safeguarding of the individual liberties of the citizen. Thus of course it is more flexible, but that is absolutely no answer.
I want to ask your Lordships to consider the matter not as though it stood alone but in the context today. It is part of a pattern, a resurgence of bureaucracy, an attempt at executive aggrandisement such as we saw 40 or 50 years ago in the surge that broke at Crichel Down with disastrous consequences for the Government at the time. There was the resignation of a popular and able Minister who took responsibility for the high-handed and misconceived actions of his officials. They were doing no more than many of their colleagues had been doing for about a decade.
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We now face a new Crichel Down situation. The Henry VIII clauses do not stand alone. There is the persistent downgrading of parliamentary control of regulations. Sometimes there is no parliamentary control, as in this Bill in Clause 26. Sometimes there is a feeble negative resolution procedure where all the constitutional indications are for the more effective affirmative regulation procedure.
Then one also gets, as one has in this Bill, the exclusion of the valuable hybrid instrument procedure. That is a procedure that is peculiar to your Lordships' House and is designed to protect the individual citizen, or body of citizens, when their rights are invaded by a Public Bill. That procedure can be excluded by statute and, sure enough, it has been excluded in this Bill, as it was in a previous local government Bill.
One has seen in recent statutes the replacement by decisions of officials of the decisions of courts of law. That was a marked feature of the so-called Child Support Act of last Session. There, too, one had appeal not to courts of law but to specially set up administrative tribunals. In that Act there were also exceptional powers of entry given to officials. The officials could go into places of employment without a by-your-leave or a thank-you, and interrogate employers and fellow employees on pain of a penalty of refusal of entry or refusal to answer.
That Act also jettisoned the valuable confidentiality of the Inland Revenue in favour of officials pursuing their aims under an Act of Parliament. All this really amounted to putting officials in a special position different from the position of others under the law. That has always been considered as the very negation of the rule of law. However, the matter did not end there. There were swept away, in the interests of officials the safeguards that the law has erected against the harsh self-help remedy of distress. Those safeguards were swept away solely in the case of officials exercising distress.
One must look at all those matters together. One cannot just isolate the Henry VIII clause and say it is now operating under a narrow band. What is being done is a general aggrandisement of bureaucracy and of Executive powers. Unless a stand is made that process will go on and shows every sign of going on.
The right body, in fact the only body, that can make a stand is Parliament. The part of Parliament which is best suited to make that stand is your Lordships' House. Your Lordships' House made such a stand on the previous occasion that this matter arose. I direct my following remarks particularly to those who are on the Bishops' side of the House, on the Government Benches. In condoning and abetting this surge of bureaucracy, and in furthering it, they are manufacturing a harsh rod for their own backs. If another government come to power they will not hesitate to use the powers I have ventured to lay before your Lordships. They will seek to undo many of the measures that have been passed in the past decade—I think they are valuable measures—by means of a skeleton Act with regulatory powers. Such an Act may have 80 regulation-making powers.

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The noble Baroness, or someone in her position, may protest if that were to occur. She will be told that in the Child Support Act there were not 80 but over 100 regulation-making powers. When she claims that only perhaps 10 of the powers are subject to the affirmative resolution, she will be met with the reply that not many more were made subject to the affirmative resolution in the Child Support Act. There were about a dozen out of 100. When she claims that some powers are not subject to any parliamentary control, she will be told that in Clause 26 of this very measure that is before your Lordships she framed important regulations which were subject to no parliamentary control at all. I suggest that in supporting the Government's condonation of the serious surge in bureaucracy, any supporter of the Government is manufacturing a severe rod for his own back.
On only one matter did I find myself in disagreement with the noble Lord, Lord McIntosh, and that is on what should be the correct relationship between the two Houses. That matter is governed both by statute and by convention. The statute is clear; it is the two Parliament Acts. Your Lordships are entitled to hold up any measure for a year. That is the law and your Lordships can exercise it in this case. If the Government wish to have this clause, they can get it by retabling this measure in the next Session after 12 months. However, the Government will not do so, because they want this Bill. I too wish to see this Bill get through. What the Government will do, if your Lordships stand firm, is to give way.
I mentioned the legal position but there is also the conventional one. I venture on that to differ with the noble Lord, Lord McIntosh. I do not believe your Lordships are bound to give way merely because the elected Chamber has taken a different view. The way it is generally put is that your Lordships are entitled by convention to limit your powers under the Parliament Act and to "ask the other place to think again". But this is the first time that the House of Commons has had a chance to think about this matter. If your Lordships reject this Commons amendment, the Commons will have a chance of thinking again. As I have said, I wish the Bill well and I particularly wish the noble Baroness well. But if the noble Lord, Lord McIntosh, divides the House on his Motion not to accept the Commons amendment, I for one shall follow him into the Lobby.
4.15 p.m.
Lord Renton: My Lords, before the noble and learned Lord sits down, I hope he will be so good as to mention an important factor in this matter which he has mentioned on other occasions but did not mention today as far as I could understand. It is this. He knows from experience, and his experience is tremendous, that there are occasions when, for a narrow purpose, a Henry VIII clause should be allowed. Indeed, the noble and learned Lord himself has on several occasions in the past year or two agreed that there should be a narrow power to amend primary legislation in order to avoid the need for the
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Government to come back to Parliament on a narrow and perhaps technical matter in order to put a point right. Is not this just such an occasion when it would be unreasonable to expect the Government to come forward with primary legislation in the form of an amending Bill?
Lord Campbell of Alloway: My Lords, perhaps I may briefly enter the debate on this matter of prime constitutional importance. A recent example occurred in the Further and Higher Education Bill, in which there was an unprecedented attempt to extend executive powers in the area of academic freedom. If your Lordships' House is the watchdog of the constitution, so be it. As the noble and learned Lord truly said, who else? However, in fairness, it has to be said that another place appears now and then, and certainly in this instance, to heed our bite as well as our bark. That is not a good reason for not continuing to bark or, on appropriate occasions, for not continuing to bite. It is quite wrong that there should be the development to which the noble and learned Lord referred —of which there have been many examples recently—and that administrative powers should be extended in the way in which the noble and learned Lord mentioned.
In that context I do not know whether any of your Lordships have had a chance to read the report of my noble friend Lord Jellicoe on the procedures of the House. There it is suggested that an all-party committee should be set up. I think that it was the evidence of my noble friend Lord Renton in particular which adverted to the practice of increasing the grant of executive power. Perhaps something should be done along those lines.
I venture to disagree with the noble and learned Lord and to agree with one of the views expressed by the noble Lord, Lord McIntosh of Haringey. Of course the law is as the noble and learned erstwhile Law Lord said, but it is not just a question of law. There is a question of convention and a question of comity between the Houses. Need I say more? For my part I totally support the attitude which was adopted by the noble Lord, Lord McIntosh of Haringey, and repetition is very boring.
In this particular case, what are we considering? My noble friend Lord Renton went straight to the heart of the matter, which is not a Henry VIII clause at all. The heart of the matter is that provision is being made in order to secure some degree of uniformity for competitive tendering for work and labour materials contracts for local government work. Any of us who has had anything to do with such contracts knows that they are not uniform. Any of us who has had anything to do with such contracts knows that some of them contain objectionable clauses—for example, to take only one, the union labour only clause. There are often other discriminatory clauses. It is entirely sensible, constructive and right, your Lordships may think, that in this narrow and specific context, as my noble friend Lord Renton said, there is no objection to the clause as it stands.
Lord Hughes: My Lords, I am tempted to intervene because I have always been impressed by the fact that

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the noble Lord, Lord Renton, has a well-deserved reputation for advocating simplicity and clarity of language in legislation. Therefore, I wonder why he is so certain that the Commons amendment is confined to a narrow base. Paragraph (a) of Amendment No. 5 refers to work "within a defined activity" and Amendment No. 6 refers to "separate procedures". What is it in the use of those two terms which makes the noble Lord, Lord Renton, so certain that separate procedures will still be within the defined activity? If I understood my noble friend Lord McIntosh of Haringey, he was afraid that that change would be used for the purpose of widening those defined procedures, perhaps to other professions. What makes the Minister and the noble Lord, Lord Renton, so certain that that power does not widen the defined activities in the quoted paragraph?
Lord Renton: My Lords, this is not a Committee stage and I need the leave of the Leader of the House to reply. If I may have that permission, I simply say this. The noble Lord is quite justified in drawing our attention to the expression "separate procedures", which introduces something fresh into Clause 8 of the Bill. However, in doing so, the amendment limits that to the context of paragraph (a) of subsection (4), which in itself is limited in its terms.
Baroness Hamwee: My Lords, I cannot begin to emulate the expertise on constitutional matters which has been demonstrated in the past few minutes. Even to say that I agree with much of what has been said is something of an impertinence. However, the Minister put the amendments in a context which extended beyond the constitutional position and I should like to say a word about that.
We are struggling with this provision for reasons on which we spent some time at earlier stages of the Bill. We were asked to consider legislation while consultation with local authorities and providers of services were still taking place. Had we had the benefit of that consultation, there might have been less concern about what might be needed by way of legislation in order to reflect the new arrangements to be brought into place. I am, of course, glad to hear the Minister say that full account will be taken of the responses to that consultation and I should not have expected otherwise.
Baroness Blatch: My Lords, perhaps the noble Baroness will give way. I am grateful to her for doing so. Does she not agree that the provision which has been inserted into Clause 8 applies only to extension of CCT, which itself is subject to secondary legislation which has to come before the House for parliamentary approval? Therefore there is no question of the use of the power until Parliament has expressed its view as to whether CCT may be extended.
Baroness Hamwee: My Lords, yes, and to some extent, no. The provisions in Amendment No. 6 refer back to Amendment No. 2, which makes reference to separate procedures. I believe that it is due to the new arrangements for separate procedures that we are now struggling with Amendment No. 6.
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I also have to say that the word "modify" in this context seems to me to be something of a weasel word. Perhaps the Minister can confirm that it means straightforwardly "to amend or change". If it is something less than that, it would be interesting to know that, but I believe that to modify the provisions of legislation means to change the provisions of legislation.
4.30 p.m.
Baroness Blatch: My Lords, perhaps I may respond to that question. It means "modify" because the provisions remain the same for other CCT. However, it would be a modification of those provisions which stand in the Bill, which stand in legislation, but a modification for a specific service which would have to come before Parliament for approval.
Lord McIntosh of Haringey: My Lords, we are not at Committee stage. The Minister will have a chance to respond. I have bitten my tongue on a number of occasions. We ought to exercise some discipline.
Lord Rodgers of Quarry Bank: My Lords, I am not sure whether the noble Lord addressed the House in general when stating that we should exercise more discipline. I hope that my contribution will be consistent with the rules of order.
When the Bill received its Second Reading and passed through the Committee stage in this House, I was not able to contribute to the debate but I followed it from afar in my capacity as director general of the RIBA. It is in that capacity that I should like to comment on the amendments before the House today with reference to Clause 8. I am aware of the contribution made in earlier debates by my noble friend Lady Hamwee and, among others, by the noble Lord, Lord Howie. I am grateful to them for what they said. I do not seek to detain your Lordships by covering that ground again.
I find it difficult to judge the full significance of the noble Baroness's statement this afternoon from the Government Front Bench. Leaving aside the argument about Henry VIII provisions, I am not clear whether she made a significant statement of policy or was putting in a different way what had been stated at Second Reading and in Committee. I believe that it was probably the latter. Had there been a change of policy it would have been more plainly declared.
I wish to make one comment on the substance of Clause 8 and its implications, to ask a question of the noble Baroness, and to make one request to her. It is germane to the amendments made to the Bill in another place. On the substance of Clause 8, it is less a comment of my own than repeating a comment made by the noble Lord, Lord St.John of Fawsley. I would hesitate to raise the matter now except that his statement was made on 30th January as chairman of the Royal Fine Art Commission some time after the Bill had left the House. Although the noble Lord's remarks are addressed to the Government's consultation paper, they apply equally to the Bill. As my noble friend said, the Bill has been unfortunately brought

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before the House parallel with the process of consultation. In a statement the noble Lord, Lord St. John of Fawsley, said:
"The Commission believes that the Government's consultation paper Competing for Quality is a threat to the quality of public architecture and, after studying it fully, rejects the section on Architectural Services".
The statement continues:
"The Commission believes that the status of architecture as a public art is at great risk if competitive tendering … becomes compulsory for all [local authorities]".
The rather lengthy statement concludes:
"Lord St. John said that the Commission believes that CCT would be a false economy and only save small amounts of money".
I am aware that that was the substance of the case against Clause 8 of the Bill. Perhaps it was naive of me—it is a reflection of nine years' absence from the process of Parliament—to expect that the Government might have changed their mind. However, that was the nub of the argument at that time. I had hoped that the amendment might have allowed for second thoughts. It has not done so and I greatly regret it.
On consultation, I am not sufficiently clear in my mind whether the noble Baroness's statement today changes the previous position. However, I think not from her remarks in response to my noble friend Lady Hamwee who referred to secondary legislation. The argument from the Government Front Bench was this. Apart from the continuing consultation process, which is not yet complete and of which full accountability will be taken in particular regarding questions of quality, there will be further opportunity for discussion when secondary legislation comes before the House. It is right, proper and inescapable that the Parliament of both Houses will make the final decisions. I appreciate that the Government, even if in parallel, will be consulted widely on competing for quality.
However, when the orders come forward, as I understand it they will be specific to certain services. It was clear from the debate in Committee that those services are very different. It is not for me to argue that other services deserve to be treated differently from the way in which I wish architectural services to be treated. But there is a difference and I should have thought that, for that reason alone, there should be full consultation—not only in this House—before this House decides to agree on any secondary legislation. Will there be further consultation with the specific professions involved before secondary legislation is brought to the House? I hope so. I hope that there will be no attempt to plead that the time needed for such a consultation process cannot be found. I am sure that the noble Baroness would not seek to so plead. Governments can always find time for what they want; and there will be time for such consultation if the Government judge that to be right.
The noble Baroness made a plain statement at Committee stage of the Bill on 17th December. Perhaps I may quote from Hansard at col. 1243. It was a helpful statement because it clarified a misunderstanding. The noble Baroness stated:
1004
"When an authority intends to put work out to a private supplier, as would be the case in much architectural work, for example, the detailed requirements of CCT legislation do not bite".
In other words, she made a distinction between those occasions when a local authority might wish to follow its established procedures for tendering and others when the local authority itself intends to do the work.
I am anxious that we do not have what I call creeping CCT. I hope that there will not be any attempt by local authorities, with overt or covert encouragement from Government, to adopt CCT procedures in advance of any decision by either House on the basis of secondary legislation. Local authorities and others have listened to the proceedings of the House. If the Bill passes its final stages, it might be thought that CCT is already the order of the day, and, despite the remarks by the noble Baroness on 17th December, that it applies to those services which hitherto have not gone out to tender. I do not ask for a specific reply today. However, perhaps the noble Baroness will be kind enough to consider whether it could be made clear to all authorities that creeping CCT would not be appropriate and that they are not required at once to adopt the procedures set out in the Bill, least of all for their existing tendering procedures.
The noble Lord, Lord McIntosh, referred to the profession of architecture. Referring to the profession, he stated that it had an objection to the provisions in Clause 8. I simply want to make clear—it is apparent from all the debate that has taken place outside this House and within it, and indeed from the remarks of the noble Lord, Lord St. John of Fawsley—that this is not a question about professional interests. It is about the quality of the built environment. My deepest regret is that if secondary legislation is made under the Bill in respect of architectural services, it will not be this House or the profession that will suffer but the built environment and all those who ought to be able to enjoy it.
Lord Howie of Troon: My Lords, it will perhaps come as no surprise to noble Lords when I say that Henry VIII was never a king of mine. With regard to the constitutional issue, I am perfectly sure that the noble and learned Lord, Lord Simon, is right and that this House should help the other place to do the right thing. But in fact we are not involved in the constitutional issue. The noble Lord, Lord Campbell of Alloway, rightly said that this was not a question of law but of the underlying issues of this debate. I paraphrase somewhat crudely what he said and I hope that he will not rise to correct me.
This issue is not about Henry VIII or any such Welsh people. It is about competitive tendering and the Government's obsession with ideology. I support most strongly the speech made by my old personal and professional though not noble friend, Lord Rodgers. Civil engineers have a curious relationship with architects, but as a civil engineer I like them a good deal of the time. This issue is about competitive tendering. I want to ask—perhaps to the annoyance of the noble Baroness, Lady Blatch—two questions which I have raised at every stage of the Bill and to which I have had no answer whatever.

1005
I have said on many occasions that compulsory competitive tendering can have ill effects, although it need not always do so. I have given the Minister two examples of such ill effects and no doubt she is tired of hearing them, but she must listen just once more. One was that of the construction in Canada—I think it was in Vancouver—of a car park which fell down because it was underdesigned owing to competitive tendering. That is one of the dangers which the construction industry faces. Whether we are architects or construction engineers, we believe that that is crucial to the central issue. The desire to win a contract by putting in a low bid can easily lead to underdesign. In the case that I have just mentioned, it led to disaster.
It is interesting that when the case in Vancouver was investigated by the government, the blame was laid directly on underdesign because of competitive tendering. That is one example, which I have raised several times during our debates.
With regard to the other example, the noble Baroness may remember that I read out a letter from a consulting engineer. He was not an acquaintance of mine in any way; the letter came entirely out of the blue following a column that I had written in the New Civil Engineer, a magazine which is widely read among a very small number of people. That engineer said that he had lost a tender but the tender which had been accepted was too low to finance the operation which was required. I admit that it was a fairly small scale operation.
I found it interesting that in the exchange across the Floor of the House the noble Baroness gave me no answer at all except to say that she did not like No. 2 Marsham Street. No doubt many noble Lords would agree with her. But that was not an answer. I thought that it seemed rather disloyal to her own department, but let us leave that aside. That answer is no longer valid because her superior has decided to demolish No. 2 Marsham Street. So that obstacle has now been removed and she may tell us whether it is a good idea that competitive tendering should be pursued when it might lead, as in the Canadian example, to disaster, if not fatal disaster on account of underdesign.
The Government have not made their case in any way other than ideologically. The ideological case does not appeal to me in any case. They have got the ideological bit between their teeth and have gone dancing off madly in the wrong direction. The underlying matter of competitive tendering is much more important than whatever the Tudors may or may not have done while they had their day. I believe that we should dispose of the other place's amendments by rejecting them.
4.45 p.m.
Baroness Blatch: My Lords, let me say first to the noble and learned Lord, Lord Simon of Glaisdale, that he was absolutely right. Your Lordships have had an effect on this debate and have caused the other place to think seriously again about this power. That is why we are considering this amendment today. To that extent I believe that he is right. He is also right to say that because a question is put to this House, this House has a right to respond negatively or positively.
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That is precisely why it is here. In fact, I invite all noble Lords to think very seriously about what we are being asked to do today.
I say to the noble Lord, Lord McIntosh, who quoted the words in Amendment No. 6, that I believe he ignored the fact that the power is expressed as being nothing more than one aspect of the power in subsection (4)(a) to make,
"incidental, consequential, transitional or supplementary provision".
It cannot therefore be used, as he suggested, to modify any of the procedures.
My noble friend Lord Renton put the matter in a nutshell. He said that of course this House—I agree with both the noble and learned Lord, Lord Simon, and my noble friend Lord Renton—must presume against the prolific use of Henry VIII clauses. Indeed, I attended a Commonwealth conference at which I sat on the scrutinising committee and that point was made very well.
However, in the case of this legislation, the Government have the power to put before Parliament a measure to extend competitive tendering. Once that power has been ascertained from Parliament it is a matter of implementation. This power is simply used to make sense of the implementation of that power, and so it is not as wide as noble Lords would suggest.
The noble and learned Lord, Lord Simon, suggested that these provisions amounted to a wide-ranging power of officials—I understand that that is what he meant—over the lives of private citizens. I do not like to disagree with the noble and learned Lord because I have far too much respect for him, but on this occasion I take issue with his comment. The power that we are discussing, as I have just said, is a limited one which can only be exercised by the Secretary of State—not by officials—of an elected government of the day and must be subjected to the scrutiny of both Houses of Parliament through the affirmative resolution procedure.
The noble Lord, Lord McIntosh of Haringey, posed a straight question: did it allow for fixed price competition? I have to say that yes, it does; nothing here invalidates the provision to do that.
The noble Lord, Lord Rodgers of Quarry Bank, addressed himself to three points. The first related to substance. He prayed in aid the Royal Fine Art Commission and my noble friend Lord St. John of Fawsley. He made the point that I wish to make; that wide consultation has taken place. Although that consultation period is at an end and the responses have been received we are allowing late responses to be considered. However, I must repeat that there will be no extension of any service—and the matter will be dealt with service by service—without parliamentary approval. All the comments made by my noble friend Lord St. John of Fawsley, the Royal Fine Art Commission and the noble Lord, Lord Rodgers of Quarry Bank, will be appropriate as and when a service comes before Parliament for extension. This power relates to the fact that if and when Parliament agrees the extension of a service for CCT, we should have a system that allows a more sophisticated judgment to be made about quality.

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The noble Lord, Lord Rodgers, asked whether there would be further consultation after the general consultation. I can give him an absolute assurance that when separate orders are made to come before Parliament there is a requirement to consult and that that consultation will extend to interested professional associations.
The noble Lord's third point related to remarks that I had made and he went on to talk disparagingly about creeping procedures. They are not creeping; they are put before Parliament. They will come before Parliament and Parliament will agree them. There is nothing furtive about the procedure. Parliament will have a specific opportunity to agree the extension of a service—
Lord Rodgers of Quarry Bank: My Lords, I believe that the Minister has misunderstood me. I did not use the word "creeping" in any pejorative sense in respect of the Government. I said only that the local authorities, having watched the passage of this legislation through the House, would begin to use CCT as a result of the example of the Bill and in anticipation of late orders. I was asking her, without further comment, whether she would be kind enough to discourage such use.
Baroness Blatch: My Lords, I considered that the word was pejorative. If the noble Lord reads Hansard he will see that he referred to the procedure as creeping. It is not creeping because Parliament will give approval service by service, in particular the professional services.
The noble Lord, Lord Howie of Troon, prayed in aid the Canada case and referred to the tender that was too low. I am not daunted by having to use yet again the example of Marsham Street. Competition in itself is not a bad thing. I would rather have heard from the noble Lords, Lord Howie and Lord Rodgers, that there is a great deal of excitement in competition. A great deal of our architecture needs competition. Marsham Street might not have been built if there had been competition. Some monstrosities have been built without any form of competition. Competition is not bad in itself.
In addressing the point made by the noble Lord, Lord Howie, I must say that in the Canada case competition or competitive tendering was not at fault. In that case either the specification was not specific and clear, and therefore the specification was at fault because the contractor was allowed to get away with a poorly built building, or if the specification was right and written up properly, the contractors were at fault. Mechanisms should exist for doing something about that. That leads me to the noble Lord's second point—
Lord Howie of Troon: My Lords, I take the point which I dare say the Minister will deal with—
Noble Lords: Order! By leave of the House!
Lord Howie of Troon: My Lords, I do not need leave to interrupt—
Noble Lords: Yes.
Lord Howie of Troon: My Lords, do I? I have been a Member of this House for 17 years and I had not realised that I needed the leave of the House to interrupt. I had thought that one needed the leave of the House in order to make a second speech. I dare say that I am wrong—I am often wrong. Now, where were we? I was interrupting the noble Baroness and noble Lords were interrupting me.
The point is that the inquiry into the Canada case stated that all the errors which the Minister has laid out were due to competitive tendering. The Minister has ignored that point constantly and I dare say that she will continue to do so. I must say that I do not blame her.
Baroness Blatch: My Lords, the noble Lord was entirely lucid in making his point and I heard it. I simply disagreed with it. I disagreed with the findings of the inquiry. I said that if the specification for that work was right, the people at fault were the contractors and there ought to be ways and means of dealing with that. If the specification was not clear and the builder built a poor building that fell apart it would have been for the client to draft a specification.
The noble Lord gave an example of a company responding with a price that was too low and being unable to deliver what it had tendered for. There are a number of ways of dealing with that situation. For instance, a bond could be put aside for default of contract, penalty clauses could be included and so forth. There are many ways of dealing with that situation but they are not the subject of the use of the powers which the Government seek today. Today the Government seek to ensure that implementation is done properly.
I can give the noble Lord, Lord Rodgers, an absolute assurance that CCT will not apply to any new service until orders are brought forward. However, I hope he will appreciate that we cannot prevent an authority from taking action voluntarily to put services out to tender. Indeed, many are already doing so. Nor would we wish to stop them. However, the terms on which they do so will be entirely for the authorities themselves until the legislation comes into effect. Even if competitive tendering is introduced for architecture, I can confirm that its provisions will apply only where local authorities wish their own workforce to compete for work.
Primary legislation sets down matters of principle but it has been viewed as quite proper for secondary legislation to deal with matters of implementation. That point was well made by my noble friend Lord Renton. That is what orders under Clause 8 and any incidental, consequential, transitional or supplementary amendments to the 1988 Act made in any such orders would do. I must stress again that an order under this section which included such amendments could be made only in connection with an order adding one of the professional services to the list of competitive tendering activities. The power to amend legislation could, therefore, not affect the application of that Act to any of the existing CCT activities or to any activities which did not consist in or involve the provision of professional advice or of other professional services, or the application of financial or

1009
technical expertise. In effect, such an order would provide for a modified form of the CCT regime under the 1988 Act to apply to individual new services. The clause lays down clearly what those modifications will he concerned with; provision for the separate evaluation of cost and quality.
Not to include in this Bill the power to make incidental changes to the CCT regime under the 1988 Act would mean that the Government brought forward secondary legislation to bring CCT to new professional activity. They might need to introduce separate primary legislation to make any necessary minor change in tender evaluation. That is the point at issue. It does not appear to me to be a sensible use of the time of this House and of another place. I hope that your Lordships, and in particular the noble and learned Lord, will accept the minor use of this Henry VIII clause. I also hope that that the House will feel able to agree that the requirement of affirmative resolution provides adequate safeguards given the technical and incidental nature of any changes.
On Question, Motion agreed to.
COMMONS AMENDMENTS
Clause 8, page 8, line 15, after 'evaluation', insert 'for the purposes of Part I of the 1988 Act'.
Page 8, line 18, after 'evaluation', insert 'for those purposes'.
Page 8, line 19, at end insert:
'(1A) This section applies to any work which—

(a) by virtue of an order under section 2(3) of the 1988 Act, falls within a defined activity for the purposes of Part I of that Act; and

(b) consists in, or involves, the provision of professional advice or of other professional services or the application of any financial or technical expertise.'.

Baroness Blatch: My Lords, I beg to move that the house do agree with the Commons in their Amendments Nos. 3 to 5 en bloc.
Moved, That the House do agree with the Commons in their Amendments Nos. 3 to 5 en bloc.—(Baroness Blotch.)
On Question, Motion agreed to.
COMMONS AMENDMENT
Clause 8, Page 8, line 34, at end insert—
'and the power conferred by virtue of paragraph (a) above shall include power for the purposes of, or in connection with, any separate procedures for which an order under this section provides, to modify any of the provisions of Part I of the 1988 Act.'.
Baroness Blatch: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 6.
Moved, That the House do agree with the Commons in their Amendment No. 6.—(Baroness Blotch.)
MOTION MOVED ON CONSIDERATION OF COMMONS AMENDMENT No. 6
6A Lord McIntosh of Haringey moved, That this House do disagree with the Commons in their Amendment No. 6.
The noble Lord said: I beg to move that the House do disagree with the Commons in their Amendment No. 6.
I am assured by the Minister that my office was consulted about the groupings of amendments. Of course, I accept that assurance and would not cast
1010
doubt on it. However, I am bound to say that had I been consulted we could have saved an enormous amount of time by dealing, in a crisp debate, with the quality issues first in Amendments Nos. 2 to 5 and then with the constitutional issue on Amendments Nos. 6 and 6A. Instead, we had a rambling debate which attempted to cover both subjects. However, we are stuck with it.
I shall concentrate only on the constitutional issue and I refer specifically to the claim of the Minister and the noble Lords, Lord Renton and Lord Campbell of Alloway, that the amendment is only a narrow and technical extension use of the Henry VIII power. I remind noble Lords that Clause 8(4) already contains the power to make an order, including the power,
"to make such incidental, consequential, transitional or supplementary provision as the Secretary of State thinks necessary or expedient".
I was not proposing—I have no way of doing so—that that provision should be taken out of the Bill. In moving that we disagree with the Commons in their Amendment No. 6, we object to,
"the power conferred by virtue of paragraph (a) above shall include power for the purposes of, or in connection with, any separate procedures for which an order under this section provides, to modify any of the provisions of Part 1 of the 1988 Act".
It is common ground that the 1988 Act already conferred the power on the Secretary of State to extend the range of services subject to compulsory competitive tendering. That is water under the bridge. We are not raising that issue again. We are raising the issue concerning the power of the Secretary of State to alter by regulation the provisions on the face of Part I of the 1988 Act; that is, to change the conditions under which such compulsory competitive tendering shall apply.
It is as simple as that. It is still a Henry VIII provision. If it were simply technical or minor then the tidying-up provisions under subsection (4) (a) would be adequate. They are only required because of the Government's intention to go further.
Moved, That the House do disagree with the Commons in their Amendment No. 6.—(Lord McIntosh of Haringey.)
Baroness Blatch: My Lords, I invite the House to disagree with the noble Lord's Motion.
5.3 p.m.
On Question, Whether the said Motion (No. 6A) shall be agreed to?
Their Lordships divided: Contents, 75; Not-Contents, 134.

Division No. 1

CONTENTS

Airedale, L.

David, B.

Annan, L.

Dean of Beswick, L.

Aylestone, L.

Diamond, L.

Bancroft, L.

Dormand of Easington, L.

Blackstone, B.

Ennals, L.

Bonham-Carter, L.

Ewart-Biggs, B.

Boston of Faversham, L.

Ezra, L.

Bottomley, L.

Falkland, V.

Bruce of Donington, L.

Fitt, L.

Carter, L. [Teller.]

Gallacher, L.

Cledwyn of Penrhos, L.

Galpern, L.

Clinton-Davis, L.

Gladwyn, L.

Cocks of Hartcliffe, L.

1011

Graham of Edmonton, L.

Prys-Davies, L.

[Teller.]

Rea, L.

Greene of Harrow Weald, L.

Richard, L.

Grey, E.

Ritchie of Dundee, L.

Hacking, L.

Robson of Kiddington, B.

Halsbury, E.

Rodgers of Quarry Bank, L.

Hamwee, B.

Russell, E.

Hanworth, V.

Saltoun of Abernethy, Ly.

Hatch of Lusby, L.

Seear, B.

Hilton of Eggardon, B.

Sefton of Garston, L.

Hollis of Heigham, B.

Serota, B.

Holme of Cheltenham, L.

Shackleton, L.

Houghton of Sowerby, L.

Shaughnessy, L.

Howie of Troon, L.

Simon of Glaisdale, L.

Hughes, L.

Stedman, B.

Jeger, B.

Stoddart of Swindon, L.

Jenkins of Hillhead, L.

Strabolgi, L.

Jenkins of Putney, L.

Turner of Camden, B.

Judd, L.

Underhill, L.

Kagan, L.

Varley, L.

Kilbracken, L.

Wallace of Coslany, L.

Listowel, E.

White, B.

Longford, E.

Wilberforce, L.

McIntosh of Haringey, L.

Williams of Elvel, L.

Peston, L.

Winchilsea and Nottingham, E

Phillips, B.

NOT-CONTENTS

Abinger, L.

Fraser of Carmyllie, L.

Acton, L.

Gainsborough, E.

Aldington, L.

Gardner of Parkes, B.

Alexander of Tunis, E.

Geddes, L.

Ampthill, L.

Gisborough, L.

Arran, E.

Goschen, V.

Astor of Hever, L.

Grantchester, L.

Auckland, L.

Gridley, L.

Balfour, E.

Grimthorpe, L.

Belhaven and Stenton, L.

Hailsham of Saint Marylebone,

Belstead, L.

L.

Bessborough, E.

Harrowby, E.

Birdwood, L.

Haslam, L.

Blatch, B.

Henley, L.

Blyth, L.

Hesketh, L. [Teller.]

Borthwick, L.

Hives, L.

Boyd-Carpenter, L.

HolmPatrick, L.

Brabazon of Tara, L.

Hood, V.

Brigstocke, B.

Hooper, B.

Brougham and Vaux, L.

Howe, E.

Butterworth, L.

Hylton-Foster, B.

Campbell of Alloway, L.

Jeffreys, L.

Carlisle of Bucklow, L.

Jellicoe, E.

Carnegy of Lour, B.

Jenkin of Roding, L.

Carnock, L.

Joseph, L.

Cavendish of Furness, L.

Kenilworth, L.

Clanwilliam, E.

Killearn, L.

Cockfield, L.

Knollys, V.

Colville of Culross, V.

Lauderdale, E.

Constantine of Stanmore, L.

Long, V.

Cork and Orrery, E.

Lucas of Chilworth, L.

Craigavon, V.

Lyell, L.

Craigmyle, L.

McColl of Dulwich, L.

Cranbrook, E.

Mackay of Ardbrecknish, L.

Crathorne, L.

Mackay of Clashfern, L.

Cross, V.

Macleod of Borve, B.

Cullen of Ashbourne, L.

Malmesbury, E.

Cumberlege, B.

Mancroft, L.

Davidson, V.

Merrivale, L.

Denham, L.

Mersey, V.

Denman, L.

Mills, V.

Denton of Wakefield, B.

Monk Bretton, L.

Derwent, L.

Morris, L.

Eccles of Moulton, B.

Mottistone, L.

Elibank, L.

Mountevans, L.

Elles, B.

Mowbray and Stourton, L.

Elliot of Harwood, B.

Munster, E.

Elton, L.

Murton of Lindisfarne, L.

Fairhaven, L.

Nelson, E.

Faithfull, B.

Norfolk, D.

Ferrers, E.

Norrie, L.

Forbes, L.

Oppenheim-Barnes, B.

1012

Orkney, E.

Skelmersdale, L.

Orr-Ewing, L.

Stockton, E.

Palmer, L.

Strange, B.

Park of Monmouth, B.

Strathmore and Kinghorne, E

Pender, L.

[Teller.]

Prior, L.

Swinfen, L.

Rankeillour, L.

Thomas of Gwydir, L.

Reay, L.

Trumpington, B.

Rennell, L.

Ullswater, V.

Renton, L.

Vaux of Harrowden, L.

Romney, E.

Vivian, L.

St. Davids, V.

Waddington, L.

Sandford, L.

Westbury, L.

Seccombe, B.

Wharton, B.

Selborne, E.

Whitelaw, V.

Shannon, E.

Wise, L.

Resolved in the negative, and Motion disagreed to accordingly.
5.13 p.m.
Baroness Blatch: My Lords, I beg to move the original Motion that the House do agree with the Commons in their Amendment No. 6.
On Question, Motion agreed to.
COMMONS AMENDMENT
Clause 30, page 26, line 4, leave out subsection (6).
Baroness Blatch: I beg to move that the House do agree with the Commons in their Amendment No. 7. This privilege amendment was moved at Third Reading in the House of Lords and inserted as Clause 30(6) of the Bill. It is a standard amendment which is always moved at that stage when Bills involving a charge on public funds begin in the House of Lords. The privilege amendment was removed at Commons Committee stage. As it is purely a procedural matter when the Minister has moved that the House do agree with the Commons amendment, there should be no discussion. I beg to move.
Moved, That the House do agree with the Commons in their Amendment No. 7.—(Baroness Blotch.)
On Question, Motion agreed to.

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

Competition and Service (Utilities) Bill
5.14 p.m.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Reay): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee. —(Lord Reay.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD AYLESTONE in the Chair.]
Clause 1 [Standards of performance]:
Lord Hacking Lord Hacking moved Amendment No. 1:
Page 2, line 2, at beginning insert ("Subject to, and only in accordance with the provisions of this Act referred to in, section 27BB below,").
The noble Lord said: In moving this amendment I intend also to address the Committee on Amendments Nos. 3, 15, 18 and 26. Amendment No. 16, which appears in the Marshalled List under my name, is not my amendment but that of the noble Lord, Lord Williams of Elvel. Before I address the Committee on the content of these amendments I have a practical question which I wish to raise with the Minister. As the Committee knows, we have set aside today, Thursday 5th March, for the Committee stage of the Bill and Monday, 9th March, has also been set aside for the second day of Committee.
My practical question is this. Can the Government tell us that they will leave sufficient time in this Parliament for the Bill to reach the statute book? I ask this question as a simple Cross-Bencher. I am not privy to the political talk of the great parties. I have heard some mention of the proposed dissolution of Parliament and that rests at the behest of Government. Judging by the long list of amendments,I believe about 128, which we have to consider, will all our labours of Thursday come to naught? Before we go further I shall be very grateful if the Minister can give us some assurance.
Lord Reay: I can assure the noble Lord that we have every intention of seeing this Bill on to the statute book.
Lord Hacking: I shall leave the Minister's answer as he puts it. On the second day of Committee I may come back to this matter because it is of some concern. For example, I note that the Report stage has been laid down in the provisional timetable for Tuesday, 24th March. If we are to follow the normal period between each stage of the Bill, there is some worry whether it will reach the statute book or whether the House will have proper time to consider its complicated provisions.
My amendments are addressed to the standards of performance—very much part of the Citizen's Charter—which are proposed in this Bill and which are new to the telecommunications industry. I have no quarrel in the public interest that these standards of performance should be introduced, although their need should diminish as the industry becomes more truly competitive. The question is how the standards of performance—individual or overall—should be implemented.
In this Bill the Government have proposed a separate regulatory regime which could have an enormous impact on those providing, for example, telecommunication services. Thus far the telecommunications industry has been largely regulated under the Telecommunications Act 1984 by a system of granting licences by the Secretary of State or the Director General of Telecommunications. Thereafter, as contained in Sections 12 to 15 of the Telecommunications Act 1984, there is a carefully balanced regime for the modification of licences by the Director General of Telecommunications in which, first, the licence holder negotiates with the director general on any proposed changes to the licence and, secondly, in cases of dispute reference is to be made to the Monopolies and Mergers Commission.
1014
While few references have been made to the MMC, it is a sensible system of checks and balances. Unfortunately, these new standards of performance are not being brought into the licensing regime which I have described to the Committee but under a separate regulatory scheme which is set out in the Bill. I urge on the Committee that that is a mistake for several reasons.
First, it places too much power in the hands of the regulator who is to be just about judge and jury in the proposed new Section 27A(6)—that is, unless the amendments of the noble and learned Lord, Lord Brightman, commend themselves to the Committee. Secondly, it deprives both industry and the public of the benefit of MMC references. Thirdly, it sets up a regime which does not have a system of checks and balances as does the regulation by the licensing scheme.
There are other ways of regulating the regulators —which is what these amendments are about. The noble Baroness, Lady Gardner of Parkes, who does not appear to be present at the moment, has tabled a rather novel amendment proposing parliamentary scrutiny by a joint committee of both Houses. There is also the instrument of the judicial review, which I anticipate the noble and learned Lord, Lord Brightman, will explain to the Committee. As drafted, that will place the court in a very difficult position.
In summary, these amendments—and the crucial one is Amendment No. 26—will bring the new standard of performance into the existing licensing regime so that there will be one regulatory scheme instead of two. For the reasons I have advanced, I commend these amendments to the Committee.
Perhaps I may say one word about the drafting of my amendments. I am sure that deficiencies will be shown in the drafting. However, it is the principle that I am seeking and not the exact wording of my amendment. I beg to move.
Lord Williams of Elvel: The noble Lord, Lord Hacking, has quite rightly drawn the attention of the Committee to an important point in his series of amendments; that a different system of regulation is proposed in the Bill from the system which exists in the Telecommunications Act. He has made a valiant effort to try not only to point this out but to offer a possible course to rectify the problem. He also put his finger on what seems to us to be the really important considerations that we mentioned at Second Reading. First, the whole question of the regulator being regulated and of who is in charge of the regulator; and, secondly, the question of how does anyone know whether the judgments of the regulator are properly fair and properly balanced. Unless the regulator gives some sort of reason for what he is doing it is very difficult for anyone to make that judgment.
I shall be interested to hear the Government's response to the noble Lord, Lord Hacking. It seems to me that in his first amendment he has struck something of a blow at the philosophy of the Bill.
Lord Reay: Amendments Nos. 1, 3, 15, 18 and 26, taken together, would have the effect of ensuring that the power we are giving the Director General of

1015
Telecommunications in this Bill to make regulations setting guaranteed standards of service for individuals and to determine overall standards of performance to be achieved by designated telecommunications operators, could only be exercised as if the making of such regulations and the determination of such standards were equivalent to the making of modifications to the conditions of the licence granted to the designated operator under Section 7 of the Telecommunications Act 1984.
These amendments would therefore have the effect of making Sections 12 to 15 of the Telecommunications Act apply to the making of regulations prescribing guaranteed service standards and the determination of overall performance standards. These sections ensure that the director general may only make modifications to the conditions of the licence with the consent of the licence holder. If the licence holder does not consent to any modifications proposed by the director general, the director may make a reference to the Monopolies and Mergers Commission. If the MMC then concludes that there are factors operating against the public interest which could be remedied by modifications to the licence, the director general is required to make such modifications to the licence as appear to him to be requisite. The amendments proposed by the noble Lord would therefore ensure that the director general could only make regulations prescribing guaranteed standards or determine overall performance standards with the consent of the designated operator or, in the absence of such consent, following a reference to the MMC and an adverse MMC finding.
I do not believe that the setting of guaranteed or overall standards should be dependent upon the agreement of the designated operator. This is effectively the position under existing legislation, where standards for designated telecommunications operators may be set voluntarily or as a condition of the licence.
The purpose of giving the director general statutory powers to set guaranteed and overall standards, as we are doing in this Bill, is to ensure that the consumer receives a better quality of service. The director general has a general duty to promote the interests of consumers. He should therefore be able to set whatever standards he believes, following his consultations, are necessary and appropriate in the light of this and his other general duties. These should, of course, be realistic and take into account the views of the designated operator. For this reason the Bill requires the director general to consult the designated operator on standards.
Designated operators may, however, only be prepared to consent to guaranteed and overall standards which could easily be achieved. It is likely therefore that standards which required the operator's agreement would often be lower than those which the director general may set under Clause 1 of this Bill. Moreover, under the amendments proposed, if the designated operator refused to agree to some or any of the regulations or overall standards proposed by the director general the only course of action open to the
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director would be a reference to the MMC. This would, I believe, be a highly unwieldy and bureaucratic approach to the setting of standards.
The noble Lord, Lord Williams of Elvel, asked about the accountability of regulators. It is our view that the regulators are already accountable. They operate within a statutory framework and they are required to make an annual report to the Secretary of State. That report must be presented to Parliament. They are also subject to the scrutiny of the appropriate Select Committee and their decisions can be subject to judicial review. The National Audit Office, which reports to the Public Accounts Committee, has oversight of financial and value for money aspects of the regulators and the decisions of the regulators are frequently the subject of press and public debate, which helps keep them on their toes.
For the reasons I have given I ask the noble Lord, not to press his amendment.
Lord Hacking: I am a little puzzled by the Minister's reply. We find common ground in that he agrees—though he did not expressly say so in his speech to the Committee—that a new regulatory scheme is being set up in the Bill which runs alongside the existing regulatory scheme under the licensing procedure set out in Sections 12 to 15.
I thought I heard the Minister state—but I did not have my pencil ready when he mentioned this—that the procedure through the MMC was an unwieldy and undemocratic process. If I did hear correctly I am further puzzled. The matter can be tested quite simply. The licensing regulatory scheme has been in existence for some six years now. Can the Minister point to any occasion when the system has not worked; when the Director General of Telecommunications has been unnecessarily restrained? At the end of the day the granting of a licence is in his power and the power of the Secretary of State.
If the Minister could identify instances where the regulatory scheme under the 1984 Act has not worked and has presented significant difficulties to the director general, I should find it much easier to withdraw my amendment.
Lord Reay: I did not say that the 1984 Act had not worked. I said that in cases where it is a question of setting standards, if the designated operator refuses to agree to some or any of the regulations which the director general proposes and the only course of action open to the director is a reference to the MMC, then we consider that to be an unwieldy method of setting standards.
Lord Hacking: I am in a further difficulty in deciding whether or not to withdraw my amendment because I do not know whether the House is to have an opportunity to consider the matter at Report stage and at Third Reading when I can have another attempt to table an amendment to deal with the problem. If the Minister could help me on that, I would feel more comfortable about withdrawing the amendment. If I am faced, as all noble Lords may be

1017
faced, with no opportunity to discuss these matters at the next appropriate stages of the Bill—Report and Third Reading—I am in some difficulty.
5.30 p.m.
Lord Reay: As in the case of the passage of any other Bill, if the noble Lord wishes to put down an amendment on Report he will have the opportunity to do so.
Lord Hacking: The question is whether there will be a Report stage. I have pressed the Minister as far as I can at this stage. I withdraw the amendment very much on the basis that there will be another opportunity at Report stage to consider the matter. On that basis, and on that basis alone, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 2:
Page 2, line 2, leave out ("may") and insert ("shall").
The noble Lord said: This amendment stands in my name and that of my noble friend Lord Desai. It may be for the convenience of the Committee if I speak also to Amendments Nos. 6, 8, 9, 17 and 39. All these amendments are designed to give more strength to the Bill. I said at Second Reading that it would be our purpose in Committee to try to make the Bill rather tougher than it is at the moment. As I go through the amendments, noble Lords will recognise many similarities between them. In fact in certain cases the words are exactly the same.
Amendment No. 2 relates to the director making regulations prescribing standards of performance in individual cases. As presently drafted there is in the Bill an enabling power for the director to make regulations. We would like to see the director being required to make regulations. We are often faced with what is essentially enabling legislation. I do not think it will be enough for the Minister to say, as I am sure he will, that the director will use this power. It is up to Parliament to instruct the director to use the power that Parliament is giving. That is the thrust of Amendment No. 2.
Amendment No. 6 is designed to make sure that the director does what Parliament wishes him to do. Amendment No. 8 deals with the director's ability to prescribe circumstances on exemptions. We are unhappy about the whole process of the director being allowed to give exemptions without any apparent reference back to the Secretary of State or indeed to Parliament.
Amendment No. 9 varies that slightly in the sense that he can prescribe circumstances,
"which may vary from time to time".
I recognise that Amendments Nos. 8 and 9 lack a certain consistency one between another, but I wanted to treat them together for the purpose of grouping. We do not want to take too long over the Committee stage of the Bill. I hope that the Committee will bear with me on that.
I shall not go through the remaining amendments because they all have the same purpose. They seek to replace "may" with "shall". The amendments seek to ensure that the Director General of
1018
Telecommunications does do what Parliament wants him to do and that he does it in a way that cannot grant exemptions without referring to higher authority. I beg to move.
Lord Reay: The effect of Amendments Nos. 2, 6 and 17 would be to place the following duties on the Director General of Telecommunications instead of giving him enabling powers as the Bill currently proposes: first, a requirement to make regulations prescribing guaranteed service standards to be achieved in individual cases; secondly, a requirement to prescribe certain matters in those regulations including the circumstances in which the designated operator is to inform persons of their rights, the standards of performance to be achieved in all cases and the circumstances in which the designated operator is to be exempted from requirements under the regulations; and, thirdly, a requirement to set overall performance standards and to arrange for publication of those standards.
There are two important reasons why we believe it would not be appropriate to place such requirements on the Director General of Telecommunications or the other regulators. The first is that it may not he necessary in all cases to make regulations prescribing guaranteed standards of service or to determine overall standards of performance. For example, a designated operator may agree to voluntary individual standards or may agree guaranteed service standards as a condition of the licence. Alternatively, the director could decide, in the light of his consultation with designated operators and representative bodies, that existing standards of performance were adequate. The Bill should not prejudge the outcome of the director's consultations by placing an absolute requirement on him to set standards.
The evidence to date suggests that a failure on the part of the Director General of Telecommunications or the other regulators to set guaranteed or overall standards is unlikely to be a problem. The regulators clearly attach importance to individual standards. Offer and Ofwat, which already have statutory powers, have set individual standards. Under pressure from Oftel, BT has voluntarily agreed to individual standards and Ofgas has agreed individual standards with British Gas as a condition of the licence. The regulators also attach importance to good overall performance and will set standards if these are required. Offer has already set overall performance standards.
Secondly, we believe it is important to protect the regulators' independence. The Government should not tell them how to do their job. The regulators all have a general duty to promote the interests of consumers and it should be for them to decide what regulations are required to satisfy this and their other general duties. This is why Clause 1 of the Bill gives them enabling powers to make regulations setting guaranteed standards and to determine overall standards instead of setting out detailed requirements.
Perhaps I may turn now to Amendment No. 8. Clause 1 allows the director to exempt a designated operator from provisions relating to guaranteed standards and compensation. The amendment would

1019
remove that power. We must leave the director flexibility to tailor the regulations appropriately to the circumstances and the particular standards that he may set and to amend the details where it proves necessary. The Director General of Electricity Supply, for example, has included in the exceptions which he has made to the circumstances in which standards must be met, such things as extreme weather and action by third parties which might make meeting the standards impracticable.
This amendment would unduly restrict the director's freedom of action. If he was required, as could be the consequence of this amendment, to impose stricter liability for failure to meet a standard than he thought appropriate for a particular case, he could be inhibited from setting that standard, to the detriment of customers.
Amendment No. 9 would have no practical effect. It reiterates that which is inherent within this clause; that the director general, having made these regulations, will review them, and the service standards arising from them, as appropriate. Given his general statutory duty to promote consumer interests, he is unlikely to leave the regulations untouched when it becomes clear to him that they no longer meet current needs.
Because it is superfluous in effect, the amendment would cast doubt on other areas of the Bill which had the same effect but did not include the relevant phrase. Therefore it would produce a worse drafted Bill.
I turn now to Amendment No. 39. It seeks to compel the Secretary of State to make regulations making provision for billing disputes to be referred to the director general, instead of enabling him to do so as the Bill currently proposes. The Bill will give the Secretary of State powers, for all the utility services, to make regulations allowing billing disputes to be referred to the director general for determination.
Disputes over bills are a particular cause of concern in telecommunications, where customers do not have meters in their homes and may have difficulty knowing how much they have spent using the telephone. Where there is a dispute, past consumption is a less reliable guide to the likely accuracy of a bill than in the case of, for example, gas and electricity. Because of the particular difficulties which exist for telecommunications, we intend to make regulations allowing Oftel to determine billing disputes after the Bill is enacted. There is no need, therefore, to compel the Secretary of State to make regulations allowing billing disputes to be referred to the Director General of Telecommunications because we intend in any case to make such regulations.
However, we have no plans at present to trigger those powers for gas, electricity or water, where disputes over bills do not raise the same problems, although I should add that we will keep the situation under review. For that reason, we believe that it would be wrong to include in the Bill a requirement on, rather than an enabling power for, the Secretary of State to make regulations in respect of billing disputes for telecommunications. We have chosen instead to adopt a consistent approach throughout the Bill
1020
across all four utilities in respect of billing disputes. That will ensure that the flexibility exists for the Secretary of State to make regulations allowing the director general to resolve billing disputes where there is a clear need for such powers for that utility, but will not compel him to do so where these powers are not necessary. For those reasons, we cannot support the amendment.
Lord Airedale: I think that I can see a difference between the first of these linked amendments and the subsequent amendments. At the beginning, there seems to be a choice between the director making regulations and achieving his purpose in some other way. But, then, we reach a point where it has been decided to proceed by making regulations. Parliament does not have to leave it to the Minister to make regulations; indeed, Parliament may have decided to deal with the matter by primary legislation. If Parliament leaves it to the Minister to make regulations, it is perfectly entitled to direct by the word "shall" what the regulations are to contain, just as if Parliament itself had legislated without leaving it to the Minister to make regulations.
Baroness Oppenheim-Barnes: My noble friend the Minister has made some extremely interesting statements about proposed future regulations with regard to billing disputes. There are further amendments to deal with the matter. It is an area of great anxiety because consumers do not have meters. However, I am not quite sure as to how such regulations could work or how such disputes could he resolved, unless consumers are to be given access to metering information. I wonder whether my noble friend can make it clear whether that is likely to happen. His response might alter one's view on later amendments.
5.45 p.m.
Lord Reay: Perhaps I may reiterate what I said with regard to the amendment on billing disputes. We do not wish in the case of telecommunications to compel the Secretary of State to make regulations allowing billing disputes to be referred to the director general because we intend to make such regulations. Therefore, we believe that it would be wrong to include in the Bill a requirement for the Secretary of State to make regulations in respect of billing disputes. On the contrary, we believe that there should be an enabling power such as we now have in the Bill. That is why we have chosen to adopt throughout the Bill a consistent approach which will apply to all four utilities. With regard to the question asked by my noble friend Lady Oppenheim-Barnes, I can tell her that the director general can demand information from the operator in order to satisfy himself that the meter has accurately recorded the usage.
Lord Williams of Elvel: I am grateful to the Minister for a number of interesting remarks—that is, not just about billing disputes but also about the nature of agreements that might be made. It was my understanding that the point about the legislation was that the director, especially in the case of

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telecommunications, would make regulations. Where there are agreed voluntary standards, can the Minister explain the status of such standards? After all, we know the status of a regulation. If someone offends against a regulation, that is a clear offence. But, if someone offends against a voluntary standard, I do not see how that standard can be enforceable in any respect. I am open to persuasion from the Minister. Perhaps when further information is available to him he can let me know the position as regards the status.
In the meantime, I should like to emphasise the fact that we do not wish to tell the director how to do his job. That is not the point of the amendments. However, I should like to take up a point raised by the noble Lord, Lord Airedale, that once Parliament has said that the director "may" do something, it is perfectly entitled to say that, if he does do so, then he "shall" do it in a certain form. That is the point of the exemption amendment. I very much hope that the Minister will be able to help me as regards the status of voluntary standards which he described in his reply.
Lord Reay: My understanding is that there is a great usefulness in being able to reach voluntary agreements but that, in fact, they do not have any legal status.
Lord Williams of Elvel: I thought that the whole point of the legislation was to ensure that standards of performance did have legal status. If they do not have legal status, what is the point? In other words, if there is a voluntary agreement, what is the point of legislation?
Lord Reay: The point is that the director can take the power.
Lord Williams of Elvel: Therefore, what we are saying is that there will be a voluntary standard until it is broken, but that when it is broken the director will make regulations. Is that what the Minister is saying?
Lord Reay: There is no reason to assume that it will ever be broken.
Lord Williams of Elvel: But it is not enforceable. We have now discovered that a voluntary standard is not enforceable. Therefore, if it is broken there is no remedy; in other words, there is no remedy under the legislation which we hope will be enacted. It is only after the director has made regulations to seal off that particular loophole, so that the standard becomes statutory rather than voluntary, that there is a remedy.
Lord Reay: If the operator does not comply with standards voluntarily agreed, then it will be open to the director to set standards in regulations with which the operator will have to comply.
Lord Williams of Elvel: The Minister and I understand each other perfectly well. In my view, there is clearly a problem about a voluntary standard. Of course, I agree that it may never be broken; but, if it is broken only once, then clearly the director has the right to make his own regulations. However, at the point at which it is broken—that is, at that one time
1022
—there is no redress. That is the point that I am making. That is why I should prefer to see all standards being enforced by law.
Nevertheless, we have had an interesting exchange. The Minister has been kind enough to give the Committee a certain amount of information which think will prove to be quite useful as we progress through the Committee stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Chairman of Committees (Lord Aylestone): I should remind the Committee that, if Amendment No. 3 is agreed to, I cannot call Amendments Nos. 4 and 5.
Lord Hacking Lord Hacking had given notice of his intention to move Amendment No. 3:
Page 2, leave out lines 7 to 14.
The noble Lord said: I have already addressed Members of the Committee on the amendment. However, I still have an anxiety and it is one that I have expressed to the Minister. On the provisional list for the future Business of the House —or, perhaps, it may be described euphemistically as a "very provisional list"—is a date for the Report stage of the Bill of Tuesday 24th March. Can the Minister say whether the Bill will be considered on Report in this place on that date? If that is not the position, can he tell us what is?
Viscount Astor: Perhaps I can help the noble Lord. He will always have an opportunity to table amendments for Report stage.
Lord Hacking: That does not answer the question. Will the House be able to consider the Bill on Report on Tuesday 24th March, as is set out in the provisional business of the House?
Viscount Astor: That is a matter for the usual channels. At the moment Report stage has a day.
Lord Hacking: But I am not part of the usual channels. At this stage I shall not press my amendment, but I shall certainly press my concern.
[Amendment No. 3 not moved.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 4:
Page 2, line 12, leave out ("appearing to the Director to be").
The noble Lord said: In speaking to this amendment, which has been tabled also by my noble friend Lord Desai, it may be for the convenience of the Committee if I speak also to Amendments Nos. 7, 19, 31, 42, 43, 82, 105 and 110.
All those amendments have the same purpose. It is to ensure that the bodies or persons who are consulted are consulted in their own right, not simply because someone such as a director or a Secretary of State deems them to be people who should be consulted. To be able to decide who will be consulted on any particular regulations that one is going to make oneself seems not dissimilar to choosing one's own umpire.
There are perfectly good, satisfactory, objective means for deciding who are persons or bodies

1023
representative of persons likely to be affected by the regulations and I see no reason why the director should not have a role in deciding who those persons or bodies should be. But the expression,
"appearing to the director to be",
specifically gives a director the right to reject bodies or persons that he considers on his own authority—on his own say-so, without reference to anybody—are not representative. I find that a somewhat difficult concept because, as I have said, those bodies are generally well established and well recognised.
I should be grateful if the Minister could explain the Government's thinking behind that expression. All of the other amendments in this series to which I am speaking have, I think, the same point that either the director or the Secretary of State seems to be the person who decides whom he shall consult. I shall be grateful if the Minister can explain the Government's thinking on this. I beg to move.
Lord Reay: Perhaps I may speak first to Amendments Nos. 4, 19 and 82. These amendments would prevent the director general from judging whom he considers to be representative of customers likely to be affected by the standards of performance he sets.
The clauses as they stand place a duty on the director general to consult with the utility and those persons or bodies whom he feels are likely to be representative of those affected by the regulations he will set. If the director general is left without any discretion in this matter, he would be required to consult every single body or organisation which might conceivably be representative of those likely to be affected. In practice, the director general could never be certain of achieving such comprehensive consultation—not least because such bodies and organisations do not remain constant. The director general would therefore be at risk of judicial review.
Amendment No. 7 would prevent the director general from coming to his own view as to the manner and frequency with which customers should be informed of the standards of service they can expect to receive. The expression "in the Director's opinion" merely reflects the expression "in his opinion" earlier in the clause; that is in line 5 on page 2. Both expressions are merely intended to ensure that the director has a discretion when making any regulations under new Section 27A to set what standards he considers appropriate. We believe that the director should be free to come to his own judgement as to the level of service standards which is suitable.
Amendment No. 31 would take away from the director general the choice of how he publishes the information he has collected. Instead, that choice would be dictated to him by the Secretary of State. It is not clear what benefit there would be from involving the Secretary of State in decisions about the form and manner of publication of the information. These are relatively minor matters which the director general is fully competent to decide. If the Secretary of State expressed views on the form of publication, no doubt the director general would have regard to them. The amendment therefore would reduce the independence
1024
of the director general. Given their general support for the concept of an independent telecommunications regulator, I hope that the noble Lord and his noble friends will not press the amendment.
The effect of Amendments Nos. 42, 43, 105 and 110 would be greatly to increase the scale of consultation which the Secretary of State would be obliged to undertake before making regulations about billing disputes. Instead of being obliged to consult representatives of those likely to be affected by the regulations, the Secretary of State would be obliged to consult all those likely to be affected. In practice, for telecommunications that would probably mean all of BT's customers; that is to say, 26 million people. Although Amendment No. 42 allows the Secretary of State to consult,
"in a manner that appears … to be reasonable and appropriate",
this would not significantly alleviate the burden of the statutory obligation as he would still be under a duty to consult the same number of people. This consultation requirement, enshrined in statute, would be extremely onerous to comply with. Compared with consulting representatives, the quality of the resulting regulations would not justify the vast extra cost and effort required in consulting 26 million people.
If a representative body when consulted under these requirements felt that further research was desirable, then the Secretary of State would consider its recommendation and doubtless act upon it if it was in the interests of consumers to do so. In any case, the Bill as drafted does not prevent the Secretary of State from consulting individual customers directly. For the reasons that I have described, it would be unnecessarily burdensome to oblige him to do so.
I hope that the noble Lord will not press his amendment.
Lord Williams of Elvel: I am grateful to the Minister for his response, but perhaps he can give me guidance on two matters. First, will the director in each case across the utilities be publishing from time to time a list of persons or bodies that appear to him to be representative of persons likely to be affected by the regulations so that we all know who is on his list and who is not on his list? Secondly, on the form of the report, if the report is to be submitted to Parliament, would it not be sensible for the Secretary of State to be able to say in what form he would like that report? After all, it would be the Secretary of State who would be responding to parliamentary questions on the matter, as I understand it. Perhaps the Minister will confirm that.
Lord Reay: The question of whether a list of the representative bodies would be published would be for the director to decide. I believe that I have deployed my arguments already on the issue of the involvement of the Secretary of State in the publication of information.
Lord Airedale: At least the merit in leaving in the words,
"appearing to the Director to be",
is that there may be a case where an organisation that should have been consulted might, by mere

1025
inadvertence, not apply to be consulted yet it still will be consulted because it is the duty of the director to consult that body because it appears to him to be a worthy body to consult.
Lord Williams of Elvel: I think that we have gone far enough on this group. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 5:
Page 2, line 14, after ("regulations") insert:
("; and
(c) after undertaking such empirical research into the views of customers likely to be affected by the regulations as the Director-General thinks fit.").
The noble Lord said: In moving this amendment, which is tabled also by my noble friend Lord Desai, perhaps it will be for the convenience of the Committee if I speak also to Amendments Nos. 20, 83, 89 and 108.
In general, as I think the Committee knows, we welcome the Bill's provision for consultation with interested parties when setting performance standards. We join forces with the Government on that.
However, as I said on Second Reading, we seek some reassurance that that consultation will be interpreted by the regulators as consultation with individual consumers—perhaps through survey work —in addition to consultation with the various representative bodies. In our view such research is crucial if performance standards are to suit the service users rather than the service providers.
I happen to believe that Amendment No. 5, and other amendments with similar wording which go right through the Bill, are in line with the principle underlying the Citizen's Charter, and so the Government should find it acceptable. So far as I remember, the White Paper said that people affected by services should be consulted. The amendment would achieve that aim. How that is done is up to the individual regulators in the individual utility. There are different methods. For instance, I understand that Ofwat already does some survey work on various aspects of the service provided by water and sewerage operators. We believe that that is a good example that should be followed by other operators.
This series of amendments was foreshadowed by me on Second Reading. I hope that the Government will feel that they are in the spirit not just of the Bill but of their own Citizen's Charter and will feel able at least to look at them sympathetically. I beg to move.
6 p.m.
Lord Reay: The amendments would require the directors general to conduct research into the views of individual customers when setting standards of performance in addition to the requirement that customer representative bodies be consulted. The new provisions of Clauses 1 and 11 bring the Telecommunications Act 1984 and the Gas Act 1986 into line with the Electricity Act 1989 by placing a requirement on the directors general to consult widely before setting performance standards. They clearly state that consultation should be undertaken with persons or bodies of persons likely to be affected by
1026
the performance standards to be set for each utility. That must presumably include taking account of customer concerns.
If a customer representative body when consulted under those requirements felt that wider research was desirable, that recommendation would be considered by the directors general and I am sure be acted upon if it was in the interests of customers as a whole to do so. The directors general can also consult directly with individual customers as well as representative bodies if they see the need to do so but it would be burdensome to require them to do so in all cases. On the face of it, if such a requirement was in statute, the directors general would need to discharge it fully to ensure that the standards set would not be ultra Tires.
It is important that the views of customers are fully known. We have tried to ensure that the Bill strikes the right balance by requiring a certain level of consultation while leaving the directors general with the discretion to decide what is appropriate in particular circumstances. Nevertheless, the noble Lord has made some good points. I accept the principle of what he said about the need for research into customers' views to be conducted. If he will withdraw the amendment, I shall take it back and consider it with a view to coming up with some proposals of our own at the next stage.
Lord Williams of Elvel: I am most grateful to the Minister. With that assurance, I beg leave to withdraw Amendment No. 5, and I shall not be moving the other amendments in the group.
Amendment, by leave, withdrawn.
[Amendments Nos. 6 to 9 not moved.]
Lord Swinfen Lord Swinfen moved Amendment No. 10:
Page 2, line 25, at end insert:
("(d) prescribe standards having particular relevance to customers who are elderly or disabled or have low incomes.").
The noble Lord said: I shall speak also to Amendments Nos. 84, 114 and 116. The purpose of this group of amendments is to enable each of the regulators to require that standards of performance to be met by the suppliers in individual cases are relevant to the needs of the most vulnerable consumers and particularly those who may experience difficulty in paying for supplies. Such standards could include, for example, procedures to be followed prior to disconnection, information to be supplied to customers in debt offering a choice of payment methods to low income consumers and access to token supply points for coinless prepayment meters.
The nature of the performance standards currently envisaged under the Bill largely concern matters such as the keeping of appointments and the restoration of supply after the reporting of a fault. Important as those are to customers who might otherwise suffer the costs and inconvenience of broken appointments and unreasonable delays, those standards do nothing to address the problems which are repeatedly raised by clients of the CAB. Overwhelmingly, those problems are associated with low income and relate to difficulty in paying for the utilities or dealing with the threat or actuality of disconnection.
The aim of this group of amendments is to enable and encourage regulators to ensure that performance standards which they set for the utility companies address the needs of all consumers, including in particular those who are vulnerable to debt and disconnection because of their difficulties in paying for supply and those who are disabled or elderly. Without the protection of performance standards which are specifically targeted at their needs, that group of consumers is at risk of being treated by the utility companies as an expensive nuisance rather than as valued customers who deserve the better standards of service envisaged by the Citizen's Charter.
There is, in theory, a range of payment methods available to customers who have difficulty in coping with quarterly credit or get into debt through paying for fuel. They include, for example, arrangements to pay off arrears in cash instalments, fuel-direct arrangements with the DSS, involving weekly reductions from income support, coin-operated prepayment meters, and, increasingly nowadays, coinless prepayment meters operated by tokens, cards or keys which can be calibrated to collect arrears as well as paying for current consumption. Different methods will suit different customers. Some, for example, find coinless prepayment meters to be of considerable assistance with budgeting, while others, especially those with restricted mobility or living some distance from token supply points, will find them extremely inconvenient, if not impossible, to operate.
There is, however, evidence that customers at risk of debt and disconnection are under pressure from some fuel companies to adopt a particular method of payment preferred by the supplier rather than being given a choice of all available methods. Sometimes it is only after intervention by someone in support of the consumer that the customer's choice is taken into account. A CAB in Cumbria has advised that Norweb has stopped accepting direct payments from the DSS for customers who are in receipt of income support. It will now install only card meters and expects the arrears to be cleared within 12 months. I understand that a similar policy is operated by Seeboard in the South-East of England.
Another aspect of the lack of choice for low income consumers arises where customers who do not have bank accounts have no means of making payments in cash without incurring an extra charge. According to research done by the Policy Studies Institute in 1990 one person in five in Britain and 25 per cent. of pensioners do not have bank or building society accounts. The problem arises especially with water companies. While some make suitable provision for customers who wish to pay in cash, others are failing to do so.
I learned from a citizens advice bureau in Wiltshire of the case of a pensioner who used to pay her water bills in monthly cash instalments at a local bank. She was able to do this free of charge because her water company banked there. When the bank closed, the client had nowhere to pay her water bill without incurring an extra charge. Paying the bill at the local
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post office would cost 70p for each instalment and travelling to the appropriate bank in the nearest town would cost her £2.75 in bus fares.
A further major problem with payment methods for some consumers, especially elderly and disabled people, concerns the availability of tokens, cards and keys for coinless pre-payment meters. These serve as a payment method for a growing number of consumers. Currently, over 1.25 million households use them for their electricity supplies, while approximately 200,000 gas customers pay by this method. That is expected within the next five years to rise to over 1 million, with the development of new metering technology. These meters are popular with the fuel companies because they ensure that the supply is paid for in advance, while any arrears are collected at the same time through calibration of the meter.
While those methods are also popular with many consumers, others will have been under pressure to accept them as the only alternative to disconnection. They will then be faced with the inconvenience, and possibly additional costs, of having to travel to obtain keys or tokens in order to ensure a continuing fuel supply. I could continue for some time with such examples but do not wish to weary your Lordships. I therefore beg to move.
Lord Allen of Abbeydale: I was glad to put my name to this amendment and I should like to say a few words in its support. I can be brief as the case has been well made by the noble Lord, Lord Swinfen. As he explained, it is the first of a series of amendments covering the various utilities and aimed at protecting some of the more vulnerable members of society. It seems to me that the amendments are entirely consistent with the Government's community care policy which aims at ensuring that these people lead as normal lives as possible. In particular, wherever it can be managed, the policy is that they should continue to live in the community rather than go into institutions. It is also to be remembered that many of the disabled are not only poor but incur extra expense with which the rest of us are not involved.
Amendment No. 10 is concerned with telephones, possession of which gives access to friends and support services and can make all the difference to an individual's life. I realise that there are specific problems, in particular over deposits, which are dealt with in later amendments. I am also conscious of the powers of local authorities to help under the Chronically Sick and Disabled Persons Act 1970, although these powers are being increasingly narrowly interpreted.
It seems to me that there ought to be a general requirement on the lines of the amendment, and in a sense it is an entirely logical development of the provision which already exists in Section 3 of the Telecommunications Act 1984 which puts a duty on the Secretary of State and the director to exercise their functions so as:
"to promote the interests of consumers, purchasers and other users … (including, in particular, those who are disabled or of pensionable age)".
Without the protection of performance standards specifically directed at their needs, as the noble Lord

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said, covering such matters as the availability of payment options, I fear that these people are likely to look on the brave new world of the Citizen's Charter as something beyond their reach.
6.15 p.m.
Lord Ezra: I too am pleased to support the amendment. Since I put my name to it together with the noble Lord, Lord Williams of Elvel, and the other two noble Lords who have spoken, it is clear that it has cross-party support.
The position of the elderly, the disabled and those on low incomes is difficult. Indebtedness is unfortunately widespread. I have had personal experience of how difficult it is because some months ago I chaired a working party concerned with debt advisory services. Many people in debt unfortunately owe not just to one quarter but have multiple debts. If they are pressed by utility companies supplying them with essential services to settle their debts, they could well be placed in a prejudicial position in the settlement of their other debts.
It is therefore important that the position of these people should be safeguarded by standards laid down by the regulator in each of these cases. I very much hope, therefore, that the amendments, or something similar, will be accepted by the Government. As the noble Lord, Lord Allen of Abbeydale, said, in the case of the Telecommunications Act, this provision runs parallel to and develops what is already in the legislation.
Lord Williams of Elvel: I too wish to support the amendment moved by the noble Lord, Lord Swinfen. There are multiple examples from citizens advice bureaux of people getting into difficulties through debt, as the noble Lord, Lord Ezra, said, or simply because they are disconnected without understanding what is going on, or because they are disadvantaged in some way. They may be old, disabled or simply poor.
I believe that the standards which are set should take account of the disadvantaged in our society. As the noble Lord said, this is a cross-party amendment and I hope very much that the Government will feel able to support and accept it.
Lord Reay: The effect of these amendments would be to make the guaranteed service standards legislation for all four utilities specify that standards may be set which have particular relevance to the elderly, disabled and those on low incomes.
Under the privatisation Acts, all four directors general and the relevant Secretaries of State are already under a general duty to consider the needs of the disabled and those of pensionable age. These general duties apply when particular statutory functions are being exercised. In exercising their statutory functions the Secretary of State and the director general must therefore take into account, in particular, the interests of those who are disabled or of pensionable age.
In compliance with those general duties, the electricity supply licence, the gas authorisation and BT's licence have all been drawn up to include specific provisions which take account of the needs of the
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disabled and those of pensionable age. So, for example, under the electricity supply licence, the supplier is required to provide special modifications for appliances and meters for the disabled, to give advice to the elderly and disabled on the use of electricity and to draw up and publish a code of practice on special services which will be made available. The Director General is able to order a review of the code of practice if he thinks fit. Given that these general duties exist and have been complied with in the licences I mentioned, there is nothing in this amendment which would add to the position of the elderly and the disabled.
The amendment also seeks to include those on low incomes. Depending on how this group is defined, it could be large. The amendment does not indicate how those people should be defined. This could involve means testing or applying some criterion relating to the national average wage, or perhaps inviting people to register in some way. However, I do not really think that it is a practicable proposal.
In any case, as I said at the beginning, the amendments would not require the directors general to set standards for the elderly, the disabled and those on low incomes. Their effect is simply that the directors general may do so. But under this Bill the directors general can already set standards for any groups they choose, so that in effect the amendments would give the directors general no greater powers than they will already receive under the Bill. I sympathise with my noble friend's desire to draw attention to the needs of special interest groups but I do not think these amendments are the right way to go about it.
Lord Ezra: The noble Lord has implied that existing legislation already satisfies a large part of the requirements implied in this amendment. However, a large number of cases can be cited—information received by the citizens advice bureaux shows that this is the case—which show that there is a great deal of hardship among customers in the category we are discussing. That applies to the four utilities that are involved in this matter.
There is another matter that puzzles me. There is little in this Bill which is not already implied in the basic legislation. I understood that the purpose of the Bill was to extend the basic legislation and to spell out more clearly and more effectively the rights of the various categories of customer. If that were not the purpose of the Bill, why are we spending our time on it? If that is the purpose of the Bill, surely one category we should be concerned with is disadvantaged people.
Lord Reay: What I was trying to make clear was that under existing legislation the directors general are already under a duty to consider the needs of the disabled and the elderly. That was stated when the licences were drawn up. At the same time in this Bill there is a general requirement which enables the directors general to set standards for any groups which they choose. This group of amendments would not add to any of the powers of the directors general which they may require to provide for the groups which the noble Lord has in mind.
Baroness Gardner of Parkes: Is it not a problem that British Telecom does not have a code of practice whereas all the other utilities do? I understand that the regulator already has a power in this respect that he does not choose to use. At a later stage we shall move an amendment to regulate the regulators. Surely this matter could be tackled in that way. My noble friend the Minister was quite right to say the amendment could not cover low income groups. I have served on an electricity board and I realise that we are not dealing with a social service. A code of practice should not determine whether people can or cannot pay their bills. However, the unreasonable disconnection of any service is a different matter entirely. It is terribly important for an elderly or disabled person to have a telephone. Gas and electricity are of course important to everyone. But as regards a telephone, a low income person at least has the option of using a public telephone. That may not be possible for an elderly or disabled person and for the latter two categories the telephone may be a lifeline. However, I believe a better way to tackle this matter is by means of regulating the regulators.
Lord Reay: My noble friend raises some questions which go wider than this amendment. However, I agree with her comments about the difficulties of including low income groups within these amendments. As I have said, British Telecom's licence has been drawn up to include specific provisions to take account of the needs of the disabled and those of pensionable age. British Telecom has a code of practice and there is a whole list of services and special provisions which it makes available for the elderly and the disabled. There is, for example, a support line scheme which offers half price rental and a certain number of free calls. There is a talking braille service, large print bills for the visually handicapped and other measures. A considerable amount is done by British Telecom to help certain categories of people.
Lord Swinfen: I start by thanking all Members of the Committee from all around the Chamber who have supported me on this amendment. The Minister said that the directors general had a general duty already in this regard, as did the Secretary of State. That may be so but at the present time that duty is not satisfactorily exercised, particularly with regard to people who have difficulty in paying their bills. That is an extremely important matter for both elderly and disabled people. Members of both those groups often have considerable difficulty in earning an income. They may be on fixed incomes. Sometimes they are on reducing incomes as a result of inflation.
I agree with some of the comments made about the difficulties of making provision for people on low incomes. However, we might be able to refine this amendment at a later stage to make it apply to people who are on income support and limit the number of people to whom it applies in that way. I wish to read what my noble friend has said. I may well return at a later stage of the Bill with similar amendments. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 11 not moved.]
6.30 p.m.
Lord Brightman Lord Brightman moved Amendment No. 12:
Page 2, line 43, at end insert:
("( ) The Director or other person making an order under subsection (6) above shall state the reasons for his determination.").
The noble and learned Lord said: In moving Amendment No. 12 I wish to speak also to Amendments Nos. 35, 44 and 56. The purpose of these amendments is to require arbitrators—I shall call them that—to give reasons for their decisions when they determine a dispute. There are four areas of dispute which may be referred to arbitrators under the terms of Part I of the Bill. These are disputes with regard to standards of performance, disputes with regard to alleged discrimination, disputes with regard to telephone bills and disputes with regard to pre-telephone connection deposits.
In the case of performance standards, disputes may be referred to and determined by the director general, or what the Bill refers to as a prescribed person. I believe that that means in effect a nominee of the director. In the other three cases of discrimination, bills and deposits, the dispute may be referred to the director or an arbitrator appointed by him. That seems to me to be very much the same thing. But in none of those cases does the Bill place on the director, nominee or arbitrator any express duty to give reasons for his decision.
It must be absolutely infuriating to a person lodging a complaint to have his complaint rejected without any reasons being given. That point was raised on Second Reading. The Government said in response that regulators:
"must give reasons for their decisions, otherwise they run the risk of being judicially reviewed".—[Official Report 14/2/92; col. 959.]
With great respect, I do not think that that is an adequate response. Judicial review is an expensive process in the High Court, the cost of which will run well into five figures according to information that I have been given. What customer who is involved, for example, in a billing dispute that involves an amount of £ 1,000 will be mad enough to bring proceedings for judicial review at a possible cost of £5,000? Surely the right answer is to spell out in the Bill, in two lines, an obligation to give reasons. It is not satisfactory merely to surmise that the arbitrator is likely to give reasons.
I now turn briefly to the amendments themselves. The first amendment relates to performance standards. If noble Lords glance at line 35 of page 2 of the Bill they will see that it reads:
"Any dispute arising under this section or regulations made under this section … may be referred to the Director … and on such a reference, shall be determined by order made … by the Director; or … by such other person as may be prescribed".
Amendment No. 12 proposes that that wording should be followed by a subsection reading:
"The Director or other person making an order under subsection (6) above shall state the reasons for his determination".
I can deal with the other amendments very briefly. Discrimination disputes are dealt with on page 6 of the Bill in very much the same way. Amendment No. 35 adds the words:

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"The Director, arbitrator or arbiter making an order under subsection (3) above shall state the reasons for his determination".
In the case of billing disputes Amendment No. 44 adds to page 7 of the Bill the words:
"The Director, arbitrator or arbiter making a determination under subsection (4) shall state the reasons for his determination".
Lastly, in the case of deposit disputes, the same scenario applies. Amendment No. 56 adds the words:
"The Director, arbitrator or arbiter giving a direction under subsection (3) above shall state the reasons for his determination".
Amendment No. 47 in the names of the noble Lord, Lord Williams of Elvel, and others seeks to introduce the Tribunals and Inquiries Act 1971. I support that amendment. If it were accepted by the Government it would render the amendments which I have suggested to your Lordships unnecessary.
According to the groupings list I ought to speak also to Amendments Nos. 13 and 14, 36 and 37, 45 and 46 and 57 and 58. All of those pairs of amendments are the same. They raise the question of whether there should be a right of appeal against the decision of the director or arbitrator on a question of law. The amendments propose a right of appeal only on a question of law and not on a question of fact. If the director or arbitrator gets the law wrong, there is a strong case for saying that the complainant should have some opportunity to correct the error. I have not sought to specify the court or tribunal to which the appeal might be made. I suggest that that might be left to regulations to be made by the Secretary of State.
I can deal with the terms of the amendments briefly. Amendment No. 13 reads:
"The Secretary of State shall by regulations make provision for an appeal on a question of law against an order under subsection (6) above".
The change proposed is exactly the same in the case of discrimination disputes (Amendment No. 36), billing disputes (Amendment No. 46) and deposit disputes (Amendment No. 57). A consequential amendment in each case deletes the word "final" from the relevant clause of the Bill. I shall give one example in relation to performance standards. Subsection (8) on page 3 reads:
"An order under subsection (6) above shall be final and shall be enforcible".
If your Lordships accepted that there should be an appeal on a question of law then it would be inappropriate to leave the word "final" in the Bill. Therefore, with Amendments Nos. 37, 45 and 58 I seek to delete the word "final".
Again, if your Lordships accept Amendment No. 47 in the name of the noble Lord, Lord Williams of Elvel, introducing in the Tribunals and Inquiries Act 1971, that will also take on board the question of appeal. I beg to move.
Lord Williams of Elvel: I should like to support the noble and learned Lord in his amendments and thank him for his comments about Amendment No. 47. I shall of course speak to the same grouping as the noble and learned Lord.
The problems which the noble and learned Lord addressed—whether reasons should be given and whether appeals should be allowed—are fundamental
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to the Bill. We agree with the noble and learned Lord that to have a regulator or director making a final decision and giving no reason for his final decision is not an acceptable procedure.
The noble and learned Lord seeks to remedy that problem with Amendments Nos. 12, 13 and 14, which are reflected in other parts of the Bill dealing with other utilities. As he quite rightly pointed out, we have put forward Amendment No. 47 which would introduce the Tribunals and Inquiries Act, under which a tribunal listed as a statutory tribunal is required to give reasons unless it comes within one of the exceptions in the Act. We propose that the Director General of Telecommunications should be incorporated under that procedure. I should add that there is an appeal mechanism for tribunals under the Tribunals and Inquiries Act to the High Court on a point of law, as the noble and learned Lord pointed out.
I understand that the DTI has been approached by the Council on Tribunals and discussions may be in course. At least that was the case when the Bill was in another place. I hope very much that the Minister will be able to tell us where those discussions have reached and, if they have come to a dead end, whether the Government will in turn accept the amendments put forward by the noble and learned Lord because, as I said, the position as set out in the Bill is hardly tolerable.
Lady Saltoun of Abernethy: I should like to add just one or two points to the remarks of the noble and learned Lord, Lord Brightman, and the noble Lord, Lord Williams of Elvel, about giving reasons for a decision. If the complaint is against British Telecom and the director does not give reasons for the decision, it is very difficult for British Telecom to do anything about putting right the complaint in other cases. The right of appeal cuts both ways. It may be to the advantage of British Telecom to be able to appeal against a decision in favour of a very unsatisfactory customer just as much as it is in the interests of an aggrieved customer to be able to appeal against a decision in favour of arrogant and intolerable behaviour by British Telecom.
Lord Hacking: These are very important amendments. I had hoped that, having heard the speeches in Committee, the Minister would at least have been willing to give this matter fresh consideration. The truth is that so far the Government's response has been very disappointing. At Second Reading I and other noble Lords raised the issue of giving reasons. The crucial matter is that the Bill moves the directors general of the utility companies from the role of regulators into the role of acting as adjudicators, to decide on the basis of evidence presented by the parties before them whether compensation should be paid and if so how much—that is apropos the point to which the noble and learned Lord's first amendment is directed—or to decide whether bills are proper to be paid, whether individual service standards have been met, and so on.

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Following my intervention at Second Reading the Minister was kind enough to write to me. Perhaps I may read an extract from his letter which deals with the matter of reasons. He writes:
"We would expect the regulators to give reasons and there are no indications that they do not intend to do so".
Certainly the Minister goes in the right direction in expecting the regulators to give reasons. With regard to provisions which so far have not been tested at all—for the simple reason that they have not been enacted—I am a little puzzled as to how the Minister or anybody else has any indication of how the adjudicators will respond to the question of giving reasons. The Minister's letter goes on:
"The decisions of the regulators are of course also subject to judicial review. A failure to give reasons is likely therefore to be grounds for judicial review".
As the noble and learned Lord, Lord Brightman, said, the failure to give reasons, particularly in the frame of the role of the adjudicator, gives an uncertain basis for judicial review.
The other point to which the noble and learned Lord directed our attention was judicial review, which is a review that can take place only in the High Court. During the passage of the Courts and Legal Services Bill, we invited the Government to consider judicial review taken, for example, in the county courts. That suggestion was rejected. If judicial review takes place in the High Court, there will be all the costs of proceedings there and, as the noble and learned Lord said, it is hardly the appropriate tribunal for disputes over fairly small matters. That is why we should be grateful to him for introducing in his other amendments an appeal procedure under which disputes—the matter is left entirely open to the regulations—could be adjudicated and reviewed in circumstances in which there would be much less cost and delay than under the process of judicial review.
The position of the Government is also puzzling when one reflects on other Bills that have passed through this Chamber when this issue has arisen. I remember the passage of the Arbitration Bill in 1979. I cannot resist commenting that that was the last Bill in which I was involved which took a rather accelerated journey through this Chamber close upon the dissolution of Parliament. In that Bill a requirement was laid down for reasons to be given for arbitrators' decisions. An appeal process also was structured in the Bill to replace judicial review. One can think of many other Bills—for example, the Financial Services Bill and the Courts and Legal Services Bill—in which is put in statute a clear obligation to state reasons. If the Minister says:
"We would expect the regulators to give reasons",
why do we not put that quite plainly on the face of the statute?
For the reasons advanced by the noble and learned Lord, other noble Lords and myself, I hope that at least in the circumstances in which this Bill goes through this Chamber the Minister will come to the Dispatch Box now and say, "Yes, I shall give consideration to these amendments".
Lord Swinfen: I should like briefly to support this group of amendments. In coming to this decision the
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director must have gone through the stage of having reasons. I can see absolutely no reason why those reasons should not be made public and given to the complainant. Decisions that are made in secret lead people to think that they are totally arbitrary. The whole process eventually gets out of hand, with a number of people feeling extremely aggrieved.
I feel that if my noble friend cannot accept the amendments this evening, at any rate he should say that he will bring forward his own amendments at a later stage of the Bill to achieve the same end.
Lord Ezra: As one who referred to this matter at Second Reading, I fully support the amendments. Everything is to be gained and nothing lost by increased transparency in this matter. As many noble Lords said, it is important that the reasons for decisions reached in these disputes should be made very clear so that the parties concerned can take them into account and adjust their views accordingly.
It is also necessary to have the possibility of appeal. That is all in line with what underlies the concept of the Citizen's Charter; namely, that such matters should be transparent and there should be the opportunity of an appeal when one or other party feels that the decisions reached are unfair. In the light of all that has been said and what I believe are the principles underlying the Citizen's Charter, I hope that the Government will be able to accept the amendments.
6.45 p.m.
Lord Reay: Amendments Nos. 12, 35, 44 and 56 tabled by the noble and learned Lord, Lord Brightman, would require the Director General of Telecommunications to state the reasons for his determinations on the following matters: a dispute arising under regulations setting guaranteed service standards and compensations; a dispute about undue discrimination in respect of charges; a dispute arising under regulations making provision for billing disputes to be referred to the director; and a dispute about the decision of a designated operator to require a customer to pay a deposit or about the amount the customer is required to pay.
My understanding is that current legal practice varies in respect of requiring bodies exercising a quasi-judicial role to state reasons for their determinations. I agree, however, that it is generally desirable that they should do so. I certainly believe that it is important that the Director General of Telecommunications and the other regulators should give reasons for determinations of this character, even though there is no existing statutory obligation on them to do so.
The noble Lord, Lord Hacking, was good enough to remind me of what I wrote to him on the subject when I stated that we should expect the regulators to give reasons. For example, Offer usually sets out its reasons and Oftel has said that it would normally expect to give reasons in resolving disputes under this Bill.
I have heard noble Lords from all round the Committee express the view that an amendment to this effect should be adopted. I should like to give

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further consideration to the matter without any kind of guarantee that I shall be able to do anything about it. However I should like to take the matter away and have another look at it.
Perhaps I may turn to Amendments Nos. 13, 36, 46 and 57. They compel the Secretary of State to make regulations to include provision for one of the parties to the dispute to appeal against the decision. The director general's decisions will in any case be subject to challenge by judicial review. The noble and learned Lord said that it would be an expensive procedure. Indeed, going to law, alas, is expensive, as many people have discovered and lamented—although usually they have not been lawyers. The noble and learned Lord is right that it would cost in the order of £5,000 to bring to judicial review. All I can say is that if the case were successful costs would be awarded against the director.
Judicial review has now developed to a point where its coverage of possible grievances is at least as wide as grounds for appeal on a question of law. I am advised that the established grounds for judicial review are illegality, which means failing to apply the law correctly; irrationality, which means coming to an unreasonable decision; and impropriety, which can include a breach of natural justice such as a failure to give reasons for the decision. The noble and learned Lord's amendments would not add to the scope of the available remedies if one of the parties objected to the director general's determination of the dispute.
Perhaps I may turn to the noble and learned Lord's third set of amendments. They remove the words "final and" where those apply to a determination by the Director General of Telecommunications. They also seek to extend the right of parties to a dispute to appeal against that determination.
We are not sure what practical effect the amendments would have. If it is the intention of the amendments to allow parties to a dispute the right to appeal to the county court against a determination made by the director general, or indeed back to the director general himself, they would not work. The removal of the stipulation that the judgement of the director general shall be final would not alter the route of appeal for either British Gas or its customers. The only appeal process available would still be judicial review in the High Court. Again, therefore, the amendments would not give customers any more right of appeal than they have under the current wording of the Bill.
I turn finally to Amendment No. 47, which stands in the name of the noble Lord, Lord Williams of Elvel and to which he spoke. The effect of the amendment would be to require the directors general to consult the Council on Tribunals when setting up dispute settlement procedures which might involve oral hearings of a tribunal-like nature.
The noble Lord referred to discussions that he hoped were continuing. I can assure him that my department is currently discussing the question of council supervision over certain adjudicative functions of the Director General of Telecommunications with Oftel and the Lord Chancellor's Department. Other departments are also considering that in respect
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of regulators for which they have policy responsibility. I can assure the House that the matter is being actively pursued.
There is clearly a need for the parties using a dispute settlement procedure to have confidence in it. I certainly agree with that. However, the views of the regulators and experience to date of regulatory regimes need to be carefully considered. While the Bill may seem a convenient vehicle for bringing the regulators under council supervision, I point out that the same goal can be achieved by an order made under the Tribunals and Inquiries Act 1971 by the Lord Chancellor's Department. I hope that the amendments will be withdrawn.
Lord Brightman: I am grateful to noble Lords who spoke in favour of the amendments. Perhaps I may add one comment about the reason for the deletion of the word "final". If there is a right of appeal on a question of law, then the determination appealed against cannot be final. Therefore, in order to give sense to the provision that the Secretary of State shall make regulations allowing an appeal to some court or tribunal it is necessary to take out the word "final." That does not leave it open to a party to a dispute to apply to the county court, as was suggested by the noble Lord. The jurisdiction of the county court is purely statutory. Unless the statute states that you can appeal to a county court, you cannot. My amendment does not provide for appeal to the county court.
I am grateful to the Minister for saying that he will consider introducing into the Bill a provision that an arbitrator shall give reasons for his decision. I hope that he will also look at the provision which I included in my amendment for appeals to the tribunal or court considered appropriate by the Government on a question of law. I believe that both branches of the amendments deserve consideration.
In the circumstances the right course for me to adopt is to ask leave to withdraw Amendment No. 12.
Amendment, by leave, withdrawn.
[Amendments Nos. 13 to 22 not moved.]
Lord Allen of Abbeydale Lord Allen of Abbeydale moved Amendment No. 23:
Page 3, line 17, after ("operator") insert ("including the requirement that all telephones are capable of being coupled to hearing aids by internal means").
The noble Lord said: For millions of hearing aid wearers, the problems of access to the telephone system can be solved by the inclusion of a small device built into the telephone called an inductive coupler. In the United States now all telephones manufactured in, or imported into, the country must be fitted with such an inductive coupler. In this country we have not gone that far. The present position, as I understand it, is that all public pay phones in the UK have to have inductive couplers. They are also featured in emergency motorway telephones and telephones in lifts. However, other telephones—in hotels, restaurants, railway stations and offices—are not required to have such couplers. They are not available to the hard of hearing customer. It is the case that telephones are frequently not so equipped.
I referred to the matter briefly on Second Reading. In reply, the Minister stated that the provision about telephones in lifts and public pay phones followed a condition in BT's licence requiring it to meet reasonable requests for such telephones. That depends on what one means by "reasonable." The Minister did not state the position with regard to Mercury.
What has been done so far gives the hard of hearing only limited access, and the problems met are still widespread. The extra cost is not very great. I am told that it amounts to rather less than 50p a telephone. That is not very significant when one considers the cost nowadays of having a new telephone installed. It seems a small price to pay to give millions of hearing aid wearers equal access to the telephone system.
It must be borne in mind that if we in this country now manufacture equipment for export to the USA it will have to include an inductive coupler. Factories in Korea, Taiwan and the other far distant places from which our equipment comes—the last two telephones that I bought came from China and Hong Kong—are now having to include an inductive coupler in the products that they supply to the large American market.
As long ago as 1982 the then Minister responsible for telecommunications expressed the necessity for urgently examining the need for a mandatory requirement. Now, 10 years later, perhaps the time has come. It would be of great benefit to a large number of the hard of hearing at what I believe would be a trivial expense. I beg to move.
7 p.m.
Lord Swinfen: I support the amendment. However, I must first declare an interest. I am a hearing aid user and therefore not only would telephones fitted with an inductive coupler be of personal benefit to me but to many other Members of the Committee who also make use of a similar system in this Chamber. It is the induction loop system which can be picked up by our hearing aids. Good National Health Service hearing aids have a proper switch which turns on the system.
As regards telephones, an inductive coupler is not an expensive piece of equipment. Indeed, if all public telephones had them fitted the cost would probably be reduced because of the benefits of mass production. When considering the amendment we must bear in mind the demographic changes which are occurring in this country. During the next 20 years a large proportion of people will be over the age of retirement and therefore more likely to need hearing aids and telephones of this kind. Therefore, there is a growing market. If my noble friend the Minister is inclined to turn down the amendment he may find that in the years to come he has done himself a disservice, in addition to many thousands of other people. I strongly support the amendment.
Lord Ezra: I too support the amendment. The case put by the noble Lord, Lord Allen, in introducing it and the support given to it by the noble Lord, Lord Swinfen, are unanswerable. Undoubtedly there is now a case for taking this relatively small step. We know
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what has happened in the American market. We know that unfortunately most of the telephones that are available to be bought in this country originate from the Far East. The manufacturers have to include the couplers otherwise they cannot be sold on the American market. Therefore, why do we not make it an obligation that henceforth all telephones should be fitted with such couplers? That would provide a great deal of benefit to a large number of people whose numbers we ourselves may be joining sooner or later.
Lord Reay: The effect of the amendment would be that all telephones either sold or rented (whether from BT or not) would have to incorporate inductive couplers and would place the responsibility for doing so upon the designated operators. Thus, the designated operators would have to ensure that telephones sold in shops contained inductive couplers.
There are a number of conditions in BT's licence which relate to equipment for the hearing impaired. BT is required to meet all reasonable demands to make available telephones which are capable of being inductively coupled to suitable hearing aids, and telephones which incorporate sound amplification facilities. BT also has to take all reasonable steps to ensure that telephones in its call boxes have inductive couplers, and they are now all equipped in this way. I understand from British Telecom that 100 per cent. are so fitted. Similar conditions are included in Mercury's licence.
The conditions in BT's licence mean that hearing-impaired customers are guaranteed that suitable telephones are on the market and that they can make a call from any BT call box. I also understand that portable couplers are available for use with telephones that do not have integral couplers.
Plainly it is the noble Lord's intention that all telephones should be fitted with integral inductive couplers. Apart from any additional costs to the manufacturers, as there would be, this is not the right Bill to introduce such a requirement. It would not be appropriate to a Bill which deals with the setting of specific standards relating to designated operators only; that is to say, BT and Kingston upon Hull. I do not believe that it would be right to make designated operators responsible for ensuring that thousands of pieces of equipment which are on the market and which come from many sources should be equipped with inductive couplers. Indeed, I do not believe that the designated operators have any powers to do so.
Although the objective of Members of the Committee may be thoroughly worthy—and the more I listened the more I tended to agree with them—I must insist that this is not the right Bill in which to pursue it.
Lord Ezra: Is the Minister aware that if one went into a shop to buy a telephone one really would be out of one's mind if one did not buy a telephone which was authorised and approved by British Telecom? Indeed, I went into my local store and saw that virtually all the telephones on sale were authorised by British Telecom. It follows, therefore, that the operators can have an enormous influence on the kind of telephones that are put up for sale.
Lord Swinfen: Can my noble friend tell me the cost and size of a portable coupler?
Lord Reay: No, I cannot.
Lord Swinfen: I believe that my noble friend will find that they are considerably more than the cost of putting them into the telephones. The last one I heard of cost some £70 and was, in fact, much larger than the telephone.
Lord Airedale: I too have a hearing aid but I do not have to use it when using the telephone. Therefore, I do not believe that I need to declare an interest. I was sorry to hear the noble Lord, Lord Allen, say that railway stations are among the places where the special telephones do not have to be provided. In my experience railway stations are places where one most frequently needs to use the telephone. I am sorry to hear that special telephones do not have to be available there for the benefit of the deaf.
Lord Swinfen: Railway stations are most important. With all the background noise, including the almost unintelligible announcements over the loud-speaker system, anyone with a hearing aid would not be able to listen on the telephone without an induction coupler.
Lord Reay: The noble Lord, Lord Ezra, said that the approval of BT is a common feature of telephone equipment available for sale in the shops. I understand that its approval applies only for connection to the BT network. It is not the case that British Telecom would have the responsibility for ensuring that all equipment on the market is fitted with induction couplers, as would be the case if the amendment were passed. That would be restoring a situation in which British Telecom would effectively have a monopoly over the supply of equipment. There is a mass of equipment on the market that comes from many different sources. It is neither necessary nor desirable for that equipment to have British Telecom approval.
Lord Allen of Abbeydale: I am a little puzzled by the Government's reply. I should have thought that it was perfectly possible to introduce a requirement that equipment should be approved by the various operators. In my innocence I believed that the telephones that I used were approved by BT. The Government appear to be saying that the provision is a good idea and that they are well aware that legislation exists in America making the requirement mandatory. They must be well aware that if there was mass production in this country—if anything is still made in this country—the cost, which is small anyway, would come down.
Therefore the Government are saying that it is a good idea but for some reason, which at the moment I cannot follow, this is not the Bill by which to introduce it. Whether that means that one ought to introduce a separate Bill I do not know. I should like to think about the matter before the next stage of the Bill. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Viscount Astor: I beg to move that the House do now resume. In moving the Motion I suggest that the Committee stage on this Bill be resumed at 8.10 p.m.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Social Security (Mortgage Interest Payments) Bill
7.10 p.m.
The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Henley.)
On Question, Motion agreed to.
House in Committee accordingly.
[The DEPUTY CHAIRMAN OF COMMITTEES (Lord Skelmersdale) in the Chair.]
Clause 1 [Payment out of benefit of sums in respect of mortgage interest etc.]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 1:
Page 2, line 6, leave out ("shall") and insert ("may").
The noble Baroness said: Approximately 310,000 families—these are 1990 statistics and we believe that the figures are now probably higher—receive income support assistance for their mortgage. Of that number 40,000 receive only half for the first 16 weeks and around 270,000 the full amount. As we understand it, around 12,000 families are on direct payment as a result of negotiation.
The Council of Mortgage Lenders alleges that up to half those families receiving income support for mortgages are not passing the money over. We do not know whether that is true. We have no information to support it. Can the Minister say how many of the 310,000 families are in arrears and what percentage of the total arrears experienced by the Council of Mortgage Lenders is represented by families on income support?
If the amendment is not accepted, the Bill will mean that everyone, whether or not in arrears, whether or not they have always paid on time, and despite their best wishes, will have their income support top sliced to be paid directly to mortgage lenders. We believe that that has some undesirable consequences. First, not all borrowers from building societies or banks wish the lenders to know that they are in receipt of income support. Unfortunately, occasionally, income support carries a certain stigma and often leads to a hardening of attitudes on the part of the lenders and building societies. There is also evidence to suggest that it produces a speedier path to repossession.
Secondly, if there is to be direct deduction, it depends on the competence and speed of the benefits agency as to whether it pays income support on time. That is a point to which I shall return. It gives us little cause for confidence in the benefit agency's behaviour. Further, it cannot be reasonable directly to deduct the

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income support element for mortgage payments when there is no history of arrears. After all, it was the Prime Minister in a previous incarnation who said that he believed that it was important to retain the skills of money management within families on income support and that they should be determining the spending patterns of their budgets.
In other words, we are seeing a Bill introduced not so much to help borrowers but to help the Council of Mortgage Lenders. It is not a Bill to help those who are in debt on income support, but to help the cash flow of the building societies which would otherwise amalgamate rather more speedily than they would wish. The amendment would remove the mandatory element and provide for top slicing by negotiation. That is a much more healthy and satisfactory way to proceed. I beg to move.
Earl Russell: I support the amendment in somewhat of an exploratory spirit until I hear the reply of my noble kinsman. I should like to hear the Government's justification for the use of compulsion. It may be that it is part of an agreement reached with the lenders, which may be regarded as binding. If so, the Committee is entitled to ask exactly what agreement and for what specific reason it is thought essential that compulsion should be used. We will need an answer to be able to weigh up the matter.
The two key points upon which the amendment is based were made by the noble Baroness, Lady Hollis. The point about a person not wishing the lender to know of his financial position may be of considerable importance. At Second Reading I drew to the attention of my noble kinsman a case reported by a citizens advice bureau in Wales where the lender discovered that the borrower was on income support and immediately began proceedings for repossession. That is not precisely the effect at which we are aiming.
When considering social security, one often tends to think of the point of view as seen from London or indeed from any other big town. But a fair amount of England and an even greater amount of Scotland and Wales is still made up of small towns. In a small town it may be undesirable to have one's neighbours and the people with whom one does business knowing the precise details of one's financial support. It may give rise to conversation which can cause embarrassment. Therefore, if possible, it is worth taking this matter seriously.
As regards late payment by the Department of Social Security, we will be able to pursue that point more fully in the debate on Amendment No. 3. I shall therefore merely note that it is there and not pursue it.
The problem is that some people do not want the lenders to know that they are in receipt of income support. I admit that there is a difficulty about how we can invoke the Department of Social Security into making direct payment when the lenders do not know that such payments are needed. I would like to think that it is possible to reach a resolution of the problem. I must admit that I have not immediately come up with one. I understand however that a verification survey conducted by the Department of Social Security is investigating the extent of the problem of
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non-payment of income support to the lender. I should like to know whether it is possible to defer the final decision on compulsion until more of the evidence is to hand.
Lord Henley: I understand the points made by the noble Baroness, Lady Hollis. I understand what she meant in repeating the point made by my right honourable friend the Prime Minister; that it is important for people to retain their money skills. However, I hope to demonstrate that it is a question of balance and that it is necessary for that reason to go down the path of compulsion.
It is important to see the new scheme in context. As my noble kinsman said, it is part of a package of measures which have been agreed with the lenders with the object of preventing people losing their homes. That is what the Bill is all about; it is part of a package. For its part the Council of Mortgage Lenders has given an assurance that the lenders will not seek repossession when interest payments are covered by direct payments of income support. As part of that, they will certainly not repossess if they discover that the borrower is on income support. That would negate the whole point of the exercise. Further measures have been agreed, including various rescue schemes which have been announced, which will help those not on income support. The amendment could put that entire package of measures at risk.
I understand the point, made by the noble Baroness and repeated by my noble kinsman, that there are many people on income support receiving help for their mortgage payments who keep up with those payments to the lender. I understand the fears they have about not wishing that fact to be known. My noble kinsman specifically gave the example of people in small towns who prefer that those matters do not become the subject of gossip, and I understand that they feel that they should not be covered by the new direct payment arrangements.
However, as my noble kinsman accepted, there is no guarantee that any other arrangements could satisfactorily identify those at risk of repossession and for whom direct payment would be the only way of helping them to keep their homes. By definition, a voluntary scheme cannot ensure that all those for whom the arrangements are made will benefit from the payment scheme. The mere making of the scheme voluntary would allow anyone, by definition, to exclude themselves from the scheme. As regards the particular case mentioned by my noble kinsman as having occurred in Cardiff, I shall, if he will give me details of it, look into it.
I return to some of the other points made by the noble Baroness. She asked whether the Government knew how many people were not handing over the money. We do not have figures here. Obviously, there is a major problem and that is why the Council of Mortgage Lenders has agreed the package with us. I hope that, because of the fact that we have reached an agreement with the Council of Mortgage Lenders and because making the scheme voluntary will put the package at risk, the noble Baroness will be persuaded that her amendment would not be a wise course to pursue. To some extent it would drive a coach and

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horses through the whole Bill. The noble Baroness appears to nod at that. I believe that she said at Second Reading that her party did support the general principles of the Bill.
I hope that my explanation of this being part of the package and a necessary balance, and accepting that some claimants might prefer not to have the details revealed, and it not being possible to manage the matter in any other way, will mean that the noble Baroness will be sufficiently satisfied to withdraw her amendment.
Baroness Hollis of Heigham: I thank the Minister for his reply. Perhaps I may make a correction. It was not that I supported the Bill at Second Reading, but that I supported the principle that people who received an allocation in their income support for mortgage payments should pay it towards their mortgages. I do not believe that there was any dispute between us, but I do not think that this is the right way to go. I was somewhat worried by the Minister's reply. It seems to be the price which the Government are willing to pay to the Council of Mortgage Lenders in order to get its support for other parts of the rescue package—for example, buying up repossessed properties and leasing them to housing associations and the like.
So far as I can see, the Minister has not a single piece of information to justify the provision. That suggests that he is fingering the income support recipients in order to improve the cash flow of the building societies so as to help other families which are not necessarily on income support perhaps to enjoy the advantage of leasehold. I am not challenging other parts of the package. I have never before come across a government measure in local government or anywhere else in which we are going to change the rules for social security and go for direct deduction. There may be a problem. We do not know the size, the number, how long, how much or how many people the problem will affect. I have to say that in 25 years of public life I have never seen social policy being made in such total ignorance of whether there is a problem or not. The fact that the Council of Mortgage Lenders believes that there is leads to the comment: it would say that, wouldn't it?
Lord Henley: If the noble Baroness cares to check her facts, although I am open to be corrected on the matter, the noble Baroness' own party has always supported direct payments in the past and opposed this Government in making voluntary payments by individuals to the lenders.
Baroness Hollis of Heigham: I confess that I do not know whether that is the case or not, but I shall certainly check it. Nonetheless, I take the point which the Prime Minister made earlier that one wants to give as much flexibility as possible to families to manage and juggle their finances. Nonetheless, I would have thought that the Minister would have wanted more information on which to base this measure. As far as we can tell we are talking about 310,000 families. It may be that 5,000, 7,000 or 8,000 out of 310,000 or 340.000 people are failing to pay over the money. Can
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the Minister give us any indication of the number? Is he talking about 5 per cent., 50 per cent. or 85 per cent? Are we really putting such a law through Parliament, with all the administrative problems and workload for the benefit agencies that will be incurred? Possibly there will be a loss of privacy for the borrowers —namely, the people on mortgage support. Are we really undertaking this measure without knowing whether we are talking about 5,000 or 150,000 people? I invite the noble Lord to give us some indication of the kind of numbers we are talking about.
Lord Henley: Various figures have been bandied about by others. All I can say is that from the department's own point of view we cannot give any figures. It is clear that certain sums are not getting through. That is why we have brought in this measure and why we have reached a deal with the Council of Mortgage Lenders. I can go no further than that.
Baroness Hollis of Heigham: Clearly, we can go no further. In that case, perhaps the noble Lord will accept the logic of the second amendment, which I shall move in a moment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 2:
Page 2, line 6, after ("shall") insert ("where arrears of a home loan exceed two months").
The noble Baroness said: Given everything that the Minister has said, and with the support of the noble Earl, Lord Russell, I hope that the Minister can now support the second amendment, which is not so strong in its implications. This amendment says that, where there is a clear problem of financial competence or the money has not been paid over, then there should be a direct deduction from benefit and direct payment to the Council of Mortgage Lenders.
That would be triggered where, for example, a family was two months or more in arrears with its payments. It is two months because I understand that benefit is normally paid a month in arrears and that there is supposed to be up to 14 days' grace for handling it through the benefit agency thereafter. The payment may run a few days later than that. In other words, a family which has not paid for two months might be regarded as presenting a financial risk to the Council of Mortgage Lenders. Two months is the kind of figure which, as regards a family which has failed to pay its rent, local government would take as a warning sign and start investigations to try to ensure that the family did not lock itself into irrecoverable debt.
Even here perhaps I may add that, if the Government really wanted to help families who were beginning to fall into arrears, probably the most useful way of doing so would be to pay the full entitlement of mortgage interest; namely, 100 per cent. from the beginning, and not merely after 16 weeks. It is clear that debt starts fairly early on in a period of income support. However, given everything that the Minister has said and that, out of 320,000, we may very well be talking about only 2,000, 5,000 or 8,000 families who are failing to pay, then I should have thought that this

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amendment would have met and bridged the concern of the Minister about where the money goes and our concern that families who have always paid on time should not, so to speak, forcibly have their income top-sliced against their own judgment and wishes. I beg to move.
Earl Russell: I appreciate why the Government have brought in this Bill in a hurry. The mortgage repossession situation, as some of us have said, was becoming rather urgent. Also the parliamentary timetable does not allow time for lengthy consideration. When this Bill is put into effect, we hope —not necessarily with great confidence—that the depth of the present emergency about mortgages and repossessions may not last all that long. It is possible that difficulties will emerge in the administration of this Bill which are not foreseen at present. Will my noble kinsman keep the use of compulsion under review, monitor it and undertake to report back to this House to see whether it is really necessary?
We have also had mention of the payment of income support in arrears. My noble kinsman and I have debated this matter before. With the introduction of this Bill we have another reason against the payment of income support in arrears. It keeps the mortgage lender, as well as the person on income support, waiting for money and therefore can have the effect, through the building-up of interest, of exacerbating mortgage arrears and possibly making repossession more likely. I should also like to ask my noble kinsman whether, in monitoring this Bill, he will think again about whether it has created a further argument against the payment of income support in arrears.
7.30 p.m.
Lord Henley: I can give a partial undertaking to my noble kinsman. Of course we shall keep the operation of this scheme under review and we shall keep the operation of all other matters in the department under review, as we always do. I cannot necessarily give an undertaking to come before the Committee at regular intervals to report on the operation of the Bill, but I am sure that my noble kinsman will find ways and means through the usual parliamentary processes to question me on these matters.
I appreciate that the noble Baroness is trying, as she put it, to bridge the gap between us. I understand that a selective approach, as suggested by the proposed amendment, seems to have some attraction. I must resist it on two grounds. First—a point I argued on the earlier amendment —is its effect on the package of measures that we have agreed with the lenders. Secondly, and more important, is the question of the practicality of the amendment.
The identification of all suitable arrears cases could present the benefits agency and lenders with intractable problems. Checking all cases every eight weeks to establish whether they had crossed that arrears threshold would be a very time-consuming and bureaucratic task. It would simply not be possible to rely on lenders being able to identify all suitable cases
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as some people do not respond to letters from lenders. That could certainly affect some very vulnerable groups of people, including families where the borrower might not always act in the best interests of dependants. It is important to remember that the new arrangements will ensure that the amount of money provided in income support for mortgage interest, which was always intended to be paid to the lender, does in fact reach them. We are convinced that the comprehensive direct payment scheme is the appropriate part of the package of measures aimed at reducing repossessions. I hope, therefore, that in that light the noble Baroness will feel able to withdraw her amendment.
Baroness Hollis of Heigham: I must say that I found that response conciliatory but singularly unpersuasive. I am not sure that the Minister was himself persuaded by his own brief. I could see the logic of his reply on the first amendment, but on the second the argument seems to be, first, that the Council of Mortgage Lenders would not like it—well, of course, it wouldn't, would it?—and, secondly, the question of practicability.
With regard to the effect of the package on the Council of Mortgage Lenders I have to say that I am very uneasy. What seems to be happening is this. In order to help families who are not on income support, who may be receiving family credit or who may be above that level, to have a more supportive relationship with their lenders—that is, their banks or building societies—families on income support who may have no financial management problems whatever, are going to find, whether they wish it or not, their income support top-sliced to improve the cash flow of the building societies and banks. Many of the problems experienced by the banks and building societies have not been the fault of families on income support but caused by the financial mismanagement of the banks and building societies themselves and their misjudgment in making mortgage loans of 100 per cent. too easily available to people on incomes that are too slender or with repayments that form too high a ratio of the total household income. We know that to be the case, even before property prices began to fall. The building societies and the banks were lending at too high a price and they are now paying the bill for that. To bail them out the Government intend to penalise people who have a perfectly good, honourable and decent track record of managing their money. The Government are going to withdraw from those people the right to manage their money as they see fit in order to bail out those banks and building societies from the mistakes that they have made in the past towards families who are not themselves on income support.
I have to say that that is an unfortunate piece of cynicism. That families on income support, who have regularly paid—and there is no dispute between us about families who get into arrears—should have their income support top-sliced in order to help those banks and building societies who have made lending misjudgments in the past is simply unfair. I expect the Minister to recognise it as unfair.

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The second point that the Minister made concerns the practicability of the amendment. We all sat through long sittings on the Local Government Finance Bill in which we were told by the Minister, when it suited, that onto a property tax it was possible to graft a discount scheme, a rebate scheme, and to do that on a daily liability basis with people moving in and out virtually on a daily basis. We were told that it could be done with ease, style and elegance by virtue of the computer wizardry that existed in town halls. If that computer wizardry which exists can manage the extraordinarily complex daily liability accounting of the council tax, then I can assure the Minister that it can certainly deal with the infinitely simple operation of ascertaining when people who owe money to building societies and banks are two months in arrears. That can then be cross-checked with benefits agencies to see whether that is indeed the case. I have to say that I cannot imagine a simpler arrangement.
Lord Henley: Will the noble Baroness give way? She is turning her previous arguments on their heads. She and my noble kinsman were arguing for the confidentiality of those who are paying either their income support payments on time or, for that matter, anyone else. She is now asking for the building societies to notify us about everyone who is in arrears, whether or not they are on income support. It is not possible to have it both ways. The banks and building societies do not know who is on income support so they could only notify us about everyone who is in arrears. The noble Baroness cannot have it both ways.
Baroness Hollis of Heigham: If a building society found that someone was two months in arrears it can seek to find out from the person concerned, through letters and so on whether he or she is on income support and what arrangements that person intends to make. If there is no response I find it not unreasonable to check with benefit agencies as to the situation because at that stage a person is in arrears and owes money to the lender. That seems to me that one is targeting the problem of invading privacy at those who, to a degree, have forfeited it by reason of being in arrears. The Minister is saying that whether or not there is a problem everyone on income support will have their privacy invaded in case there may be a problem of a small percentage.
I should have thought that the Minister could accept that the route proposed—and there may be other and better routes; we are perfectly willing to discuss that with him or take the advice of his officials on the matter—at least ensures that only those who are already in arrears will to some extent sacrifice the right to full privacy. They have to be pursued and they have to pay. That seems to me a much less injurious piece of public policy than pursuing everybody whether or not they are paying and putting them on to what is effectively a direct debit system, which certainly exposes their affairs.
Why is it that someone on income support, whether or not he pays, is not entitled to privacy, but for someone not on income support, but who is two months in arrears, the Minister claims the right to privacy? I find that very odd and a species of
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stigmatising of those on income support which they are not entitled to have, from the Minister's point of view.
However, as I said, I am surprised that the Minister is unable to accept this amendment. It seems to me to be entirely reasonable and would have met the difference between us. However, given the Minister's response I have no alternative but to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 3:
Page 3, line 3, at end insert:
("(h) for payment of the sum to the lender within a prescribed period, which shall not be more than 14 days;").
The noble Baroness said: This amendment picks up the point raised by the noble Earl, Lord Russell. One of the problems is that by handing the question of direct payment of mortgage interest to the benefits agency—given that it normally runs four weeks in arrears—we fear that there will be a very real risk that people may find themselves in arrears when they were not when paying the money themselves.
All the experience is that the benefits agency, despite its best intention, does not have an entirely satisfactory record in delivering benefit payments on time any more than, I have to say, the local authorities. To some extent we are touching on some of the arguments we had during our debates on the Local Government Finance Bill.
In some of its research on the council tax Bill the CAB found, for example, that of the 180,000 or so inquiries in the area of community charge with which it was dealing between February and May 1990, 109,000 were associated with delay in payment of benefit. About two-thirds of all inquiries and problems brought before the CAB when handling questions about benefits and the community charge were about the delays by the benefits agency in paying benefit. Therefore, what the Minister is doing is moving away from a system where people themselves pay—as many as 80 per cent. may pay on time—to having a top slicing and payment by the benefits agency which has notoriously failed to perform on time. There may well be a risk not only of the privacy of the person on income support being invaded but of the Council of Mortgage Lenders not getting its money on time.
As the noble Earl, Lord Russell, said, in theory payment should be made four weeks in arrears. But in some areas it is known that payments are made 13 weeks in arrears, which itself causes the very arrears that the Bill seeks to avoid. It would be helpful to have an undertaking that direct payment should be made no later than four weeks in arrears. The CAB quotes numerous cases. There have been delays of six weeks, delays of five months, problems in calculation of mortgage interest, problems of calculation of 16 weeks on half pay, and so on.
I hope that the Minister can tell us whether he will give strong guidance to the benefits agency so that the Bill actually works. It depends and hinges crucially on whether the benefits agency is competent and efficient

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enough to make those payments in kind. Otherwise we shall move away from a small problem to a very much larger problem and worsen the situation for all concerned. I beg to move.
Earl Russell: If the Committee will forgive me for saying a brief word about a previous matter, I listened fascinated to the exchanges between the noble Baroness and my noble kinsman about notification of the department when people are in arrears. It made me think that the system which we are setting up in the Bill is not necessarily a final system. I could not help wondering whether a good many of the difficulties being discussed would vanish if instead what we were looking at was not something tied to income support but a specific mortgage benefit. We have exchanged ideas about that before but I wonder whether that exchange illustrated precisely why that might be a helpful suggestion.
In the matter of this amendment I have no criticism to make of the benefits office but it is a very sound rule that one cannot make everything top priority. The benefits office has targets which it is required to meet. Those targets include in particular a target for payment of income support. While the targets are as they are at present it is obvious that the benefits office must meet that target. If, under pressure, offices are struggling to meet the target, inevitably something must fall behind in the process. I think there is scope here, among other things, for looking at the way the targets are drafted and making sure that we are not putting incompatible obligations on people.
There is also scope for amending form MI12 which actually has a space in it where the claimant is asked to tick the form to say yes or no to the question "Do you wish the lender to be notified?" Since now there is to be no choice about it, that is of course out of date. I should have thought that an obvious amendment is in prospect there. We have a considerable increase in the flow of the MI12 forms with the worsening situation and now, I should have thought also, an increase as a result of the Bill. A citizens advice bureau has been told by a lender in one case:
"We have a thousand of these and we don't know when we will be able to complete them". Meanwhile, of course, the forms do not even reach the benefits agency so it cannot process what has not yet reached it. So a situation arises where a part of the income support which is designed for the mortgage repayment may be withdrawn or withheld, and then arrears get worse.
Cases of this kind have been notified to us. A citizens advice bureau in London found a case of nine months' delay because the benefit office was awaiting details from the lender. At the end of that only three months' arrears were paid. There are a good many of these cases. In one the payment after six months covered only the sum eligible for M IRAS and not the whole sum.
The pressure of work on the benefits agency will necessarily go up as we have more claimants. We have had a period of rapidly rising unemployment. That means more people claiming benefit, longer queues and more work. That inevitably creates a pressure for
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more time and more staff. Perhaps one of the constructive ways forward is to think about the Bill in that context. In the Independent on 26th June last the chief executive of the benefits agency was quoted as saying that performance levels of social security benefit offices are being affected by rising levels of unemployment. That is a very reasonable thing to say. It is in the nature of the case that it would be likely to be so. It occurred to me whether it was worth asking whether we could move things on a little better and get better service by raising staffing levels and, to an extent, raising funding.
My noble kinsman may recall that I put down a Question for Written Answer on this subject. My noble kinsman replied that chief executives are principally responsible for managing their agencies by deploying available resources to ensure that they achieve their targets. I would not disagree with that, but it does not advance us very far. I wonder whether my noble kinsman can give tonight a rather more helpful answer to that Question for Written Answer and whether that might do something to ease some of the arrears to which the amendment is directed.
Lord Henley: Delays in making direct payments have been mentioned. I accept that delays can happen, just as the noble Baroness, Lady Hollis, accepted that they happen with benefits administered by local authorities. Obviously I am prepared to look at any specific cases which the noble Earl would like to put before me. However, I cannot comment on them at the moment. There may be some instances of delay. We do not have any evidence that this is widespread. The benefits agency advised its local offices last year that payments to lenders should be made no less than four weekly and this will apply to the new scheme. The agency is very much committed to improving the quality of its service. Perhaps I may say in passing that I understand that the agency is doing extremely well and, largely speaking, is well on course to deliver its income support targets on both accuracy and time.
One of its declared objectives is the core value of customer care. The operation of the new direct payment scheme falls squarely within that objective. The introduction of main frame computer support for what has been until now a wholly clerical operation we hope will further increase the efficiency of the direct payment arrangements.
My noble kinsman also asked whether there would be increased staffing and whether we had taken into account the administrative costs of the new scheme. I can tell him that we have so far taken into account an additional staffing provision of what I understand is referred to as 800 man years allocated to deal with this new task. All the claims will be subject to targets on clearance times and accuracy and processed on the income support computer system.
In this context it is important to note that the benefits agency has work in progress at the moment to enhance the computer system yet further to enable payments to be made to lenders. We hope that this will provide reliable and prompt payment facilities and will greatly assist the local services. It will also help to

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eliminate what I hope were in the main isolated difficulties that have arisen under the present arrangements.
With those assurances, I hope that the noble Baroness will not feel it necessary to withdraw—I am sorry, I meant to say that I hope the noble Baroness will find that it is possible for her to withdraw the amendment. I gained the impression that it was more by way of a probing amendment in order to seek assurances from us that we would do our best to ensure that payments were made within the four-week period. Certainly the advice from the agency to its local offices will be, "Yes, do try to keep to the four-week period".
Baroness Hollis of Heigham: I thank the Minister for his helpful reply. I hope that the Hansard report of the proceedings will show his correction in full. As Freud said, "You never make a mistake". We were seeking an assurance about the four-week payment. If the scheme is to be introduced we all want to see that it actually happens with the maximum efficiency and effectiveness. Therefore, should the general election results not go the way that we expect, we shall ourselves be asking the Minister for a report on the effectiveness of the four-week payment in six months' time. With the leave of the Committee, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 1 agreed to.
Remaining clause and schedule agreed to.
House resumed: Bill reported without amendment.
Report received.
Earl Howe: My Lords, I beg to move that the House do now adjourn during pleasure until 8.10 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The sitting was suspended from 7.52 to 8.10 p.m.]

Competition and Service (Utilities) Bill
House again in Committee on Clause 1.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 24:
Page 3, line 17, at end insert:
("( ) having determined the standards of overall performance under paragraph (a) above, give due regard to the price regime which he or she approves to assess whether that price regime is appropriate in relation to the provision of the standards of overall performance; and that he or she will have power to require the operator to change that price regime to one which is commensurate with the standards of overall performance which are met and the cost structure of the operator in meeting those standards,").
The noble Lord said: In moving this amendment, which was tabled also by my noble friend Lord Desai, it may be for the convenience of the Committee if I speak also to Amendment No. 25.
Amendment No. 24 seeks to establish a relationship between the standards of overall performance which are to he set by the director and the price regime. It is our belief that, as I said on Second Reading, the only way in which one can successfully ensure that a standard of performance is observed is by affecting the profit and loss account of the operator. It seems to us
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that that is a perfectly proper way of going about things. It should not be considered so much in the nature of a fine, and it certainly should not be considered a subsidy. But if there is a failure to meet the standards of overall performance, it seems to us that the designated operator should suffer where it hurts most—in his profits. That is the point of Amendment No. 24.
Amendment No. 25 is somewhat different although it relates to the price regime. There is a sometimes rather worrying tendency for operators to avoid what is known as "cross-subsidisation". In general, cross-subsidisation is not necessarily a desirable phenomenon, but there are occasions when it is so difficult to allocate the overheads between different services and to decide the result of certain services that are perhaps given for free that cross-subsidisation is desirable and, indeed, justified.
Perhaps I may cite directory inquiries as an example to the Committee. At the moment, the directory inquiries service that is managed by BT costs an inordinate sum of money. I believe that it costs 43.5p per inquiry. In the United States, directory inquiries cost nothing provided that a call is put through immediately afterwards. That is the important point about directory inquiries—they generate calls. It seems to me that the United States system, which is a form of cross-subsidisation, is one that we should permit and, indeed, encourage here. However, it is not only the United States that practises that system. Directory inquiries are free in Canada. In the United States, directory inquiries without a subsequent trunk call are charged at about 15p. In France, Australia and Spain directory inquiries are free. In Germany, directory inquiries cost 7·6p and in Belgium 8·5p. All those figures show that there is some measure of cross-subsidisation in all the countries that I have cited. That seems desirable when the point is to try to encourage business for the designated operator.
I have accepted the grouping of the two amendments because both relate to the price regime. The point is that the director should not only have responsibility for operating the price regime as set out in the Telecommunications Act and in subsidiary legislation but should also link the standard of performance to the price regime. Within the standards of performance, an efficient directory inquiries system should take account of the prices charged to the end user. I beg to move.
Lord Reay: Amendment No. 24 would require the director to ensure that the price regime was appropriate to the overall standard of service provided by the designated operator and the operator's cost structure.
The regulator will clearly set standards against the background of the currently agreed price regime. The Bill provides effective measures for preventing a reduction in standards of services so as to achieve a hidden price rise by providing for compensation for failure to meet individual standards and for enforcement of compliance with overall standards.
In addition, the Director General of Telecommunications has general duties under Section 3 of the Telecommunications Act 1984 which are

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relevant. The Act already requires him to secure that those providing telecommunication services are able to finance the provision of those services. He must also promote efficiency and economy on the part of service providers. He must exercise his functions in the manner best calculated to promote the interests of consumers, purchasers and other users in the United Kingdom in respect of the prices charged for, and the quality and variety of, telecommunication services provided and telecommunication apparatus supplied. There are similar provisions relating to the other regulators.
There can therefore be no question but that the regulators will take due account of all relevant factors, including the achievement of overall standards and the cost structure of the operators, in exercising their functions, including when they review the price caps.
One thing I would like to mention while we are on the subject of standards and prices is that Sir Bryan Carsberg has recently issued a consultation paper on this subject which can be obtained from the Office of Telecommunications. Customers, including any noble Lords, have the opportunity to respond to this and to express their views on BT's standards of service and their relation to prices. Any comments on the consultation paper should be submitted to Oftel by 27th March.
For the reasons I have given, I consider that the issues raised by the amendment are already adequately covered by the Bill.
Amendment No. 25 would allow the director to require a designated operator to provide free information and advice services, paid for by the users of other services. BT is required by its licence to provide a free directory inquiry service to the blind and others who have a disability which makes them unable to use the normal phone book.
Any information and advice services which BT provides must be funded from somewhere. If a service is provided free of charge or at a price below what it costs to provide, the cost will inevitably have to be recovered through higher call charges for all customers. We believe strongly that it is only right and fair that those who use a service should in general pay for it rather than the cost being borne by every customer whether they use the service or not.
Lord Williams of Elvel: The point I was trying to make was that by having a cheap directory inquiry service, BT, or any designated operator, would generate a higher volume of business rather than merely spread the cost over the same volume of business.
Lord Reay: I see the noble Lord's point, but when BT started to charge for directory inquiries at the same time it cut the price of national calls by 7.3 per cent. If BT were required to provide a free directory inquiry service, that would be unfair competition for those other companies, including some which are not telecommunication operators, which provide similar services; so I cannot accept the amendment.
Baroness Oppenheim-Barnes: Surely, my noble friend will agree that this is a business judgment for BT to make. If it were to think that it would generate a greater volume of calls as a result of having a free directory inquiry service, that would be a judgment it could make and act upon. I hope that it would not be prevented from doing that because it represented unfair competition. As a telephone user, I should hope not to be subsidising free directory inquiry calls. I saw tremendous abuse of the service when it was free. I have seen secretaries and other people sitting at desks with a pile of telephone directories in front of them. It was easier for them to pick up the telephone and call directory inquiries than to look up the number in the directory.
There are two conflicting arguments. I am sorry to make the matter more complicated. The first is that I hope my noble friend will confirm that BT could make that business judgment, if it wanted to. Secondly, I should like it on the record that I do not believe that the service should be free and subsidised by other telephone users.
Lord Reay: I am sure that my noble friend is right in saying that there can be abuse of the service. She is right when she draws attention to the fact that the noble Lord is raising commercial matters which, in the first instance, must be for BT.
Lord Williams of Elvel: Will the Minister also respond to the noble Baroness's other point? Is BT at the moment at liberty to offer a free directory inquiry service?
Lord Reay: The agreement reached was that BT should introduce charges, which it did in April 1991. At the same time, the price of national calls decreased by 7.3 per cent.
Lord Williams of Elvel: That is the true answer: under its licence, BT does not have the power to agree a free directory inquiry service. I believe that the director general has laid down that there should be no cross-subsidisation within BT, and I believe that he sticks to that ruling.
I apologise for interfering in what is perhaps a private dispute on the other side, but it is something at which the Government should look. Perhaps it is more properly looked at in respect of the licence for designated operators than it is in the Bill. I accept that. As we are dealing with what is essentially a privatised monopoly—BT is still a privatised monopoly—it is a matter for regulation rather than pure competitive factors. If there were five operators in the market, which could knock out BT's monopoly once and for all, I would accept the noble Baroness's argument about commercial competition.
I am grateful to the Minister for telling me that Amendment No. 24 is unnecessary. I am glad about that because it is important to get that point on the record. We have a difference of opinion about Amendment No. 25. I suspect that it is a difference of opinion that will continue and one that cannot be resolved across the Floor of this place. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 25 and 26 not moved.]
Clause 1 agreed to.
[Amendment No. 27 not moved.]
Clause 2 [Information with respect to levels of performance]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 28:
Page 3, line 28, leave out ("levels") and insert ("standards").
The noble Lord said: It may be for the convenience of the Committee if I speak also to Amendments Nos. 92 and 107. This is not really an amendment. I am merely trying to find out whether the language is right. On reading the Bill, I did not quite appreciate and understand the difference between "levels of overall performance" and "standards of overall performance." It seemed to me that different words were used at different times in the Bill. For instance, on page 3 we have,
"the levels of overall performance",
but if we turn to Amendment No. 92, which takes us to page 13, we see that it relates at line 25 to
"determine such standards of overall performance",
as opposed to "levels of overall performance". I then turn to Amendment No. 107, which takes us to Clause 20, and the wording is,
"that supplier's level of performance as respects each of those standards".
I merely ask the Minister to comment upon the language to see whether, in the Government's view, it means the same in all parts of the Bill. There may be some draftsman's error here. I beg to move.
Lord Reay: I was not certain what the amendments were intended to achieve. The noble Lord explained that they are in the nature of probing amendments to discover the meaning of the words that we have adopted in the Bill. The Bill refers to performance in two ways. When it refers to the director general setting targets for performance it uses the term "standards of performance"; when it refers to how well a company has measured up to those targets, it talks about "levels of performance" that the company has achieved against the standards that have been set for it. In other words, for every target there is one standard to be achieved, but there may be many levels of performance against that target. That use of the words is consistent throughout the Bill. As the clause refers to collecting information about performance against targets that have been set, the word "level" is appropriate.
Lord Williams of Elvel: I am most grateful to the Minister who has reassured me. Will he now tell me what "overall performance" means? What is the definition of "overall"?
Lord Swinfen: While my noble friend is thinking, I should have equated the meaning of "levels" with quantity and that of "standards" with quality. Somehow, to my way of thinking, my noble friend's explanation does not add up. We attended the same school many, many years ago. We were both taught by the same English teachers. I doubt somehow that we can both be right in this matter. One of us—probably me—must have failed the examinations.
Lord Reay: The noble Lord, Lord Williams of Elvel, asked me what "overall" means. He appeared to be satisfied with my explanation of the use of the words "level" and "standards." Overall performance is the performance which the company must achieve; for example, 95 per cent. of telephone boxes have to be working. That would be an overall standard. I cannot improve upon the explanation I have given. The best I can propose is that the noble Lord read the explanation in Hansard tomorrow.
Lord Williams of Elvel: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 29 to 31 not moved.]
Clause 2 agreed to.
8.30 p.m.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 32:
After Clause 2, insert the following new clause:
("Advisory body for premium rate services
—(1) The Director General of Telecommunications shall, in consultation with the Secretary of State, establish a further advisory body under section 54 of the Telecommunications Act 1984 (power to establish advisory bodies) for matters relating to premium rate services, and that section shall he amended in accordance with the provisions of this section.
(2) In subsection (4), after paragraph (b) there shall be inserted—
"and
(c) an advisory body for premium rate services."
(3) After subsection (6) there shall be inserted—
"(6A) In the case of the advisory body for premium rate services, the body shall, in addition to its duties under subsection (6) above, have the duty of advising the Director whether any premium rate service should, in the opinion of the advisory body, be discontinued."
(4) After subsection (8) there shall be inserted—
"(9) For the purposes of this section a premium rate service is a telecommunications service made available by a public telecommunications operator on the basis that a payment will be made to the person providing the service which represents the whole or part of any sum charged to a consumer using the service".").
The noble Lord said: On behalf of my noble friend Lord Morris of Castle Morris, I beg to move Amendment No. 32 and it may be for the convenience of the Committee if I speak also to Amendment No. 62 in the name of the noble Lord, Lord Ashbourne.
We are dealing here with premium rate services. The purpose of my amendment, which requires the setting up of an advisory body for premium rate services, is to explore with the Government exactly where we are in relation to premium rate services; that is, after the announcement by the director general that chat lines would in some way be prohibited or that the code of practice would be removed and therefore they could not operate.
There are many problems with premium rate services. Some messages have been offensive and there are problems of advertising and costs and of their impact on families. We believe that there has been progress in controlling the services, but it is important in our view, that there should be some statutory arrangement that would replace the non-statutory body which supervises these matters at the moment. The Independent Committee for the Supervision of

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Standards of Telephone Information Services is, I believe, the full name. That would imply that there would be a power to ban services completely.
The lesser alternative is the one in my Amendment No. 32 which is to have an advisory body for the services. It would have the duty of advising the director general whether any given premium rate service should be discontinued. The director general would obviously have the power to require the operator to discontinue the service.
The problem is complicated. One does not wish to restrict proper initiative but, on the other hand, we do not wish to see the telephone network used for what might be regarded as improper purposes. I beg to move.
Lord Ashbourne: At Second Reading I said that I favoured the replacement of ICSTIS, the Independent Committee for the Supervision of Standards of Telephone Information Services, by a statutory body to give it teeth. That is what Amendment No. 32, cogently moved by the noble Lord, Lord Williams of Elvel, does. As both Amendment No. 32 and Amendment No. 62 are concerned with the regulation of telecommunications, with the leave of the Committee I shall take it that any decision on Amendment No. 32 will be binding on Amendment No. 62, which will not then be moved separately.
Amendment No. 62 is an enabling amendment to help deal with the problems and suffering caused by premium rate services. The amendment would give the Director General of Telecommunications a new power to provide that a category of premium rate services or 0898 numbers should be available only at the explicit request of the telephone subscriber. He can reach his decision having taken the advice of a statutory committee such as that proposed by the noble Lord, Lord Williams, in his amendment, or he can do so at the request of a telecommunications operator like British Telecom.
I have the highest regard for the way in which the present Director General of Telecommunications, Sir Bryan Carsberg, has conducted his responsibilities. I know that he has been profoundly worried about the problems of premium rate services from their inception. I am sure that if this new power were available to him, he would not hesitate to use it if he believed that certain services were causing such problems that they should be available only on request.
Before I tell the Committee why I believe that opting in is a good idea, I wish to respond to the Minister's comments on my speech at Second Reading when I briefly mentioned the need for opting in. In essence, the Minister said that this idea had been considered by the Monopolies and Mergers Commission and had been rejected. But that seems a poor reason for rejecting the concept of opting in.
The Monopolies and Mergers Commission became involved in the issue because it has a role under the Telecommunications Act 1984 to consider matters referred to it by Oftel where it appears that some aspect of the monopoly in the provision of telephone services is acting against the public interest. In my
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view, the MMC's expertise lies in economic regulation. It was not well placed to consider this kind of social problem. Its report now looks like a dated, historical document. The worsening problems on premium rate services and the huge growth in the market have occurred since it reported.
Some of the MMC's recommendations caused real difficulties. For example, on chat lines which showed serious problems at the time it argued that the adverse effects did not justify the virtual cessation of the services. Since that time British Telecom stopped chat lines for a period, then they came back and now the Director General of Telecommunications announced only last Monday that they should stop. All that stop-go could have been avoided if the director general's advice had been taken in the first place.
The same is true of opting in, where the Director General of Telecommunications went on public record to the MMC as strongly arguing that this should be introduced for certain categories of service. The MMC perversely rejected his view. The director general has not changed it and I have seen a letter from Oftel as recently as last December confirming that he would prefer to see what I describe as opting in. I therefore believe that we should not be over-persuaded by what the MMC said three years ago. We need to deal with the situation now and with the expert view of the Director General of Telecommunications.
The present situation is that anyone who has access to a telephone can make premium rate calls unless the telephone subscriber specifically requests otherwise. The operation is described as call barring and it is to stop the use of 0898 calls from a certain number. I have gone through the process for my flat, about one mile from here, and for a house in Hampshire. The reason I did it is that I do not wish to be faced suddenly with a telephone bill for, say, £1,000 a month, whereas previously it had only been £100. I do not think that this is likely to happen to me. But I ask Members of the Committee to reflect on whether they believe it will happen to them. I suspect that most of them probably think that it will not and they may be right, but the point is that it happens to some people. It comes as an unpleasant shock.
The present regulation is rather like locking the stable door after the horse has bolted. I support the amendment because it would lock the stable door before the horse has bolted. The amendment seeks to make it necessary to opt in. It must be done in writing before premium rate calls can be made from the telephone in question. Thus the subscriber must make a conscious decision to opt in to premium rate services if he wishes to make 0898 calls. Opting in is strongly favoured by the Director General of Telecommunications. I commend both amendments to your Lordships.
Lord Reay: Amendment No. 32 would oblige the director general to set up an advisory body on premium rate services (PRS). The advisory body would have a duty to advise the director if in its opinion a particular premium rate service should be discontinued. However, the amendment fails to take account of the arrangements which are already in

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place to control premium rate services. There already exists an Independent Committee for the Supervision of Standards of Telephone Information Services, known as ICSTIS, which is an effective independent watchdog. As a result of its efforts, 350 services were removed or amended in 1990. Last year it recommended the removal of 255 recorded message services, amendment of nearly 200 others and amendment of over 235 advertisements. That is evidence of its effectiveness in controlling the excesses of the industry.
This week's news provides further evidence of the strength of the regime which we already have. The Director General of Telecommunications has publicly stated his intention to revoke the code of practice. The result of that will be that in one month from now these chatline services will cease to exist. As noble Lords will have gathered from the press, this is because the chatline service providers have failed to keep their compensation fund at an adequate level. I understand that BT has offered to make funds available for any outstanding claims from those who have suffered as a result of chatline use. I would argue that this week's events show very clearly that the powers of Oftel and ICSTIS are very effective.
I have two further difficulties with the amendment. It gives no indication of the grounds on which the proposed new body might recommend disconnection of a premium rate service. I should also point out that the effect of subsection (4) as drafted would be to include within its definition of a premium rate service virtually all telecommunications services, including ordinary voice telephony. We believe that the present watchdog already provides an effective safeguard for the user of premium rate services and that experience so far supports this.
Amendment No. 62 would enshrine in statute the idea of opting in to premium rate services: that is to say that they would be provided only to customers who specifically ask (in writing) to have the possibility of calling such numbers. Opting-in was given thorough consideration by the Monopolies and Mergers Commission in 1988 and rejected by it. Instead it recommended a range of measures to protect customers, most of which have already been implemented by BT.
These measures add up to a strong package of safeguards which are already in place and in the pipeline. Among these I would draw the Committee's attention in particular to call barring, which is a means of preventing premium rate services from being dialled from a subscriber's number. It is now available, free of charge, to 50 per cent. of BT's customers and should be available to over 90 per cent. by the end of 1995. Another way the customer can keep track of calls and their costs is by requesting itemised billing. This is available to 75 per cent. of BT's customers and all of Mercury's and Vodafone's. These and the other measures recommended by the MMC, in our view, provide adequate safeguards for the customer.
There is an additional aspect of this amendment which raises an important issue of principle: it seeks to introduce a new way of modifying a public telecommunications operator licence, which is
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currently possible only by agreement between the operator and the director general or upon reference to the MMC. To add a new power for the director general to change the licence unilaterally seems to me to open up new uncertainties for telecommunications operators and place them in a significantly weaker position than they have hitherto had in the regulatory system.
In the light of the safeguards which already exist which flow directly from the Monopolies and Mergers Commission's consideration of this very question in 1988, I consider that the proposed amendments are unnecessary.
Lord Williams of Elvel: I am most grateful to the noble Lord for his full response. This is a complicated subject and we shall certainly have to read what he has said. I must say that I am not entirely convinced by the noble Lord's response, but I shall have to study it with greater care and consider what to do after that. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3 [Information to be given to customers about overall performance]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 33:
Page 4, line 26, after ("inform") insert ("free of charge").
The noble Lord said: In moving Amendment No. 33 it may be for the convenience of the Committee if I speak also to Amendment No. 112. These amendments are self-explanatory. As in the case of Amendment No. 33, I assume the consumer will be informed about the material in question without having to pay for that. I beg to move.
Lord Reay: I have some sympathy with Amendment No. 33 and agree that it is important that customers are fully informed about the standards they should expect and whether they are being achieved. I do, however, feel that this extra requirement is not needed. The way in which a designated operator disseminates information on overall performance is already subject to the agreement of the director general and in almost every conceivable circumstance I believe the director general would stipulate that the information should be provided free of charge. I say almost every conceivable circumstance advisedly. It is an important consideration that, in setting up independent regulators, we do not tie their hands in such a way as to impinge on their effectiveness. It is feasible that sometime in the future circumstances may change, for example the director general might see a need for a newly designated operator to recoup postal charges in some way. It is difficult to prejudge entirely future circumstances and I would argue that the discretion of the director general is the best safeguard rather than detailed requirements of the type proposed.
As regards Amendment No. 112, part of Clause 22 requires an electricity supplier who intends to take a customer to court to recover money owed for the provision of electricity supply services to give the customer at least 28 days' notice and to inform him of his rights under this clause to have any dispute over the amount owed to be determined by the director or

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an arbitrator. The amendment would mean that under no circumstances could the customer be charged for action the supplier had to take to fulfil this duty. The Secretary of State may prescribe the manner in which the supplier must inform customers about possible court action. This will enable him to ensure that the way customers are informed will in practice avoid customers incurring a charge.
I have some sympathy with the thrust of the amendment as I do not believe that in general customers should be charged for being informed of their rights and given a chance to settle a dispute without going to court. But the requirement to inform also covers the small minority of customers who have no dispute but simply refuse to pay. This is as it should be—even such people have the same rights to be informed as those involved in a genuine dispute. It may, however, be appropriate to make different arrangements over paying for action the supplier has had to take in relation to such customers. If after consultation the Secretary of State believes this to be necessary, he should have the power to make those arrangements.
Lord Williams of Elvel: I am grateful to the noble Lord for that response. It seems to me that he sympathises with my amendments but refuses to put them on the face of the Bill. That seems to me a rather perverse attitude, but there is nothing much I can do about it. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3 agreed to.
Clause 4 [Procedures for dealing with complaints]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 34:
Page 4, line 45, leave out ("him") and insert ("the Director").
The noble Lord said: Surely in the new Section 27E to be inserted in the Telecommunications Act 1984 it should be the director who decides who should be representative rather than the operator. Is that not right? I beg to move.
Lord Reay: This amendment would require the director to lay down the persons and bodies to be consulted by a designated operator on its proposed complaints procedure. The establishment of a procedure for handling complaints is principally a matter of day to day management for the designated operator. In order to ensure that the interests of customers are properly protected, the Bill requires the operator to consult customer representatives and to get the director's approval for the procedure. Since it is for the designated operator to undertake the consultation, in our view it would be an unusual and unnecessary interference in the operator's business for the director to dictate who should be consulted.
The Bill requires a designated operator to have a complaints handling procedure, but the operator cannot establish such a procedure without the director's approval. If the director considers that there are deficiencies in the proposed procedure as a result of inadequate consultation, it is open to him to withhold his approval.
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I consider that these arrangements provide adequate protection for customers and that there is no justification for the interference in the operator's business which would result from the amendment.
Lord Williams of Elvel: In practice, therefore, the noble Lord is saying that the operator will decide who he consults, but, if the operator does not consult the people the director thinks he ought to consult, then the director can tell him to change his procedures. Is that right?
Lord Reay: The operator cannot establish a complaints procedure without the director's approval. If the director is not satisfied with the procedure which the operator has used and considers that the consultation has been inadequate, it is open to the director to withhold his approval.
Lord Williams of Elvel: Then that meets my point that the director has the final say on consultation. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4 agreed to.
Clause 5 [Disputes about discrimination etc. in fixing charges]
[Amendments Nos. 35 to 38 not moved.]
Clause 5 agreed to.
Clause 6 [Billing disputes]
[Amendment No. 39 not moved.]
Lord Allen of Abbeydale Lord Allen of Abbeydale moved Amendment No. 40:
Page 7, line 9, after ("which") insert ("in all the circumstances is fair and reasonable for").
The noble Lord said: In moving Amendment No. 40, I should like to speak also to Amendment No. 41. I shall go further and point out that something has gone wrong and that Amendment No. 41 should read:
"leave out ('is entitled')",
rather than just "entitled".
I welcome the clause giving Oftel the power to determine billing disputes, which make up such a large proportion of complaints. However, I remain uneasy about the limitation of the power to determine disputes only in accordance with the contract. That is a point I made at Second Reading.
It is reasonable enough that an operator should be able to recover payment for calls which its equipment shows as occurring on a certain line, but trouble arises because of the insecurity of the network. When I tried to explain the problem at Second Reading I failed to make myself clear because the Minister, when responding to the debate, did not answer the point I had tried to make. He said:
"If a telephone line is tampered with—and that occurs outside the customer's premises,—then British Telecom is only entitled to the cost of calls that have been legally made". —[Official Report, 14/2/92; col. 960.]
I am not absolutely sure that the note which the Minister received from the Box about legality was quite right. As I understand it BT undertook last March not to press customers on calls which did not cross the network terminating point, but the changes to the contract have still not been made so that in contractual terms the customer is still liable for calls which do not cross the network terminating point.
More important than that, I venture to think that the Government's response, both here and in another place, has paid insufficient regard to reality. In the end it comes down to problems of proof and in any dispute the operator has all the big guns.
Perhaps I may take as an example the case of a member of the Consumers' Association. He was baffled when he was woken up by his telephone ringing during the night. It rang three times between 2 o'clock and 4 o'clock in the morning. It was his BT call-back facility informing him of the cost of the last call he had made. That is a useful service for people who work from home. The individual took the matter up with BT and was told to ignore the problem as the facility was obviously not functioning properly. However, when his bill came it showed the 0898 numbers which matched the times of the calls which had woken him up. He then wrote to BT, who said that their print-out showed that the numbers were used during the period of monitoring and that there was no reason to doubt the charges. The matter was taken up with Oftel, which in its turn said that there was nothing it could do. No one seems to have taken any account of the extraordinary surrounding circumstances. In the end, instead of taking the matter to arbitration—as he could have done then but will not be able to do once this Bill is passed—the customer paid up, as is the normal solution in such disputes, rather than face the risk of disconnection.
Clause 6 will give the regulator new powers to demand information from the operator but in the end, as I understand it, he will still be bound by the strictures of the operator's contract. The amendment suggests that he should be given a specific power enabling him to look beyond the contract and to determine a case according to what is in the circumstances fair and reasonable.
From what the Minister has been saying I have a fair idea of what the Government's answer to that may be, but it seems to me only right that, if the regulator is to be given new responsibilities, he should be given the power to carry out those responsibilities effectively and fairly. As we were reminded earlier, he is judge and jury where billing disputes are concerned, and he should have the power to look at all the circumstances where there is a dispute. I beg to move.
Lord Swinfen: When responding to the amendment, will my noble friend let the Committee know how accurate the telephone companies' metering equipment is? If it is inaccurate that could lead to many disputes, particularly with some of the more modern systems where a call which one makes from a number other than one's own can be charged to the account for one's own number.
Lord Reay: This linked pair of amendments would give the Director General of Telecommunications a very wide power to assess the amount which a customer should pay when a bill is in dispute. The present wording of the Bill allows him to determine only what the designated operator is "legally entitled" to recover.
The clause as it stands is intended to enable the director general to determine cases where the
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customer is questioning the accuracy of the bill. It includes a power for the director general to obtain such information as he may require from the designated operator in order to arrive at his decision on the case. That could well include requiring evidence which would satisfy him that the customer's line had not been tampered with.
The amendments, however, would enable customers to try to persuade the director general that he should consider other matters such as their ability to pay. In other words, it would give the director general far wider discretion and it could potentially deprive the operator of payment for units used on the subscriber's premises. That would take away from the consumer the responsibility for paying bills legally incurred. We believe that that is a principle which should be retained.
The noble Lord raised the matter of unauthorised calls. At the end of the duopoly review the director general announced that he would be asking British Telecom to agree that customers would not be liable for calls made outside their premises. The formal amendment to BT's contract with its customers has still to be finalised but BT assure me that its staff has been instructed to interpret the existing contract in that way and similar instructions have gone to the Chartered Institute of Arbitrators, which is responsible for BT's arbitration scheme for settling disputes.
I recognise that there may be difficulties in some cases in providing evidence of what has gone on. That point was taken up by my noble friend. But BT will still be in the position of trying to obtain payment and therefore it will have to provide evidence sufficient to satisfy the director general that the meter has recorded accurately the units used and that network security has not been violated.
Finally, I should like to take this opportunity to say to the noble Lord, Lord Allen of Abbeydale, that the Bill takes away no existing rights to go to arbitration.
9 p.m.
Lord Swinfen: Before my noble friend sits down, perhaps he will clarify a point with regard to the metering equipment. If a customer is in dispute, is there any way in which he can make an independent check on that equipment or are all checks carried out by British Telecom or Mercury, as the case may be?
Lord Reay: The amendments to BT's licence, which was agreed last year, require meters to be approved to a designated standard of accuracy.
Lord Allen of Abbeydale: I am grateful for the information about arbitration. Obviously I misread the Bill. For the rest, I am afraid that I am not very satisfied with the reply. The amendment has nothing whatever to do with disputes about the ability to pay. It was directly concerned with the question of whether a charge had been wrongly made. The illustration that I gave was intended to demonstrate that point.
It may be that the amendment ought to be drafted in a different way. As I said at the beginning, it is defective as it appears on the Marshalled List. In the light of what the Minister said, I should like to think

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again about the matter and perhaps return to it at a later stage. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 41 to 46 not moved.]
Clause 6 agreed to.
[Amendment No. 47 not moved.]
Clause 7 [Deposits]:
Lord Desai Lord Desai moved Amendment No. 48:
Page 8, line 27, at end insert ("and
(c) the conditions under which a deposit shall be returned in a single payment to the customer.").
The noble Lord said: This amendment stands in my name and that of my noble friend Lord Williams of Elvel. The straightforward point is that, in as much as Clause 7 lays down the conditions under which a designated operator will require deposits, we want to add the condition that the deposit will be returned to the customer in a lump sum. The current practice is to deduct the deposit from future bills.
There is a certain amount of evidence from citizens advice bureaux in many parts of the country that customers find that method both surprising and inconvenient. It is surprising because it has not been made clear to them that the deposit will not be returned in a lump sum. But also there is a delay of about four to five quarters before the amount is even credited to their account.
The amendment seeks to ensure that the deposit is returned in a lump sum and in one fell swoop. If there were to be any delay it would be ideal that the lump sum should be repaid with interest. I beg to move.
Lord Swinfen: I support this amendment. There are many people who have small incomes and find considerable difficulty in paying the deposit at all. I have in mind in particular disabled or elderly people. If they are told that the deposit will be returned to them after a year, they may well rely upon that sum and be put to considerable financial inconvenience if the deposit is not returned as a whole.
Perhaps my noble friend can enlighten me on another point. Years ago, when I was managing rented property, the question arose of deposits in respect of rent. I was told that there was never any point in taking a deposit in respect of rent because it counted as rent in advance. Therefore until the deposit was used up, the tenant need not pay that rent. I wonder whether the same position applies to deposits on telephone and power accounts and whether a deposit, which after all is a sum against non-payment of the account when the account is due, is legally payment in advance for those supplies and services.
Lord Reay: This amendment relates to the process whereby the director general and the designated operator agree upon criteria for the requirement to pay a deposit. The effect of the amendment would be to ensure that the criteria included provision for the customer to be given back the deposit in one lump sum under certain conditions.
I understand that BT's practice has usually been to credit, against the fifth quarterly bill sent to the customer, the amount of any deposit it has held. That
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has worked to the disadvantage of customers who only incur very low bills. We have challenged BT on this question and it recognises the force of the argument that those customers should not have to wait until another quarter has passed before they are reimbursed. Accordingly, I am very happy to be able to tell the Committee that BT has agreed to change its procedure, so that any customer whose fifth bill does not cover the return of the full deposit will automatically be sent a cheque for the remaining sum with interest. The new procedure will require some programming and organisational changes for BT but we expect it to come into effect in May.
My noble friend asked me a specific and separate question, to which the answer is that the deposit is not a payment in advance in the case of a BT bill.
Given that the problem which this amendment seeks to solve by legislation has now been overcome by negotiation, I have no doubt that the noble Lord will wish to withdraw it.
Lord Williams of Elvel: Perhaps we may clarify the matter. The issue has been resolved by negotiation with BT. However, does it mean that it will be resolved with all designated operators? I presume that it is an assurance; it is not legally binding. Alternatively, is it part of the conditions of licence? If it is not, it would be better to put the matter on the face of the Bill. We are pleased with the news that the noble Lord gives us but we are not sure of its status.
Lord Reay: There are only two designated operators. The noble Lord wonders whether the matter has been pursued in the case of Kingston upon Hull. It has not yet been pursued in that case.
Lord Williams of Elvel: Since it is such a desirable objective, should it not be put on the face of the Bill with the agreement of all sides of the House?
Lord Reay: The noble Lord asks for too much. I believe that I gave a satisfactory answer to the amendment. The matter which the amendment seeks to put in the Bill has been dealt with and the outcome that he wishes has been produced. I believe that that is a very satisfactory situation for all concerned.
Lord Swinfen: I am sorry but I am not satisfied with what my noble friend said. I believe that the noble Lord, Lord Williams, is not satisfied. There is nothing to guarantee that British Telecom will not go back on the current suggested agreement. I gather that so far it is only a suggested agreement. There is no guarantee that the other operators will come up to scratch. It would do absolutely no harm whatever to put the issue on the face of the Bill. It is a matter of good faith. I see absolutely no reason why my noble friend should decline to do that. He may not like the exact wording. However, since he is agreeable—he says that people wish to make such a change—there is no reason why at the next stage he should not bring forward an amendment to the same effect with wording that suits him.
Lord Reay: Kingston is a small operator compared with BT. It is not a matter that has yet been pursued with it, but it will be. BT was challenged by us on this

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question. There is no question of BT not yet having agreed. It has agreed to change its procedure. The arrangement which the noble Lord seeks to achieve by legislation has already been achieved. Therefore I see no reason why a provision should be put on the face of the Bill. However, since noble Lords are so insistent, I am willing to consider the matter further without any commitment.
Lord Desai: I thank the Minister for that clarification and concession. If BT has agreed to change its procedures, it will help BT if everyone else does so too. BT may welcome the fact that if it has decided to behave, everyone else ought to be made to behave too and the matter not left to chance. However, in the circumstances I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 49 not moved.]
Lord Reay Lord Reay moved Amendment No. 50:
Page 8, line 29, at end insert:
("(2A) Before settling, or varying, the criteria the designated operator shall consult persons or bodies appearing to him to be representative of persons likely to be affected.
(2B) The designated operator shall—

(a) prepare a summary of the criteria, with the agreement of the Director;

(b) publicise it in such manner as may be approved by the Director; and

(c) send a copy of it, free of charge, to any person who asks for one.").

The noble Lord said: The noble Lord, Lord Allen of Abbeydale, and my noble friend Lord Swinfen put down an amendment which I liked and was disposed to accept. However, there were difficulties with the precise wording chosen. I have therefore put down an amendment which seeks to carry out the proposal of the two noble Lords.
The effect of the amendment is to require a designated operator to consult customer representative bodies before setting the criteria for charging a deposit. It also requires that the criteria be publicised and sent free of charge to anyone who requests it in a similar manner to the way in which performance standards are to be publicised. I believe that it will be of considerable benefit to customers to make the practice on deposits more transparent. I recommend the amendment to the House.
Lord Swinfen: I thank my noble friend. I am delighted that I was not called upon to move my Amendment No. 49 and for once to be in total agreement with my noble friend.
On Question, amendment agreed to.
Lord Reay Lord Reay moved Amendment No. 51:
Page 8, line 32, at end insert:
("(3A) Subsection (2A) above does not apply to any variation made in compliance with a direction under subsection (3) above.").
On Question, amendment agreed to.
9.15 p.m.
Lord Swinfen Lord Swinfen moved Amendment No. 52:
Page 8, line 32, at end insert:
("( ) The criteria shall provide that disabled people shall be exempt from the requirement to pay a deposit.").
The noble Lord said: The effect of the amendment would be to exempt disabled people—
Lord Williams of Elvel: I am sorry to interrupt the noble Lord so early. Is he speaking also to Amendments Nos. 54, 55 and 59?
Lord Swinfen: I was not but I should be delighted if the noble Lord would like to speak to them once I have moved the amendment. At this hour of the night I am not always as awake as I ought to be.
The effect of the amendment would be to exempt disabled people from the requirement to pay a lump sum security deposit as a condition of receiving a telephone service. Although the exemption will apply to all disabled people without the necessity of a means test, it is likely that many people in this category will either already have a telephone service or will not be required to pay a deposit under existing criteria because they have already established a satisfactory payment record. It is anticipated, therefore, that the majority of beneficiaries of the exemption will be new subscribers who are likely to be on a low income and have not previously had the opportunity to establish any telephone payment record.
Most disabled people are receiving below average incomes. The OPCS survey The financial circumstances of disabled adults living in private households (1988) showed that 75 per cent. of disabled people depend on benefits as their main source of income. Under the Government's community care policies many more vulnerable disabled people can be expected to be living alone or with carers in the community. Access to a telephone will be vital to facilitate their care and their ability to remain independent for as long as possible.
Evidence from citizens advice bureaux, however, indicates that the requirement to pay a deposit is a major obstacle to many disabled people wishing to obtain a telephone service and in some instances a complete barrier preventing them from obtaining any service at all. For many of these people the telephone is an essential service and a lifeline.
A CAB in Merseyside reports the case of a client with severe angina, living alone and receiving invalidity benefit and income support. His doctor says that he needs a telephone. The CAB has successfully helped him to appeal against the refusal of a budgeting loan from the social fund to pay for the cost of installation. But the client now has a letter from British Telecom requiring £125 security deposit. He cannot afford this and cannot see how he can obtain a telephone.
A CAB in Cheshire reports the case of a client with two dependent children who was terminally ill with cancer, separated from her husband and in receipt of income support. She had recently had an operation and was advised by her consultant that she must have a telephone. She received from a charity £150 to have the telephone connected but BT demanded £350 deposit. British Telecom would not move when approached by the CAB. It was determined to get its deposit, showing absolutely no compassion. The CAB was in the process of obtaining another donation from a charity when the client died.

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I welcome Clause 7 which will require the telephone companies to establish criteria for deposits, subject to the agreement of the regulator, and provide a right of appeal against deposit decisions to the director. I also welcome the recent change in policy by British Telecom, following intervention by the regulator, which has resulted in a new ceiling on deposits of £150. This will undoubtedly be of considerable assistance to customers in such a position. However, the requirement to raise a lump sum of up to £150 in order to gain access to a telephone service will still prove to be a barrier to many would-be customers. I beg to move.
Lord Reay: I have some sympathy with the effect of this amendment, which would relieve the disabled of the need to pay a deposit and thus ease access to a service which they might need. The Government are similarly concerned that the system shall be fair to those who are disadvantaged, such as the disabled, and Clause 7 of the Bill will ensure that the system is fair, by making the setting of criteria on deposits subject to the scrutiny of the director general.
However, I do not think a blanket exemption from deposits is in fact the right solution. There is already considerable general protection for the disabled under existing legislation and the licence conditions of BT. The director general has a duty to promote the interests of consumers, including, in particular, those who are disabled or of pensionable age. That is laid down under Section 3 of the Telecommunications Act. The director also has a specific body, the Advisory Committee on Telecommunications for Disabled and Elderly People, set up under the Telecommunications Act 1984, to advise him on matters affecting the disabled and elderly.
Clause 7 already provides a check on the criteria for determining whether a deposit should be paid, and if so at what level, by requiring designated operators to seek the director general's approval. The director general can also, under subsection 3, require the operator to modify the criteria. In addition, where a customer is unhappy at a request to pay a deposit, he will be able to appeal to the director general to decide whether the criteria have been properly applied. The director general will have the authority to decide, for instance that it is inappropriate, in a particular circumstance, for a disabled customer to pay a deposit even though he has not previously been a customer.
In addition, BT already pays special attention to the disabled. The needs of disabled and elderly persons are specifically covered in BT's general code of practice and a Guide to Service for the Disabled has also been published. BT's licence requires them to consult the director general from time to time about the supply and connection of apparatus for the disabled. Furthermore, BT provides a wide range of other services helpful to the disabled, including the Supportline Scheme, and has established an Action for Disabled Customers department to help it meet the needs of the disabled.
However, I can assure the Committee that neither the Government, Oftel nor BP are complacent about the issue. Conscious of the anxieties expressed during
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the passage of the Bill in another place, BT was asked to look again at its policy on deposits with regard to the elderly and disabled. As a result, BT now propose to lift the standard credit vetting of these groups in cases where the customer has applied for the Supportline Service or where the local authority is providing assistance to the customer with the cost of having a telephone under the Chronically Sick and Disabled Persons Act 1970. Where those conditions apply BT will not require a deposit unless the customer has a recent history of default with BT.
That policy will be introduced on a trial basis to iron out any problems which may arise, but the intention is to continue with the policy after the trial. It is a further step in the right direction and serves to show that the combination of existing arrangements and the new provisions in the Bill is robust enough to ensure that the elderly and disabled are properly catered for. I therefore hope that my noble friend will agree that his amendment is not necessary.
Lord Swinfen: I thank my noble friend for his response, particularly the last part, which I found to be of considerable interest. To a large extent the first part of his reply was irrelevant. The amendment deals solely with deposits and not with other services for disabled people. However, the last part was of considerable interest. I should like to read it carefully when it is published in Hansard and consider it further. I shall then decide what I wish to do at a later stage of the Bill. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Ezra Lord Ezra moved Amendment No. 53:
Page 8, line 32, at end insert:
("(4) The criteria settled shall provide that the amount of the deposit required shall be reasonable with regard to the customer's ability to pay, where the customer consents to a means enquiry.").
The noble Lord said: This amendment too deals with the question of deposits. Its intention is to ensure that any potential telephone customers who may experience difficulty in paying a deposit are offered the option of making a declaration of their means and of having the amount of deposit fixed with regard to those means.
It is not the intention that all new customers should submit to a means inquiry. A great many customers will not be asked to pay a deposit at all. Of those who are required to pay, many will have no difficulty in meeting the request or will not wish to reveal their means to the telephone company. The deposits will be fixed according to the criteria settled under the present clause as just amended. But the amendment that I am proposing is aimed at those who, because of low income, are at risk of being barred from access to a telephone service altogether by the request for a deposit which is out of proportion to their means.
Evidence from the citizens advice bureau indicates that the requirement to pay a deposit is a major obstacle for low income clients wishing to obtain a telephone service. In some cases it acts as a complete barrier preventing the would-be customer from getting any service at all. I beg to move.
Lord Reay: The effect of this amendment would be to make the criteria set for seeking a deposit take account of the customer's ability to pay for the service, provided that the customer agrees to some assessment of his ability to pay. I can understand the concern that a low income customer regarded as a potential credit risk should not be charged the same deposit as a wealthy customer similarly regarded as a risk. However, I would be surprised if many customers in either category would be prepared to undergo any form of means test.
I appreciate the sad fact that many of those customers on low incomes come into the category of credit risk. However, if BT was not able to require a deposit commensurate with the risk of non-payment, the cost of default would fall on creditworthy customers who were paying their bills and some of these would be on low incomes. I remind the Committee that the cost of customers defaulting on BT bills was £170 million in the financial year 1990–91.
The new provisions of Clause 7 of the Bill will aid the position of all customers regarding deposits. The right of appeal to the director general is provided where customers are unhappy at a request to pay a deposit. The director general will be able to look at whether the deposit criteria have been applied correctly or whether they are inappropriate in the particular case. In the case of someone with a low income, the director general will be able to consider whether there are particular circumstances which should be taken into account. If he decides the criteria have been applied incorrectly or are inappropriate in that case, he can direct the designated operator to reduce the amount of the deposit or lift the requirement to pay any deposit at all. In the light of that reply I hope that the noble Lord will therefore agree that the customer is protected under this Bill and that he will agree to withdraw his amendment.
Lord Ezra: I thank the noble Lord for those explanations. However, I am sorry that he has not been prepared to accept the amendment. It has been proposed by the citizens advice bureaux after a great deal of experience encountered at its various locations. In its opinion it would considerably ease the problem of many who turn to the CAB. Nonetheless, I shall consider carefully what the noble Lord has had to say. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 54 not moved.]
Lord Brightman Lord Brightman moved Amendment No. 55:
Page 9, line 3, leave out ("may") and insert ("shall").
The noble and learned Lord said: This amendment arises on Clause 7 which deals with disputes about pre-telephone connection deposits. At page 8, line 21 of the Bill, it is provided that a telephone company shall settle criteria by reference to which the obligation of an intending telephone user to pay a deposit is to be determined. Subsection (3) at the top of page 9 reads:
"If the Director or arbitrator (or arbiter) considers that the criteria have not been correctly applied, or that they are inappropriate in the particular case, he may determine—

(a) whether the person concerned is to be required to pay a deposit, and

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(b) if so, the amount which he is to be required to pay, and"—

I add the word "may"—
"give the appropriate direction to the designated operator".
Surely, if the director or arbitrator considers that the criteria have not been correctly applied, or are inappropriate, he should be under an obligation to give the appropriate direction to the telephone company. Surely "may" in line 3 should read "shall". The Committee will note by contrast that in other cases of dispute the director or arbitrator is bound to make the appropriate order. Page 2, line 39, reads,
"shall be determined by order".
On page 6, lines 6 to 8, we see the words:
"shall … make such order as he considers appropriate"
—not "may".
I cannot understand why, in the case of a deposit dispute where it is determined that the criteria have not been correctly applied, there is no obligation to give an appropriate direction. I beg to move.
9.30 p.m.
Lord Reay: Under the provisions of Clause 7 the director general, or his appointed arbitrator, can consider complaints from customers about deposits. Subsection (3) of that clause then states that the director general "may" make a determination on the appropriateness of a deposit. The effect of this amendment would be to state that the director general "shall" make such a determination. It seems it is intended to remove any discretion of the director general to do otherwise.
I sympathise with the concept that the director general must make a decision on such a dispute referred to him by a customer, but in practice the director general could be open to judicial review if he refused to do so. It would only be in a very exceptional circumstance that the director might need the discretion not to proceed—perhaps if a customer withdrew a complaint—but in our view it would be unnecessarily restrictive to prevent any flexibility in the Bill. We should like to keep this discretion in existence. I hope therefore that the noble and learned Lord will not press the amendment.
Lord Brightman: I thank the noble Lord for his reply, but I must say that I cannot understand it. The scenario is that the director has decided that the criteria have not been correctly applied, or he has decided that they are inappropriate. The Bill states that in those cases, where he has made his determination, he still has a discretion on whether he gives effect to it. I must confess that to me it is a total nonsense.
Lord Williams of Elvel: I agree with the noble and learned Lord, Lord Brightman. If a complainant withdraws his complaint then there is no reference; the reference is withdrawn under subsection (2). So there is no question of whether the criteria are appropriate, inappropriate, or correctly applied. But once they go through with the reference—that means that the complaint has not been withdrawn—and the director has to determine, as the Bill states and as the noble and learned Lord quotes, where the criteria have not been correctly applied, or are inappropriate, then it

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must follow that the director or the arbitrator, or arbiter, must take action. It does not seem to me that there is any discretion allowable in the matter at all.
Lord Swinfen: As the Bill is drafted the director or arbiter is allowed to leave everything up in the air; it is just nebulous, and it makes absolute nonsense. My noble friend should reassess his position and give an undertaking that he will consider very seriously what the noble and learned Lord said.
Lord Ezra: I should like to support what other noble Lords have said on this matter. It seems to me the most extraordinary inconsequential use of language. If the director decides that the criteria have not been correctly applied he must determine whether or not certain action has to be taken. There seems to be no point in leaving the rest of the sentence conditional.
Lord Hacking: I should like to join with other noble Lords and ask the Minister to reconsider this point.
Lord Reay: In the light of the strong arguments deployed by noble Lords around the Committee I am willing to look at this matter again. However, I cannot give any commitment.
Lord Brightman: I am most grateful to the noble Lord. In the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 56 to 59 not moved.]
Clause 7, as amended, agreed to.
Clause 8 [Disconnections]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 60:
Page 9, line 40, at end insert ("and any power of that designated operator to discontinue the provision of that service shall be exercised only in accordance with a code of practice on disconnections approved by the Director.").
The noble Lord said: As the Committee will be aware, the gas, water and electricity utilities have statutory codes of practice on disconnections included in their licences. For some reason telecommunications does not. It is not apparently considered to be an essential utility. Indeed British Telecom, so far as I am aware, does not publish its disconnection figures.
Noble Lords will be in no doubt that the telephone is an essential means of participating in modern life and in some cases it is a means of survival. There are particular groups such as elderly people and people with disabilities for whom the telephone can be neither more nor less than a lifeline. Social services departments increasingly rely on telecommunications for successful implementation of community care policies. The telephone is a vital part of modern life. It seems to us that the telecommunications business should be brought into line with gas, water and electricity. That is what we intend to achieve by this amendment. I beg to move.
Baroness Oppenheim-Barnes: I hope that my noble friend will not accept this amendment. I entirely understand the point about people for whom the telephone is a lifeline and of vital importance but for most other people the telephone is not vitally
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important. There are more telephone boxes situated up and down the country, and in working order, than there have been for many years. It is perfectly right that the disconnection rule has been made with regard to gas, electricity and water. I cannot accept that people who are in good health and are able to go out to a telephone box should have this special consideration.
Lord Reay: This amendment would compel designated operators to agree a code of practice on disconnections with the director. BT has already established procedures so that customers are not disconnected for debt unless they have been given every opportunity to pay their bill or contact the company to discuss the problem. Its policy is to try and come to an arrangement with customers who are experiencing difficulties, and as a result the number of people actually disconnected is a small proportion of those initially warned about disconnection.
BT also has special arrangements for the disabled, such as the protected service scheme, which enables "at risk" customers to nominate a friend or relative as guarantor. If the subscriber does not pay the bill BT will contact the guarantor who may then pay instead. This can provide a good deal of peace of mind as it helps avoid the possibility of disconnection as a result of bills being inadvertently left unpaid, for example, during an extended stay in hospital.
The director recently issued a consultative document on the future of BT's price caps. In that document he acknowledged that there is public concern about the company's policy on disconnections. In recognition of this concern the director has said that he intends to review BT's disconnections policy. He will do this after the passage of the Bill so that he can conduct his review in the context of the new regulatory framework which is being laid down. I welcome this review.
The director general already has the power to seek amendments to BT's licence if he sees the need to establish a more formal code of practice on disconnections. We must wait and see the outcome of his review. I hope that the noble Lord will be prepared to allow the director to come to a judgment after assessing all the facts and that he will not press his amendment.
Lord Williams of Elvel: I am glad to hear that the director general is making this review. I believe that that is very important. I hope very much that, as a result, there will be a code of practice on disconnections. I am afraid that I fundamentally disagree with the noble Baroness, Lady Oppenheim-Barnes; where I come from in mid-Wales, telephone boxes are situated about five miles apart and there are many sick, elderly and disabled people in the area. If the gas, water and electricity utility codes of practice apply to the well off, I do not see why a telephone disconnection code of practice should not also apply to them.
Baroness Oppenheim-Barnes: We are not talking about well-off people. I made it perfectly clear that there should be a no-disconnection policy in relation

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to elderly and disabled people. I made the distinction quite clear. I was speaking about people who are healthy and quite capable of walking five miles.
Lord Williams of Elvel: To my mind that constitutes a code of practice. However, let us not argue about definitions. I thank the Minister for his response. We shall certainly wait to see what the director general brings forward after the review. I am glad that he is taking such matters into consideration. In the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 8 agreed to.
9.45 p.m.
Clause 9 [Enforcement of standards of performance, etc.]:
Lord Hacking Lord Hacking moved Amendment No. 61:
Page 10, line 1, leave out ("achieve") and insert ("conduct his business in such a way as can reasonably be expected to lead to his achieving").
The noble Lord said: I should point out to Members of the Committee that I intend to speak just to Amendment No. 61. Amendment No. 63, which is also tabled in my name and grouped with this amendment, covers a different matter. Amendment No. 113 which is tabled in the name of the noble Lords, Lord Williams of Elvel and Lord Desai, has, so far as I can ascertain—although the noble Lords will no doubt put me right if I am wrong—no connection whatever with the amendment now before the Committee. The amendment is of considerable importance to the telecommunications industry.
Lord Williams of Elvel: I am sorry to intervene. But do I take it that the noble Lord is to speak separately to Amendment No. 63 and therefore allow us to speak separately to Amendment No. 113?
Lord Hacking: I can only speak for myself. As I said, I intend to speak separately to Amendment No. 63. The amendment is of considerable importance to the telecommunications industry. It seeks to relieve the industry of the absolute duty in the enforcement of the new overall standards of performance. That is fair; the industry is rightly worried about matters beyond its control. For example, as was cited on Second Reading by the noble Baroness, Lady Gardner of Parkes—who, alas, is not present in the Chamber—the extensive damage to the overhead cabling in the 1987 hurricane fell into the category of events over which British Telecom had no control.
I thought it right to investigate this matter further and inquire of the circumstances in more detail. I learnt that no degree of reasonable planning and forethought could have enabled British Telecom to tackle the damage caused by the storm so quickly and efficiently that there would have been no decline in overall performance. Yet, in the Bill, any failure to meet the overall standards will be treated as if British Telecom has breached its licence so enabling the director to take enforcement action.
On Second Reading, as some Members of the Committee may recall, the noble Baroness, Lady Gardner of Parkes, cited other examples of deliberate
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action to vandalise and put pay phones out of action. When I raised the matter on that occasion, I argued that not only was it unfair and impractical but that it also displayed an unevenhandedness by the Government towards the regulation of the utility industries. I drew attention to the equivalent position for the gas industry which is covered in Clauses 11 and 12 of the Bill and in the new Section 33C(3) of the Gas Act 1986.
I also drew attention to Clause 23 of this Bill and to the new proposed subsection (3) of Section 40 of the Electricity Act. Therefore it appears that the telecommunications industry is being paired off with the water industry, which is under an absolute standard under the Water Industry Act 1991.
As the Minister was unable to give me an answer when he replied to the Second Reading debate, I pressed him on whether he would write to me. The Minister was kind enough to write to me on 28th February giving a reply that I can only describe as a bit "Delphic". In his letter the Minister stated:
"We have sought in the Bill to build on the regulatory frameworks which already exist for each utility."
He then cited the public electricity supply licence where the performance standard is monitored under a reasonability clause but pointed out that the test of reasonability was now shifting from the company to the regulator. Having referred to the gas industry, his letter continued:
"There is no equivalent provision in licences issued to designated telecommunications operators so the enforcement provision in Clause 9 of the Bill is based instead on the powers in the Water Industry Act 1991".
There is an immediate and simple answer—that when the Telecommunications Act of 1984 was passed and the conditions of the licences were agreed—the Citizen's Charter had not been invented and there were no standards of performance!
However, as I thought that the matter should be checked in a little more detail, I looked at the public electricity supply licence and was able to confirm that what the Minister had told me in his letter concerning that licence was correct. I then looked at a number of the provisions of the licence that was granted to British Telecommunications on 22nd June 1984 by the then Secretary of State for Trade and Industry, the right honourable Norman Tebbit. On examining the provisions of Schedule 1, I found that the Minister's letter to me was not exactly correct. Condition 1, relating to the universal provision of telecommunications services, applies a general "reasonable" standard. In condition 5, on international services, one finds the words,
"necessary to satisfy all reasonable demands for such Services".
Condition 6, on the terms for the public emergency call services, again applies a practical test. The words used are "as swiftly as practicable". Under condition 11, on public call box services, one sees that the duty on BT relates to the continued provision of the service being practical—and so forth as the conditions continue. Therefore, it would be more accurate to say that the reasonability test applies under the actual conditions of this licence.
However, we must approach this logically. Surely it is not a question of what the existing licences contain

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but of what the correct position should be and, above all, of whether the application of regulations on all the utility industries should be even-handed. Questions therefore arise such as, "Why not one test for all the utility industries? Why different treatments for electricity and gas on the one hand and for water and telecommunications on the other? What features of supply are common to the water and telecommunications industries?".
I then focused on an important aspect of the supply of water. I thought about the issue of contamination and poison and concluded that a special or absolute duty might perhaps be reasonably applied to the water industry. Then I recalled my grandmother talking to me about the introduction of telephones at the end of the last century and about how her family, believing the medical evidence of the time, thought that she would be in grave danger of catching measles if she spoke over the telephone to a cousin who was suffering from them. I wondered for a moment whether the Minister was in possession of new medical knowledge and that now contagious or infectious diseases can be passed down telephone lines. If that is not the case, can we have a logical even-handed approach to this matter? Will the Minister therefore give the amendment favourable consideration? I beg to move.
Lord Reay: Amendment No. 61 would have the effect of changing the duty which the Bill currently places upon designated telecommunications operators to achieve standards of overall performance to a duty to conduct their business in such a way as could reasonably be expected to lead to the achievement of those standards. The amendment would therefore weaken the duty on designated operators to achieve overall standards.
The reason we have adopted a different approach for gas and electricity than for telecoms and water is that we have sought to build on the regulatory frameworks which already exist for each utility. For electricity, therefore, the enforcement provision in Clause 23 is based on a condition in the public electricity supply licence. It significantly strengthens the licence conditions so that the director general, rather than the company, is the judge of whether the company has made reasonable efforts to achieve the standards set. A similar enforcement provision is included in Clause 11 for gas, the other energy utility.
There is no equivalent provision in licences issued to designated telecommunications operators so the enforcement provision in Clause 9 is based instead on the powers in the Water Industry Act. That is because we decided, in the absence of any existing regulatory mechanism for telecommunications, that it would be appropriate to place the same requirement to achieve overall standards on designated operators as already exists for water and sewerage companies.
The key points to note are, first, that as a result of the Bill powers will exist for all the regulators to set overall performance standards to protect the consumer and there will be a clear discipline on each of the utilities, enforced by the regulator, to comply with the standards set. Secondly, the requirement to
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comply with overall performance standards will be enforceable for all the utilities by order as if it were a licence condition.
Ensuring that those broad provisions are common to all the utilities is more important than the exact replication of detailed enforcement powers. The existing regulatory framework for electricity, under which the Director General of Electricity Supply has already set and is monitoring overall performance standards, is working well and we believe that it is sensible to build upon this. I suggest that the amendment proposed is not desirable and I ask the noble Lord to withdraw it.
Lord Hacking: I can hardly be satisfied by that reply. I rehearsed the Minister's arguments when I read extracts from his letter. All he has done is to repeat his previous argument that I was challenging in my address to the Committee. I was seeking a logical answer to the points I was making. The Minister has not attempted to answer the points that I made. I remain dissatisfied.
Lord Reay: That points to the Government's consistency. I have been repeating the arguments I put in the letter that I wrote to the noble Lord.
Lord Hacking: I am arguing about the Government's inconsistency—their inconsistent treatment in the application of regulations to different industries for no good reason, or at least for no reason that the Minister or the Government have cared to advance. I shall not divide the Committee at this stage. I express great dissatisfaction. I remind the Minister, in case he has forgotten, that I remain anxious that this place may not be considering this matter again in full during the Bill's next stages. Nonetheless, with the concern that I express again, and with my dissatisfaction, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 9 agreed to.
[Amendment No. 62 not moved.]
Lord Hacking Lord Hacking moved Amendment No. 63:
After Clause 9, insert the following new clause:
(" . In section 16(5) of the Telecommunications Act 1984 there shall be inserted after paragraph (a)—
"(aa) that the telecommunications operator has agreed to take and is taking all such steps as it appears to the Director for the time being to be appropriate for the operator to take for the purpose of securing or facilitating compliance with the condition in question." ").
The noble Lord said: I shall speak to this amendment and not to Amendment No. 113 which is in the names of the noble Lords, Lord Williams and Lord Desai. The amendment deals with the licence enforcement order; in other words, the power of the regulator to order anyone who has breached conditions of licence to remedy that breach. The current position concerning the telecommunications industry is to be found in Section 16(5) of the Telecommunications Act 1984. In subsection (5) there are two circumstances under which the regulator can

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desist from the order of compliance. One is when the duties imposed on him under Section 3 preclude him from making the order. The second is when,
"the contraventions or apprehended contraventions are of a trivial nature".
However, what about when the licensee has agreed to take the necessary action to ensure compliance and is doing so? When this comes up in other industries, there is a simple and sensible solution. I refer, for example, to Section 25(5) (b) of the Electricity Act 1989. It is held that the director can desist from making the enforcement order when,
"the licence holder has agreed to take and is taking all such steps as it appears to the Director for the time being to be appropriate for the licence holder to take for the purpose of securing or facilitating compliance with the condition or requirement in question".
We can then turn to the water industry where a similar situation arises. Once again the Secretary of State or director can desist from making the enforcement order when—I quote from Section 19(1) (b) of the Water Industry Act 1991—
"the company has given, and is complying with, an undertaking to take all such steps as it appears to him for the time being to be appropriate for the company to take for the purpose of securing or facilitating compliance with the condition or requirement in question".
One goes then to the water industry, the next main industry which is the subject of the Bill. Again, one finds the matter being dealt with in a way which applies the same test. I am sorry; I am misleading the Committee. I am now referring to the gas industry. In the Bill Clause 44 adds to subsection (5) of Section 28 of the Gas Act the provision which your Lordships will find on page 40.
With that background, the question has to be asked: why not the same even-handed treatment for the telecommunications industry? It stands alone and separate from the other three industries. I wish to press the Minister to reply to that. Why the difference? I beg to move.
Lord Reay: If a telecommunications operator contravenes a licence condition—something which is in practice extremely rare —the director general is currently obliged to take enforcement action to remedy the situation. The effect of the amendment would be to remove or relax that obligation where the operator had subsequently agreed to take action to correct the contravention. In that case, enforcement action might not then be taken.
In practice, however, under the Telecommunications Act 1984, the director general already has flexibility over the application of enforcement action. He has discretion to make a provisional rather than a final enforcement order and then, if that has the desired effect and the operator takes steps to correct the contravention, no final order need be made. The director general also has discretion not to take enforcement action if the breach of a licence condition is of a trivial nature.
At present, the enforcement regulations are straightforward and clearly understood by all operators. The amendment would create uncertainty over the circumstances in which enforcement action would be taken and so detract from this position. It should be borne in mind that the regulator is
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overseeing a large number of telecommunications operators, not just the designated operators. He oversees some 130 operators in all. I can confirm that the regulator is content that the existing provisions work well and he would not wish to see them relaxed. Therefore I cannot accept the amendment.
Lord Hacking: The ball is on the other foot now. I have heard what the Minister said and I shall wish to consider that. On that basis I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
10 p.m.
Lord Ezra Lord Ezra moved Amendment No. 64:
After Clause 9, insert the following new clause:
("Referrals
("( ) In section 49 of the Telecommunications Act 1984 (investigation of complaints) the following paragraph shall be inserted in subsection (1) after paragraph (b)—
";or
(c) is referred to him by the Council under subsection of section ( ) below."").
The noble Lord said: In moving Amendment No. 64, I wish to speak also to the amendments that are grouped with it on the groupings list: that is, Amendments Nos. 65 to 71, 75 to 81, 90, 91, 94 to 98, 101—
Lord Williams of Elvel: I am sorry to interrupt the noble Lord but I am afraid that the noble Baroness, Lady Gardner of Parkes, wished to take Amendments Nos. 81 to 119—those are her amendments—outside the group on the groupings list. The noble Lord is absolutely right in saying that he is speaking to Amendments Nos. 64 to 71. He is also speaking to Amendments Nos. 75 to 80 rather than to Amendment No. 81.
Lord Ezra: I thank the noble Lord for that information, as it alleviates my task. In any event I wish to speak specifically on Amendments Nos. 64 to 71. We now reach the important issue of the consumers' councils. In the course of our Second Reading debate a number of noble Lords, including myself, spoke about the unevenness of the consumers' councils as regards the four utilities with which this Bill is concerned.
It was pointed out that only one of the four utilities—namely, the gas industry—has a powerful, strong and well constituted council. As regards the other utilities, the councils vary considerably. There is no common practice. Perhaps the weakest utility of all in this regard is the telecommunications industry. I introduce these amendments to strengthen that council. It seems appropriate in a Bill of this kind which is concerned with strengthening the position of the consumer that the consumers' councils should form a significant part of the provision.
At present in the telecommunications sector there are four territorial committees with two specialist committees. It is felt that the specialist committees work pretty effectively but that the four territorial committees do not play a role which is in any way similar to the role exercised by the gas consumers' council. It is that deficiency which the amendments

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seek to put right. This matter is a real test of the seriousness of the Government in concerning themselves with safeguarding the interests of the consumer in these important industries. If they are serious about that, they should put right this anomaly.
It has always seemed to me difficult to understand why we should have these different consumers' council regimes. The utilities all provide essential services. The interests of the customers are fully taken into account and it would appear that in all cases there was justification for powerful consumer bodies. The task of the director is to ensure that operators adhere to the conditions of their licences in providing a service. But there must be relatively independent consumer bodies to safeguard the interests of consumers. Those bodies must work alongside the important work of the director. I await with great interest the Minister's reply so that I may discover the views of the Government on the amendments. I very much hope that this will be among the proposals which the noble Lord, Lord Reay, will take away with him and ponder upon until we come back to the matter at a later stage. I beg to move.
Baroness Oppenheim-Barnes: I have a good deal of sympathy with the point made by the noble Lord, Lord Ezra. I do not know that I would go the whole way and would want to set up the panoply of a telecommunications consumers' council. However, I should like to take this opportunity to say for the record that from the consumers' point of view the status quo is not satisfactory.
Oftel is not readily accessible to the ordinary consumer. It is not easy for a consumer in any part of the country to find the telephone number of Oftel nor to get in touch with it. If consumers write to Oftel they may not receive a response for a considerable period of time. The absence of such a body means that there is no consultative procedure, which would be of benefit to the director general. Therefore I hope that my noble friend will consider putting it to the director general that there might be a review of consumer representation so far as concerns telecommunications.
Lord Desai: In rising to support the amendment in the names of the noble Lord, Lord Ezra, my noble friend Lord Williams and myself, I should also like to speak briefly to Amendments Nos. 65 to 71 and 75 to 80.
As the noble Lord, Lord Ezra, said, the purpose of the amendments is to strengthen consumer representation in the telecommunications field on the lines of the Gas Consumers' Council. In other words there would be a properly financed and staffed body which would be accessible to consumers—both individuals and businesses—and which would report regularly and take up complaints.
Since the noble Lord, Lord Ezra, has already spoken about the proposed telecommunications consumers' council perhaps I may point out that the Gas Consumers' Council, which is the model in this instance, currently cannot deal with complaints concerning supply matters. Given the lateness of the hour I wish to say only that the main purpose of
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Amendments Nos. 75 to 80 is to enable the Gas Consumers' Council to deal with supply matters as well. The amendments also concern many other smaller matters, all of which are designed to strengthen the accountability of the Gas Consumers' Council and the proposed telecommunications consumers' council.
Lord Reay: Did the noble Lord speak to all the amendments through to Amendment No. 80?
I shall speak first to the amendment moved by the noble Lord, Lord Ezra, and the other amendments in the group comprising Amendments Nos. 64 to 71. That series of amendments would scrap the existing structure of national and local telecommunications advisory committees and replace them with a single body analogous to the Gas Consumers' Council.
As the law stands the prime responsibility for protecting the interests of consumers lies clearly with the director general. That is his function. He has the necessary powers for that, enshrined in statute and in the public telecommunications operators' licences.
As the noble Lord explained, the telecommunications industry already has four national advisory committees, one each for Scotland, Wales, England and Northern Ireland. In our view the committees do a good job. They have a good track record in helping consumers to resolve problems. They have been in existence since before the 1984 Telecommunications Act. The members of each national advisory committee are appointed by the Secretary of State, not by the director general. Therefore, any fear that they are not sufficiently independent is unfounded.
In addition to the four national bodies, there are 160 local telecommunications advisory committees, either voluntary or sponsored by an organisation such as a chamber of commerce or local authority. They know what their responsibilities are and how to discharge them properly.
There exists then, in our opinion, a perfectly good statutory regime under which the director general has clear duties to promote the interests of consumers and clear powers to discharge those duties. He is able to draw upon the advice of the advisory committees in doing so, and all except the committees for England handle customer complaints in the first instance as well. All that is well established and would in my view only be harmed by what would amount to an upheaval which would follow from adopting the noble Lord's amendment.
Another problem raised by these amendments is that they would divide the responsibility for investigating customer complaints from the power to resolve them. In our view, that could cause confusion and delay to the customer. The proposed new council would be able to investigate complaints but not settle them by a legal determination. In order to have effective regulation there has to be one person or one body to make the decisions, with power to settle complaints in the interests of either the consumer or the business, based upon a fair judgment of the legitimacy of those complaints. Oftel has both the power and the independence to deal with consumers' problems with telecommunications operators.

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The noble Lord has implicitly endorsed our view that the regulator should remain the only person with the power to determine disputes. But I seriously question the benefit of a new organisation existing alongside the regulator to investigate disputes. Therefore I cannot accept the amendments.
My noble friend Lady Oppenheim-Barnes raised a very interesting and important question which certainly deserves to be looked into. As she suggested, I am willing to ask the director general to consider whether a review of the existing structure is needed.
I turn to the amendments to which the noble Lord, Lord Desai, spoke. The effect of Amendment No. 75 is to oblige the Secretary of State to take into account relevant experience of people he is considering for appointment to the Gas Consumers' Council (GCC). The Secretary of State will take into account a great many factors in deciding whom to appoint as a member of the council. Experience or knowledge of the subject are naturally factors which would be considered, but to place one of those factors on the face of legislation would implicitly reduce the scope to take others into account. Therefore we would not consider it desirable to oblige them by law to do so.
Amendment No. 76 would have two effects. It would oblige the director general to take up cases where the GCC has not been able to resolve a dispute; and it would remove the existing requirement for the GCC to refer "enforcement matters" to the director general. In our view this amendment would confuse the legal responsibilities and powers of the director general and the GCC with no advantage accruing to the customer. Indeed, I would argue that the result could be a less useful system for resolving customer complaints.
With regard to Amendment No. 77, we consider that where the director general has statutory responsibility for something it is only right that he should control the handling of it. The amendment would cause confusion between the responsibilities of Ofgas and the GCC in a way which seems to us to be at the very least unhelpful.
The provisions relating to written reports would be particularly harmful. The GCC, having investigated a complaint which only the director general can resolve, can draw up a written report and, if it wishes, send copies to all sorts of people. This report can recommend that the gas supplier reconsiders the matter. Alternatively, or presumably once the supplier has refused, another report can be drawn up and copied to those people again recommending that the director general should consider exercising his enforcement functions. At this point we would finally have arrived at where we would have been at the outset if the director general had been allowed to deal with the matter himself.
This amendment sets up in statute the untried mechanisms that I have described. What we believe we want is a customer complaint handling system which is quick, clear and decisive. I do not feel that the amendment is the route to that.
On Amendment No. 78, the GCC is already free to offer advice on such matters to the Secretary of State. My understanding is that it corresponds with and calls
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upon the Secretary of State and that he considers its advice. The amendment seems to place an unnecessary new statutory duty on the GCC. I therefore cannot agree to it.
Amendment No. 79 seems to impose a very open-ended and onerous requirement. I cannot understand it as being right that Ofgas should be obliged to pass on all information to the GCC whether or not the GCC has a specific use for it. Some information will be commercially confidential or otherwise sensitive and the director general is required to bear that in mind in any publication that he makes based upon it. However, the new clause fails to cater for that possibility and leaves the director general with no choice but to pass such information outside his control. One result of that risk could well be that gas suppliers would supply the director general only with information which they felt could safely be published without their permission. Therefore the quality and depth of information available to the director general would be considerably less than we had envisaged.
Amendment No. 80 is consequential upon Amendment No. 78. I argue that it is not necessary.
10.15 p.m.
Lord Ezra: Will the noble Lord elucidate something that he said at the beginning of his remarks in response to his noble friend Lady Oppenheim-Barnes? Did he say that he would be asking the director general to conduct a review of consumer representation within the telecom sector?
Lord Reay: I said that I would ask the director general to consider whether a review of the existing structure is necessary.
Lord Ezra: That is half a crumb. I remind the noble Lord of one of the wider issues raised at Second Reading. A number of noble Lords believed that the time had come to have a more clearly defined separation of the economic regulation function of the director general; the regulator on the one hand, and the consumer protection function on the other. It was not suggested that the two be entirely separated. Nonetheless it was felt that consumer representation should be strengthened and become the function of an at least quasi-independent body. I hope that that will be borne in mind.
In view of the fact that that approach will be made to the director general, I am ready to withdraw the amendment at this stage and to return to the matter at a later stage.
Amendment, by leave, withdrawn.
[Amendments Nos. 65 to 71 not moved.]
Clause 10 [Interpretation]:
Lord Reay Lord Reay moved Amendment No. 72:
Page 10, line 38, leave out ("operators") and insert ("operator").
The noble Lord said: This is a drafting amendment. Its effect is to correct a wrong definition of designated operator which is currently defined in the Bill only in the plural.
The amendment does not signify any change of policy. As currently printed, it would operate in the plural. The definition means that every reference in the

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Bill to a designated operator can only be taken to mean all designated operators. That is not our intention. We wish "designated operator" to be capable of meaning one designated operator. The amendment enables different standards to be set for different operators if that is desirable. I trust that the Committee will find the amendment acceptable.
On Question, amendment agreed to.
Lord Williams Lord Williams of Elvel moved Amendment No. 73:
Page 11, line 4, leave out ("25") and insert ("35").
The noble Lord said: It may be for the convenience of the Committee if I speak also to Amendment No. 74. Both amendments have more or less the same purpose. My amendment is interrogatory in the sense of asking why the figure of 25 per cent. is used and not, say, 35 per cent. The amendment tabled by the noble Lord, Lord Hacking, goes into a little more detail but I shall leave it to him to explain. I beg to move.
Lord Hacking: I wish to address the Committee on my Amendment No. 74 at this stage. Like that tabled by the noble Lord, Lord Williams, it is directed to the definition of market share. The Bill will apply to an operator who provides 25 per cent. of the voice telephony services in his licensed area. I believe that if the citizen is to have rights as regards the quality of his or her telephone service enshrined in legislation those rights should be available whatever company is supplying the relevant services. Thus my preference would be for no qualifying threshold.
However, if there is to be such a threshold it needs to be expressed more precisely than as,
"25 per cent. of the voice telephony services in his licensed area".
Nowhere does the Bill define what is meant by that phrase. The proportion of the services could be calculated in a number of ways; for instance, call volume, exchange line provision, call revenue, combined call and exchange line revenue and so forth. The definition is crucial since it determines to whom the legislation may apply, yet the Bill is silent on it.
British Telecom has approached me. It believes that Clause 10, which covers interpretation, should be amended to indicate that an operator provides 25 per cent. of the service when calls over exchange lines installed by that operator account for 25 per cent. of the call revenue generated over all exchange lines (by whomsoever supplied) in that operator's licensed area.
I suggest that call revenue responds best to market power because of the scope for cherry-picking customers who make the most intensive use of telephone services. I can see no good reason why the market should not be defined now. Doing so would have the advantage that all the players, including the new entrants, would know exactly where they stood. That is the reason for tabling my amendment.
Lord Reay: The effect of the amendment, tabled by the noble Lord, Lord Williams, appears to be to increase the level of market share at which a designated operator comes under the jurisdiction of the director general.
The object of the Bill is to provide the regulators with the powers to ensure improved services for utility
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customers where competition is too limited to provide the stimulus of good service. For that reason the Bill concentrates on areas where utilities still have an effective monopoly; in the case of telecommunications, where a company has 25 per cent. of voice telephony services. The figure of 25 per cent. is not an arbitrary figure plucked out of the air but is based on the definition of 25 per cent. of a market which constitutes a monopoly under the Fair Trading Act.
I believe, therefore, that it would be wrong to depart from what is a soundly-based definition and I would resist the amendment.
Lord Williams of Elvel: In what respect does the noble Lord believe that it is soundly based? It has come under heavy criticism.
Lord Reay: It is the figure drawn from the 25 per cent. of the market which constitutes a monopoly under the Fair Trading Act.
Lord Williams of Elvel: Perhaps I did not make myself clear. The Fair Trading Act definition of monopoly as 25 per cent. of the market has come under heavy criticism.
Lord Reay: We believe that it is a sound reason for why the figure should be 25 per cent. in this case. It supplies the reason why we have adopted 25 per cent. in this case.
I turn to Amendment No. 74, tabled by the noble Lord, Lord Hacking. Its effect would be to enable the Secretary of State to designate for the purposes of the Bill an operator with more than 25 per cent. of the voice telephony market judged as a percentage of call revenue. It appears to be aimed at trying to include Mercury within the Bill's scope, since Mercury tends to operate mainly in the market of more expensive calls.
The Government's policy is that the Bill should apply only to those operators who can exercise a dominant influence over the market. Operators such as Mercury are competing for market share with BT in selected markets such as international calls, and consumers are reaping the benefits in terms of competition over service and price.
We consider competition to be working and believe that we do not need to use the Bill to try to increase the regulator's role in relation to those operators. BT still has a virtual monopoly in the provision of a number of services and the Bill is therefore necessary to ensure high standards of service. I therefore cannot agree with the amendment.
Lord Hacking: I raised a number of technical points. It is a question of definition, and I shall be grateful, if the Minister cannot agree with me on his feet, if he will do me the courtesy of reading my speech again. I presented the points as precisely as I could.
Lord Reay: I am happy to give an assurance that I will read the noble Lord's speech in Hansard. I will study further the technical points that he made and, if necessary, reply to him.
Lord Williams of Elvel: I am grateful to the noble Lord for his replies. I am bound to say, as I did when

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intervening, that the figure of 25 per cent. of a market in the Fair Trading Act 1973 has come under considerable criticism, not least by the Monopolies and Mergers Commission. As the noble Lord knows, it is difficult to define a market and to say whether or not 25 per cent. is a dominating position. It depends on what percentage other people have in the same market, however one defines it.
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However, if because it's there, because it's there, because it's there, is the reason that 25 per cent. appears in the Bill, which the noble Lord seemed to imply, there is nothing much more I can say. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 74 not moved.]
Clause 10, as amended, agreed to.
[Amendments Nos. 75 to 80 not moved.]
Clause 11 [Standards of performance]:
Baroness Oppenheim-Barnes Baroness Oppenheim-Barnes moved Amendment No. 81:
Page 12, line 14, at end insert:
("( ) the Council; and").
The noble Baroness said: In moving Amendment No. 81 on behalf of my noble friend Lady Gardner of Parkes, who apologises for her absence, I shall speak also to Amendments Nos. 90, 94 to 98, 101, 104 and 119.
These amendments are simple, clear and extremely modest. Each one adds the word "Council" and, as in the Gas Act, it means the Gas Consumers Council. If the Government accept the amendments, as I believe they should, it means that the Gas Consumers Council will be entitled to be consulted as of right. It is widely acknowledged that the Gas Consumers Council is unique; that it is effective, efficient and held in high regard. If these minor amendments are not added to the Bill, the position of the Gas Consumers Council will be undermined at a time when the Government have committed themselves, through the Citizen's Charter, to a better deal for consumers.
The regard in which the Gas Consumers Council is held owes a great deal to the brilliance of its former chairman, Sheila Black, and of course to its present chairman. I have a letter from Sheila Black, in which she says,
"As former chairman of GCC, I well recall how we worked alongside Ofgas on monitoring disconnections, helping to shorten the time on collecting data for that project, eventually of benefit to everyone—Ofgas, British Gas and consumers. The work on Standards of Service produced a real Citizen's Charter from British Gas, was also to the benefit of companies and consumers".
Continued consultation, therefore, is of the greatest importance to everybody concerned, and I very much agree with those sentiments.
My noble friend has been extremely courteous, patient and acute at this late hour, but I hope that he will not argue that these consultations will not be required because it is a matter of course that the council is likely to be consulted. That is not good enough. The requirement to consult the Gas Consumers Council is something which, in view of its stature and standing, the work it has done and the benefits it will bring, is important enough to write into the Bill. I hope also that he will not argue that he cannot do it because the other utilities do not have consumer councils. That is an area into which we do not want to stray at this time of the night.
I hope my noble friend will consider these modest amendments favourably.
10.30 p.m.
Lord Williams of Elvel: I would like to support the noble Baroness, Lady Oppenheim-Barnes, in this group of amendments. I believe that we all admire the work of the Gas Consumers Council and would wish it to be reinforced. Indeed, part of the amendment which we have just discussed was designed to reinforce, perhaps over-reinforce, the powers of that consumer council. But I stray into territory that the noble Baroness has warned me against. It is because
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the Gas Consumers Council is so successful that we on this side of the Committee would like to see consumer councils of a similar nature for the other utilities. I see that the noble Baroness is waving me down and I do not want to offend her.
I very much hope that the Government will accept these amendments because they mark an important step in consumer protection.
Lord Ezra: I would also like to support this series of amendments. They are modest, as the noble Baroness said when introducing them, but they are of great importance. We are here concerned with strengthening the position of the consumer and of the councils wherever appropriate. It is appropriate in these cases because the director is having to make consultations in every one of these cases. In the normal course of events, as the noble Baroness surmised, he will probably approach the consumers council anyway, but I agree with her that that is not good enough and that the council should be designated as such in order to give it increased status and position in these matters.
Lord Reay: The amendments to Clauses 11, 15 and 17 introduce a specific requirement on the director to consult the Gas Consumers Council where there is currently a general requirement to consult consumer representatives when setting guaranteed standards, overall performance standards and standards for the promotion of the efficient use of gas. It is not the case that this Bill undermines the position of the Gas Consumers Council.
In this Bill we have extended the role of the Gas Consumers Council. We have extended it by involving it in complaints handling and the determination of disputes. In Clause 14, which relates to complaints handling procedure, and Clause 16 on the determination of disputes, the director is specifically required to consult the council because the council will have an active role in dealing with complaints and disputes. It is therefore appropriate in those cases that the requirement to consult should actually go so far as to specify the council.
The clauses which these amendments seek to change are different. They relate to the setting of standards which will affect large numbers of consumers whose interests may be represented by a wide range of different organisations. The director is therefore required to consult persons or bodies likely to be representative of persons likely to be affected. That could cover a whole range of bodies as diverse as the National Consumer Council and Age Concern. Any reasonable person would include the Gas Consumers Council in this definition and I do not see the need to name it specifically when there is such a wide-ranging obligation to consult. Beyond that, to refer specifically only to the Gas Consumers Council would detract from the standing of other bodies whose views may be equally valid.
As regards Amendment No. 94, that would introduce a new requirement on the director general to consult the council before he publishes information on performance against standards that he has set and compensation paid when those standards are not met.

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Although we have taken steps in this Bill to extend the role of the council, we did not believe that publication of information was an area where it was appropriate to involve the council.
The director has to strike a delicate balance between passing on information he has obtained which may be of interest to customers and retaining information which might damage individuals or companies. An example might be where information on standards of performance reveal that British Gas had consistently failed to maintain a supply to a business. That business may have made great efforts to ensure that its customers are not inconvenienced by the failure of British Gas and would, understandably, not wish existing or potential customers to discover its difficulties.
The responsibility for achieving that balance should clearly lie with the director who has been given a duty to collect such information. By requiring the director to consult the council the amendment would dilute the director's sole responsibility for deciding what information to publish on standards of performance and compensation paid. Therefore, I do not think that the amendment is suitable.
I turn now to Amendments Nos. 96, 97 and 98. These amendments introduce new requirements for a public gas supplier to consult the Gas Consumers Council if he has been ordered by the director to carry out a review of his complaints handling procedure. The clause strengthens the role of the council by requiring a public gas supplier to consult the council when it establishes a complaints handling procedure. The director general may order a review of complaints handling procedures once they have been established. If he does so he has a general power to specify the manner in which the review is to be undertaken. This could include a requirement that the council be consulted.
It is therefore not necessary to include a specific requirement that the supplier should consult the council during a review of its complaints handling procedure if such a review is ordered by the director. The place for consultation is during the review and the director has the power to require that it takes place. Once the director has the report of the review it is his responsibility to decide what action to take and these amendments would make that responsibility less clear.
Finally, I turn to Amendment No. 119. The Bill provides for the abolition of British Gas's monopoly of supply to customers using less than 25,000 therms a year. I expect an initial reduction of the monopoly threshold to a level not less than 2,500 therms to take place in the next Parliament. The director general is responsible for promoting competition in gas supply and has considerable expertise and knowledge in this field. The Secretary of State is therefore obliged to consult the director before reducing the therm monopoly threshold. The Secretary of State may also consult a range of other people. I believe that this requirement to consult strikes the right balance and I therefore urge that this amendment should not be pressed.
Baroness Oppenheim-Barnes: I am grateful to my noble friend for his courteous reply. On reflection, I
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agree with him that the Bill does not undermine the Gas Consumers Council, but neither does it reinforce it very much. It is a body which is worthy of reinforcement. I also agree that some of the later amendments in the group to which I was speaking may not be as appropriate as some of the earlier ones.
I should like also to say to the Minister that requiring the director to consult the Gas Consumers Council is not exclusive. It does not mean that if he consults the Gas Consumers Council he cannot, or may not, consult any of the other excellent bodies where appropriate, including those that my noble friend mentioned.
In view of these lingering doubts I ask the Minister to reconsider the matter as my noble friend Lady Gardner may wish to raise the matter again at a later stage. Under the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 82 to 84 not moved.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 85:
Page 12, line 31, at end insert:
("( ) prescribe that, before a public gas supplier exercises his power to cut off supply under Schedule 5, paragraph 7(5), he shall make contact with the customer and provide a written statement of the options by which the customer can pay the charges due to him in respect of gas supply. This statement shall include information with respect to—

(a) a payment arrangement to pay by instalments, and

(b) the installation of a coinless pre-payment meter, and

(c) a direct payment arrangement with the Department of Social Security for customers who are in receipt of income support or other state benefits.

The statement shall ask the customer to indicate the preferred payment method.").
The noble Lord said: This is a relatively simple amendment. It has the purpose of requiring a gas supplier to seek methods of repayment for cutting off supplies to a customer. It also has the purpose of requiring a supplier to offer different payment options before disconnection. We believe that this amendment makes it easier for those on low incomes to re-budget in order to pay their debts and take away some of the unnecessary stress, if it is unnecessary, of disconnection. I beg to move.
Lord Reay: This amendment would require British Gas to inform customers of alternatives to lump sum payment arrangements and give them a chance to respond before cutting off supply.
British Gas's licence obliges the company to draw up a code of practice which includes guidance to domestic customers if they have difficulty paying their bills. British Gas is also obliged to distinguish between customers who have difficulty in paying and others in default and to adopt methods for dealing with customers who have difficulty in paying.
To comply with these licence conditions British Gas takes a series of steps. It encourages customers in debt to make contact as soon as possible to discuss ways of paying off the debt. A copy of the code of practice is sent to every customer who is sent a second reminder of an outstanding bill. The code encourages customers to contact British Gas but also lists other sources of help and advice—the Gas Consumers Council, citizens advice bureaux, local authorities and the DSS.

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It sets out the different ways in which payment can be made—by instalments, savings stamps, token meters or coin meters.
If the customer fails to contact British Gas, debt collection staff will always visit the customer and either discuss the problem or leave a "Helpline pack", which includes a further copy of the code of practice, and a Helpline card. The Helpline card again encourages the customer to contact the company, the DSS or an advice agency and sets out the methods of payment available. The company will take no further action for 21 days if the case is under consideration by the DSS. If British Gas wishes to proceed with disconnection it must obtain a warrant of entry. It will again write to the customer informing him of this action, referring to the code of practice and offering a pre-payment meter (token-operated where feasible) if it is safe and practical to fit one. These arrangements are working very well: gas disconnections are at an all time low (18,161 or 0.11 per cent. of domestic credit customers in the year to June 1991, compared with a peak of 61,796 or 0·4 per cent. in the year to 31st March 1988).
I am sure that the noble Lord will accept that the amendment is not necessary. British Gas's current arrangements are broadly similar—and in some ways go further—than what the amendment proposes and are enforceable as licence conditions. Furthermore, they have the advantage that they can be adapted to changing circumstances, which would not be possible if the requirements were prescribed on the face of the Bill. In view of those considerations, I hope that the noble Lord will not feel it necessary to press the amendment.
Lord Williams of Elvel: I am most grateful to the Minister. The reply is absolutely satifactory. I am grateful to him for spelling out in detail and for the record exactly what the situation is. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 86 to 93 not moved.]
Clause 11 agreed to.
Clause 12 [Information with respect to levels of performance]:
[Amendments Nos. 94 and 95 not moved.]
Clause 12 agreed to.
Clause 13 agreed to.
Clause 14 [Procedures for dealing with complaints]:
[Amendments Nos. 96 to 98 not moved.]
Clause 14 agreed to.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 99:
After Clause 14, insert the following new clause:
("Accountability of the regulator
.—(1) In section 34 of the Gas Act 1986 (General Functions of Director), after subsection (3) there shall be inserted the following subsection—
"(3A) The Secretary of State may, after consultation with persons or bodies appearing to him to be representative of persons likely to be affected, give directions prescribing the standards of performance which ought to be achieved by the director in carrying out his functions under the Act".
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(2) In section 39 of the Gas Act 1986 (Annual and other reports of Director) in subsection (2), after the words "under section 34(3)" insert "and (3A)".
(3) In section 39 of the Gas Act 1986, at end of subsection (2), after the word "above" insert—
"and his performance in carrying out his functions in relation to standards set by the Secretary of State in directions under section 34(3A) above".").
The noble Lord said: I shall not be speaking to Amendment No. 117 in the name of the noble Baroness, Lady Gardner of Parkes, which was originally grouped with this amendment. The noble Baroness wishes to speak to it herself on the next day of Committee.
At Second Reading a number of noble Lords referred to the accountability of the regulator. The amendment seeks to address the problem raised by noble Lords on Second Reading. As a result of the Bill, I believe that public awareness of the role of the regulators in relation to privatised utilities is now becoming much more generally recognised. The Bill extends the existing powers of the Director General of Gas Supply to include adjudication on disputes in a number of areas. The expanded role will increasingly bring the director into a direct service relationship with the public. No doubt the various organisations will be called upon to assist individual customers in pursuing grievances.
As I said, concern was expressed on Second Reading—and, indeed, in another place—about the lack of requirement in the Bill for the directors to give reasons for their decisions. We discussed that aspect earlier today. But the question which now arises is the role of the Director General of Gas Supply and whether his performance—that is, the performance of the regulator himself—in carrying out his functions in relation to the standards set by the Secretary of State (under directions in the section referred to in the amendment) should be measured and, finally, whether the Secretary of State should set standards which the regulator ought to live up to.
The method is just one way of regulating a regulator. It may not be the only method. Indeed, the noble Baroness, Lady Gardner of Parkes, will be seeking to produce another one. However, it is a problem that will not go away. As the regulators become more powerful, there will need to be some mechanism for ensuring that they perform as they are meant to perform. This is only one suggestion; I put it forward as such. I beg to move.
Lord Reay: The amendment would enable the Secretary of State to set performance standards for the Director General of Gas supply. I entirely agree that the director should be accountable for his performance: he is already accountable to the Secretary of State, to Parliament and, through the system of judicial review, to the courts. However, if he is to perform his duties effectively, the director must, in our view, retain his independence of the political process. For the Secretary of State to set performance standards for the regulator as the amendment envisages would involve him in second-guessing the director and would compromise that independence.

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I do not, therefore, think that the Secretary of State should be involved in setting performance standards for the director. The director is appointed by the Secretary of State and, if he does not carry out his duties satisfactorily, he can be replaced.
Lord Williams of Elvel: As always, I am grateful to the noble Lord for his response. I believe that we shall have to return to the matter at the next sitting of the Committee, when the noble Baroness, Lady Gardner of Parkes, will move her amendment. I put the method forward as one alternative. I do not say that it is the only alternative; indeed, it may be that a direct relationship between the regulators and a parliamentary committee of some sort would be preferable. However, I give notice to the noble Lord that the discussion is not yet finished. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 15 [Promotion of efficient use of gas]:
[Amendments Nos. 100 to 103 not moved.]
Clause 15 agreed to.
Clause 16 agreed to.
Clause 17 [Billing disputes]:
[Amendments Nos. 104 to 106 not moved.]
Clause 17 agreed to.
Clauses 18 and 19 agreed to.
Viscount Astor: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Local Government Finance Bill
Returned from the Commons with the amendments agreed to.
Nurses, Midwives and Health Visitors Bill [H.L.]
Returned from the Commons agreed to with a privilege amendment; the amendment considered and agreed to.

Offshore Safety Bill [H.L.]
Returned from the Commons agreed to with a privilege amendment; the amendment considered and agreed to.
House adjourned at ten minutes before eleven o'clock.