Lords Sitting of 9 March 1992

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

Road Transport: Environmental Damage
Lord Clinton-Davis Lord Clinton-Davis asked Her Majesty's Government:
Whether they propose to take action to ensure that road transport companies in Britain and the European Community pay the full cost of the damage they cause to the environment.
The Minister of State, Department of Transport (Lord Brabazon of Tara): My Lords, it has long been the Government's policy that vehicle operators should at least cover their road track costs through taxation. We have supported European Commission proposals to have similar principles apply throughout the Community.
Lord Clinton-Davis: My Lords, I thank the Minister for that reply. He will be aware that the Commission has recently produced a Green Paper on the effects of transport on the environment. Are we to understand from what he has said that he agrees with the main thrust of the paper that, in view of the estimated growth of around 42 per cent. in road haulage over the next 20 years, road haulage should bear not only the costs of the damage done to the environment but also the costs of damage done to the infrastructure? Does he agree with that principle?
Lord Brabazon of Tara: My Lords, the noble Lord referred to the Commission's recent Green Paper. We are already committed to integrating environmental concerns into transport policy, so we can accept the broad thrust of the Commission's proposed strategy of sustainable mobility. But we would need to study the paper and some of its proposals very carefully. So far as concerns costs, as I indicated in my original Answer, we in this country already expect heavy goods vehicles to more than cover their costs environmentally. At the moment I believe that the sum paid is around 25 per cent.
Lord Mowbray and Stourton: My Lords, as the bulk of goods in Great Britain are carried by the road transport system, if the suggestion of the noble Lord, Lord Clinton-Davis, was carried to its logical conclusion might not the consumer rather than the road haulage companies end up paying for environmental damage?
Lord Brabazon of Tara: My Lords, as I said earlier, we make the road haulage industry pay a sum for the environmental damage caused. My noble friend has a good point. At the end of the day it is not the road haulage industry which pays; it is the consumer in general.
Baroness Nicol: My Lords, can the Minister say what the value is currently attached to sites of special scientific interest when new roads are planned? Is it not the case that in the past the Department of Transport has often chosen locations where sites of special scientific interest exist because such sites have a low commercial value? Has there been any change in this regard?
Lord Brabazon of Tara: My Lords, some environmental costs are already included in our road track cost calculations. The figure for expenditure on roads used in the calculations includes, for example, the costs of measures taken to alleviate environmental problems such as noise and includes measures such as the implementation of road traffic and traffic management schemes which separate traffic from people. Designing roads in such a way as to fit them into the surrounding environment, which is I think the point behind the noble Baroness's question, is also a part of road costs.
Lord Hailsham of Saint Marylebone: My Lords, as road transport and for that matter all types of mechanical transport are to some extent a reflection of economic activity, is it not important that the value of this activity should not be deprecated? Otherwise we shall be in a pretty poor way economically.
Lord Brabazon of Tara: Of course, my Lords. As said in answer to my noble friend Lord Mowbray, one has to bear in mind that any measures one takes have a cost attached to them. If that cost then goes through to the costs for industry and the consumer, there is that impact to be taken into account.
Lord Hatch of Lusby: My Lords, can the noble Lord tell the House whether the Government have any policy for reducing the estimated increase in road transport over the next 10 to 20 years? If not, how can they square that with their promised target of reducing carbon dioxide emissions by the year 2005?
Lord Brabazon of Tara: My Lords, we have signed up to a target for the reduction of CO2 emissions. That can be achieved in a number of ways, principally perhaps through increasing the efficiency of road transport vehicles. We are active in that pursuit.
Lord Marlesford: My Lords, will my noble friend reconsider even at this late hour the Government's decision to spend £1 billion adding a further lane to the M.25? Anyone who knows Los Angeles will realise that the addition of an extra lane will reduce congestion by only a small amount. The costs are enormous and the impact on the environment, especially in the southern part of London, will be huge.
Lord Brabazon of Tara: My Lords, that is rather wide of this Question. I believe that an increase in the capacity of the M.25 will further reduce the amount of traffic that comes through London.
Lord Stoddart of Swindon: My Lords, is the Minister aware that it will come as a considerable surprise to many people that heavy goods vehicles cover the track costs, let alone part of the

1163
environmental costs? Can he elaborate on that? Does he not agree that the only way to avoid increasing damage to the environment is to ensure that heavy goods are transported not by road but wherever possible by rail?
Lord Brabazon of Tara: My Lords, the noble Lord put his finger on the point in the last part of his question when he used the words "wherever possible". Obviously we would like to see as much traffic transferred to rail as is possible, but it is a fruitless argument to claim that the majority of traffic can transfer very easily from road to rail. Most road journeys for heavy goods vehicles are below 50 miles and are not readily transferable. There are two different markets.
Lord Molloy: My Lords, can the Minister say what part of the law of our island applies whereby, if someone commits a criminal act or breaks the law, he can automatically pass on the costs of doing so to the consumer? In other words, in what part of the legal system does that provision exist?
Lord Brabazon of Tara: My Lords, I am not sure where the noble Lord thinks that that can be done. I have not suggested that anyone could break the law and pass the costs on to the consumer.
Lord Clinton-Davis: My Lords, if the Government's environmental claims are to be taken seriously, do not they think it important to eliminate, or at least to mitigate, the distortion of competition which currently prevails between rail and road in that the railways have to bear the full costs of their infrastructural damage whereas the road hauliers certainly do not?
Lord Brabazon of Tara: My Lords, that is just not true. Rail costs are calculated in the way that they are calculated. Road costs are considerably More; indeed, as I said, 25 per cent. in the case of road haulage and probably three times as much in the case of cars.

European Court of Auditors: Reports
2.45 p.m.
Lord Bruce of Donington Lord Bruce of Donington asked Her Majesty's Government:
Whether, before preparing their response to the European Court of Auditors' reports on the accounts submitted to them by the institutions of the European Community, they will consult the Comptroller and Auditor General and incorporate his observations thereon.
Lord Brabazon of Tara: My Lords, the European Court of Auditors' reports comment on the Community institutions' management of their budgets. The Comptroller and Auditor General has no formal locus in the preparation or response to those reports. However, the Government benefit from Parliament's views on matters such as Court of Auditors' reports.
Lord Bruce of Donington: My Lords, is the Minister aware that the Comptroller and Auditor General and
1164
his office enjoy the utmost respect in this country—and justifiably so—and that, even though they are ostensibly and actually under parliamentary control, the Government have had control over Parliament for the past 13 years? Therefore, it only needs a Motion by one Back-Bencher to be endorsed by the Government to ensure that the accounts are in fact examined by the Comptroller and Auditor General.
Will the Minister bear in mind the fact that over the past 10 years, at least, each Court of Auditors' report has contained observations which, if applied to a public limited liability in this country, would have resulted in the directors being held on a charge of misfeasance? Is he also aware that there is little or no financial control in the European Community as we in the United Kingdom understand it? What action is he prepared to take?
Lord Brabazon of Tara: My Lords, the noble Lord has just asked me a number of different questions. He asked, first, whether we respect the role of the Comptroller and Auditor General. The answer is, yes. Secondly, I should say that the Comptroller and Auditor General is a servant of Parliament; he is completely independent of government. If he were to be involved in support of the executive branch of government, as implied by the noble Lord's question, that could prejudice his independence. In the case of the Public Accounts Committee, it is possible for Parliament to ask the Comptroller and Auditor General to examine any proposals from the Court of Auditors in respect of the Community or expenditure so far as it affects this country. That is a perfectly proper role for him to play. However, I do not think that it would be right for the Government to ask the Comptroller and Auditor General to look at such matters on his own.
Lord Cockfield: My Lords, is not the position that from time to time governments disagree with the observations of the Comptroller and Auditor General? Further, as the responsibility for responding to the Court of Auditors rests with the government, would it not be wrong in principle for government to convey to the Court of Auditors observations of the Comptroller and Auditor General with which they disagree?
Lord Brabazon of Tara: My Lords, my noble friend is quite right. As I said, it is perfectly possible for the Public Accounts Committee to ask the Comptroller and Auditor General to look at any matters which the committee feels might affect it. But it would not be right for the government to do so.
Lord Peston: My Lords, as I understand it, the Minister's point is that the Comptroller and Auditor General does not have a locus standi in this respect. But, equally, the point made by my noble friend Lord Bruce of Donington is that the CAG has at least the right kind of expertise. Whether we are discussing fraud, on the one hand, or the efficient use of Community resources, on the other, if the office of the Comptroller and Auditor General is not the right place to go can the Minister say where is the right place to go within government to ensure, from our

1165
point of view, that the Community's finances are being used both correctly and efficiently? For example, is it the Minister's view that the Treasury has all the relevant expertise? Is that what he is trying to tell the House?
Lord Brabazon of Tara: My Lords, I was not trying to say that. The European Court of Auditors looks at the way in which the Commission is spending its money and whether that is correct, as the noble Lord suggested. It then reports to the Council of Ministers, which looks at the matter again. The European Parliament then also looks into these matters. The Government make their input as a result of advice from the Treasury, but mainly from the Court of Auditors. It is not unknown for the Court of Auditors to be critical.
Lord Peston: My Lords, I understand the Minister's answer, but want to press him on one point. I am not saying that I am entirely committed to it, but there is a view in this country that some aspects of the Community's use of funds is less than satisfactory. Although the Minister is reassuring when he tells us that the Court of Auditors looks at all this, there is at least a view that there is a British Government interest which we could perhaps pursue a little more strongly. I am not suggesting that the Minister is mistaken, but I put this one question to him: is there any possibility that we could pursue this matter rather more strongly from our side?
Lord Brabazon of Tara: My Lords, I do not believe that any government within the European Community pursues this matter more strongly than we do. We have pursued it constantly at Council meetings. Obviously, we are influenced by the report of the Court of Auditors, but also by the advice that we receive from a variety of different sources. I believe we achieved a better way forward at Maastricht in that the Court of Auditors' role has been enhanced. Eventually, that should result in a better way of doing things.
Lord Bruce of Donington: My Lords, will not the Minister—or rather the Chancellor of the Exchequer in ECOFIN—presently be required to give a discharge to the European Community budget for the year 1990 to which the report of the Court of Auditors relates? What would provoke the Government to object to giving a discharge to the European Commission in respect of its budget, bearing in mind that for the past 10 years increasingly satisfactory Court of Auditors' reports have given prominence to widespread fraud within the European Community and to the expenditure of the funds of, among others, British taxpayers? When will the Government take a stand on that and insist on proper auditing standards and on the Commission complying with its own financial regulations?
Lord Brabazon of Tara: My Lords, that is very much a role for the Court of Auditors, which I believe the noble Lord regards as a useful institution. The European Council and Parliament carefully consider the Court's findings and the Commission's response.
1166
In granting its discharge to the budget, acting on a recommendation from the Council, the European Parliament indicates what further action it believes to be necessary. That further action has included the new Community 45-point action programme on fraud within the budget, which covers a number of areas, particularly agriculture, which have been identified in various reports by the court. I think that that is the best way forward.

Defamation Trials: Length
2.53 p.m.
Viscount Hanworth Viscount Hanworth asked Her Majesty's Government:
Whether they consider that changes are needed to the legal system in the light of the length of recent trials for defamation; and whether they consider that awards for compensation in cases of defamation are excessive in comparison with awards for other injuries.
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, in 1991 there were 18 trials for defamation in the High Court. The average length of those trials was just over six days. The longest trial lasted 14 days and the shortest two days. It is at the interlocutory (pre-trial) stage that defamation actions, with their complex procedure, tend to take up time. With this fact in mind, in February 1990, I invited the Supreme Court Procedure Committee to examine the rules and practice, and to propose reforms. I have received numerous responses suggesting various ways forward, some attractive and all under consideration.
As to the level of damages, an award, whether in an action for defamation or personal injuries, is a matter for the courts. I expect, under Section 8 of the Courts and Legal Services Act 1990, the Court of Appeal will provide a principled system to help to determine the awards in these cases.
Viscount Hanworth: My Lords, I thank the noble and learned Lord for that very satisfactory reply. I should like to put two points to him. First, as I understand it, the present situation is that it is the jury, without any real guidance, that decides on the damages. Surely, that is wrong. Members of the jury are laymen and need guidance before they can make a sensible reply. Secondly, does the noble and learned Lord agree that perhaps 40 years ago defamation represented a major damage to the person defamed but that that damage is far less today? Finally, if the noble and learned Lord thinks that those who are defaming need to be warned-off that course, would he consider dividing the damages between the person who has been defamed and those who are defending him or her?
The Lord Chancellor: My Lords, in so far as guidance is concerned, the learned judge who presides at the trial gives such guidance as he thinks appropriate to the jury before reaching the award. With the new powers of the Court of Appeal to which I have referred, the nature of that guidance may well be more ample than is possible at present. Whether the

1167
present results of defamation are greater than they were 40 years ago, I am not sure that I am in a good position to judge. It must be for the jury at the time to decide what, in its view, is appropriate in the light of the guidance that it has been given. On the noble Lord's third question, I doubt whether there is any basis in principle upon which such a division could be made.
Lord Rawlinson of Ewell: My Lords, does the noble and learned Lord agree with this question? Although there have recently been many rather extravagant awards of damages in defamation cases, the fact that it is a jury that awards the damages in defamation cases provides a salutary discipline for certain sections of the press which would otherwise engage in extravagant and sometimes malicious stories?
The Lord Chancellor: My Lords, my noble and learned friend has very great experience of these matters and speaks in the light of that experience. It seems to me that at present there is no consensus on removing the role of the jury in such cases, and one aspect of that may be the aspect to which my noble and learned friend has just referred.
Lord Irvine of Lairg: My Lords: is it not the case that awards of damages by juries are generally regarded as fair and reasonable, and that if the jury goes seriously wrong in any case, the Court of Appeal is there to correct things? However, are not damages in personal injury cases regarded as generally far too low, and are they not fixed in accordance with tariffs that are laid down exclusively by judges who say that the loss of an eye is worth only £20,000, that almost total deafness due to industrial causes is worth £10,000 or less; and with the loss of taste and smell being worth about the same amount? Is it not a fact that it is the judges' awards that are too low in such cases and that juries are more often right in defamation cases?
The Lord Chancellor: My Lords, it might be a little difficult for me to make an unqualified acceptance of that proposition. I know that when judges make awards in personal injuries actions, they do so after hearing submissions from learned counsel such as the noble Lord. Therefore, they have received help when reaching their conclusion. I have referred the matter of the principle of damages to the Law Commission. It has taken on a study in that area, with particular reference to, but not restricted to, personal injuries actions.
Lord Hailsham of Saint Marylebone: My Lords, are there any significant differences between the law of England and the law of Scotland in that respect which might shed some light on the substantive question?
The Lord Chancellor: My Lords, I seem to recollect one of the Members of the House in former times saying that the person who wished to dig for his fortune using a Scottish jury as a spade had hard work to do. I suspect that that might be quite a good principle.
Baroness Phillips: My Lords, is the noble and learned Lord aware that as the victim of a personal injury, I was annoyed to be told by my solicitor that my shattered leg, which changed my life, was worth £5,000, whereas a certain lady's reputation was worth £50,000? Can we change a stupid law that works that way?
The Lord Chancellor: My Lords, I of course share the noble Baroness's feelings about the advice that she received. I would not be able to say whether the advice was well-founded. There is no law which specifies that principle. For all I know, it may be the result of the application of the law to the particular facts in the case to which the noble Baroness referred. The best I can do is to have referred the principle of those matters to the Law Commission for its examination because I believe that this is a subject which is within its field of expertise. I am sure that we all look forward to receiving its report.
Lord Havers: My Lords, is it not a fact that over the recent few years personal injury claims have resulted in much bigger awards than used to be the case?
The Lord Chancellor: My Lords, my impression is that the level of awards has gone up. Part of those awards normally represents loss of earnings. The award reflects the value of earnings lost. Apart from that, it would be right to say that the general level of awards has gone up. I have recently increased considerably the award for loss of society under the statute.
Lord Mishcon: My Lords, does the noble and learned Lord accept that we are all delighted that the matter of damages has been referred by him to the Law Commission? Perhaps I may emphasise the point made by my noble friend Lord Irvine of Lairg that there is a general view that industrial injuries are not properly compensated for by the present scale, even as increased. Does the noble and learned Lord accept that there is at least a case—there is nothing political in this—for uniformity of damages in defamation cases to be looked after by the judge and not by the jury awarding damages?
The Lord Chancellor: My Lords, as I said, I appreciate that some people take the view that the level of awards in personal injury actions is low. That is one of the reasons why I referred the question to the Law Commission as one of principle, rather than by dealing with particular cases. So far as the power to award damages in defamation actions is concerned, the step taken by Parliament in the 1990 Act to give the Court of Appeal power to substitute its verdict for the jury's, if it should disagree with the jury's verdict on damages, is a step in the right direction. It enables the Court of Appeal to guide the level of damages without actually supplanting the jury. That may represent the best of both worlds at this juncture.

Limited Nuclear Strikes: Global Protection
3.3 p.m.
Lord Jenkins of Putney Lord Jenkins of Putney asked Her Majesty's Government:
Whether they share the view of the German Social Democratic Party that global protection against limited strikes would be ineffective and costly and that protection from nuclear war will be best achieved by a complete ban on both atomic testing and production of fissile material.
Lord Cavendish of Furness: My Lords, GPALS is consistent with our policy of preserving peace through effective deterrence and with our efforts to prevent the spread of nuclear weapons through the provisions of the non-proliferation treaty. A comprehensive nuclear test ban or an end to production of fissile material by the nuclear powers would not prevent clandestine efforts by countries like Iraq to acquire nuclear weapons. Nor are they preconditions for progress in nuclear arms reduction and non-proliferation.
Lord Jenkins of Putney: My Lords, I thank the noble Lord for that Answer. Will he address himself to reports that the view that GPALS (as the Americans call it) is ineffective and grossly expensive is not confined to the German SDP but is shared by Foreign Minister Genscher and is also widely held in other parts of Europe? Is the Minister aware of that view? If so, will he comment upon it? What do Her Majesty's Government think about it?
Lord Cavendish of Furness: My Lords, I am aware of the various remarks attributed to Herr Genscher and the SDP. The UK's position on fissile material is different from that of the superpowers. We do not have large stocks of surplus material upon which to draw. In the event of an agreement between the US and Russia to cease production, UK production would have to continue, but only at the minimum level necessary to satisfy our nuclear deterrent and naval reactor needs. We believe also that the SDP's estimate of the cost is greatly exaggerated.
Lord Williams of Elvel: My Lords, will the Minister assure the House that GPALS, as he refers to it, covers not just the United States but the United States' allies as well? In other words, it is NATOwide. Will he also tell us whether that system will be based on the Patriot missile? If so, what has happened to the replacement for the Bloodhound missile which is now out of commission? I understand that Bloodhound was pulled out of service last year, and Her Majesty's Government announced a replacement. When will that replacement be operational?
Lord Cavendish of Furness: My Lords, on the first point, my understanding is that GPALS is going forward with all the allies. On the second point, it is far too early to say what the replacement will be.
Lord Mellish: My Lords, but it is recognised, is it not, that countries such as Iraq and others will
1170
completely ignore any such ban? They will be the only ones left with atomic power. What kind of a daft position are we getting into?
Lord Cavendish of Furness: My Lords. I have to agree with the noble Lord.
Lord Chalfont: My Lords, will the Minister confirm that President Yeltsin, whose socialist credentials must be at least as respectable as those of Mr. Genscher, welcomes the GPALS initiative? Does he also agree that one of the enduring mysteries of life is why it is that the people who are most vociferous about the dangers of nuclear weapons are the most violently opposed to any attempt to defend people against them?
Lord Cavendish of Furness: My Lords, Mr. Yeltsin is in favour of GPALS and also recognises our independent nuclear deterrent. With regard to the noble Lord's second point, I am sure that the House will wish to draw its own conclusions.
Lord Jenkins of Putney: My Lords, does the Minister agree that if GPALS, as is widely believed, is likely to be totally ineffective, it will be a complete waste of money? Will the Government further address themselves to the efficiency of the proposition?
Lord Cavendish of Furness: My Lords, it is far too early to say what will be the effect of GPALS until it has been worked out fully. It is a reorientation of the SDI programme. There is no reason to believe that it will be ineffective.

Business
3.8 p.m.
The Earl of Strathmore and Kinghorne: My Lords, at a convenient moment after 3.30 p.m., my noble friend Lord Brabazon will, with the leave of the House, repeat a Statement on trust ports that is to be made in another place.

Sexual Offences (Amendment) Bill
Brought from the Commons on Friday last; printed pursuant to Standing Order 48, and read a first time.
Midland Metro Bill
Read a third time, and passed, and returned to the Commons with amendments.
Midland Metro (No. 2) Bill
Read a third time, and passed, and returned to the Commons with amendments.

Radioactive Substances Bill [H.L.]
3.9 p.m.
Read a third time.
The Lord Chancellor: My Lords, I beg to move that this Bill do now pass.

1171
Moved, that the Bill do now pass.—(The Lord Chancellor.)
Lord Mishcon: My Lords, it would not be entirely reckless for me to say that this is possibly the last consolidation Bill that will be before your Lordships' House in this Parliament. Having said that, I wonder whether your Lordships agree that this is a correct moment to think about those who are responsible for consolidation legislation, a most important evolution in our legislative life.
Among those who undoubtedly deserve the House's admiration and appreciation is the Joint Committee of this House and another place presided over with distinction by the noble and learned Lord, Lord Jauncey of Tullichettle. Those who during this Session of Parliament have chaired the committee, as well as its members, also deserve our gratitude.
The Law Commission is an eternal memorial to Lord Gardiner, a distinguished leader and Lord Chancellor, as I am sure the noble and learned Lord, Lord Mackay will agree. It is his monument, still fresh in our memories, which is so useful in the work of Parliament.
The parliamentary draftsmen are looked upon with respect but, nevertheless, from time to time they evoke criticism from your Lordships. With these consolidation measures they deserve our great thanks. I conclude by saying that those who promote the consolidation legislation—and I refer particularly to the noble and learned Lord who sits on the Woolsack —deserve our appreciation and thanks. The whole business of consolidation makes life for the practitioner and the intelligent member of the public examining our legislation much easier, and our statute book much tidier.
Lord Campbell of Alloway: My Lords, perhaps I may add a word of tribute from these Back-Benches to the work of the consolidation Joint Committee of your Lordships' House and another place. I pay tribute also to the memory of Lord Gardiner, who led me on many occasions, as a friend and who gave me Silk.
The Lord Chancellor: My Lords, I am grateful to the noble Lord, Lord Mishcon, for his comments, and to my noble friend Lord Campbell of Alloway for what he said about me. My main thanks go to the Law Commission whose work we have endeavoured to press forward, to the draftsmen who work for them and to the Joint Committee of both Houses. They carry out the work with great care. I thank in particular those who have presided over the work of the Joint Committee.
I also join in the tribute to Lord Gardiner, whose work initiated the Law Commission both in England and in Scotland. It is to these commissions that the important work has been committed; they carry it out faithfully and assiduously. It is our privilege and pleasure to pass the Bill. In the meantime, I commend the Motion that the Bill be read a third time.
On Question, Bill read a third time.
The Lord Chancellor: My Lords, I beg to move that the Bill do now pass.
Moved, That the Bill do now pass.—(The Lord Chancellor.)
On Question, Bill passed, and sent to the Commons.

Medicinal Products: Prescription by Nurses etc. Bill
3.13 p.m.
Baroness Cumberlege: 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, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Baroness Cumberlege.)
On Question, Motion agreed to.

Still-Birth (Definition) Bill
Lord Kilmarnock: 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, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Lord Kilmarnock.)
On Question, Motion agreed to.

Traffic Calming Bill
Lord Skelmersdale: 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, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Lord Skelmersdale.)
On Question, Motion agreed to.

Firearms (Amendment) Bill
Lord Kimball: 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, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Lord Kimball.)
On Question, Motion agreed to.

Competition and Service (Utilities) Bill
3.15 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 again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Reay.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD CHANCELLOR in the Chair.]
[Amendment No. 106A had been withdrawn from the Marshalled List.]
Lord Hacking: My Lords—
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 106B:
Before Clause 20, insert the following new clause:
("Consumer research: electricity
. The following paragraph shall be inserted in the Electricity Act 1989 after section 39(b)—
"(c) and after undertaking such empirical research into the views of customers as the Director-General thinks fit,".")
The noble Lord said: This amendment stands in my name and that of my noble friend Lord Desai. On the first day in Committee we debated the role of market research in helping the regulator of each individual utility to arrive at sensible standards and sensible decisions. The Minister was kind enough to say that he thought that there might be merit in that suggestion. Since we have already passed the section of the Bill dealing with telecommunications and gas, I have left this amendment on the Marshalled List because we are now dealing with the electricity industry. I hope that when the Minister replies he will make the same encouraging noises as he made last Thursday and that we may see a substantive amendment put forward by the Government. I beg to move.
Lord Hacking: The noble Lord, Lord Williams, in addressing the Committee, explained why he had left this amendment "on" the Marshalled List. That was the expression he used. I should be grateful if he could explain why he left so many amendments "off" the Marshalled List. I refer to the 26 amendments that he tabled for Committee stage which he has now withdrawn.
I have had the pleasure of sitting in a number of Committee stages on Bills with the noble Lord, Lord Williams, and he is noted for carefully considering amendments before tabling them. Once they are tabled, he presses the argument diligently and carefully in Committee, on Report and on Third Reading. Therefore, I am puzzled in this Bill as to why he has chosen to withdraw so many amendments—26 of them—and should be grateful if he would give the Committee an explanation.
Lord Williams of Elvel: I am speaking to Amendment No. 106B which is the object of the Committee's deliberations. If the noble Lord, Lord Hacking, had wished to speak to this point, he might
1174
have done so on the Motion, That the House do now again resolve itself into Committee. I see no reason at all to continue this discussion and I hope that the Minister will respond to my amendment.
Lord Hacking: But that is exactly the point. I have been criticised for not speaking at the time when the House was considering whether it should go into Committee. I stood up, as noble Lords may have noticed, and attempted to speak but unfortunately the noble Lord, Lord Williams, did not hear me and did not give way.
Lord Williams of Elvel: I am afraid that I only stood up when the amendment in my name was called by the noble and learned Lord the Lord Chancellor, who is in the Chair. That is all I can do, and I spoke to the amendment.
Lord Reay: The effect of this amendment would be to require the Director General of Electricity Supply 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.
This is a similar amendment to Amendments Nos. 5, 20, 83, 89 and 108, to which the noble Lord spoke on the previous day in Committee and withdrew after I had said that I would like to take them away with a view to coming back with proposals at the next stage. I confirm to the noble Lord and to the Committee that we intend to bring forward amendments on Report which will cover those amendments, including Amendment No. 106B. I am sure therefore that the noble Lord will be willing to withdraw his amendment.
Lord Williams of Elvel: I am most grateful to the noble Lord for his comments. On the basis of that assurance I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 106C to 110 had been withdrawn from the Marshalled List.]
Clauses 20 and 21 agreed to.
Clause 22 [Billing disputes]:
Baroness Gardner of Parkes Baroness Gardner of Parkes moved Amendment No. 111:
Page 21, line 26, at beginning insert ("Except in such circumstances (if any) as may be prescribed")
The noble Baroness said: As it currently stands, Clause 22 provides a complete prohibition of any proceedings before any court in respect of any charge in connection with the provision by a public electricity supplier of electricity supply services to a tariff customer. The kind of proceedings that are covered by the prohibition are proceedings before the court in respect of insolvency; applications for interim relief —for example, applications for injunctions to prevent assets being moved abroad; applications to a county court to enforce a determination under Clause 22(5); and proceedings in respect of amounts which cannot be the subject of a billing dispute, which means a dispute with a person who is not a prescribed person under Clause 22(5).
The Electricity Arbitration Association in particular foresees circumstances where it would be

1175
inappropriate to serve the notice either because the customer may have no rights under the clause or, alternatively, because urgent action is justified. If the amendment is accepted, the Secretary of State would have the opportunity in regulation to make such exceptions as he thinks appropriate. That would give flexibility, but parliamentary control would still be retained through the statutory instruments procedures. I beg to move.
Lord Reay: Clause 22, subsection (7) of the Bill requires a public electricity supplier, before commencing court procedures in respect of money owed to him, to give the customer concerned 28 days' notice of his intention to do so. It also requires the electricity supplier to inform the customer of his rights under the billing dispute procedures in the Bill. This amendment would make it possible for the Secretary of State to prescribe exceptions to these requirements. I should perhaps make it clear that the existing provision in the Bill would only apply where regulations had been made by the Secretary of State establishing a billing dispute procedure. At present the Secretary of State has no plans to do so for electricity.
However, where billing disputes regulations are made, the requirement on the public electricity supplier to give 28 days' notice of court proceedings and to inform customers of their rights provides an important layer of protection for the customer. If this requirement did not exist, court proceedings could be started by the supplier against a customer before the customer had been given any warning that this was the company's intention, or without the customer becoming aware of his or her right to have a dispute about a bill referred to the director general.
Moreover, the burden the requirement to give notice places upon public electricity suppliers should not be unduly onerous. I am aware of the concern that it would add another lengthy stage to the electricity supplier's debt recovery procedures during which customers could continue to run up bad debts. It should, however, be possible for a supplier to inform the customer at any early stage in the debt recovery procedure—for example, when the first reminder that payment is overdue is sent—that court proceedings will be set in hand if necessary. This would minimise the danger that customers would use the notice period as extra time in which to run up large bills.
As for the obligation to inform customers of their rights under billing dispute regulations, this would only apply where the supplier wished to commence court proceedings. Customers could be informed of their rights, again when the first reminder of overdue payment was sent, by means of a standard letter. I am also aware of the concern that customers could, on being informed of their rights, use the right to have a dispute over a bill referred to the director general as a deliberate tactic to postpone payment. The director general will, however, be able to ensure that frivolous or vexatious claims are not used in this way.
If the amendment of the noble Baroness were passed, the Secretary of State could, when making billing dispute regulations, come under pressure from electricity suppliers to prescribe large numbers of
1176
exceptions to the rule that customers should be given 28 days' notice of court proceedings and of their rights to refer disputes to the director general. It is, however, difficult to see in what circumstances such exceptions would be justified. The point of this Bill is to strengthen consumers' rights and I would not wish to include in it provisions which might lead to this objective being undermined. I hope that in the light of the explanation I have given, the noble Baroness will accept that the concerns underlying her amendment are largely unfounded and will therefore agree to withdraw it.
Baroness Gardner of Parkes: I have listened to what the Minister has said and I hope he is correct. However, I have mentioned specific examples where it would be highly relevant to have a degree of flexibility. When we are protecting consumers' rights it is important to realise that every consumer is disadvantaged if unscrupulous people get away with certain practices. I believe that matter needs to be looked at again. Perhaps between now and Report stage I will have the opportunity to study what the Minister has said. I hope that he will study the examples that I have mentioned and determine whether the amendment is appropriate in the light of those examples. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 112 to 113B had been withdrawn from the Marshalled List.]
Clause 22 agreed to.
Clauses 23 and 24 agreed to.
[Amendment No. 114 not moved.]
Lord Allen of Abbeydale Lord Allen of Abbeydale moved Amendment No. 115:
After Clause 24, insert the following new clause:
("Disputes over performance.
. The following section shall be inserted in the Electricity Act 1989, after section 39—
"Disputes over performance.
(1) The Director shall have the power, in the course of a dispute to which this section applies, to investigate and determine the dispute.
(2) This section applies to any dispute, not being a claim for personal injuries, between a customer and public electricity supplier who is seeking to render no performance at all or performance substantially different from that reasonably expected of him by virtue of reasons claimed to be beyond the supplier's control; where either party to the dispute has referred the matter to the Director for determination,".")
The noble Lord said: In rising to move Amendment No. 115 perhaps I should begin by saying there has been a slight mistake in the printing. This clause has always been in my name. I gather printing problems may affect tomorrow's proceedings as well as today's.
In moving this amendment I do so with no great optimism in view of the fate which has overtaken previous attempts in the Committee to enlarge the regulator's powers. It seems to me that there is a real problem here. It concerns the case which is perhaps somewhat unusual in its nature and falls outside the scope of the compensation scheme which applies

1177
where a public utility fails to meet certain guaranteed service standards and does so on the basis that the failure is due to reasons beyond its control.
There is a difficulty that can arise in any of the utilities. I raised this point on Second Reading in the context of BT and it is perhaps particularly appropriate to raise it today in the context of the supply of electricity. I am aware that the Electricity Act 1989 already contains the provision in Section 17(2)(a), that a supplier is not obliged to give a supply of electricity where,
"he is prevented from doing so by circumstances not within his control",
and such an exclusion provision is incorporated by the electricity companies in their literature.
When I raised this general issue on Second Reading in the context of BT, the Minister said:
"In setting standards for the utilities, it would be for the director general to decide whether there should be any exemptions from paying compensation for certain circumstances".—[Official Report, 14/2/92; col. 960.]
I found those remarks a little cryptic at the time. I am still not absolutely sure that I have understood them. I hope that I am not doing the Minister an injustice if I suggest that what he said does not altogether dispose of the point which I tried to make about a utility arguing that there were circumstances beyond its control.
Perhaps I may illustrate my point by quoting an actual event. It concerns an individual who, over a two-year period, suffered 45 separate interruptions to his electricity supply, seemingly caused by equipment failure on his supply route. None of the interruptions lasted for the necessary length of time to qualify him for compensation under the guaranteed service scheme. After a prolonged exchange of correspondence with Seeboard, he was told that Seeboard could offer no compensation because the loss of supply was due to faults which were outside its direct control. The Office of Electricity Regulation was apparently sympathetic but felt that it could not go against Seeboard's decision.
If a case falls outside the guaranteed service scheme and is not suited to the arbitration procedure conducted by correspondence, the aggrieved customer will think a long time before taking on the embattled might of the electricity company in the courts. Nor is it an answer to suggest that such problems could be met by making a new standard. The regulator can hardly be expected to anticipate every difficulty which might conceivably arise. In addition, when one does crop up outside the guaranteed service scheme, it may well be that the circumstances are not likely to be often repeated, and that it would not be justifiable to set a new standard covering that particular point, such as, for example, the problem of intermittent faults in the instance which I quoted.
Therefore, I suggest that the regulator, as an independent adjudicator, should be given the power to ensure that the operator is not attempting simply to stonewall and hide behind the exclusion clause. I envisage that the power would need to be used only rarely; but the operator, when negotiating with the complainant, would always be aware that the power existed as a last resort.
It seems to me that the amendment would provide a simple and economical way of avoiding protracted and frustrating disputes over whether the reasons why things had gone wrong were or were not within the control of the utility. I beg to move.
3.30 p.m.
Baroness Oppenheim-Barnes: I have a certain amount of sympathy with the arguments which the noble Lord, Lord Allen of Abbeydale, put forward. A great deal of annoyance and often considerable loss is occasioned by interruptions of supply over a long period. That may not involve danger or loss of life but may result in the loss of a freezer full of food or be expensive.
Of course there has to be an exemption clause. However, the problem arises in relation to who will define what is an act of God and what has arisen as a result of negligent maintenance. In my experience, on a number of occasions when the electricity supply has been cut in the country the story has always been that a tree had fallen somewhere. If trees fall or the lines are near trees surely that is a problem of maintenance. Perhaps not in every case, but in some cases negligence could be alleged on the part of the operator. Therefore, I should have thought that if one was to consider giving the regulator that role he would also have to have access to a great deal of technical advice in order to determine difficult cases. However, as the exemption clause stands at present I am not entirely happy.
Lord Reay: The effect of the amendment would be to give the director general power to intervene, at the request of either party, in a very wide range of disputes between a customer and his or her electricity supplier. It contains no power for the director general to limit or specify the range of disputes which he can determine. The amendment as drafted also gives no indication of what the director general would have the power to do after deciding that one or other of the parties were right.
The director general already sets guaranteed service standards. In doing so he takes a view on which activities should be covered by the standards. He then monitors their operation and has the power to expand or strengthen the standards if he finds it necessary. So, if it comes to his notice that customers have cause for complaint in areas which fall outside the guaranteed service standards, he has the power to change the standards or introduce new ones to cover that area.
Under the Electricity Act the customer already has his potential complaints covered in two broad areas: first, under guaranteed service standards which, as I have said, the director general can amend at any time to cope with new problems; and, secondly, under the director general's dispute resolution powers concerning the terms on which electricity will be supplied. The customer also has the option of taking the electricity company to court to resolve disputes. In addition, the Bill makes provision in Clause 22 for the Secretary of State to make regulations which will establish a procedure to resolve billing disputes. We intend to

1179
make billing dispute regulations for telecommunications as soon as the Bill is enacted but have no plans to do so immediately for the other utilities, where we shall keep the situation under review.
Furthermore, the amendment would breach an important principle of general legal policy. The amendment gives the director general an extraordinarily wide discretion to intervene in almost any imaginable dispute, without the company or the customer knowing in advance what he will consider and on what basis he will arrive at his decision. That goes well beyond the norms of dispute resolution under our legal system whereby all disputes are settled by reference to known legal principles, such as contract law or the law of tort. It is axiomatic that a person should be able to find out in advance whether any action of his or hers is capable of leaving him or her liable to be taken to court or be ordered to pay compensation to someone else. By giving the director general such a wide and undefined discretion the amendment departs from that basic principle, and for that and the other reasons I have given I hope that the noble Lord will not press it.
Baroness Phillips: Before any of my noble friends on the Front Bench or those who have put their names to the amendment decide what to do, I should like to make an appeal on behalf of the customer.
We have brought in such complicated legislation that it is practically impossible for someone to understand his or her rights in a very simple dispute. I know that it is unpopular to make anecdotal comments, but I should like to give an example. Recently I wanted a replacement for an item of electrical equipment originally supplied by the London Electricity Board. I shall not weary the Committee with the long and protracted exchanges that took place. It was a very simple request. However, when I telephoned the company, I spoke to about 12 people—obviously the company is grossly over-staffed in its offices and under-staffed in terms of the people who supply the equipment.
The important point is that I know the ropes. My daughter, in another place, telephoned the chairman of the company who came up with an extraordinary explanation. He said, "Your mother should have called in a private electrician in the first place". My daughter took great pleasure in pointing out to him that he was a private electrician, and that in the second and third place he received a vast salary and did not seem to know what his function was.
We had the matter dealt with, after a long time. However, what if that had happened to some of my neighbours? A little lady living on her own who had that problem would not understand the position and would not want to go to law. She would not understand that there was somebody to protect her. I support the noble Baroness. Anything we can do to support the unfortunate consumer has to be right. It is a private monopoly. There is nothing else but electricity to use. One is totally at the mercy of these people and they know it. Anything that can make it possible for the law to be properly carried out to the benefit of the consumer must be right and useful.
The Earl of Selkirk: I should like to support the remarks of the noble Baroness. She made a very important point. I am in a curious position. My telephone has worked very well for 40 or 50 years but now the bell has broken down. I have telephoned the company and asked whether they would replace the bell. Naturally I want to hear it, but sometimes it is so light that it is hardly audible. I was told that the equipment was no longer made. What was to be done? It is essential to have a bell, otherwise one does not know when the telephone rings.
I was told that a replacement was not possible but that I could be supplied—I suppose at my expense —with a new telephone altogether. I do not need a new telephone. My telephone works perfectly well and I have been satisfied with it for many years. It is only the bell that has broken down but the company refuse to replace it. If the noble Lord says that the Bill covers that situation, I shall be delighted; if he cannot say that, I very much regret it.
The Earl of Onslow: One can in fact get a new telephone with a new bell for about £8. It can be plugged in. It is not very difficult. One does not have to have one of those instruments which are wound up with a handle; the ones where you take part of it out of a socket on the side and stick it into one's ear. For the benefit of my noble friend Lord Selkirk, it is quite possible very cheaply to obtain a new telephone which will solve his bell problem instantly.
Lady Saltoun of Abernethy: But only if there are modern sockets.
Baroness Phillips: I should like to ask the noble Earl whether the telephone he mentions comes from Taiwan. At that price it is certainly not of English manufacture.
The Earl of Onslow: The one that I bought came from the British Telecom shop in Guildford.
Lord Williams of Elvel: The Committee is indebted to the noble Lord, Lord Allen of Abbeydale, for bringing this matter before us. The Minister will recognise from the speeches made from around the Committee that there is a genuine problem. Accepting all the technical difficulties that the noble Lord puts in the way, the Government ought to reflect on how that problem should be met. It is not enough simply to say that consumers can be disadvantaged because one law or another does not work. Furthermore—this point returns to a discussion on the first day of Committee—any form of litigation is extremely expensive for the consumer. Many consumers simply cannot afford to go to law. I very much hope that the Government will reconsider this point.
My noble friend Lady Phillips quite rightly pointed out that although some people may have interests in certain quarters and some people may be millionaires and able to go through the courts, there are millions of people in this country who cannot afford to do so. They are the people who need help.
Lord Reay: Perhaps I may just add a few words. There will always be cases which fall outside guaranteed service standards. The noble Lord, Lord

1181
Allen of Abbeydale, gave one such example when the guaranteed service standard plainly did not apply to the situation in which many power cuts of short duration had occurred. But it is up to the director general to make the standard more strict. He has the powers to do so. The amendment does not affect that situation and is not therefore the answer to that problem.
Lord Allen of Abbeydale: I am grateful for the contributions to this short debate. They reflect the fact that there is a good deal of disquiet on the point that I tried to raise. I tried to anticipate (for once I use the word correctly) the explanation which the Government might offer on standards and explain why I thought it was not the answer to my point. Indeed, even if there is a new standard in the light of experience, it does not do much to help the people who have been suffering in the meantime.
I must confess to the Committee that I found it extremely difficult to relate the Minister's reply to the point that I was making. It is basically an extremely simple point: if the utility maintains that what went wrong was because of circumstances beyond its control, is that to be the last word or is the regulator to be given power to look behind the scenes and assess whether that was so? It is very much the point raised by the noble Baroness, Lady Oppenheim-Barnes.
I do not want to widen the debate, but perhaps it will be remembered that on Second Reading I mentioned the example of the Scarborough telephone exchange which burned out and for some days all the subscribers in the area were unable to use their telephones. In the end BT said that the fire was because of circumstances beyond its control. But no one was able to check whether that was right or to look behind that excuse.
That is the limited purpose of the amendment. Its use would arise rarely. I do not consider it right to say that the amendment goes very wide and opens up the field to all kinds of disputes. I have made the point. In the light of the parliamentary programme—if I may put it that way—I must reluctantly withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 115A to 115F had been withdrawn from the Marshalled List.]
Clauses 25 to 27 agreed to.
Earl Howe: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Trust Ports
3.46 p.m.
Lord Brabazon of Tara: My Lords, with the leave of the House I shall now repeat a Statement being made in another place by my right honourable friend the Secretary of State for Transport. The Statement is as follows:
1182
"With permission, Mr. Speaker, I should like to make a Statement about the progress which has been made on the privatisation of the trust ports since the Ports Act 1991 received the Royal Assent in July of last year. The main objective of the Government in promoting this legislation was to enable the major trust ports to bring themselves into the private sector.
"On 28th January I announced that I had given my consent to the sale of the Tees and Hartlepool Port Authority's undertaking to Teesside Holdings Ltd, and that sale has been completed; and the Forth Ports Authority intends to seek the privatisation of its undertaking on 12th March by floating it on the Stock Exchange. The boards of the Clyde Port Authority and of the Medway Ports Authority have now put to me their recommendations concerning the sales of their ports; the board of the Port of London Authority has put to me its recommendation concerning the sale of the port of Tilbury.
"Different objectives were agreed for the sales of the three ports, but in all three cases they included encouraging the disposal to managers and employees of the whole or a substantial part of the equity share capital; seeking the best open market price subject to the other objectives; and continuing the port operations of the undertakings.
"I am satisfied that in all three cases the boards conducted the sales in a fair and proper manner. In particular I am satisfied that each of them carefully assessed the bids for their ports against the agreed objectives of sale.
"The Clyde Port Authority board concluded that the bid made by Clydeport Holdings Ltd, a management and employee buy-out team, satisfied most appropriately and fully the objectives of sale. It was also the largest bid in monetary terms. Under the terms of the bid at least 60 per cent. of the equity share capital of the company will be held by managers and employees. The Clyde port authority board has accordingly recommended to me that its successor company should be sold to Clydeport Holdings Ltd.
The Medway ports authority received only one final bid for its undertaking. This was from Medports Mebo Ltd, also a management and employee buy-out team. The board considered that the bid fully met the agreed objectives of sale. Under the terms of the bid 51 per cent. of the equity share capital will be held by managers and employees of the company and an employee share ownership trust. The Medway Ports Authority board has recommended that its successor company should be sold to Medports Mebo Ltd.
"The Port of London Authority board concluded that the bid by International Transport Ltd, also a management and employee buy-out team, best met the agreed objectives. It was also the largest bid in monetary terms. Up to 50.1 per cent. of the equity share capital and 7.5 per cent. of preference capital will be available to managers and employees of the company. The board of the Port of London Authority has recommended that the port of

1183
Tilbury should be sold to International Transport Ltd.
"I have considered carefully the recommendations of the three port authority boards. I am satisfied that in all three cases the recommended bids meet the agreed objectives of sale. I have noted the provisions made in each case for managers and employees of the company to hold a substantial part of the equity share capital of the companies. I also consider the bids to be satisfactory in monetary terms.
"I am therefore writing to the chairman of each of the three port authority boards giving my consent to the sale of their ports to the three bidders whom they have recommended, subject to the completion of satisfactory contracts of sale. I am delighted that today's announcement means that three more major British ports are now moving into
"I commend this Statement to the House".
My Lords, that concludes the Statement.
3.50 p.m.
Lord Clinton-Davis: My Lords, first, I thank the Minister for repeating the Statement made by the Secretary of State in another place. Will he confirm that out of the 111 British ports there have been only four cases of privatisation, despite the great claims made by the Government during the passage of the Bill?
I welcome the management/employee buy-out. That was the position taken by the Opposition. I am glad that three of the cases have resulted in such a buy-out, but we have heard little about the terms. The House should have a little more information than the Minister has been prepared to give thus far.
With regard to Tees and Hartlepool, does the Minister agree that there seems to be a considerable disparity of treatment? In the Tees and Hartlepool case one had a management buy-out which was evidently in excess of the tender that was ultimately accepted. Does he also agree that, notwithstanding the investigation undertaken by the Secretary of State, there remains considerable concern about that venture? It lacked transparency. It is also remarkable that in that instance, compared with the others, the management buy-out failed. Why?
Will the Minister give the House some estimate of the price that applies in each of the four cases to which he has referred? To what extent has the Treasury benefited from those issues shortly before a general election?
Perhaps I may turn to a question affecting the Port of London Police Authority. Does the Minister agree that it very much opposed the way in which it was treated? Its representations came to nothing so far as concerns the Minister. The police authority's anxieties about the powers it had exercised being transferred to a private police authority remain unsatisfied. What assurances is the Minister able to give?
The overwhelming majority of ports have not been privatised. Will the Minister give some indication of the progress, or lack of it, that is being made in that regard?
Lord Ezra: My Lords, I too express appreciation for the information that we have been given today on the progress of privatisation under the Ports Act. The steps taken to privatise the three ports referred to seem to be in line with what is proposed; namely, that preference was given to management buy-outs and that in every case the bid was either the only bid or the best bid.
However, like the noble Lord, Lord Clinton-Davis, first, I wish to refer back to the Tees and Hartlepool case. I asked the noble Lord, Lord Brabazon, a Question on that issue on 17th January. It appeared from the information then available that the favoured bid was not the highest price and nor did it represent the interests of the management. Since then the Secretary of State has apparently accepted the proposition put forward by the company in question. It seems that the principles which have applied in the three cases brought to our attention today were not applied in that case. We are entitled to know a little more about why that decision was taken despite those considerations.
Secondly, are the Government still determined to persevere with the privatisation of trust ports of the size specified in the legislation which may not wish to be privatised? The noble Lord, Lord Brabazon, will recall that anxiety was expressed on all sides of the House about that. There are certain ports—Poole is a notable example—which consider that they are run effectively as trust ports and which in no circumstances wish to be privatised. Do the Government still intend to persevere along that route?
Lord Brabazon of Tara: My Lords, I am grateful to both noble Lords for their reception of my repetition of the Statement. It is good that we have been able to make the Statement today and that three more ports have gone along the road of privatisation. The noble Lord, Lord Clinton-Davis, referred to 111 ports. I do not believe that we ever envisaged that all 111—some of which are extremely small—would ever necessarily go along that road.
Together with Tees and Hartlepool, the ports that I have announced today—and the fourth port authority which, as I stated, is going for a flotation very shortly—represent four of the five largest ports in this country. That is surely the criterion against which we ought to measure the issue rather than sheer numbers—the noble Lord, Lord Clinton-Davis, referred to 111.
The noble Lord, Lord Ezra, asked what we would do with our power of compulsion under the Ports Act. Those powers will not be available until July 1993. They will apply not to the whole 111 but to some 13 ports on the turnover criterion which is laid down in the Act. Five have already sought privatisation and I hope that it goes ahead smoothly. As I said, those ports are four of the five largest trust ports. As I stated at the time, each case will be examined on its own merits. There is no reason why Poole—the noble Lord, Lord Ezra, specifically referred to it—should not be able to make its case one way or another when the time comes. We shall just have to wait and see.
Both noble Lords referred to Tees and Hartlepool and the apparent disparity of treatment between what

1185
was decided in that case and what has been decided in the three cases that I have announced today. My right honourable friend made his Statement on Tees and Hartlepool on 28th January. I cannot add more at this stage. I am very happy that the three sales announced today are management and employee buy-outs — MEBOs, if one can put it that way. In fact the Tees and Hartlepool MEBO was neither the largest bid nor the bid recommended by the board. We base the decision not on our own judgment in the first place but on the recommendation of the port authority board. It is not a matter which the Government decide on their own. However, in answer to the noble Lord, Lord Clinton-Davis, the fact that we did not choose the largest bid with regard to Tees and Hartlepool proves that we are not in it just for the money.
The noble Lord, Lord Clinton-Davis, also asked what was in it for the taxpayer. The consideration being paid for Tilbury is £32 million. That is slightly different from the rest because it is not the sale of the whole of the PLA but merely the sale of Tilbury as a part of the PLA. The consideration for Medway is £29.7 million and for Clyde it is £26 million. Of course, that is not the consideration for the Government but it is the price being paid.
The noble Lord, Lord Clinton-Davis, asked in particular about the case of the PLA police. They have transferred to the Tilbury company on their existing terms and conditions of service and with their existing powers. There would be little sense in them remaining with the PLA, which would have no function to give them.
I believe that one way and another this is a satisfactory Statement and will he of great benefit to the ports industry.
4 p.m.
Lord Taylor of Gryfe: My Lords, I am delighted that the promotion of privatisation by the Clyde port authority has now been resolved. As the Minister will recall, private legislation was initiated some time ago to accomplish that, at considerable expense to the Clyde port authority. The Minister mentioned £26 million as a consideration in respect of the port. I wish to ask him about the structure of the company.
The Minister was good enough to say that 60 per cent. of the equity will be held by the employees and the management. However, I am worried about one aspect of such privatisation management buy-outs. It is the amount of loan capital which is in the company and which is largely dressed up as an employee/management buy-out. The substantial block of cash which goes into such purchases is often bank cash. Therefore, it carries with it a considerable debt burden. Will the Minister enlighten me about the size of the share capital in the company in this case and the extent of the debt burden that has been incurred?
Lord Brabazon of Tara: My Lords, I am not in a position to give the details requested by the noble Lord. I can only repeat what I said in the Statement; that the MEBO team will have at least 60 per cent. of the equity share capital of the company. One must remember that these privatisations are different from
1186
ordinary privatisations in that at the moment there is no owner of the trust port. Therefore, any money put into the company is additional capital rather than "paying something away". Perhaps that is not the best way of putting it but the noble Lord will understand what I mean.
The Earl of Selkirk: My Lords, I thank the Minister for his comments, in particular about Glasgow. I am fairly certain that the project there will be a success and will be warmly welcomed when they hear the Minister's message.
I wish to comment on what the noble Lord, Lord Ezra, said about Poole. In some ways Poole is a peculiar place and it is not easily suited to the kind of task which would suit the port of Glasgow. I hope that its position will be cleared up so that it knows where it stands in the new situation.
Lord Brabazon of Tara: My Lords, I am grateful to my noble friend for his remarks about Clyde. He is right in saying that the announcement will be widely welcomed on the Clyde. It is good news for the management and employee team, even though it offered the best price for the port.
As regards Poole, there is little that I can add to what I said to the noble Lord, Lord Ezra, or to what I said during the passage of the Bill. It is now up to Poole to make representations to the department and I have no doubt that it will do so. Included in those representations will be remarks that were made during the passage of the Bill by my noble friend and other noble Lords.
The Viscount of Oxfuird: My Lords, I wish to express to my noble friend the thought that the management of Clyde was frustrated by its own Private Bill being overtaken by the Government's Bill. Subsequently, any help that Scottish industry can contrive to give will be well accepted, in particular the whisky industry; for example, I understand that a vast amount of whisky is exported through Felixstowe. Clyde is not nearly so far away. Therefore, may its future be attended by a fair wind and I am sure that everyone's good wishes go with the noble Lord and his attendants on this venture.
Lord Brabazon of Tara: My Lords, I am grateful to my noble friend for his remarks. I am sure that the Clyde port authority and the management/employee buy-out team will also be grateful for what he said, in particular as regards whisky exports.
Lord Clinton-Davis: My Lords, does the Minister agree that in the light of the Statement none of the cases thus far represents a real test of the Government's bona fides in relation to management/employee buy-outs for the following reasons? First, the bid made by the Clyde Port Authority Board represented the largest bid in monetary terms. Secondly, in relation to the Medway port authority there was only one final bid for the undertaking; namely, the management/employee buy-out. Thirdly, the bid placed by the Port of London Authority Board was also the largest in monetary terms. Therefore, is it

1187
not right to say that, as regards the testing of the Government's bona fides in that regard, the jury must remain out?
As regards Tees and Hartlepool, is it not odd that in conflict with the other issues in relation to management/employee buy-outs, the trustees' decision was to award the port neither to the highest bidder nor to the buy-out team? Perhaps that represents a significant indictment of the Government's present position. Finally, does the Minister agree that it is right that there should be far more transparency about such operations than has been the case so far?
Lord Brabazon of Tara: My Lords, the noble Lord asked me a series of questions in addition to those that he previously asked. He asked whether I would agree with him. I can say that, in general, I would not agree with almost anything that the noble Lord said. He said that the jury must remain out as regards management/employee buy-outs—
Lord Clinton-Davis: My Lords, as regards the Minister's attitude.
Lord Brabazon of Tara: My Lords, as regards the Government's attitude to management/employee buy-outs, which comes to the same thing. The Statement that I have repeated today made that clear, as did the announcement that we made about Tees and Hartlepool, where the management/employee buy-out was not the one recommended to us by the board of the Tees and Hartlepool port authority. It was not the best bid nor did the board recommend what was the highest bid in monetary terms. It recommended the bid which in its view—it was the board's view and was accepted by the Government —was the best bid for the future of the port. That is the most important aspect. In the cases that I have announced this afternoon the best bid was from the management/employee buy-outs. I should have thought that that was entirely clear.

Competition and Service (Utilities) Bill
4.8 p.m.
House again in Committee.
[Amendment No. 116 not moved.]
[Amendments Nos. 116A and 116E had been withdrawn from the Marshalled List.]
Clauses 28 to 33 agreed to.
Baroness Gardner of Parkes Baroness Gardner of Parkes moved Amendment No. 117:
After Clause 33, insert the following new clause:
("Parliamentary scrutiny
.—(1) There shall be a Committee of members of both Houses of Parliament with the following functions—

(a) to keep under review the development of regulation as applied to the telecommunications, gas supply, electricity supply, water supply and sewerage service industries;

(b) to consider the broader principles of regulation and recommend how proper weight can be given to long term as well as short term factors in the regulation of the industries listed in paragraph (a).

1188

(c) to take evidence on issues where there has been failure to reach agreement between the Directors and their respective designated operators or public suppliers or undertakers;

(d) to review the annual reports of each of the Directors; and

(e) to make reports to both Houses of Parliament at intervals of not more than one year.

(2) In performing their functions under subsection (1), the Committee may take evidence from the Directors, from the designated operators or public suppliers or undertakers, from consumers representative organisations, from other persons or bodies likely to be affected and from other relevant persons.")
The noble Baroness said: I am pleased to move the amendment because I have read with interest the supportive comments that were made by other Members of the Committee on Thursday evening in anticipation of the discussion. Unfortunately I was unable to be present and my amendments were moved by my noble friend Lady Oppenheim-Barnes.
In keeping with the tradition of this Chamber and the interesting development of our constitution, the new clause after Clause 33 seeks to fill a gap that is developing in our democratic structure. Through a series of utility privatisation Acts the Government have created regulators to control and oversee the operations of the privatised utilities. I fully support the need to have strong regulators to oversee such utilities, especially in terms of their relations with consumers.
Many of the Bill's provisions further strengthen the powers of the directors over the utilities as a way of ensuring that customers' rights are increased. I personally support that. Therefore, we expect to have already strong regulators made stronger, relative to the utilities. And yet there are no corresponding moves to increase parliamentary scrutiny of the regulators.
Other Members of the Committee have already raised the question of how to regulate the regulators. Of course, there is the famous quote from Lord Acton that.
"Power tends to corrupt, and absolute power corrupts absolutely."
We do not have corruption nor are there absolute powers, but we do not wish to reach that point.
The proposed clause attempts to fill the gap which is developing so that the temptation for future regulators to act unilaterally would be checked and the democratic process strengthened. Other Members of the Committee have suggested involving the Council on Tribunals. Amendment No. 99, in the name of the noble Lord, Lord Williams, sought to improve the accountability of the regulators by increasing the power of the Secretary of State to give directions prescribing standards of performance which should be achieved by the directors. Those are possible ways of meeting the same perceived need to increase the supervisory powers.
The proposed clause does that by increasing the role of Parliament. I suggest that there should be a committee of Members of both Houses. I appreciate that the mechanics of establishing such a committee

1189
are extremely technical, doubtless there are deficiencies in the drafting of the amendment. However, I wish to establish the principle, and I shall leave it to the specialists to draft any specific clauses required.
I shall briefly describe the various subsections. The amendment suggests a Joint Committee of both Houses. If that is thought to be too complex or inappropriate, I should be interested to hear whether it is felt that the committee should consist of Members of one place or the other.
The committee's first function would be to keep the development of the regulation of utilities under review. The Bill seeks to give regulators similar powers and the committee would make sure that regulation is implemented evenly and consistently across the industries.
Paragraph (b) intends to provide an informed forum to consider the important broader issues of how the regulation of privatised utilities in Britain should proceed. We can be sure that this Bill will not be the last in this sphere. It would be extremely useful to have a specialist committee of Parliament to consider the guiding principles beforehand.
Paragraph (c) would allow a supervisory function to be exercised where there has been a prolonged failure to reach agreement. It is not intended as a reviewing committee to become embroiled in day-to-day matters.
Paragraph (d) provides for the review of annual reports. That would allow a systematic analysis and scrutiny rather than the mere formality that we seem to have at present. Paragraph (e) expects the Committee to report regularly.
Subsection (2) provides for the important function of taking evidence. The ability of appropriate committees to take evidence from a wide range of relevant persons has been shown to be an important element of the parliamentary process. I accept that the existing departmental Select Committees can call regulators, like other relevant persons, as part of their inquiries. However, this is different from a specialist committee examining the specific issues in the regulation of the utilities in a systematic way.
Those issues are so important that I firmly believe that they deserve a special committee. I am not over anxious about the exact procedures for the establishment and operation of the committee. I am not familiar with that kind of detail. However, I believe that there is a basic need and I ask my noble friend Lord Reay to accept the broad proposals in principle and to agree to take them away so that the appropriate improvements leading to implementation can be made on Report. I beg to move.
4.15 p.m.
Lord Ezra: I support the amendment proposed by the noble Baroness, Lady Gardner of Parkes. I make it clear that I commend the work of the regulators. The four regulators concerned have acted vigorously in conformity with the Acts setting them up and also, in many cases, have shown a degree of commendable innovation.
We should hear in mind that the regulatory system which has now been set up in regard to those
1190
I enterprises is an entirely new departure in the economic management of our affairs. Therefore, it is right that all the time we should ponder as to how they can best operate. I support the point of principle made by the noble Baroness that there should be a review, possibly carried out annually, of the operations of the regulators.
I am rather apprehensive about paragraph (c) of the amendment, which proposes that the committee should look at specific areas of disagreement. I believe that that may mean that the committee would be in permanent session as there would be a temptation for virtually all issues to be referred to it when agreement could not be reached.
However, I have no doubt that there should be in place a machinery for a regular review of the regulatory procedure as now established in that vital area of our economic affairs. Therefore, I hope that the noble Lord, Lord Reay, will say that the Government will look at this matter.
Lord Williams of Elvel: I support the basic thrust of the amendment moved by the noble Baroness, Lady Gardner of Parkes. As she rightly said in introducing the amendment, this is the third shot that we have had at trying to solve the knotty problem of how to regulate the regulators.
The amendment in the name of the noble Baroness introduces what is to my mind an ingenious formula because we must recognise that every regulator and every operator and every consumer is in a position of having a possible conflict of interest. That is why we have regulators and operators: to protect the consumer and to protect the operator. Therefore, there are always two sides to the problem.
When there are two sides to the problem and when the problem is major, as it is as regards privatised monopolies, it is right and proper that those problems should be aired before the highest court of the nation; namely, Parliament. I believe that the behaviour of the people who are trying to resolve conflicts of interest of that nature should be open to parliamentary scrutiny.
I anticipate what the Minister might say in reply. It is not sufficient to say that the regulators are responsible to the Secretary of State and that they make their accounts available to Parliament. That will no longer do because major issues are involved. Indeed, there can be grievous problems and suffering as a result of those important monopolies behaving wrongly or the regulators acting in some way contrary to the public interest. Therefore, I hope that the Government will look sympathetically on this proposal.
There are many examples of joint committees of both Houses. I do not believe that in principle or practice, the proposal would cause many problems.
I take up the point made by the noble Lord, Lord Ezra, as regards paragraph (c) of the amendment. I suspect that if the Bill is enacted, the number of failures to reach agreement will be extremely limited. After all, the point of the Bill is to make sure that directors—regulators—have the power to enforce standards. The director can merely close negotiations by saying, "That is what I think, and these are the regulations I shall make".

1191
Therefore it will not be an open-ended invitation for the committee to sit every day, all day and all night throughout the year. I believe that the regulators in these monopoly industries are now extremely powerful—here I agree with the noble Baroness, Lady Gardner of Parkes. One thinks back to the early 1970s when we created the Office of Fair Trading and thought that that would be a powerful body, but it is nothing like as powerful in its order-making powers as Ofgas or Ofwat and the other organisations we created under privatisation.
It is therefore proper that Parliament should exercise its historic right in scrutinising the behaviour and functions of those organisations to make sure that they are doing their job in the public interest. That is what Parliament is for. I hope that the Government will agree to the amendment of the noble Baroness.
Lord Hacking: I too join the noble Lords, Lord Ezra and Lord Williams, in supporting the intent of the noble Baroness's amendment. I do so with no criticism—here I join the noble Lord, Lord Ezra—of the performance thus far of the directors general in their regulatory roles. However, the important point, which the Committee considered at an earlier stage, is that the regulators under the Bill are being granted more extensive powers which move them into a quasi-judicial role. For that reason also we should support the noble Baroness in her amendment.
I only hesitate from going fully with the noble Baroness on whether the best means have been chosen of, as the expression was earlier used in Committee, "regulating the regulators". I say that not simply because it was my amendment which was considered in Committee at an earlier stage, but because I believe the rationale behind my amendment was better for regulating the regulators.
I am concerned that the watchdog of Parliament proposed by the noble Baroness will affect the independence of the directors in their administrative decisions. I therefore hesitate to put the watchdog of Parliament over them. For that reason, I go back to commending—in so far as the noble Minister is still listening—the formula which I tabled for the Committee, supported by the noble Lord, Lord Williams; that is, to have a single scheme of regulations under the auspices, to put it broadly, of reference to the M MC. That will involve the Office of Fair Trading and the established regulatory procedures that are already working under the licensing regime.
Having said that, the noble Baroness draws attention to an important matter and the principle of the amendment should be supported. I hope it will be.
Baroness Phillips: I too support the amendment. Again there is an attempt to confuse matters with the reference to the regulating committee regulating the regulators. I should like to liquidate the liquidators, but that is a different matter!
The noble Baroness has not called for wide powers. When one uses the terms, "to consider", "to keep under review" and "to take evidence", one does no
1192
more than what is required of a Parliament—that is, to see that the legislation it has introduced is being carried out.
There is nothing unreasonable in the amendment and nothing too far-reaching. The Government will find it a great vote catcher—I do not know why I am constantly giving them these ideas; they do not take them up. It will be popular. It will be reasonable in the way that it tackles the problem again on behalf of the millions of consumers.
Lord Reay: The effect of Amendment No. 117 would be to establish a joint committee of both Houses of Parliament which would review and report on the activities of the four utility regulators—that is, the directors general of telecommunications, gas supply, electricity supply and water services—and consider issues where there had been a disagreement between the regulator and the utility. The amendment would give the committee no powers other than, by implication, to make recommendations in its reports to Parliament.
Let me say at the outset that it would be an unusual step to establish a joint committee of both Houses. The noble Lord, Lord Williams, said that there were plenty of examples of it, but my information is that at present there are only two joint committees, the Joint Committee on Statutory Instruments and the Joint Committee on Consolidation Bills.
Lord Williams of Elvel: Perhaps the noble Lord will allow me to intervene. As a member of the Ecclesiastical Committee, I have to say that it is a joint committee of both Houses.
Lord Reay: In that case, there is an alarming lacuna in my brief. Both committees consider the technical aspects of legislation brought before either House. I am not aware of any precedent for a joint committee to oversee the policy and activities of independent bodies.
I accept entirely that the regulators should be accountable for their performance—and they are already accountable in a number of different ways. First, they must operate within the framework laid down by Parliament in the relevant legislation; that is, the Telecommunications, Gas, Water Industry and Electricity Acts. Parliament has laid down in that legislation clear duties for all the regulators. The regulators also have a continuing, direct accountability to Parliament: for all four the legislation requires the director general to make an annual report to the Secretary of State, which must be presented to Parliament. In addition, as my noble friend recognised, the directors can be called before the appropriate Select Committee in another place.
Secondly, the directors' performance of their statutory duties is subject to judicial review and their decisions can be overturned by the courts if they fail to act reasonably. Case law makes clear that a failure to give reasons is also likely to be grounds for judicial review. However, as I said in replying to the noble and learned Lord, Lord Brightman, on our last Committee day, I am considering whether to amend the Bill to require the directors to give reasons for their decisions.

1193
Thirdly, the director cannot impose regulatory requirements without the consent of the utility or without independent backing. The legislation requires the utilities to have a licence or authorisation from the Secretary of State or the director before they can operate as utilities. These licences include much of the more detailed regulatory requirements within which they must act. If the director sees a need for a change in the regulatory regime, for example a change in the price cap, it will need to be reflected in an amendment to the licence. The director can only amend the licence by agreement with the regulated utility. If the director and the utility cannot come to an agreement, the legislation already provides for the director to refer the matter to the Monopolies and Mergers Commission for a determination.
The regulators are also constrained informally by public opinion: they consult widely before taking major decisions. For example, when Ofgas reviewed the tariff price formula recently, it published consultation documents inviting formal responses and held 14 special meetings throughout the country to discuss the proposals in a less formal process.
Fourthly, the directors are appointed by and are answerable in broad terms to the appropriate Secretary of State. If the director does not carry out his duties satisfactorily, he can be replaced.
The regulators' powers are therefore subject to a number of safeguards. We believe that those safeguards are proper and adequate and that there is no need for further mechanisms to be established. Indeed, we deliberately set up the directors as independent bodies to distance the regulation of the utilities from the political process. If Parliament wishes to consider and make recommendations about the activities of specific regulators or the system of regulation in general, there are already adequate opportunities for it to do so.
Ultimately, someone must be responsible for striking a balance between the interests of the industry and its customers and for deciding on appropriate regulation to reflect this. We believe that the regulator is the appropriate person to do that. The legislation makes it the regulator's duty to do so and all the regulators have carried out this duty very effectively. I am grateful to the noble Lord, Lord Ezra, for his commendation of the way in which they have carried out their duties. If the regulator fails to carry out his duties he can be replaced.
Finally, if Parliament did consider that the existing committees do not allow adequate opportunity for consideration of the regulators, it does not require legislation to establish further Select Committees. It would be better to do so through the normal procedures than to enshrine it in legislation. For all those reasons, I do not believe that a sufficient case has been made to look at this matter again.
4.30 p.m.
Baroness Gardner of Parkes: I thank my noble friend for his detailed reply and I shall certainly consider it carefully in deciding whether to pursue this matter further at Report stage or to leave it to a later occasion when the pressures of events which are now
1194
happening are not with us. I have no doubt that this issue will come back again at some stage. I confirm my agreement in that none of us is criticising the regulators at all. When this Bill becomes an Act the situation may become more apparent of necessity. We must wait and see what happens. I thank those who have supported me in this amendment and I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Clause 34 [The 25,000 therm limits]:
Lord Hacking Lord Hacking moved Amendment No. 118:
Page 31, leave out lines 30 to 40.
The noble Lord said: As the Committee will observe, Part II of the Bill and Clause 34 go to the matter of gas supply and the issue of competition. This amendment is of concern to the gas industry. Subsections (1) and (2) of the proposed new Clause 8A of the Gas Act 1986 give the Secretary of State powers to reduce each reference in the Act to the current tariff threshold of 2,500 therms per annum to a figure which he believes appropriate. The proposed subsection (3) goes further than that. It gives the Secretary of State power to remove all references to tariff thresholds while still retaining the obligation in Section 10(1) of the Gas Act on the public gas supplier to meet all requests for a supply for up to 25,000 therms per annum within 25 yards of a main.
Perhaps I may refer to those sections in the Gas Act 1986 because, for the purpose of this amendment, they are critical. Section 10(1) of the Gas Act, after a proviso at the beginning, reads as follows:
"a public gas supplier shall, upon being required to do so by the owner or occupier, give and continue to give a supply of gas to any premises which—

(a) are situated within 25 yards from a relevant main of the supplier; or

(b) are connected by a service pipe to any such main and in the case of premises falling within paragraph (a) above, shall also provide and lay any pipe that may be necessary for that purpose".

That sets out the wide obligation resting on the public gas supplier. Section 10(5) reads as follows:
"Nothing in subsection (1) above shall be taken as requiring a public gas supplier to supply gas to any premises in excess of 25,000 therms in any period of twelve months".
Therefore, the Committee will see the relevance of the 25,000 therms per annum and the proposal by the Government progressively to reduce that threshold and in doing so to increase the element of competition. By way of history, this proposal follows a review by the Office of Fair Trading and the Government's support of that review by the Office of Fair Trading that the supply to tariff customers should be progressively abolished. The Secretary of State has indeed stated that he wishes to reduce the tariff threshold initially from 25,000 therms per annum to 2,500 therms per annum.
When Members of this House were considering that matter at Second Reading the Minister said:
"I shall begin with the gas competition provisions. At present only British Gas has the right to supply householders and small firms who use 25,000 therms a year or less and are within 25 yards of a gas main. Yet customers at or below the 25,000 therms threshold account for two-thirds of the total gas market.
The Bill gives the Government powers to end that monopoly which we intend to reduce by stages. As my right honourable friend the Secretary of State for Trade and

1195
Industry said in another place, we should expect the initial reduction to be to a level not lower than 2,500 therms, and to take place in the next Parliament.
Such a reduction would open up to competition about 7 per cent. of British Gas's market, giving some 200,000 businesses, like the big firms, the right to buy gas from anyone, with the possibility of obtaining better terms and lower prices. After that, the next stage will be a review in 1996 to determine the date at which the monopoly will end, opening the rest of the market to competition".—[Official Report, 14/2/92: cols. 934–5.]
That brings me to the first reason for this amendment. By excluding subsection (3), as my amendment does, we are removing a provision which at this stage is premature in the light of what the Minister himself said at Second Reading; namely, that the Government intend to bring the threshold down to 2,500 therms and then to carry out a review in 1996.
The second reason for this amendment is that it fails to show parity in the supply of gas between the public gas supplier and other suppliers of gas: namely, the public gas supplier (not the other suppliers) remains under this obligation in Section 10(1) and 10(5), which I have read to the Committee, to supply gas.
The third reason for my amendment is that the removal of the tariff limit in a comprehensive fashion from the Gas Act requires considerable amendment to the Act and further time should be taken to produce a suitable comprehensive provision, if required, following the 1996 review proposed by the Secretary of State and repeated to this Chamber. Those are the three reasons for my amendment and therefore I hope that the Government will be willing to think further about it. I beg to move.
Lord Reay: By quoting so extensively from what I said at an earlier stage of the Bill the noble Lord has removed the need for me to repeat at any great length much of my argument. The effect of this amendment would be to remove the power which the Bill gives the Secretary of State completely to abolish British Gas's statutory monopoly of supply to customers who use 25,000 therms a year or less and who are within 25 yards of a gas main.
Under the noble Lord's amendment the Secretary of State would, however, still be empowered to make an order reducing the threshold of 25,000 therms to any level which he considers appropriate. The Secretary of State would therefore still be able, in theory, to reduce the monopoly threshold to any level down to one therm per annum.
It did not seem, and it does not seem to me, sensible to have legislation which would in theory permit the monopoly threshold to be reduced to as little as one therm, but which would not permit it to be removed entirely. For that reason I hope that the noble Lord will withdraw his amendment.
Lord Hacking: There are the practical difficulties which I have tried to advance to the Minister. Therefore, I must express some disappointment. At an earlier stage of this Committee I expressed concern about the future timetable of this Bill. I confess that that concern is greater today in Committee than it was when I expressed it on the first day of Committee. I am
1196
not a suspicious person by nature, but the Minister said that he expects this Bill to reach the statute book. The noble Lord, Lord Williams, referred in Committee to this Bill not just being a Bill but "an Act" which he hopes will reach the statute book. I am glad that the noble Lord, Lord Williams, has returned to the Chamber for there has also been the matter of the withdrawal by the noble Lord of some 26 amendments to the Bill.
Is all this going to bring about the result that later this week our Standing Orders are going to be suspended and that —perhaps on Thursday—this House will be invited to take this Bill both at Report stage and Third Reading in one session? If so, there must be considerable concern among Back-Benchers like myself who have, during the passage of this Bill, received representations from outside this House not concerning matters of politics, with a capital P, but matters of great concern to various sectors of the utilities industry.
I have certainly tried in this Committee to represent the views of British Telecom and British Gas, this amendment being directed to a concern of British Gas. As a Back-Bencher, I am not privy to the discussions through the usual channels; but noble Lords, particularly Back-Benchers moving amendments such as I have attempted to move—and the noble Lord, Lord Allen of Abbeydale, the noble Baroness, Lady Gardner of Parkes, and other noble Lords—for practical, sensible reasons have every reason to be concerned about our Standing Orders being suspended and the Bill being taken through at a sharp pace. I hope that other Back-Benchers will join me in expressing concern.
Having said that, it is clear that I shall not be able to press with any success this amendment at this stage. I am given no choice but to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Gardner of Parkes Baroness Gardner of Parkes had given notice of her intention to move Amendment No. 119:
Page 31, line 42, at end insert ("and the Council").
The noble Baroness said: This matter was debated last Thursday and so I shall not move the amendment.
[Amendment No. 119 not moved.]
Clause 34 agreed to.
Lord Reay Lord Reay moved Amendment No. 120:
After Clause 34, insert the following new clause:
Conveyance and storage of gas
(" .—(1) In section 4 of the Gas Act 1986 (general duties of Secretary of State and Director General of Gas Supply), the following subsection shall be inserted after subsection (1)—
"(1A) In relation to the conveyance and storage of gas the Secretary of State and the Director shall, in addition, each have a duty to exercise the functions assigned to him by this Part in the manner which he considers is best calculated to secure effective competition between persons whose business consists of or includes the supply of gas."
(2) In section 7(7) (a) of the Act of 1986 (inclusion of conditions in authorisation of public gas supplier) the words "relating to the supply of gas, or requiring information to be furnished to the Director or published" shall be omitted.
(3) In section 19 of the Act of 1986 (acquisition of rights to use pipe-lines), subsection (8) shall be omitted.
(4) In section 24 of the Act of 1986 (modification of authorisation on reference to Monopolies and Mergers Commission), for paragraph (a) of subsection (1) there shall be substituted—
"(a) whether any matters which relate to—

(i) the supply of gas by a public gas supplier to tariff customers, or

(ii) the conveyance or storage of gas by any public gas supplier,

and which are specified in the reference operate, or may be expected to operate, against the public interest; and".
(5) In section 27 of the Act of 1986 (modification of authorisation by order under section 56 of the Fair Trading Act 1973 or section 10 of the Competition Act 1980), after the words "supply of gas through pipes", in paragraphs (a) and (c), there shall in each case be inserted "or the conveyance or storage of gas by a public gas supplier".").
The noble Lord said: In moving this amendment perhaps I may speak at the same time to Amendment No. 127. The purpose of these amendments is to underpin an undertaking which the Office of Fair Trading is currently negotiating with British Gas in respect of its gas transmission, distribution and storage business. This undertaking is part of a wider set of voluntary undertakings which the Office of Fair Trading is seeking from British Gas aimed at promoting competition in the supply of gas. The other undertakings relate to British Gas's share of the contract market and the early release of gas, currently contracted to British Gas from North Sea suppliers, to other companies to buy and supply to end users.
The undertaking to which these amendments relate will require British Gas to run its transmission, distribution and storage business as a separate unit which will treat the gas trading arm of British Gas and external customers on a wholly even-handed and transparent basis. These amendments will give the Director General of Gas Supply statutory powers to regulate British Gas's transmission, distribution and storage business.
The new clause includes amendments to Sections 4 and 7 of the Gas Act to enable the director general to include conditions relating to these activities in British Gas's authorisation. He is not at present able to do so. In addition, it amends Section 24 of the Gas Act to enable the Director General of Gas Supply to refer British Gas's transmission, distribution and storage activities to the Monopolies and Mergers Commission if changes in the authorisation cannot be agreed voluntarily.
It also amends Section 27 to ensure that, following a reference to the Monopolies and Mergers Commission by the Director General of Fair Trading under his Fair Trading Act or Competition Act powers and an adverse MMC finding, any order made by the Secretary of State in response to the MMC finding could provide for a modification of the gas supplier's authorisation in respect of transmission, distribution and storage. Without this amendment, such a remedy would not be available to the Secretary of State. The amendment to Schedule 2 is a small consequential which is required as a result of the proposed new clause.
The Director General of Fair Trading and the Director General of Gas Supply both agree that Ofgas should have these new powers. British Gas has also
1198
accepted that the Director General of Gas Supply should regulate its transmission, distribution and storage unit. I hope therefore that noble Lords will support this necessary and important amendment.
Lord Ezra: I support the amendment. It moves very much in the direction of the views recently expressed by the OFT report that it will encourage competition. It is important that the conveyance and storage of gas should be conducted by British Gas at arm's length from its trading operations because the conveyance and storage are by law meant to be available to third parties who could be in competition in the trading of gas. Therefore I very much hope that the amendment will go through.
On Question, amendment agreed to.
Clauses 35 to 39 agreed to.
Clause 40 [Bulk supplies of water]:
4.45 p.m.
Lord Reay Lord Reay moved Amendment No. 121:
Page 35, line 33, leave out from ("applicant") to end of line 36.
The noble Lord said: In moving this amendment perhaps I may speak also to Amendments Nos. 124, 126, which are incorrectly attributed in the Marshalled List to my noble friend Lady Gardner of Parkes, and Amendment No. 128. These are minor and consequential amendments to the parts of the Bill dealing with bulk supplies of water and conditions for connections to water mains.
Amendment No. 121 is a drafting amendment. Variation and termination of bulk supply agreements are now covered in new Section 40A, inserted by Clause 40. This makes the reference in new Section 40 of the Water Industry Act unnecessary and the amendment removes it.
My noble friend Lord Elliott of Morpeth drew attention at Second Reading to difficulties which the present wording of Clause 46(3) of the Bill would cause for the water companies in maintaining services to customers. I said then that I would give further consideration to the issues raised. As a result I have brought forward Amendment No. 124. It will enable a water company to insist on separate service pipes to premises if it is reasonable for it to do so in order to be able to carry out its water supply functions efficiently. Any dispute about whether separate service pipes can reasonably be required can be referred to the director for determination.
Amendments Nos. 126 and 128 are consequential to Amendment No. 124. They amend Section 64 of the Water Industry Act so that an undertaker cannot use that provision to insist on separate service pipes when it would not now be able to do so under Section 47 of the Water Industry Act, as amended by Clause 46 of this Bill. I commend these amendments to the Committee.
On Question, amendment agreed to.
[Amendment No. 121A had been withdrawn front the Marshalled List.]
Clause 40, as amended, agreed to.
Clauses 41 to 45 agreed to.
Lord Reay Lord Reay moved Amendment No. 121B:

1199
After Clause 45, insert the following new clause:
Protection of interests of customers of water and sewerage undertakers
(" .—(l) In section 2 of the Water Industry Act 1991 (general duties with respect to water industry), in subsection (3), the following paragraph shall be inserted after paragraph (b)—
"(bb) to ensure that the interests of every such person are also protected as respects any activities of that company which are not attributable to the exercise of functions of a relevant undertaker, or as respects any activities of any person appearing to the Secretary of State or (as the case may be) the Director to be connected with that company, and in particular by ensuring—

(i) that transactions are carried out at arm's length; and

(ii) that that company, in relation to the exercise of its functions as a relevant undertaker, maintains and presents accounts in a suitable form and manner;".").

The noble Lord said: In moving this amendment perhaps I may speak also to Amendment No. 124A in my name and Amendments Nos. 122 and 123 in the names of the noble Lords, Lord Ezra, Lord Williams of Elvel and Lord Desai.
Amendment No. 122 would require appointed undertakers to separate their water and sewerage business from any other activities they carried on. Amendment No. 123 seeks to require appointed undertakers to isolate diversified activities which are not related to their statutory function in separate subsidiaries and to require the director to establish rules to prevent any cross-subsidy to the diversified activities from customers of the regulated functions.
I appreciate the concern which lies behind the proposed new clauses. It is clearly important that the director should have power to ensure that an appointed undertaker's ability to carry on its core business is safeguarded. Under existing legislation there are powers expressed in general terms for the director to impose conditions restricting diversification by water and sewerage undertakers. However, I accept that there is a case for making explicit the director's responsibility for ensuring that customers' interests are protected in relation to diversification by water and sewerage undertakers. I have therefore tabled government Amendment No. 121B and the consequential Amendment No. 124A to address those concerns.
The amendments would add to Section 2 of the Water Industry Act an explicit duty for the director to ensure that customers' interests are protected when water and sewerage undertakers diversify into activities which are not part of the regulated water and sewerage business. In particular, the director would be required to ensure that transactions between the core water services business and other activities are carried out at arm's length; and that the undertakers maintain separate accounts covering their statutory functions.
The Director General of Water Services has been consulted about the government amendments. He had previously expressed concern that diversification could, in certain circumstances, act to the detriment of the interests of customers of the appointed business. He therefore amended the companies' licences to provide for regular certification that adequate
1200
financial and management resources are available to the appointed companies, so as to ensure that their ability to meet their statutory obligations is not compromised.
The director welcomes the Government's proposed new clause as strengthening his powers to protect the interests of the appointed undertakers' customers and potential customers. In particular, it will provide the basis for him to ensure that transactions between appointees and other group companies do not involve any cross-subsidisation from the appointed business. I commend government Amendments Nos. 121B and 124A to the Committee and hope that the noble Lords opposite will withdraw Amendments Nos. 122 and 123. I beg to move.
Lord Ezra: I should like to express my appreciation for what lies behind Amendment No. 121B, especially the requirement that the other transactions should be conducted "at arm's length" and that the interests of consumers should be taken into account. However, I regret to say that the amendments do not go far enough. In particular, as regards Amendment No. 123, it is proposed that not only should those other activities be conducted completely separately—that is, not just at arm's length—but, more importantly, under subsection (2), it is also proposed that,
"customers of any water and sewerage undertaker pay no charges or make any contribution to the undertaker for the activities of any of its subsidiaries".
We are not saying that water companies should not engage in other activities, but we believe that it should be made entirely clear that if they do engage in such other activities then they should be run quite separately. It is especially important that consumers of water should in no way be financially penalised for the results of such operations. I very much hope that the noble Lord will be prepared to amend his amendments to take account of those views.
Lord Williams of Elvel: I generally agree with the remarks made by the noble Lord, Lord Ezra. I support the idea; indeed, my noble friend and I have attached our names to the noble Lord's amendments —Amendments Nos. 122 and 123. Subsection (1)(bb) (ii) of the Government's proposed new clause says,
"that that company, in relation to the exercise of its functions as a relevant undertaker, maintains and presents accounts in a suitable form and manner".
I very much hope that the Minister will be able to tell the Committee that the words,
"a suitable form and manner"
include the items which the noble Lord, Lord Ezra, has in mind—in other words, that there will be no cross-subsidisation between the water side of the business and the other side of it, so that water consumers will not be penalised by investments made outside of the water industry. If the Minister can reassure us that that is what the director will deem to be,
"a suitable form and manner"
of such accounts, then I think that the government amendments achieve as much as we hoped to achieve with Amendments Nos. 122 and 123.
Perhaps I may say a little more about some of the thinking lying behind the amendments tabled by myself, my noble friend and the noble Lord, Lord

1201
Ezra. The major problem is that water undertakings are, generally speaking, generators of cash. There have been occasions—and I am thinking especially about South Wales—where the water undertaking has decided that it wishes to join forces in one way or another with the electricity undertaking in the same area. That has given rise to a great deal of grievance in South Wales.
I very much hope that what the Government propose will he able to deal with the matter. It is important because the water industry is an industry which we on these Benches do not believe should be in private ownership. I want to make that point absolutely clear. This is the one privatisation which we fundamentally oppose. Given the opportunity, and when such an opportunity arises in the course of time —and I cannot put any timetable on it—I am sure that we shall endeavour to bring the water industry back into public ownership. When that happens, although I cannot put a timetable on it at all, the activities which may lie outside the water industry and in which water companies may have engaged would have to be dealt with in one form or another. Having said that, I must say that I am grateful to the noble Lord for bringing forward the government amendments. I shall not oppose them.
Lord Reay: Perhaps I may attempt to answer some of the questions raised. The noble Lord, Lord Ezra, expressed the view that my amendments did not go far enough. Subject to the necessary scrutiny by the director to ensure that the core activity is safeguarded, in our view diversification should be a commercial matter for the companies. Involvement in a range of activities—for example, exporting treatment plant, research undertaken for other companies and waste disposal—can bring benefits to the company and to the environment in this country and more widely. Companies should also be free to make the maximum use of their assets for the benefit of customers and shareholders, especially where this is related to their duty to ensure that the water and land that they have are made available for recreational purposes.
The noble Lord, Lord Williams of Elvel, asked me whether the words
"in a suitable form and manner"
would ensure that cross-subsidisation did not take place. The answer to that question is, yes. The director general will be able to ensure that transactions between appointees and other group companies do not involve any cross-subsidisation from the appointed business. I hope that that allays the noble Lord's fears.
On Question, amendment agreed to.
[Amendments Nos. 122 and 123 not moved.]
Clause 46 [Conditions for connections with water mains and for supplies of water]:
Lord Reay Lord Reay moved Amendment No. 124:
Page 41, line 30, leave out from ("unless") to end of line 33 and insert ("it is reasonable to do so in order to ensure that the undertaker will be able to perform its functions, in relation to the supply of water to the relevant premises or any part of those premises, efficiently.").
On Question, amendment agreed to.
Clause 46, as amended, agreed to.
Clauses 47 to 50 agreed to.
Clause 51 [Short title, commencement and extent, etc.]:
Lord Reay Lord Reay moved Amendment No. 124A:
Page 43, line 41, leave out ("46 and") and insert ("Protection of interests of customers of water and sewerage undertakers) to").
On Question, amendment agreed to.
Clause 51, as amended, agreed to.
5 p.m.
Schedule 1 [Minor and Consequential Amendments]:
Baroness Gardner of Parkes Baroness Gardner of Parkes moved Amendment No. 125:
Page 46, line 42, at end insert:
("(2B) If the customer refuses to accept any conditions relating to safety, the installation of the meter, the prevention of interference with the meter or with the connection between the meter and the supplier's electric lines or electrical plant and such other conditions as the electricity supplier may reasonably require then such refusal shall be deemed to be reasonable grounds for the purpose of the sub-paragraph (2A) above.
(2C) If a customer fails to comply with any of the conditions referred to in sub-paragraph (2B) above then, for the purposes of paragraph 10(1) below, the meter belonging to him shall be deemed not to be in proper order."").
The noble Baroness said: The amendment is fairly clear and relates basically to meters. We all know what an electric meter is, but I should tell the Committee that, technically, it is a piece of equipment for measuring electricity consumption and, in some cases, the maximum demand. We need meters because they require that payment for electricity is related to the measured consumption and, again in some cases, to the maximum demand.
Why do the public electricity suppliers believe that the accuracy and security of the meters is so vitally important? The meter is the main interface between customer and supplier. It determines the revenue of the public electricity supplier, and its accuracy and security are vital to the ascertainment of the correct level of the charge. A small but significant minority of customers seek to defraud the supplier by interfering with the accuracy of the meter or by trying to bypass it. I went into detail on that matter on Second Reading because I have personally seen many such meters.
What does the law say about meters? The Electricity Act 1989 has elaborate provisions about meters. In general, they must be certified and installed in an approved manner. At present, domestic customers cannot provide their own meter—a change in the law that was made in 1989. That is why the issue has become so relevant again in this Bill. The meter examining service of the Office of Electricity Supply Regulation—known as OFFER—oversees the provisions about certification and approval of an installation. OFFER has published a "Metering Consultation Paper", which advocates the installation of sophisticated two-way communicating meters. I believe that I have explained such meters previously to your Lordships. Eventually, it should be possible to read the meter by telephone or by someone simply passing a customer's house in a van. There is no power to require customers to install such meters should the

1203
customer have opted to provide his or her own meter, which is now permitted. While advocating customer choice, the paper states:
"The concept of a single basic design meter would in itself reduce metering costs and allow greater flexibility for both suppliers and customers alike."
That is inconsistent with choice.
The present law is inadequate to safeguard against unsafe practices and meter frauds because in general terms the public electricity supplier is allowed, under the present law, to specify where a meter shall be located and to require that the meter is fixed in a vertical position to a secure surface and connected in accordance with the method on the meter. That method is usually just an indication of to which terminals the cables are to be connected. The law makes no requirements as to the sealing of the connections to the meter, a practice which is used to maintain safety and to deter fraud. There is no power to specify the design of the meter provided it is certified. The public electricity supplier has no right to supervise or to make the connection. To make a safe connection, the fuse has to be removed from the public electricity supplier's cut-out. This needs to be done either by the public electricity supplier or under its supervision to ensure safety and to make sure that the cut-out is resealed. There is no power to ensure that that is done.
There is a need for a regular visit by the public electricity supplier because under the Electricity Supply Regulations of 1988 (Regulations 25 and 27) the public electricity supplier has a duty to ensure that its own works on customer's premises are safe and protected by a fuse or an automatic cut-out, and to be reasonably satisfied that the customer's installation is safe. In practice, meter readers are trained to carry out an inspection of the public electricity supplier's equipment and at the same time to look for any evidence of tampering or interference. The public electricity supplier tries to arrange at least one visit a year.
So, why does paragraph 14 need amending? In the light of what I have just said, the paragraph is inadequate in that it does not give any guidance as to what might be reasonable grounds should the matter come before the director general on appeal. It makes no provision for reasonable conditions to be imposed to ensure continued safe and secure operation of the meter. The paragraph should allow an agreement to cover the following points: first, the making or supervising of the connection by the public electricity supplier; secondly, the specification and carrying out of safety and anti-fraud safeguards in relation to the connection; thirdly, the design requirements of a meter to match any two-way communication system; and fourthly, the on-going need to inspect and maintain the seals and the other safety or security safeguards. Finally, there should also be provision for meeting the costs that are incurred by the public electricity supplier, if needed. The amendment is drafted to cover those points. I beg to move.
Lord Tombs: I support the amendment that has been tabled by the noble Baroness, Lady Gardner of Parkes. I do so, having 23 years' experience in the electricity industry. The metering equipment provides the interface between the supplier's mains and the consumer's equipment. Its integrity is of the utmost importance for two reasons. The first relates to safety; and the second to avoiding meter fraud. Both of those are difficult technical areas requiring the proposals that have been put forward in the amendment. I therefore believe that the amendment is in the interests of the great body of consumers, and I hope that the Minister will feel able to accept it.
Lord Reay: This Bill enables domestic electricity customers to install approved meters of their choice, as gas customers and non-domestic users of electricity are already permitted to do. This should allow them to maximise the advantages now available as a result of advances in meter technology which, for example, include better cost and use measurement and energy management equipment. I entirely agree with my noble friend that accuracy and security are vital, and with the noble Lord, Lord Tombs, that—in his words —"integrity is of the utmost importance".
However, it will still be the case that meters provided by the customer will have to satisfy the provisions in Schedule 7 of the Electricity Act, including approval and certification by OFFER's meter examiners and installation in an approved manner. In addition, the provision in the Bill enables public electricity suppliers to refuse to allow a customer to provide a meter where there are reasonable grounds for doing so and is designed to cater for the sort of conditions envisaged in my noble friend's amendment.
However, the amendment would give the public electricity supplier extremely wide powers to refuse a customer permission to choose his own meter. We believe that that would inhibit the growth of competition and the supply of electricity in the longer term. A recent consultation document published by OFFER pointed out that the extension of customer choice in metering as a result of the Bill will facilitate competition when the statutory monopoly of supply ends in 1998 by allowing customers to change supplier without incurring the costs involved in a change of meter. The amendment would allow public electricity suppliers to constrain that right. I do not believe that that is a desirable consequence, and it is not one that would be in the customer's best interest. I hope that I have allayed some of my noble friend's worries and that she will not feel bound to press the amendment.
Baroness Gardner of Parkes: I thank my noble friend for that reply. It does not satisfy me, because I do not understand the circumstances in which under the Bill the customer can own his meter. There might be a need to check whether its use was fraudulent. It might be different from any other meter in the area. That could involve a great deal of extra cost. I spoke about the possibility of reading the meter by telephone, but if one or two people in an area were determined to hang on to a type of meter that cannot

1205
be checked in that way it would mean that someone would have to he sent to check those meters.
Fraud is one of the most important aspects of the matter. I appreciate that everyone wants to be assured that the electricity meter is safe. Most people who are out to defraud the supplier do not intend to blow themselves up. Real disasters happen in the gas industry, because it is dangerous to interfere with a gas meter. When people want to defraud the electricity suppliers they usually do so by interfering with the meter. In some cases they make it go backwards. That is curious and interesting, but it is no way to pay one's electricity bill.
It is important to consider this matter more thoroughly. I can see that my noble friend does not want to commit himself to allowing too wide a power, but I believe that the Bill is defective in regard to safety and the security of meters against fraud. It is important that we have an opportunity to discuss this matter before Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Chairman of Committees (Lord Hayter): My Lords, there is a misprint in the Marshalled List, the next amendment (Amendment No. 126) should be in the name of the noble Lord, Lord Reay.
Lord Reay Lord Reay moved Amendment No. 126:
Page 47, line 23, at end insert:
(" . In section 64 of the Act of 1991 (supply of water by means of separate service pipes)—

(a) the words "within its area" shall be omitted from subsection (1); and

(b) in subsection (2), for the words "was provided to those houses before 15th April 1981 wholly or partly by the same service pipe and continues to be so provided" there shall be substituted "is provided wholly or partly by the same service pipe".").

On Question, amendment agreed to.
Schedule 1, as amended, agreed to.
Schedule 2 [Repeals]:
Lord Reay Lord Reay moved Amendment No. 127:
Page 48, line 19, at end insert:

("1986 c.44.

The Gas Act 1986.

In section 7(7)(a), the words "relating to the supply of gas, or requiring information to be furnished to the Director or published". Section 19(8).").

On Question, amendment agreed to.
Lord Reay Lord Reay moved Amendment No. 128:
Page 48, line 32, column 3, at end insert ("In section 64(1), the words "within its area".").
On Question, amendment agreed to.
Schedule 2, as amended, agreed to.
House resumed: Bill reported with amendments.

Prison Security Bill
5.14 p.m.
Read a third time.
The Minister of State, Home Office (Earl Ferrers): My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(Earl Ferrers.)
Baroness Ewart-Biggs: My Lords, this is a moment when, if we are lucky, we can congratulate the Minister on taking a useful Bill through the House and, perhaps, congratulate ourselves, on having persuaded him to make a few changes which might have improved the Bill; but we can do neither in the case of this Bill. One of the high points was when the noble Lord, Lord Hesketh, vacated his lofty place as Chief Whip and descended to the Front Bench to introduce the Bill. He did so most effectively, and we are grateful to him for doing that. He has since been replaced by the noble Earl, Lord Ferrers, who, with his usual courtesy, explained in Committee the Bill's provisions and the reasons why our amendments were inappropriate.
I shall repeat briefly what was said by several noble Lords during the debate on the gracious Speech and on Second Reading. They asked why the Government had produced legislation which no one felt was necessary and which no one wanted. Having rightly asked Lord Justice Woolf to set up an inquiry following last year's prison disorders, they wanted to know why the Government had implemented a measure that he did not recommend. He made 204 recommendations, but did not recommend—nor did Judge Stephen Tumim—the creation of the offence of prison mutiny. The Prison Reform Group, NACRO, the Prison Governors' Association and the Prison Officers' Association agreed. The POA said that the new legislation might well prove a hindrance rather than a help in prison control. What could be more damning than that? The very people responsible for the day-to-day care and control of prisoners find the Bill at best ineffectual and at worst a hindrance. They know that prisoners involved in violence, damage and disorder can already be charged with a wide range of criminal charges. If the severe penalties available for existing offences do not deter rioters, nor will a new offence.
We were also disappointed that amendments that we tabled in Committee, and that we hoped would mitigate the Bill's worst effects, were not accepted. We felt that the Bill in its present form might catch prisoners who are not the perpetrators of the kind of problems we saw at Strangeways or the riots that took place in several of our prisons last year.
Today I went to the Butler Trust awards. The trust, as the Minister knows, is an excellent organisation that rewards those who work in the prison system for exceptional work done within the prison service. I therefore had the opportunity to speak to many people involved in the penal system. Again, there was fear that the Bill would catch inadequate prisoners who might be caught on the fringe of a riot or mutiny

1207
but would do nothing to catch those at the centre of trouble in prisons. If they cannot be caught under the existing law, it was felt that the provisions of the Bill would be unlikely to catch them.
There is only one conclusion we can draw; namely, that the Bill is largely cosmetic and one that the Government can use as part of a prison public relations exercise. The Government wish to be seen to be doing something about prison disturbances but lack the courage and inclination to follow the recommendations of the Woolf Report, which go to the heart of the problem: remedying the causes of prison disturbances and riots by improving prison conditions and ending overcrowding. That is the way in which we could get to the root causes of rioting: by trying to improve the conditions in which prison officers can operate and prisoners live.
Lord Donaldson of Kingsbridge: My Lords, we have spent long enough on this unsatisfactory Bill. My noble friend on the Labour Front Bench said everything that I wish to say except for one point. I hope that one aspect of the Bill will never be operated—the prosecution for mutiny of prisoners who have shown no violence nor threat of violence. I believe it to be quite impossible to prosecute for that offence with justice. Having said that, I thank the noble Earl for his courtesy, as always, and hope that next time we meet it will he on a more interesting subject.
Earl Ferrers: My Lords, I hope that I shall have the pleasure of meeting the noble Lord, Lord Donaldson, in the near future on a more interesting matter than this. I am sure I shall. I was going to say that I was grateful to him for what he said, but I was not particularly grateful. He was not complimentary about the Bill, nor was the noble Baroness, Lady Ewart-Biggs. When she began her speech I thought that she would be complimentary so I became excited, but then she was not.
One remark she made was a compliment. She said that she was grateful to my noble friend the Chief Whip for taking the Second Reading of the Bill when I was unavoidably detained. I, too, was grateful to him for that.
The noble Baroness made one fairly pertinent remark. She asked why on earth we wanted to introduce a Bill which nobody believed was necessary. The fact is that some people believe it is necessary. We saw the most appalling riots and disturbances in prisons, which were quite unacceptable. I do not believe it is right for any government to see that happen and the damage that occurred without being prepared to consider whether it is right or possible to take action to stop it happening in future.
After all, prisons are institutions for the public benefit. They are kept and looked after correctly. When they are destroyed, with great respect to the noble Baroness, I do not believe it is good enough for her to say that we need better prisons and better conditions and that that will prevent rioting. Perhaps it will. A great deal is being done towards that, but in
1208
itself it is no excuse or reason to say that we should not take other measures to prevent such rioting.
The existing law has clearly failed to deter prisoners from attempting to wreck our prisons. Something is needed to bring home to them the consequences of their conduct. In the Bill we do not seek to criminalise demonstrations about food or lack of time for visits or the many other matters about which prisoners complain or protest. If demonstrations of that kind are in breach of prison discipline, governors will have powers to adjudicate and, in appropriate cases, to award a disciplinary penalty such as loss of remission.
What we are discussing is not a protest about stale bread but something infinitely more serious. It is conduct which is intended to make a prison or part of a prison ungovernable, whether or not that conduct involves violence, criminal damage or anything else which constitutes an offence under the Public Order Act.
I do not believe that it is right that any inmate or collection of inmates of a prison should try to take the law into their own hands yet again and make the prison ungovernable. We are talking about the kind of conduct for which the maximum disciplinary penalty of one month's loss of remission would obviously be inadequate. The Bill would not lead to all those found guilty of prison mutiny being sentenced to periods of 10 years' imprisonment—the maximum penalty. The courts have more than enough experience in matching penalties to the seriousness of the offence.
The noble Baroness referred to the Prison Officers' Association. It has given us no inkling of its views on the Bill and if it is opposed to the legislation, I should have expected it to tell us. It was suggested that prison governors did not like the Bill, but the Prison Governors' Association has not suggested to us that it is opposed to the Bill. Its secretary has sent us a copy of comments which he made earlier to Mr. Robert Maclennan to which that honourable gentleman referred in another place. The comments were confined to a number of specific points. The first point was that the association considered the penalty of 10 years on conviction of mutiny to be too high. I explained in Committee that this is a maximum rather than a mandatory penalty. Secondly, the association thought that the Bill as originally drafted would encompass relatively minor disturbances. Of course, your Lordships will know that that provision no longer stands.
Thirdly, the association believed that the penalty for the offences would not deter those who were serving life sentences. But even if that were so, the criticism could be levelled at the penalty for any criminal offence committed in prison. Even life sentence prisoners may expect to be released some day. Their conviction for prison mutiny would significantly set back the date of their release.
Fourthly, the association had a range of anxieties about the decision to remove boards of visitors from the disciplinary system from April of this year and about the way in which the courts would deal with

1209
offences committed by prisoners. That is outside the scope of the Bill.
That is the kind of evidence that we have received. I do not believe that one could conclude from it that the Prison Governors' Association is, as the noble Baroness suggested, opposed in principle to the Bill. I should be surprised if it were, because the Bill is designed to make life easier for the association's members.
I realise that the noble Baroness, Lady EwartBiggs, and the noble Lord, Lord Donaldson of Kingsbridge, do not find themselves enamoured of the Bill, but I hope that they will realise and understand the reasons for which it was introduced. The fact is that where prisoners create mutiny in prisons, it is intolerable that they or a collection of prisoners
1210
should make the prisons ungovernable. That is why the Bill was introduced. I hope that your Lordships will agree that the Bill do now pass. I commend it to your Lordships.
On Question, Bill passed.

Access to Neighbouring Land Bill [H.L.]
Returned from the Commons agreed to.

Offshore Safety (Protection Against Victimisation) Bill [H.L.]
Returned from the Commons agreed to.
House adjourned at twenty-seven minutes past five o'clock.