Lords Sitting of 13 December 1993

Preamble
The House met at half-past two of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Guildford.

The Marquess of Bristol: Imprisonment
The Chairman of Committees (Lord Ampthill): My Lords, I have to acquaint the House that the Clerk of the Parliaments has received a letter from the Chief Clerk of the Crown Court at Snaresbrook informing him that the Marquess of Bristol was, on 28th June 1993, convicted at that court on two counts of the offence of possessing a controlled drug, and, on 6th December 1993, was sentenced to 10 months' imprisonment on each count to run concurrently.

Kuwait: Iraqi Incursions
Lord Molloy Lord Molloy asked Her Majesty's Government:
Whether they are satisfied that action by the United Nations is sufficient to prevent further incursions by Iraqi security forces into Kuwait.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, following recent violations of the Iraq-Kuwait border, the Security Council made a statement on 23rd November reminding Iraq of its obligations under Security Council Resolutions 687 and 833, and demanding that Iraq respect the inviolability of the boundary. The United Nations Iraq-Kuwait Observer Mission (UNIKOM) will be strengthened by the arrival of a mechanised battalion in February 1994.
Lord Molloy: My Lords, I am most grateful to the Minister for that reply. Is she aware that the Iraqi people and their government are grateful to our Government for the mention of their country in the Queen's Speech and for trying to understand what they are going through? Nevertheless, is she further aware that Kuwait is still subject to Iraqi terror raids? Kuwait knows what Iraqi occupation can mean. They are grateful for all that we have done, but they still live in terrible anxiety and a great sense of fear. Is she able to tell the House that something can be done to help assuage those feelings that now afflict the Kuwaiti people?
Baroness Chalker of Wallasey: My Lords, we agree that the Kuwaiti people are still very nervous. That is why we do not believe that sanctions should be lifted until Iraq complies fully with the relevant Security Council resolutions. We wait for the Iraqi regime to comply fully with those resolutions and to recognise the international frontier. It is up to Iraq to prevent further demonstrations and incursions into Kuwaiti territory.
Lord Rea: My Lords, is the noble Baroness aware that, according to her right honourable friend Sir Edward Heath, who recently returned from Iraq,
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Saddam Hussein is using the economic chaos and poverty resulting from the sanctions to increase his support base among his own people? Could she ensure that there is some means of allowing a limited amount of Iraq's foreign assets to be released pending full compliance with the sanctions, in order to improve the lot of the Iraqi people and the surrounding nations who are suffering as a result of being unable to trade with Iraq?
Baroness Chalker of Wallasey: My Lords, I am well aware that there are no lengths to which Iraq and particularly Saddam Hussein will not go to try to blame others for the penalties that the people of Iraq suffer because Saddam Hussein will not implement Security Council Resolutions 706 and 712 which permit Iraq to export oil. The proceeds from the exportation of oil would fund the UN operations, including the humanitarian programme. We are still helping in a small way and we shall continue to do so. However, we have to make sure that the facts of the situation are known. The Iraqi opposition takes every opportunity to do that and where there are opportunities to make known the real situation in that country, obviously we should be very glad for the Iraqi opposition to do so.
Lord Campbell of Alloway: My Lords, does my noble friend agree that the Question is perhaps somewhat misconceived? Assume that Her Majesty's Government are not satisfied—which is not a difficult assumption—what on earth are they supposed to do without the support of the United States and the United Nations?
Baroness Chalker of Wallasey: My Lords, my noble friend is absolutely right. Britain alone cannot change the situation. However, looking through the list of Security Council resolutions, it is interesting how few people—on many occasions no one—voted against the resolutions brought to the United Nations to show Saddam Hussein exactly what is the situation. Therefore we are not alone. We believe it is right to continue with the sanctions regime; our quarrel is with the regime and not with the long-suffering Iraqi people. Food and medicines are permitted under the sanctions regime. The review in November enabled the council to conclude that conditions did not exist for the lifting of sanctions.
Lord Mayhew: My Lords, does the noble Baroness agree that, while the Iraqi Government refuse to recognise the frontier of Kuwait, there can be no question of the Government recommending that sanctions be lifted?
Baroness Chalker of Wallasey: My Lords, I agree absolutely.
Lord Archer of Weston-Super-Mare: My Lords, will my noble friend confirm that, despite the release of the three British hostages, millions of people in Kurdistan still live in fear of Saddam Hussein crossing their border? Will my noble friend also confirm that the Foreign Office has no illusions that Saddam is a reformed character?
Baroness Chalker of Wallasey: My Lords, I can assure my noble friend that the Government have no illusions about Saddam Hussein. We are glad that Sir Edward Heath was able to help bring back the three British men who are now reunited with their families. We provided support and advice, but there was no question of a deal to secure their release. However, we are aware daily of the fears of the Kurdish people in Iraq. We hope that they will be secure from the threats, although that is unlikely as long as Saddam remains. On the more general question of detainees, we hope that Iraq will release all foreign detainees, including the Kuwaitis, for whom the noble Lord, Lord Molloy, was concerned.
Lord Jenkins of Putney: My Lords, can the noble Baroness say whether or not some of the people in Kuwait would like more democracy? And is anything being done to encourage that?
Baroness Chalker of Wallasey: My Lords, that is an entirely separate Question. I know that that matter has been discussed privately. It is perhaps best left in private, where matters seem to progress rather better than they do in public.
Lord Clinton-Davis: My Lords, will the noble Baroness accept from the Opposition that we completely support the continuance of sanctions against the Iraqi regime under the authority of the United Nations? Indeed, the protestations made by Saddam Hussein of "liberating" Kuwait, accompanied by constant provocation on the part of military and others against the Kuwaitis, is totally unacceptable. It shows no change of temperament or mind on the part of that regime. Consequently, we welcome what the Minister said in regard to sanctions.
Baroness Chalker of Wallasey: My Lords, I am extremely grateful to the noble Lord and delighted that we should agree so wholeheartedly on the matter.
Lord Molloy: My Lords, I thank the noble Baroness for her replies this afternoon. They were most encouraging. However, is the Minister aware that Saddam Hussein is indulging in chemical warfare, particularly in the Basra Province? He is threatening to liberate Kuwait. Therefore all that the noble Baroness said must be translated into reality by the uniting of our partners in Europe and the Security Council. We must translate words into reality.
Baroness Chalker of Wallasey: My Lords, UNSCOM is investigating the recent reports of chemical weapon attacks. We would view the matter seriously were the reports to be confirmed.

EC Expenditure: Controls
2.47 p.m.
Lord Bruce of Donington Lord Bruce of Donington asked Her Majesty's Government:
Whether they will state the nature and extent of the United Kingdom's parliamentary control over the amounts paid or payable from the Exchequer to meet
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the expenditure of the European Community as detailed in the annual budgets, prior to their establishment by the Council of Ministers concerned.
The Minister of State, Department of Transport (The Earl of Caithness): My Lords, the Government deposit documentation and submit explanatory memoranda on the Community budget for consideration under the arrangements for scrutiny of European Community proposals. The explanatory memoranda set out the implications for the UK's contribution to the Community budget.
Lord Bruce of Donington: My Lords, in bringing something into the public domain rather than allowing it to remain private, can the noble Earl explain why he is unable to answer the Question on the Order Paper? It asks what parliamentary control exists over the expenses. Is the noble Earl aware that it is no use citing to me the various appendices and parts of the Edinburgh conference? I want a definite answer. Is there any parliamentary responsibility or not? Are the Government answerable to Parliament or not for those expenses?
The Earl of Caithness: My Lords, I answered the noble Lord's Question. Explanatory memoranda are available. The noble Lord, Lord Bruce, was at the forefront in ensuring parliamentary Questions and scrutiny.
Lord Stoddart of Swindon: My Lords, does Parliament have the opportunity, through the procedures, to refuse finance to the organs and institutions of the EC? That is what we want to know. What parliamentary control exists over the financing of the EC?
The Earl of Caithness: My Lords, the noble Lord will be aware that when we joined the European Community there was an agreement as to the amount of the budget increase provided that it stayed within the limit. We make certain that it does; that is our responsibility.
Lord Finsberg: My Lords, can my noble friend say whether or not any Answer that he gives would satisfy the noble Lords, Lord Bruce of Donington and Lord Stoddart of Swindon?
The Earl of Caithness: My Lords, I can inform my noble friend that on certain issues the noble Lord, Lord Bruce, and I have been very much in agreement.
Viscount Tonypandy: My Lords, is the Minister aware that the House owes a great debt to the noble Lords, Lord Bruce of Donington and Lord Stoddart of Swindon, for the research that they carry out and the way in which they keep us all aware of what the Government are doing?
The Earl of Caithness: My Lords, there are times when I think that the noble Lords, Lord Bruce of Donington and Lord Stoddart of Swindon, are the Opposition Front Bench.
Lord Peston: My Lords, I certainly wish they were, particularly on these matters. I have learnt more about financing the European Community from listening to the questions and the answers than in any other way. I wish to help the noble Earl to clarify his answer. Am I right that essentially Parliament votes money for the Government in the normal way without voting it specifically for the Community? Or are there also examples of where one is actually voting in a separate way in terms of finance for the Community? I know the commitment under the various pieces of European legislation, but am I right that essentially the control of public expenditure here is the same as for the control of finance in other ways?
The Earl of Caithness: My Lords, provided the budget complies with the legislation, including the legally binding ceilings on revenue from own resources, which is 1.2 per cent. of EC GNP, further specific authority for the annual contribution is not required because of the European Communities Act 1972.
Lord Peston: My Lords, is my noble friend Lord Bruce therefore right? Are there examples of a method or principle of control that is different from that applying to public finance within the United Kingdom economy? Is the noble Earl confirming that what my noble friend says is correct?
The Earl of Caithness: No, my Lords. There is parliamentary scrutiny because all the documents are laid before Parliament. But provided the budget is within the own resources agreement and within the legislation that is laid down for it, no further specific authority is required.
Lord Cockfield: My Lords, does my noble friend agree that the budgetary procedures in the European Community are significantly different from those in the United Kingdom and that, in particular, the budget is the arithmetical result of decisions already taken in the appropriate Council of Ministers or by the European Council? If those sums are to be challenged the appropriate place to challenge them is at the point when the policy is agreed. If one waits until the budget appears the horse has long since bolted.
The Earl of Caithness: My Lords, I certainly agree with my noble friend that there is a different procedure for the European budget as opposed to our own Budget. There are the strict criteria by which the budget has to abide, and the Court of Auditors checks the European Parliament's budget, as indeed it checks our own.
Lord Bruce of Donington: My Lords, the noble Earl has acknowledged that the procedure is different. Of course, it is! But is it not very incongruous that when the Chancellor of the Exchequer talks about a public sector borrowing requirement of something in the region of £50 billion and takes it out, or proposes to take it out, on the poorer sections of the community, there is expenditure amounting to some £3.5 billion net going out of the same funds? Should not the Government, at the intergovernmental conferences, insist on some amendment being made to the limits already concurred with?
The Earl of Caithness: My Lords, the noble Lord knows full well that it was entirely due to the actions of my right honourable friend the Prime Minister at the Edinburgh summit that the increases in the budget were kept to the level that they were. Others in the Community wished to push them higher. The noble Lord will be aware too that my right honourable friend the Prime Minister achieved last weekend a reduction of the borrowing which would have affected our children's and our children's children's taxes.
Lord Jenkins of Putney: My Lords, is the noble Earl aware that if what his noble friend Lord Cockfield says is correct it reveals an appalling state of affairs? Is it really the case that every time a decision is made in the European Union that automatically goes into the budget without any further ado?
The Earl of Caithness: My Lords, provided it is within the limits, yes.
Earl Russell: My Lords, I ask the Minister once again to remind the noble Lord, Lord Bruce of Donington, that the authority for contributions to the European Community budget is that of the European Communities Act 1972 and therefore by Act of the British Parliament? Will he further remind him that, although many weak reasons have been given for disobeying particular Acts of Parliament, a defence of parliamentary sovereignty cannot be among them?
The Earl of Caithness: My Lords, the European Communities Act 1972 controls what happens. We will take action if it is outside that.

Human Rights
2.55 p.m.
Lord Judd Lord Judd asked Her Majesty's Government:
Whether they marked Human Rights Day on Friday 10th December by publicising human rights initiatives they have taken during the last year.
Baroness Chalker of Wallasey: My Lords, no. A summary of UK policy on human rights is contained in Foreign Policy Document No. 215, which is available in both Libraries of the House.
Lord Judd: My Lords, does the Minister agree that, although responsibility is frequently difficult to pinpoint, regrettably there is too much evidence of spreading abuse of human rights in the world? Does she agree that it would be helpful in demonstrating tangibly the Government's commitment to the support of human rights if each year they were to make available to Parliament a human rights report detailing the specific action they have taken to advance the cause of human rights, including foreign policy, aid policy, co-ordinated interdepartmental policy, awareness training for civil servants and liaison with appropriate non-governmental organisations?
Baroness Chalker of Wallasey: My Lords, certainly agree with the noble Lord that there is far too much evidence of abuse. I rather like his idea and I shall

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look into the noble Lord's suggestion. Perhaps I may tell him that I can quickly give four examples: the mission of my noble and learned friend Lord Howe to China in December 1992; the recent visit of the noble and learned Lord, Lord Browne-Wilkinson, to Pakistan; my right honourable friend Mr. Goodlad receiving officials from Vietnam to help them learn how to organise their human rights policy; and also the lead we have taken in the European Union in making positive criticism at the CSCE Human Dimension meeting in Warsaw in September of the Turkish Government's abuse of the right to freedom of expression. All four are just some of the examples of the initiatives we have taken during the year; and we intend to take more.
Lord Renton: My Lords, is it not a fact that Her Majesty's Government have defended human rights in the Far East, in the Near East, in South Africa, in South America, in Northern Ireland and everywhere else? Is it not merely the Government's reluctance for publicity which has prevented these things from becoming better known? Should we not be grateful to the noble Lord, Lord Judd, for this opportunity of drawing attention to them?
Baroness Chalker of Wallasey: My Lords, I am grateful to my noble friend. Indeed, Her Majesty's Government have taken action in all parts of the world on these issues. I am glad to report that, after working hard with our European Union partners in New York in the face of strong opposition, we have now agreed that a High Commissioner for Human Rights should be established. We are waiting to go to the General Assembly on that point.
Lord Avebury: My Lords, is the Minister aware that we are most grateful to the Government for speaking out robustly at the CSCE human dimension review meeting in Warsaw on freedom of expression, especially on the violations of that right in Turkey? Is she further aware that on Human Rights Day itself the Turkish authorities raided all the offices of the pro-Kurdish newspaper Ozgur Gündem in Istanbul and Diyarbakir and so on, closed down the newspaper, arrested all the staff and damaged the equipment, thus making it impossible for the newspaper to appear? Will the noble Baroness consider what further steps are available to us under the CSCE procedures for persuading the Turkish authorities to comply with their obligations under the freedom of expression provisions?
Baroness Chalker of Wallasey: My Lords, I heard this morning on my return from abroad of what had happened in Turkey on Friday. We are looking at what may be done in that respect.
Lord Cledwyn of Penrhos: My Lords, in addition to the action which the Government have taken and which all of us applaud, can the noble Baroness give an assurance that the British Government do not permit arms from this country to be sold to those countries which are guilty of abuse of human rights?
Baroness Chalker of Wallasey: My Lords, we shall certainly only enter into any arms contract where those
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arms are for defensive purposes and never where they are for offensive purposes. We are most careful in what we do in that respect.
Lord Ennals: My Lords, does the noble Baroness agree that sometimes it is difficult to determine one from the other? From these Benches we have often asked about the supply of arms to Indonesia in view of the appalling breaches of human rights in East Timor. As I have been instrumental in asking such a critical Question, will the Minister accept from me our appreciation not only of the department of the Foreign Office which deals with human rights, but also the decision which she has taken that in the Assembly they will press for a human rights commissioner? That would be a great step forward.
Baroness Chalker of Wallasey: My Lords, I am grateful to the noble Lord. As regards East Timor, we remain gravely concerned about the human rights situation. With our European Union partners we have repeatedly made clear to the Indonesian Government the importance which we attach to respect for human rights. I can only echo what the noble Lord has said about the human rights unit in the Foreign and Commonwealth Office and the help which we have had from non-governmental organisations on human rights, whose members I meet on a six-monthly basis. We are working well together and that augurs well for our influence in the General Assembly debate.
Lord Judd: My Lords, will the Minister accept that the whole House is encouraged by her positive reply? Does she agree that the question asked by my noble friend Lord Cledwyn illustrates the importance of recognising that this is not just a Foreign Office matter but stretches across departments, with interdepartmental responsibility, and that that aspect could be covered in a report? Will the Minister also tell us what is being done by the Government to support the United Nations in its extended responsibilities following the Vienna conference last year?
Baroness Chalker of Wallasey: My Lords, I appreciate the point made in the noble Lord's first remark. We have been very active in the drafting group of the Third Committee of the General Assembly in agreeing terms for the creation of a High Commissioner for human rights. I am delighted that we are moving forward in that respect. It will be up to the Secretary-General of the United Nations to select a suitable person to fill the post. We shall make sure that all the information that comes our way is fed into that operation.

Suicide Rate: Reduction Measures
3.2 p.m.
Lord Rea Lord Rea asked Her Majesty's Government:
What measures they propose to take to achieve the target in the White Paper Health of the Nation of reducing the suicide rate by 15 per cent by the year 2000.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege): My Lords, the measures that we have taken include funding of the confidential inquiry into homicides and suicides by mentally ill people; the issue of the mental illness key area handbook to NHS and local authority managers; support for the "Defeat Depression" campaign; and publication and widespread distribution of a booklet on suicide. Copies of these documents are available in the Library.
Lord Rea: My Lords, I thank the noble Baroness for her Answer. I appreciate the steps which are being taken and I hope that they will result in improved mental health services. Does she agree that perhaps suicide is related to wider factors than simply mental illness alone? For example, has she read an article in this week's British Medical Journal about unemployment and psychiatric admissions? The report concludes:
"Unemployment rates are an extremely powerful indicator of the rates of serious mental illness that will need treatment in hospital in those aged under 65".
While I agree that unemployment is not directly related to suicide per se, does the Minister agree that there are wider economic and social factors involved in suicide rather than simply the improvement of services? In setting the target, did the Government realise that they had to deliver a marked improvement in the economy in order to achieve the target?
Baroness Cumberlege: My Lords, we do appreciate that there are many factors which affect suicide. It is a very complex problem, but in looking at unemployment there is no direct correlation between the numbers of unemployed and those who commit suicide. Indeed, in times of full employment the suicide rate sometimes goes up. Although I accept the general points made by the noble Lord, I cannot accept his point that there is a direct correlation.
Lord Ennals: My Lords, as the Minister said, there are multi-faceted reasons for suicide. I believe that there is a ministerial and inter-governmental committee which is looking at targets. Has it considered this particular question of the reduction in the numbers of suicides and, if not, could it be an important measure, bearing in mind the different government departments which have an interest?
Baroness Cumberlege: Yes my Lords, this is an area on which the Government place a very high priority. It is one of the five key areas in the Health of the Nation strategy and will be very widely considered.
The Countess of Mar: My Lords, will the noble Baroness accept that the rate of suicide among farmers is much higher than in a great many other social groups? Is she aware that the situation is particularly tragic in the West Country, where young farmers are committing suicide? Will the Minister bear in mind that exposure to toxic chemicals in agriculture can cause or exacerbate depression and that it is often unrecognised by the medical profession? Can the Minister say what action the Government propose to take?
Baroness Cumberlege: My Lords, I very much appreciate the doughty fight that the noble Countess has been carrying on in the past few months. I am aware that particularly farmers have a high risk of suicide. We are doing a great deal of work with them, specifically in conjunction with the Samaritans and the National Farmers Union. As I am married to a farmer I am well aware that he needs to be cherished.
Earl Russell: My Lords, can the noble Baroness say how many suicides last year were aged 16 or 17? Among that number can she also say how many were without a job, a youth training place or severe hardship payments of income support?
Baroness Cumberlege: My Lords, there were 5,500 suicides in total last year. I do not have the detailed breakdown that the noble Earl wishes, although I shall be very happy to obtain it for him in due course.
Lord Henderson of Brompton: My Lords, will the Minister tell the House what steps the Government have taken, and propose to take, to reduce the incidence of suicide in prison and especially in young offender institutions? Further, will she consider action to avoid possible suicide due to depression in those who are suddenly and adversely affected by the operation of the Child Support Act?
Baroness Cumberlege: My Lords, the Government have made considerable efforts to try to reduce the number of suicides in prison by improving communication and co-operation between the staff; by the training of prison officers and health care staff in the recognition and assessment of suicidal risk; by improving the therapeutic regimes of psychiatric inpatients, and by the use of fellow prisoners as listeners, supported by the Samaritans. As regards the second part of the question, I know that one case was publicised in the press. I believe that that was a unique situation.
Lord Rea: My Lords, in setting the target in their White Paper for the reduction in the number of suicides, what evidence did the Government have that any of the steps which they are taking would be effective in reducing the numbers of suicides? I am not aware of any. If there are no actual examples of reducing the number of suicides in other countries, why was suicide chosen as one of the targets to aim at?
Baroness Cumberlege: My Lords, the target was set only a year ago. We have put in hand a number of measures. Clearly, it is far too early to make a rigorous assessment as to whether our efforts have been effective. In other European countries it is interesting to note that Denmark, Belgium, France, Luxembourg, West Germany, the Netherlands, Ireland and Italy all have higher suicide rates than this country.

Business
Viscount Ullswater: My Lords, at a convenient moment after 3.30 p.m. my noble friend the Leader of the House will, with the leave of the House, repeat a Statement that is to be made in another place on the European Council.

EC Development Aid: ECC Report
3.9 p.m.
Lord Hunt of Tanworth Lord Hunt of Tanworth rose to move, That this House takes note of the report of the European Communities Committee on EC Development Aid (21st Report, Session 1992–93, HL Paper 86).
The noble Lord said: My Lords, in moving the first Motion which stands in my name on the Order Paper, with the leave of the House, I should like to speak also to the second Motion in my name.
I am presenting to the House two reports by the European Communities Committee, prepared by Sub-Committee A, on the EC's policies towards developing countries. The first, on development aid, was published in May and the second, on trade and aid, last month. I am glad that we can debate them together because, if the Community's commitment to fostering sustainable development in the third world, particularly among the poorest and the most disadvantaged, is to be effective, its development aid cannot be seen as standing on its own but needs to be buttressed by its other policies, notably on trade and agriculture in so far as they affect the developing world.
I should like to begin by acknowledging our debt to all those who helped us with oral or written evidence to both inquiries: government departments, nongovernmental organisations, international bodies, academics, Members of the European Parliament, and many others. We were glad to be able to visit the Commission in Brussels and the Court of Auditors in Luxembourg. We were particularly appreciative of the oral evidence from the noble Baroness, Lady Chalker, and from Sir Leon Brittan. We owe special debts to Dr. Christopher Stevens of the Institute of Development Studies at Sussex University, who was our specialist adviser for both inquiries, and to our Clerk, Mr. Tom Mohan, who skilfully organised our inquiries and drafted our reports.
In speaking to two reports in the time normally available to introduce one, I obviously cannot attempt to cover them in detail, but I should like to focus on a few key points and hope that some of my colleagues may supplement what I have to say.
Our inquiries took place against a background of renewed discussion in the Council on the effectiveness of EC aid and on the relationship of the Community's aid programmes both to the aid programmes of member states and to the Community's other external policies. At the Development Councils held in May and at the beginning of this month, the Ministers of the member states considered similar questions to those dealt with in our reports. I should welcome it if the Minister, whom I thank for the government responses we have received
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to both inquiries, could inform the House in her reply what progress has been made in those discussions and thus perhaps supplement the somewhat terse written reply that was given to the noble Lord, Lord Brougham and Vaux, on 9th December.
One other important aspect of the background to these inquiries was the Maastricht Treaty, which has amended the Treaty of Rome to provide formally for the first time general powers and objectives for Community aid. Our inquiries were directed mainly at the principles which underpin the Community's policies rather than into particular or topical problems.
The coverage of the two reports differs in one important respect. The Community has exclusive competence under the common commercial policy to conduct commercial relations, including the award of trading preferences, with the rest of the world, whereas development aid is a matter of shared or parallel competence, with both the EC and its member states having their aid programmes. In the latter field there was much talk by some witnesses of complementarity, but although there is a reasonable degree of co-ordination to avoid duplication or conflict, there is no division of responsibility between the Community and member states according to predetermined criteria as to what is best done at EC or member state level. The EC's aid programme is essentially a 13th one alongside those of the member states and pursuing the same aims. We did not, however, question the justifications for this 13th programme and I personally feel that among other things it helps to make the Community a more outward-looking body.
There is, however, an important point about its size resulting from the Edinburgh Council's decision to increase spending on EC aid to Asia, Latin America, Central and Eastern Europe and food aid by 60 per cent. in real terms in the period up to 1999. The Council decision to increase EC aid provided from the general budget is of course only part of the picture. Rather more than half of the Community's development aid is provided to the African, Caribbean and Pacific states through the European Development Fund negotiated under the Lomé Convention. This is subject to review at five-yearly intervals. The next review will take place next year, and may well increase the size of the EDF.
One thing did, however, strike us forcibly. The UK's contribution to the EC's aid programme comes out of the same aid budget that finances our own national aid programme. The Overseas Development Agency seems to have escaped cuts in the recent public expenditure decisions; but if our contribution to the EC's programme is increased without an increase in real terms in the total ODA budget, it follows that there has to be a reduction in our own bilateral programmes to accommodate the EC increase. I accept that there are uncertainties attaching to the size of this squeeze, particularly since the future size of the EDF will not be settled until next year. But squeeze there will certainly be, and we were concerned about the implications for the ODA's expertise and independent capacity. I accept also that it is the quality of outputs rather than the volume of inputs which matters, but we felt bound to draw the House's attention to the possible serious

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consequences: and I note that the Select Committee on Foreign Affairs in another place (Fourth Report, Session 1992–93) subsequently said that it shares our concern.
This diversion of resources from our national to the EC's aid programme will make it all the more important to ensure that full value for money is achieved for the EC's aid programme. In expressing some concerns about this, I would not like to give the impression of a report which is unduly critical of the Commission and its overseas representatives. Indeed, we heard much evidence that was favourable to them: and those of us who visited Brussels were, I think, favourably impressed by the quality of some of the people in the development directorates whom we met. Nevertheless, we felt that certain changes were needed and that in the Development Council the Government should press, or perhaps I should say "continue to press" (for I accept that to some extent they are already doing so), for these changes.
They can be summarised under two heads: first, the Community needs a more integrated aid policy given the different legal instruments through which it functions and the need to have a common EC approach on many across-the-board policy issues. The EC's aid programme has grown up piecemeal over the past 25 years, with both the EDF for the Lomé states and a wide range of different programmes financed direct from the EC budget. It may be politically impractical to merge these different instruments now, but the need to focus aid primarily on the poorest people in the poorest countries calls for a more integrated approach, with as a first step the responsibilities for aid at present divided between Directorates-General VIII and I being amalgamated under a single director-general. We also expressed some concern about the separating off of the EC's emergency humanitarian relief into a new office (ECHO) because in many cases a division between emergency and longer-term aid cannot be sustained.
Secondly, we think the Commission should concentrate more on policy and pre-planning where a longer planning horizon, particularly for budgetary aid, is desirable and then afterwards on monitoring and evaluating the quality of aid delivered; and should delegate more to its representatives in the field during the middle operational phase. We heard far too much about the need to refer everything to Brussels, although we accept that to some extent this reflected a concern about financial accountability.
When we were taking evidence on the development aid inquiry, several witnesses made the point that trade concessions were a more effective way of helping developing countries than aid: and our second report on trade and aid was a natural follow-up, particularly since Article 130v of the Maastricht Treaty required the Community to take account of its development objectives in the other policies it implements which affect developing countries.
The EC's tariff preferences, which have their origins in colonial history but have become overlaid with a variety of different agreements, are complicated, different and varying in their effect. Part 2 of our report
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therefore tries to give a straightforward and clear explanation of them before we go on in Part 3 to evaluate them.
The complicated preferential hierarchy, or "pyramid of privilege" as it is often known, is not significantly out of line with the Community's declared objective of concentrating the greatest assistance on the poorest countries. Preferences are, however, a very imprecise tool. They are negotiated without proper analysis of the potential value of a given concession and are difficult to target to particular needs. Furthermore, their take-up, as distinct from their awarding, depends on a whole variety of other economic, administrative and educational policies. That is illustrated vividly by the fact that many of the least favoured states from the preference point of view have in practice performed better than some of the most favoured. Indeed, in some cases an, over-reliance on preferences seems to have been a disincentive to diversification away from traditional and primary products.
The value of tariff preferences has in any case been eroded by greater trade liberalisation, and that is likely to continue. Furthermore, developed countries wishing to restrict imports in sensitive areas have turned increasingly to quotas and non-tariff barriers. While accepting the need for those in certain circumstances, we were clear that some of them—and in particular some aspects of the rules of origin—bear especially heavily on developing countries. We think that that is an area where the EC's declared priority to take account of their needs in its other policies is not being sufficiently followed: and here we offer some suggestions. In particular we believe that both the public and private sectors could do more to encourage the export regimes of developing countries.
Three things were in a sense peripheral to our second inquiry but were of crucial importance to it. The first was uncertainty about the outcome of the Uruguay Round. But, assuming that it was concluded successfully, we felt that it could only benefit the developing world in the long run through an expansion of world trade. However, it is a sad fact that some of the poorest will benefit least and some, particularly in Africa, may lose in the short and medium term. We believe therefore that some poor countries should be offered by way of compensation new preferences on certain products considered too sensitive for general liberalisation.
The second was the CAP. I hope that we avoided trespassing on the territory of Sub-Committee D, but we felt bound to record our view, which the Select Committee endorsed, that the CAP, which leads, for example, to the dumping of subsidised beef in West African countries to the detriment of farmers and herdsmen in those countries, is seriously holding back the development of agriculture in the developing world; and without that no other development there is possible.
The third was the help being given to central and eastern European states. Of course we welcomed that, and in the long run the emergence of those countries as fully fledged market economies should benefit also the traditional developing world. There is, however, no doubt that that help represents a diversion of resources

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away from the traditional developing countries, particularly in the technical assistance area, and we felt that that should not continue. Central and eastern Europe is a new commitment and other resources should be found for it.
I hope that these two reports provide the House with a useful assessment of the EC's main policies towards the traditional developing world. I should like particularly to thank most warmly the other members of Sub-Committee A for all their interest and help. It was a privilege to work with them in my baptism of fire as chairman of Sub-Committee A.
There was of course a missing element in these inquiries: debt and the burden of debt servicing. Consideration of that issue, which is an international and not just a European Union problem, would however have taken us outside our terms of reference. We therefore ventilated the possibility of an ad hoc Select Committee to address the matter.
This country has a major interest in helping the traditional developing countries. There is a moral interest to help the have-nots and the less fortunate certainly, but there is also a self-interest. When poor countries progress, they are better able to care for themselves and less prone to instability and conflict; and as a major international trading nation we should welcome the growth and diversification of their economies. But at a time when there are severe constraints on public expenditure—and when in particular a higher proportion of our aid budget is to be spent on our behalf by the EC rather than directly by the ODA—it becomes more and more important that that assistance is targeted correctly and that value for money is achieved. I beg to move.
Moved, That this House takes note of the report of the European Communities Committee on EC Development Aid (21st Report, Session 1992–93, HL Paper 86).—(Lord Hunt of Tanworth.)
3.26 p.m.
Lord Carr of Hadley: My Lords, perhaps I may first say how much I agree with what the noble Lord, Lord Hunt of Tanworth, said in speaking to these two Motions. As the first of the other members of the sub-committee whom he thanked to speak, I should like, on behalf of all its members, to thank our chairman for the leadership and control that he exercised over us. I also warmly endorse the gratitude he expressed to our Clerk, our specialist adviser and all our witnesses.
Once upon a time—to be precise some 30 years ago—I was an aid Minister myself. I realise, therefore, the danger of having my head stuffed with out-of-date, and dangerously out-of-date, information. On the other hand, I believe that I learnt some basic principles at that time which are probably still valid. So I shall not hesitate to use that experience in some of the comments that I wish to make.
First, I am sure of one thing that has not changed; that is, the necessity of looking at aid and trade in the same breath. I am sure it is of value to the House that our sub-committee looked at those two subjects one after the other and that we should today be discussing the two
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reports together. The first question that I asked myself, coming again to the subject, was whether it was right that aid to the developing countries should be provided by the Community collectively and by individual member countries. It was apparent from the evidence that no serious attempt was made to co-ordinate collective and individual national policies. Nor was there much attempt within the Community to co-ordinate its own policy. Nevertheless, on balance, I believe that it is right. The noble Lord, Lord Hunt, gave one reason—the outward-lookingness of the Community. But in the post-colonial era I believe that there is some value in the poorest developing countries having more individual nation states to whom they can look for assistance. So on balance it is right that we should be content—although it is a muddle sometimes—that the Community itself, collectively, and individual member states, should be providing aid. That brings me straightaway to what I want to emphasise perhaps more than anything else; that is, the point made by the noble Lord: the singular importance of Britain's own aid programme.
All one can discover about that aid programme from independent sources is that everyone is full of praise for it. Its quantity is never enough but its quality and effectiveness are rated highly. I support our contribution to the EC's aid programme, but we must not allow our own aid programme to fall below what I might call the critical mass level where we can maintain its present efficacy and quality. That would be bad for Britain and the interests of the developing countries. I hope that my noble friend the Minister will have words of comfort on that subject.
I pass to the EC's organisation; and perhaps it would be kinder to pass over it quickly. While I agree that it has among its staff some first-class skilled people of great merit, its organisation is crazy. It is spread about among several directors-general and that must be put right. Rationalisation of the present organisation within the EC cannot wait for years.
In addition to the unrationalised responsibility within the Commission I wish to re-emphasise a point made by the noble Lord, Lord Hunt. As the committee took evidence it became apparent that there was a need for the Commission to concentrate more on the monitoring and evaluation of its programmes as the best way of obtaining value for money and of achieving a good effect on the ground. The decision-taking and the administration must become significantly less centralised. More of the management needs to be local because it is at local level that co-ordination is achieved between what the EC is trying to do and what the non-governmental organisations, individual countries and the receiving governments are trying to do. Such co-ordination cannot be achieved by having messages flashing up and down the line between Brussels and the front line of action.
Furthermore, it is important that more effort is made not only by the Commission but by all individual donor countries and NGOs to make the maximum use of local staff; that is, using the nationals of the country that is being assisted. I have had experience both of overseas aid and that relating to the problems of inner cities and

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there is a similarity between them. The more experience I have had the more convinced I have become that one can build effectively only from the bottom upwards and not from the top down. I believe that is of immense importance.
Separate from that matter, but related to it, is my belief that it is about time the EC became more sceptical about claiming to provide aid by exporting food surpluses to developing countries. To call that "aid" is pure hypocrisy. Too often it disrupts the primary production facilities of the developing country on which its whole social and economic development depends. I remember that when I became an aid Minister many years ago I received a request from the late Sir Edward Boyle to talk to him about the subject. He was a splendid man in everything that he did and he had some wise words to say on the matter. Above everything else he wished to impress upon me his historical view. I had studied science at university, not history, and I needed support in the matter. His historical view was that the healthy development of a country required that an agrarian revolution should precede an industrial revolution. To achieve a healthy economy and a healthy industry in such countries one had to build up the primary side of agriculture, in particular, before one started helping with steel mills and so forth in terms of modern technology. I believe that in that respect, and in others, the EC must get the CAP under control. It should not handicap rather than help the development aid that we are trying to give to the countries that need it most.
I pass briefly to the EC trade policy. Hitherto it has depended almost entirely on preferences. There is a complicated pyramid of preferences to which the noble Lord referred. One of the disappointing factors is that in terms of development the countries receiving preference do not appear to have benefited as much as one might have hoped. No doubt the reasons for that are complicated, and some were mentioned by the noble Lord, Lord Hunt. One reason may be that if preference is given to a market one becomes complacent and not sufficiently competitive. Whatever the reason, preferences have not been as helpful as might have reasonably been expected, say, 20 years ago.
Whatever may be the truth of that, we must face the fact that with an increasing amount of free trade in the world, and perhaps a new GATT agreement, preferences will become less important. Trade will become freer and there will be fewer tariffs against which one can give a preference. Therefore, preferences will be no substitute for advanced countries more freely opening their markets to imports from developing countries.
Of course, that means hurt for Britain and for other countries but we must face that. I say not only to our Government—and I held this view 30 years ago in respect of the governments of other countries—let us spend, if necessary, some of the money which we are at present spending on aid in helping people in our home economies to be able more freely to absorb imports from developing countries. In doing so we shall be helping them to redeploy their own industries and employment. We shall have to do more of that.
In that respect the CAP is a terrible sinner but it is not the only sinner. Many industries in this country and in
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others too easily try to claim protection against dumping. Of course our industries must he properly protected against genuine dumping but the Committee considered, among other things, that what constitutes genuine dumping must be looked at more precisely and critically than has often been the case within the EC and individual countries. We must take that step if we are to achieve the development that we want in those countries because in the end it will be a great support to our own prosperity. The sooner those countries develop prosperous markets the greater will be the wealth that we shall gain from them.
In conclusion, I wish to make one or two reflections on my experience of 30 years ago. Aid and trade must be dealt with together. I then came to the conclusion, and now feel more strongly than ever, that the measure of the percentage of GNP devoted to aid is thoroughly phoney and should be given up as soon as possible. There are a number of reasons for that. The first is that aid has to be associated with trade. When I was a Minister all those years ago I was in no doubt that what was done at the first United Nations Conference on Trade and Development in trying to free trade did more good than all the aid that we were giving. My right honourable friend Sir Edward Heath was then President of the Board of Trade and played a notable part in that conference.
A country which is generous in giving aid and clocks up an enormous number of Brownie points in the percentage of GNP test but is mean in making its markets accessible to the produce of developing countries might do better to stop giving aid and to open up its markets. Trade is more important than aid. To judge what we, and other countries, do for developing countries as the size of our aid programme measured as a percentage of GNP is phoney for that reason.
It is also phoney for another reason. When I was a Minister I came to the conclusion, and I have not changed my mind, that by and large technical assistance is more valuable than capital assistance. It is much cheaper. A country which gives primary attention to providing technical assistance will spend less money than one which gives primary importance to providing capital aid. The country which gives primary importance to capital aid will clock up more Brownie points under the stupid measure of how well we serve developing countries; that is, by expressing its aid programme as a percentage of GNP.
I dearly wish that the international community could find some other factor which would be a truer indication of the help which different countries give to developing countries. I am not saying that because I wish to cover up our performance. I do not believe that we give enough assistance. It is not adequate and has not been so for 20 or 30 years. I should love to see that performance become more adequate. However, I am merely saying that we should not fall into the trap of believing that the percentage of GNP given in aid is the right way in which to measure what a country is doing to help developing countries; it is not.
When you have an old bee in your bonnet you can go on buzzing for too long. I had better stop it buzzing straightaway.

European Council, 10th–11th December
3.40 p.m.
The Lord Privy Seal (Lord Wakeham): My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Prime Minister about the European Council in Brussels on 10th and 11th December. The Statement is as follows:
"With permission, Madam Speaker, I would like to make a Statement on last weekend's European Council, which I attended with my right honourable friends the Foreign Secretary and the Chancellor of the Exchequer. The task we set ourselves at this Council was to set Europe on a course towards economic recovery and the creation of new jobs.
"In Britain unemployment has been falling since January. But across the rest of the Community it has been rising; indeed, since the Edinburgh Council met a year ago one and a half million extra people have become unemployed. At Brussels, and in the White Paper Growth, Competitiveness, Employment, we considered how this could be reversed.
"The conclusions of the Council on the White Paper show that member states are now determined to pursue realistic, practical and market-orientated policies to improve Europe's competitiveness.
"In Brussels we agreed on the need for firm control of public spending and low inflation, open markets, deregulation, a more decentralised Europe, flexibility in labour markets and reductions in social costs, and the decisive role of private investment in generating economic growth. These conclusions are very welcome. They reflect policies that we have advocated at Council after Council. But a number of my fellow heads of government, and the European Commission itself, would have found many of the conclusions unthinkable only a few years ago. Outdated policies, involving extra burdens on business and extra borrowing to fund spending by the European Commission, were firmly rejected.
"Drawing on elements of the White Paper, the European Council agreed a common framework within which member states will consider measures aimed at improving the supply side performance of our economies. The emphasis on improved training and education, measures to reduce the costs of taking on new employees, deregulation at both Community and national level—all closely echoed the themes of my right honourable friend's Budget last month.
"I am glad to report to the House that the conclusions include the British proposal that Community and national legislation should be subjected to a test—an audit—of its effects on jobs. The European Council rejected the intrusive, damaging and defeatist notion of compulsory work-sharing.
"The European Council reaffirmed the conclusions it agreed at Edinburgh on the speedy completion of trans-European networks—infrastructure projects designed to improve the workings of the single market—supported by finance from the
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European Investment Bank. I am glad to say that the Council recognised the decisive role to be played by private investors in financing trans-European networks. Additional loans would only even be considered if there was evidence that priority projects were blocked for lack of finance. European finance Ministers have been asked to examine financing in more detail with the help of the European Investment Bank.
"The Council did not endorse the last-minute proposals brought forward for extra financing through so-called "union bonds" issued by the Community.
"There was firm agreement on the need to ensure that measures taken at Community level should not undermine domestic efforts by national governments to reduce their borrowing.
"A theme running through all our discussions was the need for a successful conclusion of the GATT round of trade talks. This would be, by far, the most important boost to international confidence and job creation. Independent estimates suggest that the economies of European countries would be the single biggest gainer from the Uruguay Round. Negotiations between the Community and the United States were continuing while the Council met. Sir Leon Brittan, the Council negotiator, is reporting to the Foreign Affairs Council this afternoon. We always knew the end game of these negotiations would be difficult. They are still going on. This is a hugely ambitious round of negotiations, covering 4.5 trillion dollars of international trade. Success is a prize worth fighting for.
"The Council discussed the internal implications of the GATT negotiations.
"The Council noted the Commission's assessment that the reformed CAP is compatible with the new commitments which would result from an agreement in GATT. Some delegations asked what the position would be if that judgment proved wrong. In debate the Council agreed, crucially, that if any additional measures were to prove necessary, they would not breach the financial ceilings agreed by the Edinburgh European Council.
"The European Council also endorsed an excellent work programme drawn up by home affairs and justice Ministers. In particular, it agreed to an Anglo-German proposal that the Europol drugs unit should be set up forthwith and that the Europol convention should be completed by December 1994. Community action in this area has a valuable contribution to make in the international fight against organised crime, drug trafficking and illegal immigration. This particular decision illustrates a new appreciation in the Community of a distinction we have long sought to make clear: between actions sensibly conducted in co-operation, and policies which are for national governments to decide. The principle of subsidiarity is now producing concrete results. In Brussels we secured agreement to repeal, withdraw or amend 17 directives out of a list of 24 put to the Commission jointly by the British and French governments. Other governments will now, I

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believe, follow suit. In particular, the German Government are pressing their own proposals to extend subsidiarity. The necessary procedures are in place to ensure that this process continues. We are determined to maintain high standards, but we are determined too to simplify European legislation, to make it less intrusive, and to leave more room for national choice.
"The European Council also discussed foreign policy issues. Foreign Ministers discussed the position in former Yugoslavia with Lord Owen. Although there has been some improvement in the delivery of humanitarian aid, obstacles to a political settlement in Bosnia remain. In a further effort towards peace foreign Ministers invited the parties to the conflict to a meeting in Brussels on 22nd December. As the winter sets in and the suffering of the population intensifies, we must continue to seek a political settlement, however difficult this will be.
"We also discussed the French Prime Minister's initiative for a pact on stability which aims to promote stability and regional co-operation in central and eastern Europe. A launch conference will be held in Paris in spring 1994.
"I also had a useful meeting with President Yeltsin, who subsequently met the European heads of state and government.
"At the summit the heads of government agreed that the only road to economic recovery is the one on which this Government are already embarked, with a year and a half of rising output already achieved. Low inflation, low interest rates, a reduction in industry's burdens and a lifting of the dead hand of regulation; these are the signposts to investment and jobs. Open markets bring new opportunities to exporters; free markets encourage enterprise and prosperity. Europe has a long way to go. But on this side of the House we will continue to point it in the right direction".
My Lords, that concludes my right honourable friend's Statement.
Lord Richard: My Lords, I am grateful to the noble Lord the Leader of the House for repeating the Statement made by his right honourable friend in another place.
The Statement is unrecognisable if one compares it with the conclusions of the summit. I choose my words carefully but I must say to the House that the Statement is grossly misleading in the way in which it presents those conclusions. I implore noble Lords to look at what the summit actually concluded and not merely listen to the Prime Minister's Statement.
Having listened to the Leader of the House repeating the Statement one would not have thought that the primary conclusion which came from the summit was:
"The European Council decided on this basis to implement an action plan based on specific measures at the levels of the Union and of the Member States directed at, in the short term, reversing the trend"—
that is, the trend of unemployment—
"and then, by the end of the century, significantly reducing the number of unemployed, at present standing at the unacceptable level of 17 million".
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That is the plan that they agreed. However, there is not a word in the Prime Minister's Statement about it.
Then one looks at the funding. I have with me the Prime Minister's Statement in which he says:
"Outdated policies, involving extra burdens on business and extra borrowing to fund spending by the European Commission, were firmly rejected".
That is all he said about funding. However, as regards funding the Council's conclusions were:
"With respect to funding, the Community's principal task is to ensure, by reducing the financial risks, that private investors will be involved to a greater extent in projects of European interest. The … role played by private investors will be supported by the Community in accordance with the procedures set out below".
But, what are they? First,
"the Community budget will supply some ECU 5 billion per annum from the "networks" budget heading, from the Structural Funds, the Cohesion Fund and research and development and appropriations".
So that is 5 billion ecu going to back the action plan. Secondly,
"the European Investment Bank, as part of its normal activities, and the European Investment Fund will contribute ECU 7 billion per annum in the form of loans and guarantees".
So that is 12 billion ecu so far to back up the action plan which the Prime Minister did not think important enough even to mention. Thirdly,
"the additional funding will be provided, as far as is necessary, to ensure that priority projects do not run into financial obstacles which will jeopardise their implementation. With this in mind, the European Council called upon the ECOFIN Council to study, together with the Commission and the EIB, procedures which would enable the mobilisation of up to an additional ECU 8 billion per annum in loans for operators involved in setting up networks".
As I see it, the actual amount of cash involved in backing up the action plan is 12 billion ecu in firm commitments per annum and another 8 billion ecu as a distinct possibility if it runs into financial obstacles. Frankly, I am a little surprised that the Prime Minister did not think it worth while to mention that in the Statement.
This side of the House welcomes the conclusions that were reached at the summit. If in fact they are implemented—and, despite the absence of any reference to it in the Statement, one assumes that the Government are sincere in wishing to implement what was agreed at the summit—we believe that they could make a significant impact on the levels of unemployment throughout the Community.
I should like to mention one further matter; namely, the social dialogue. The following is what the Prime Minister agreed to, although it is not mentioned in the Statement:
"The success of the action plan presupposes the commitment of all those involved to preserving social cohesion; this will be easier to achieve if a dialogue is established at all appropriate levels on the objectives to be pursued and the means to be employed. In this connection the European Council invites the Commission to continue its efforts to lead the social dialogue and to make full use, subject to the provisions of the Protocol annexed to the Treaty, of the new possibilities available under the Treaty on European Union, and calls upon both sides of industry to respond constructively".
When the Commission is pursuing a task that the Prime Minister and other leaders have set upon it (as set out in the above paragraph) will Britain be present, or do we leave the room when the social dialogue—which the action plan supposes the commitment of all those involved to preserving social cohesion to be a

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prerequisite of its success—is discussed? Are we to be a party to those discussions or will there be this farce of our leaving the room while the other members of the Community get on with discussing something which the Prime Minister agreed in Brussels this weekend is important? Are we or are we not to be part of it?
I am sorry that I have spoken with some heat on the matter, and I apologise if I have, perhaps, gone further than I wished. However, since I received the Presidency Conclusions at about 1.30 p.m. today, and the Prime Minister's Statement about 30 or 40 minutes ago, I must say that the immediate impact I experienced on comparing the two, in the brief time available, was such that I felt it right to warn Members of the House that they should not rely upon the Prime Minister's Statement.
As regards the European Council, I think that it took some major steps which, if implemented, will have an effect. I believe that what it said about foreign policy was, on the whole, probably right. So far as I am concerned, I wish success to the possibility of the launch conference for the new pact. As a piece of preventive diplomacy (which is what the Council agreed that it was) I hope that it will be successful. Finally, can the noble Lord the Leader of the House confirm that we shall have the presidency of the Council in 1998 and then not until the year 2006?
Lord Jenkins of Hillhead: My Lords, I am bound to say that I believe there is considerable force in the comment made by the noble Lord, Lord Richard, that the Statement contains an unusually heavy British Government gloss. Of course, we are always told not to believe everything that we read in the press, but my experience of European Councils—which extended over quite a number of years—was that one should also be cautious about believing the briefings put out by individual heads of government. The skilled press can quite often give a more accurate picture of the residue of what has taken place than what heads of government, not only the British, wish to present to their own countries and electorate.
The impression that the Statement left on me is that, whatever one might have expected beforehand, the outcome of the summit was at least as great a success for M. Delors as it was for Mr. Major. I am not sure that I see the point from a British interest of what one might describe as this "horizontal heavyweight approach" to European Councils beforehand which, apart from anything else, does not really suit the Prime Minister's style.
I have used the phrase "horizontal heavyweight". It means that you take up a strongly adversarial position, announce that you are going to slaughter your opponent but then, when you get there and discover that there is a lot of solid support behind him, you let him have a good part of his way. The process on this occasion was accompanied by a few saloon-bar aphorisms from the Chancellor of the Exchequer. We all admire the brio of the Chancellor of the Exchequer, which indeed makes a welcome and happy change from that of many of his colleagues. However, we may sometimes be a little less
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enthusiastic about his flippancies from the sidelines, especially when dealing with important international gatherings.
Incidentally, can the noble Lord the Leader of the House enlighten me on something about which I am a little puzzled? What is now the composition of the European Council? In particular, was the Chancellor of the Exchequer there as a participant or was his presence more in the nature of a supporting fan, anxious to keep up the British tradition in that respect? In my day, European Councils were composed only of the head of state of government and the foreign minister of each participating country. As there were only nine countries at that time and as the President of the Commission and one other Commissioner were present, that meant that there were only 20 people, plus one official, in the room supporting the presidency. That made it a very intimate gathering and gave it a purpose quite distinct from that of the Council of Ministers. However, if it is now the case that we are to have three Ministers present, and as there will be a a large degree of enlargement, it will soon become not a conclave but, following the route of the Council of Ministers, another gathering of 100 people or more which will completely change the nature of it.
I believe that many of us will welcome the thrust which came from the European Council to try—and it is not an easy problem—to deal constructively with the deadening problem of unemployment which affects Europe. I hope that the Government will not take the narrow little position that all that has to be done to deal with unemployment is to adopt the policies of the British Government.
It is perfectly true that we are coming out of the recession earlier than other countries. But that is largely because we went into the recession earlier, and indeed deeper, than other countries. All these policies which the British Government believe, or purport to believe, are the full answer to unemployment were policies which the British Government pursued—at least I understood they said they were pursuing them—throughout the 1980s. Throughout that decade our unemployment record was consistently one of the worst within the European Community. I ask the Government to adopt a more constructive approach and to be a little less complacent about the effect which a difference in the phasing of the trade cycle makes to our position compared with that of our allies.
Can the noble Lord the Leader of the House tell us anything more up to date about the GATT negotiations? These are becoming rather a cliff-hanger. I do not know whether the intention is to keep up our pre-Christmas interest or whether the situation really is fluctuating. It would clearly be a tragedy if at this stage, after everything we have been through, success were to elude us, given the importance of the negotiations—I entirely endorse that—and the relative narrowness of the differences.
I wish, through the noble Lord the Leader of the House, to send a message of warm appreciation to Sir Leon Brittan who has played a notable role in bringing the process to its current stage. It is a task to which his

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exceptional talent is perhaps better suited than some of the other roles he has discharged. He deserves our full support in a difficult and delicate task.
Lord Wakeham: My Lords, I am grateful to both the noble Lord, Lord Richard, and the noble Lord, Lord Jenkins of Hillhead, at least for some of the comments they made. I shall do my best to reply. I do not accept for a single minute that the Statement is in any way misleading or that it gives a one sided account of the conclusions of the European Council meeting in Brussels.
Indeed, it is a particular tribute to my right honourable friend to recall just how much the thinking of the heads of government in Europe has changed in recent years as a result of his persuasion and arguments. I do not believe that the Statement is misleading. The noble Lord, Lord Richard, may not be entirely clear about the figures that he mentioned. As regards the 5 billion ecu of structural and cohesion funds, the 7 billion ecu from the European Investment Bank, and the additional 8 billion ecu to be provided as necessary, the first two of those tranches constitute the budgetary provision that was agreed at the Edinburgh Council. The essence of the Brussels negotiations was that the sums would not be increased. Nevertheless there was a provision that we would consider the third additional provision if necessary. The conclusions state:
"The possibility thus provided should not run counter to the efforts undertaken by the Member States to reduce public debt, nor to the stability of financial markets".
On the social dialogue, the noble Lord, Lord Richard, again quoted some of the conclusions but I am not sure he mentioned everything that is relevant. The Commission's White Paper is clear on the issue. It states explicitly that in each country the methods of social dialogue will reflect national traditions. That is how it must continue to be. The conclusions refer to the continued use of the social dialogue,
"subject to the provisions of the Protocol annexed to the Treaty"
to which the United Kingdom is not a party. In my understanding, that means we will certainly be part of those discussions but because of the protocol we will not necessarily be bound by them in those areas where we made reservations at Maastricht.
The noble Lord, Lord Richard, also asked about the presidency. He is correct that under the revised rotation the next UK presidency will be in 1998. However, we are agreeing only one rotation at this point, so the subsequent presidency is uncertain and will depend, for example, on how many more countries join the Union as it enlarges.
I turn now to the contribution of the noble Lord, Lord Jenkins of Hillhead. This is, I believe, the first time that I have had an opportunity to congratulate the noble Lord in this House on his receipt of the Order of Merit. I am sure that that has given enormous pleasure to Members on all sides of the House. The noble Lord speaks with great authority in these matters but I am not sure that he was entirely fair in his comments. One difficulty—I believe that it was the subject of at least one remark by my right honourable friend the Chancellor of the Exchequer—was that the White Paper which, it was originally thought, might have been the subject of some
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decisions at Brussels, arrived at a late hour. That made it difficult to hold proper consultation on the full range of matters and to reach decisions at the time. I believe my right honourable friend said that it would have been better if the White Paper had been published a little earlier.
The Chancellor of the Exchequer attends economic discussions at European Councils on the basis of the Maastricht Treaty which makes clear that finance Ministers should be involved in discussions on Article 103 guidelines.
The noble Lord asked whether I could say anything more about the GATT talks. I agree with those who feel that a successful conclusion of the GATT round overshadows almost everything else we are dealing with at present. I wish I could be specific and say what the position is at this moment. I shall give your Lordships as much information as I have. My noble friend Lady Chalker will give any update she can when she responds to the debate that has been interrupted by the Statement.
The position, as I understand it, is that the director general, Mr. Sutherland, achieved agreement on most of the Uruguay Round text earlier today. Sir Leon Brittan and Mr. Kantor were meeting this morning. My right honourable friend Douglas Hurd is in Brussels for the Foreign Affairs Council meeting to which the Commission will report this afternoon. I have heard of no major stumbling blocks but there are a number of big issues still to be resolved. I agree that it would be disastrous if any of those difficulties were allowed to stand in the way of an agreement before the 15th December deadline.
4.8 p.m.
Lord Boyd-Carpenter: My Lords, will my noble friend say a little more about what is obviously the most important of all the issues arising from the Statement—that is, the outcome of the GATT discussions? Will he comment in particular on the truth of a statement in the press that there is a time limit; that is to say, a date by which agreement has to be obtained, or it will not be obtained at all and the process will lapse? Is there a time limit? And is the main obstacle still the attitude of France to the agricultural issue?
Lord Wakeham: My Lords, my noble friend Lord Boyd-Carpenter asks me to comment a little further on the position with regard to GATT. As I understand the position, the 15th December deadline for agreement is necessary if the fast track approach which the United States has adopted is to be used to implement the agreement. Thus it would be a major setback if we were not able to achieve an agreement by 15th December. At Brussels the European Council agreed expressly that any changes resulting from the GATT deal should not alter the financing arrangements agreed at Edinburgh. That is important, particularly in relation to the question of any possible changes in the CAP.
So far as concerns the outstanding issues, my information—which may not be absolutely up to date—is that it is not agriculture which is the problem. I understand that there are difficulties in relation to audio-visual arrangements, on which there is an

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agreement between the EC and the United States recognising the special nature of the US audio-visual sector. That problem has been reduced to a small number of issues. There is a question concerning textiles which has not yet been settled. I understand also that there are outstanding questions regarding the aerospace industry. That is the latest position, but it is a fast-moving scene and the situation may well have changed.
Lord Bruce of Donington: My Lords, perhaps I may press the noble Lord a little further on the question that was raised by his noble friend Lord Boyd-Carpenter relating specifically to the last paragraph of the statement issued after the conclusion of the conference. Apropos of agriculture, it states:
"It would, if necessary, take the necessary steps for the application of the reform while respecting the financial decisions of the Edinburgh European Council".
The implication of what the noble Lord said is that at the conclusion of the Council that was the position.
Suppose the negotiations continue and we press on towards 15th December and still no agreement is reached. Will the noble Lord give the House an unequivocal undertaking that, regardless of the progress of those negotiations and the possibility that they might fail on 15th December, Her Majesty's Government will on no account increase the British contribution to the European budget in order to bail out the position of the French?
My next question arises from the text of the document itself. Unusually, I agree with my noble friend Lord Richard that it differs materially from the Statement made by the Government. Perhaps I may draw the attention of the noble Lord to the text of the conclusions and the heading:
"The fight against unemployment—the action plan".
When I read that I looked at the rest with bated breath. What did I find? I found that that was varied some paragraphs later by the statement that:
"The primary purpose of the action plan is to reinforce the competitiveness of the European economy".
That is slightly different from the main priority being the reduction of unemployment. It rests on the highly questionable supposition that the reduction of unemployment depends on an increase in the competitiveness of European industry. That is an assumption which is by no means proven.
The third point arises in connection with the additional 8 per cent., to which the noble Lord correctly referred as the additional funds likely to be made available by way of investment to aid the general investment programme. The text of the communiqué reads:
"With this in mind, the European Council called upon the ECOFIN Council to study, together with the Commission and the EIB, procedures which would enable the mobilisation of an additional ECU 8 billion per annum in loans for operators involved in setting up networks".
The important qualification is that:
"The possibility thus provided should not run counter to the efforts undertaken by the Member States to reduce public debt, nor to the stability of financial markets".
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I interpret the words "should not" as meaning that they ought not to rather than that they will fulfil the conditions laid down in the communiqué. Perhaps the noble Lord will reply.
Lord Wakeham: My Lords, I apologise if the noble Lord had difficulty in obtaining a correct copy of the conclusions in English from the Printed Paper Office earlier today. As he will see from the document, the page from which he quoted is in a different typescript from the rest of the document. That is because there was some difficulty in agreeing the English translation of the French conclusions. It was important that we got it right. It was not until 12 o'clock this morning that the version from which the noble Lord quoted was accepted as a correct translation of what had been agreed.
Lord Bruce of Donington: My Lords, was that not the correct translation?
Lord Wakeham: My Lords, I believe that the noble Lord had the correct translation and quoted from it. I apologise if it was not available to him at the time it was available to me or to anybody else.
I believe that the conclusions are quite clear. The European Council agreed at the weekend that any settlement had to be within the existing budgetary constraints. I do not have any authority to go further or to say that anything more will happen. Whatever I may say about what may be agreed in the future will not necessarily bind anybody. Therefore, I shall say no more except that I believe that the Statement is clear: this is the budget, and there will be no settlement of GATT, particularly in relation to the common agricultural policy, which will run counter to the guidelines that have been agreed.
As regards the question of unemployment, I am prepared to accept that it is controversial if the noble Lord tells me that it is controversial. However, I take the view that one of the best ways of creating jobs in the European Community is for the European Community to be competitive. I believe very strongly in competitive industry. Therefore, I do not accept the contradistinction between providing jobs and becoming competitive. We set out in the Statement what was agreed. I do not need to repeat it. The agreements are all concerned with making us more competitive and creating more jobs.
The noble Lord mentioned the possibility of additional funds. In view of the reference that has been made to the statement, I am delighted that the extract which the noble Lord quoted was exactly the same as the one I quoted, namely:
"The possibility thus provided should not run counter to the efforts undertaken by the Member States to reduce public debt, nor to the stability of financial markets".
Again, that was a firm declaration by the heads of government at the meeting. I have absolutely no reason to think that they did not mean what they said. I would not expect that to change.
Lord Simon of Glaisdale: My Lords, as one who is firmly pro-European but suspicious of the ambitions and aggrandisement of the Commission, perhaps I may ask these questions. First, was any explanation given why the White Paper was tabled too late for a proper

1141
consideration? Secondly, does not the White Paper contain, as the CBI reaction suggests, some variable ideas as well as some unacceptable ones? Thirdly, is it not out of the question to allow the Commission to have control of such vast sums—nearly £100 billion—in view of its financial record and its virtual irresponsibility at this stage of function? Therefore is not the urgent task now institutional reform of the Community, first, to inscribe firmly, permanently and effectively the principle of subsidiarity; and, secondly, to bring the Commission under effective control?
Lord Wakeham: My Lords, the noble and learned Lord asks me a number of specific questions. I shall do my best to answer in so far as I can.
First, I accept that the White Paper was delivered too late. The most likely explanation is that the Commission was trying hard to get as much agreement as possible, before the meeting of the European Council. There was a considerable change from the first to the last draft of the White Paper. There was much in the Commission White Paper with which we agree about improving flexibility of labour markets and cutting costs. We also welcome the recognition by the Commission in the White Paper that action is primarily a matter for member states.
We had considerable doubts along the lines suggested by the noble Lord about the Commission raising a large amount of money by what I think are called union bonds, and a number of other member states shared those doubts. Substantial financial resources have already been agreed and we were not persuaded that more were needed.
We had a good discussion at the European Council on subsidiarity. There was an extensive review of the application of the subsidiarity principle and the recommendation that some 25 per cent. of the Commission's legislation should be considered again. The Council welcomed the report and called for early proposals to put the recommendations into effect. I believe that many other member states will be looking more seriously at the scope for improvements under that heading, which is now an established feature of the European Commission.
Lord Richard: My Lords, I am sorry to intervene again but it is an important issue. Page 4 of the conclusions states:
"The European Council considers that the White Paper, whose quality it stressed and which served as a basis for its discussions, contains a lucid analysis of the present economic and social situation of the Union and constitutes a reference point for future work".
That was the Council's view of the White Paper. With regard to the remarks made by the noble and learned Lord, Lord Simon, will the Leader of the House confirm that that is the view of the Government?
Lord Wakeham: My Lords, absolutely. I do not disagree with that; nor have I heard anyone else who disagrees with it. I do not believe that I have heard anyone seriously complain about the analysis of the present economic and social situation.
There were considerable degrees of doubt on the reference for future work, and there was a late
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circulation of the paper in order to achieve an agreement on that issue. That was a pity, but it was probably for the best reasons.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that with regard to subsidiarity the Prime Minister's Statement justifies the comment of the noble Lord, Lord Jenkins, about an element of gloss? My noble friend gave the answer that because one or two other members at the summit expressed doubts about whether the White Paper had merit, that justified the working of subsidiarity. Are we to understand that subsidiarity goes no further than allowing members to express doubt?
Lord Wakeham: My Lords, my noble friend is being unfair. Perhaps I may give him one example. The Commission agreed with the overwhelming majority of the 24 items on the Anglo-French subsidiarity list. It agreed I think it was 17 out of the 24. Two others are still being considered. That does not indicate to me that either the Commission or the member states are treating subsidiarity as other than an important development.
Lord Stoddart of Swindon: My Lords, I still am not satisfied with the Minister's reply relating to this 8 billion ecu or £6 billion, I believe it is, per annum in loans for various works. The document states:
"The possibility thus provided should not run counter to the efforts undertaken by member states to reduce public debt, nor to the stability of financial markets".
The word "should" seems to me a little weak; it means that the possibility could run counter to such efforts. Perhaps I may have the assurance of the noble Lord the Leader of the House that there is absolutely no possibility that the Finance Ministers will agree to the Commission being allowed to raise money through bonds or in any other way; and that if an attempt is made to do so the British Government will oppose it, even to the extent of a veto?
My second question relates to reports that the British voting strength is likely to be diluted when others decide to join the Community. Is that so? If so, how will it operate to our detriment?
Finally, was the plan by M. Delors to make the President of the Commission President of Europe, elected by the European Parliament, discussed either formally or informally? If it was, what was the answer of the British Government?
Lord Wakeham: My Lords, the noble Lord always entertains me when he asks questions. Member states, the Commission and everyone else are not immune from the politics of the world as we know them, with which the noble Lord has lived throughout his life. By and large there are socialists who wish to spend a lot of extra money and those on this side of the House and in equivalent Chambers who tend to wish to preserve taxpayers' money and to keep public spending down. I find it pleasantly amusing to hear the noble Lord being so critical of a suggestion which I suspect many of his confreres on the Continent would welcome enormously.
However, the position is clear. We have quoted many times the passage which states:

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"The possibility thus provided should not run counter to the efforts undertaken by member states to reduce public debt, nor to the stability of financial markets".
There has been no agreement to increase spending by such an amount. It will require another European Council meeting to agree it. As I understand it, the British Government have not been persuaded of the necessity for an increase. The issue will be considered by Finance Ministers, and no doubt we shall take part fully in those discussions. But I see no reason to believe that our conclusions will be different. However, persuasive arguments may be deployed which may persuade even the noble Lord that change is right.
On the effect on enlargement of the British position so far as concerns voting, as I understand it, where there is unanimity that is still the position. Where there is qualified majority voting in the new circumstances, some changes will have to be made; but nothing has so far been agreed.
With regard to the President of the Commission being the President of Europe, there was nothing in my briefing in French or English, either in or between the lines, which indicated to me that that was discussed in any way at any time. However, there are many people at Brussels. It is possible that someone did discuss it, but word has not reached me.
The Earl of Onslow: My Lords—
Lord Wakeham: My Lords, it is time to move on as 20 minutes have elapsed.
The Earl of Onslow: My Lords, the Front Benches take up at least 25 minutes—
Lord Wakeham: My Lords, perhaps I may explain the position to my noble friend. After the Statement has been made, the Front Benches have asked their questions and I have done my best to respond, there are 20 minutes for Back-Bench questions. That is the rule which the House set down. Obviously, it can be changed if the House thinks differently, but while that is the rule we ought to stick to it. I believe that the noble Lord, Lord Rea, who is next, should now speak.
The Earl of Onslow: My Lords, perhaps I may just say this about a very important Statement. Some of us waited patiently while our elders and betters got in. I wished to ask a simple question on something important; I shall not ask it now because obviously it would be out of order. However, on an issue as important as this, cannot the usual channels allow slightly more than 20 minutes? It is not too much to ask, say, for half an hour.
Lord Wakeham: My Lords, my noble friend asks a reasonable question. I shall see that the appropriate committee considers the point.

EC Development Aid: ECC Reports
4.31 p.m.
Debate resumed.
Lord Rea: My Lords, as a compensation to the noble Earl, Lord Onslow, perhaps I may say that the debate
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which was interrupted for the Statement also concerns Europe. He may care to listen; in fact I was expecting him to speak in the debate because overseas aid is one of his interests.
As a member of neither sub-committee I speak with some diffidence. Both reports are full of interest and make sense of complex issues. Personally, I found both of them to be of great educational value, for which I wish to thank members of both sub-committees and the chairman, the noble Lord, Lord Hunt.
I believe that I now know the difference between an MFN (a most favoured nation) and the MFA (the Multi-Fibre Arrangement). I know the difference between the CAP (the common agricultural policy) and the ACP (the African, Caribbean and Pacific states covered by the Lomé conventions). Another layer of fog has been lifted from my mind to help my understanding of the inner workings of the EC and its many directors-general. However, visibility is still not too good in that department.
I should have liked to read all the evidence, much of it fascinating, but some is heavy going and time did not allow me to read it all. However, reading the verbatim accounts of witnesses brings the subject to life, sometimes quite sharply. I feel that the evidence given by the NGOs and academics makes for much better reading than that given by civil servants, who have to watch over their shoulders and of course are past masters of "officialese".
To sift the evidence, we are reliant on and indebted to the Select Committee and its specialist advisers, and it is their summary and conclusions to which we need to pay attention. I shall try to refer to each report in turn, but as there is considerable overlap, it is possible to cover both, I hope logically, in the same speech.
In the debate on the Queen's Speech, I quoted the second conclusion of the committee on paragraph 65(b) of the first report:
"We are concerned about the potential serious effect on the United Kingdom's own bilateral programme of the decision to increase EC aid without knowing whether there will be a corresponding increase in the ODA's budget which finances both our share of the EC's programme and also our own bilateral programme. There is a risk of an unacceptable squeeze on our bilateral programme".
The noble Lord, Lord Hunt, has already emphasised that conclusion.
I am not against the European Community being involved in overseas aid. There may be types of aid to which it is particularly suited. Here I think of emergency relief, provided it is not used as a way to get rid of food mountains. But if our own carefully built up value-for-money programmes are to be damaged in the process, the EC commitment will do more harm than good. To expand EC aid to less developed countries would be much easier to justify if it were in the context of an overall expansion of aid. When the total is static, however, we are in a difficult situation. Here I should like to quote from the evidence given to the committee by Simon Maxwell from the Institute of Development Studies of Sussex University, on page 57 of the first report,
"Britain already devotes close to twice as great a share of its aid programme to EC aid as other major donors; around 23 per cent.",

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of the British aid budget goes to EC aid, as compared to an average of 13.5 per cent. for other European countries.
"The reason for this is the stagnation of our total aid budget, in circumstances in which we are committed to contributing a standard share (around 17 per cent.) of a growing EC programme.
Given other multilateral demands on the British programme, notably the UN and the World Bank, the result of the growth of the EC programme has been a major squeeze on the British bilateral programme. This has shrunk by 30 per cent. in real terms since 1979, compared to a reduction of only (!) 15 per cent. for the aid programme as a whole.
There is beginning to be a serious question about the critical mass of the bilateral programme, which any further expansion of the EC programme could make acute—unless, of course, total British aid were increased more than proportionately".
That section of his evidence is entitled,
"Fattypuffs and Thinifers in the debate about European aid".
I should be surprised if any member of the Select Committee, or any Member of your Lordships' House for that matter, is not deeply concerned about the effect on our own overseas aid programme of this diversion to the European Community, Quite apart from the bilateral aid which the ODA carries out in co-operation with the governments of developing countries, there is the question of support for the non-governmental organisations, both United Kingdom and overseas-based. Under the noble Baroness's guidance, that support has greatly increased over the past few years because of their ability to do such a good, well-targeted job at field level.
Looking at the evidence, it was suggested that non-governmental organisations should perhaps be encouraged to apply to the European Community instead of to the UK for support. Perhaps I may quote from the noble Baroness's evidence at page 39 of the first report:
"One of the most valuable things that we get from British NGOs is their relationship sometimes with local NGOs in the recipient country. Where there is that sort of twinning and the relationship in the delivery of aid is also sound, I can say that the Commission would do well to allow the NGOs to be the implementer of the Commission funds in that country".
Is that perhaps a hint that NGOs should look to Europe for their money?
Evidence from the non-governmental organisations themselves —for instance, Save the Children Fund—is that obtaining funds from the EC is a long drawn out and tedious process. However good are the sentiments that they should work with NGOs, in fact the money often comes so late that it is inappropriate by the time it arrives, if it comes at all. The good working relationships which many non-governmental organisations have built up, as I quoted earlier, and which were mentioned by the noble Baroness, are not to be brushed aside. They should be developed further. Will the cut in funding for bilateral aid include cuts in the joint funding schemes for non-governmental organisations? That is not quite clear. That is the only area of the overseas budget —the one to NGOs—which has been expanding.
On the subject of joint funding, the noble Baroness is aware that she agreed to fund at 100 per cent. those NGOs engaged in direct family planning activities. Will NGOs which now do not carry out family planning activities per se but which agree to start to do so, and thus qualify for 100 per cent. funding for that part of their programme, lose funding from other parts of their programme? Those other parts of their programme may
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include areas of community development which in the long term are equally if not more important in stabilising population. It would be a pity to rob Peter to pay Paul—or in this case to rob Petra to pay Paula.
Continuing the subject of family planning, in her evidence the noble Baroness said that, although a resolution on family planning was passed by the Council of Ministers last November,
"the exact position of who does what is more fluid than the policy setting".
I quote her own words. Has any further progress been made? I suggest that there is a good case for the EC to support the work of the established international organisations such as the United Nations Fund for Population Activities—although I am not sure whether the EC can support a United Nations organisation directly—or the non-governmental organisations which are co-ordinated by the IPPIF.
Finally, as the report suggests, all overseas aid should be handled by one DG. That point was emphasised by the noble Lord, Lord Hunt. I am still baffled by the way in which the system of directorates-general was set up. It does not seem to be parallel with the ministerial pattern of any country. Despite my scepticism, I remain basically a pro-European (I see the noble Lord, Lord Bruce, leaving the Chamber having heard that remark).
I have spent more time talking about aid than trade because aid is closer to my area of knowledge. But I fully realise that in the long term trade is more important. Aid must be regarded as assisting countries to join the world economic community in a self-sustaining role. As the table on page 17 of the second report shows, even the 25 largest recipients of aid, which are quite poor countries and received 3.2 billion dollars of EC aid, earned by exports to the EC 40 billion dollars. That is a rough calculation that I have made—the total is not given on the table—that is, 12½ times as much as they received in aid. Even nations in abject poverty or in the midst of civil war earned almost as much as they received in aid.
Money earned by exports does not always result in the relief of poverty or in building up the social and material infrastructure needed for developing countries to become self-sustaining. Too high a proportion, especially in Africa, goes on the servicing of international debt. Also, some of it lands up in Swiss Banks or is spent on quite inappropriate imports of consumer goods. That is an aspect which will not be improved by GATT, if the agreement is ever concluded. Let me here point to India as an example. India has managed to avoid building up an international debt because it has been quite tough on what it allows to be imported. When GATT is concluded it will have to import consumer goods which will compete with its own industries and which it probably does not need.
The committee rightly felt that debt was outside its remit. The point was made by the noble Lord, Lord Hunt. Nevertheless, it recognised its importance and recommended that it should be considered by a Select Committee. I fully support that recommendation. Lifting the burden of debt would do more lasting good than most overseas aid. But even then there would still be a need for aid but the aid could be much more

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appropriately targeted. It could be targeted to help countries' economic progress and not so much directed to the relief of distress and abject poverty.
Much of the report on aid and trade concentrates on the effect of trade barriers and partial relief from them through a variety of mechanisms. Those are quite complex and numerous. But the imminent conclusion of the Uruguay Round—the noble Lord, Lord Jenkins, said that we might have that for a Christmas present—will in fact overlie all those mechanisms and supersede them. However, the committee estimated that the Lomé countries stand to lose from 90 million to 120 million ecus if the GATT is concluded. The World Bank estimated that there are likely to be losses of 7 billion dollars for the poorest countries because of the changes in GATT.
It is no wonder that the poorer countries do not join in the general euphoria about GATT and the increase in world trade that will result from it. As the noble Lord, Lord Hunt, said, compensation for those losses should surely be available in the form of new preferences, appropriately targeted.
In conclusion, I am very much concerned about the possible effects on poor farmers in the third world as a result of the free availability of low priced and subsidised food products from efficient farms in the developed world. I gather that the CAP will still be able, even under GATT, to operate to some extent and undercut the products of developing countries. I quote from the second report:
"The CAP is holding back the development of agriculture in the LDCs, and without that development no other development is possible".
Here I echo the words of Sir Edward Boyle, quoted by the noble Lord, Lord Carr. I suggest that a more radical overhaul of the CAP is urgently necessary so as to stop its harmful effects on some of the poorest people in developing countries.
4.49 p.m.
Lord Boardman: My Lords, let me start by paying two tributes. My first is to the noble Lord, Lord Hunt, who chaired the two committees and managed to pull together the difficult subjects of aid and trade and to focus the committee on producing the report in a way which, I hope, we can understand and sensibly debate. My second is to all those many hundreds of dedicated people who work in what I call the aid business and who devote their time and a great deal of their own resources to helping people in poor areas. They do great work. Any criticisms made of the overseas aid are not meant to be a reflection on them. Many gave evidence to us and many of us met others from time to time in various capacities.
There must be some anxiety in regard to the number of institutions that exist in what one might call the aid field. Quite apart from the 12 national organisations within the Community—it is there where our attention was mainly focused; in our case it is the ODA—and apart from the EC itself, a large number of non-governmental organisations exist. Outside Europe we have the World Bank, the IMF and so forth. It is a
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great credit to them that they do not end up tripping over themselves the whole time. Often, because one of the aid bodies happens to be sited with an office and staff in a specific country, it manages to create an organisation locally to face an emergency or build up an infrastructure. However, it is a chancy business. I find it hard to understand why we do not see more duplication or omission—for instance, thousands of blankets arriving but no tents—but somehow—perhaps by the "old boy" network—with a certain amount of co-ordination from the nations concerned, and particularly the ODA, those problems do not arise as often as one may imagine.
An attempt has been made to pull some of those together in Europe by the office of ECHO—European Communities and Humanitarian Office—to which my noble friend Lord Hunt referred. I was fortunate enough to be one of those who visited Brussels and met representatives from ECHO. It is obvious that it is at a fairly early stage and those involved are perhaps a little green in what they are doing. I felt that there was a certain resentment about its role—it is neither one thing nor the other.
The Community is described as the 13th donor. There is confusion among the directorates—again referred to by my noble friend Lord Hunt. It is slow to make decisions; it tends to be bureaucratic. On my visit I was impressed by the trouble both it and the Court of Auditors took to see us and explain what they were doing; what the aims and difficulties were. It is sad to contrast that keenness with the reluctance of the MEPs to present themselves or make any sensible case at all, with certain exceptions. I felt that the lack of enthusiasm showed by the MEPs in what is an important subject was disappointing. Their enthusiasm appeared merely to be to recount the visits that they had made to various countries in the course of their duties. But perhaps that is an unfair criticism and no doubt my noble friend will know better than I how hard they work.
Many NGOs appeared unhappy about some projects led by the EC. They complained that there was difficulty in obtaining decisions and funds. They felt much happier and progressed much better when the projects came under the ODA. That was encouraging in one way—one likes to hear support for the ODA—but it was disappointing to know that the EC is presenting a number of difficulties.
That is emphasised by what is happening with the increase in the Community funds allocated to aid. Within a given figure the more that is hived off into the Community central organisation the less there is left for the ODA. If that is carried too far it can result in the ODA ceasing to be economically viable or being able effectively to perform the tasks which it has been doing efficiently for many years.
I shall not rehearse the arguments on the question of bilateral aid. They appear in the reports. There is a tendency by many people to downgrade bilateral aid. However, it provides substantial benefits, often due to the historical connection. A country may have a colonial background but the historic connection plays a part in obtaining mutual understanding and thus speedier decisions are reached. There is a great deal to commend

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bilateral aid, though I recognise, as the report makes clear, that there are disadvantages. Having said that, we should take care not to sweep too many of the resources which are available for aid into the central organisation, either in Europe or elsewhere.
I was somewhat intrigued to hear from the NGOs that their main interest was not the treatment of emergencies but the building up of long-term development, such as in agriculture, to try to prevent the emergencies with which they had had to deal from recurring. Of course, it is the emergencies which strike the headlines. It is the banners about thousands of starving women and children which hit the headlines that also refill the coffers of many charities. But, quite rightly, their main effort and work is to the longer term; to deal with the problems that they foresee if agriculture and so forth is not generated within those countries.
Perhaps I can deal briefly with trade—I say "briefly" because a great deal must depend on the outcome of GATT. At present massive anomalies arise in relation to trade preferences. Some are largely historic and bear little relation to anything that currently should be applied. Then we have terms like "most favoured nation" which often means the least favoured nation. Often those nations that receive little trade preference of any kind, by virtue of that, struggle through and make a success of their economies while those which receive most aid do not make the same kind of progress.
A feature which appears from time to time in the trade aspect is protectionism; for example, the rules of origin. They were introduced so that a country which was growing a raw material could obtain a tariff preference when importing those materials into the developed world. But if that same country started to manufacture, whether utilising material it was growing itself, material from the next state or a combination of the two, then those tariff preferences were lost. The country was penalised. It must be in our interests that those countries we wish to help and bring on are encouraged to develop and process the materials that they grow rather than being penalised when that is done.
Apart from the technical preferences, there are quotas, voluntary agreements, non-tariff barriers and so forth, many of which vastly exceed the impact of tariffs on what happens. There are also elements of self-interest by developed countries which appear seriously to damage some of the lesser developed countries. Reference was made to that this afternoon in relation to agriculture and the so-called "Brussels beef carve-up" to which the noble Lord, Lord Hunt, referred. It is worth briefly recalling what happened. The main exporting CAP countries—France and the Netherlands —managed to export large quantities of low grade beef to West Africa. However, they received the same subsidy for exporting that low grade—what is called "side beef' with up to 50 per cent. fat—as though it were prime rump steak. The result was that the poor West African farmers who had been struggling to rear and sell their own stock were unable to face competition—poor though the beef may have been—coming in at a price that made beef production quite uneconomic for them. We, the members of the Community, are paying funds not to help the West
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Africans but to enable, in this case, the French, the Dutch and others to export their low grade beef to West Africa and to put out of business West African farmers. That cannot be right. I know that it is one of the matters that is being considered and perhaps will be dealt with in the Uruguay Round. It is a feature of something that has been there. I hope that it is an exceptional one and that there are not too many more of them. But I rather fear that there may be.
Finally, the more I hear of trade policies designed to help those in need the more I become convinced that most of them should be scrapped and that we should start again. There is a certain amount of historic nonsense in so many of them. Perhaps the GATT agreement, if we get it through in the next few days, will provide the answer and a satisfactory solution. I certainly hope so.
5.1 p.m.
Lord Bruce of Donington: My Lords, noble Lords have dealt with this matter very thoroughly indeed. I find myself in agreement with much of what they said. That enables me, except in one or two small instances, to forgo going over the same ground.
I cannot let the occasion pass without paying tribute to the noble Lord, Lord Hunt of Tanworth, and the committee's permanent staff for the way these questions have been dealt with. Based on my professional experience I calculate that the noble Lord spent at least 35 hours in the committee cross-examining—or should I say examining—witnesses. On the basis that every hour of examination takes at least two hours' preparation by the chairman of the committee concerned he must have spent a further 15 hours on the deliberations. And reading all the papers must have taken at least another 175 hours of his time, including thinking time. On the basis of a conventional calculation of professional fees for a senior qualified clerk in a firm of chartered accountants, that should have netted him some £22,500, instead of which he has had to be content, like the rest of us, with a daily attendance allowance. I pay tribute, as a Eurosceptic, to the structure of the reports and their contents.
There has been general agreement that aid from the United Kingdom in one form or another, either through the EEC or through direct aid, probably typifies more than anything the aim of "back to basics" which is so often mooted these days. Going back to basics means going back to justice, honour, decency and compassion. That is what back to basics means. It has nothing to do with free market forces. The aid that we provide, in whatever form it is provided, typifies a return to those basic values which I believe most noble Lords share and which at any rate all political parties profess to share. That is against the background of a United Nations obligation to devote 0.7 per cent. of GDP to aiding developing countries—a course of action advocated most vehemently from time to time and with great eloquence by my noble friend Lord Judd, who is to speak in the debate. At present we are devoting around 0.35 per cent. of GDP.
The noble Baroness, Lady Chalker, is extremely clever: I do not mean "clever" in the nasty sense. She

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has said something that is probably true but quite unprovable. As the noble Baroness emphasises always—and very properly—it is the quality and not the quantity that matters. No one in your Lordships' House can challenge that assertion. No one would query in the slightest the noble Baroness's sincerity and purpose in carrying out the duties of her office in that respect. I pay my tribute to her on that account alone.
Mind you, there are certain difficulties. Not all the aid classified under the aid and trade provisions is sent out with the same purpose. The committee had the opportunity to consider a slight deviation from the procedure evidently adopted by Her Majesty's Government. I do not seek to introduce a note of undue controversy or to detract from anything the noble Baroness has done when I refer in particular to a Written Answer of 28th October. It appeared on a Thursday and therefore would not have been read, if at all, until the Friday. The Question asked the Secretary of State for Foreign Affairs to list each individual scheme which received financial assistance under aid and trade provisions since the programme began. I have to inform the House that there was a project amounting to some £306 million in Malaysia which went to Balfour Beatty. It was a considerable electrification scheme. It did not meet with the approval of the Foreign Office. In fact it was specifically said that it did not have the approval of the Foreign Office. Indeed, the Foreign Office recommended that it should not be done—more particularly since it accounted for more than half the aid contributed during that year, 1991. The answer was that the approval came from a higher authority.
It might be wise to have the matter cleared up quickly. I know that the noble Baroness was not responsible, but as we did not have time to touch upon it in the committee, noble Lords will perhaps forgive me for raising the question today. We would like to know who overruled what the ODA thought was the right thing to do. I have no doubt that I shall receive a reply and I trust that the question will be answered in the same spirit in which it is asked. It is not sought to bring any kind of blame, directly or indirectly, upon the noble Baroness. But we would like to know who authorised no less than £306 million. It is no small matter when we are supposed to be suffering a very considerable degree of financial stringency. My noble friend Lord Judd would certainly not object if that amount had been put in the correct perspective as regards overseas aid and trade so that we could bring up our contribution more towards the level which we undertake to give. But it was not that at all. It was devoted to one project, the usefulness of which, from the aid and trade standpoint, could not be officially endorsed by the Foreign Office itself.
Much has been said with which I entirely agree; namely, the apparent conflict between our contribution to the European Community budget which in turn is passed on to the various projects directly and the aid provided by the Government themselves directly and in collaboration with non-governmental agencies. On the basis of the evidence submitted to us, I do not think that any member of the committee could fail to agree that direct government ODA aid from ourselves, working
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with non-governmental organisations operating in the field, was the most effective and that aid channelled through the Community did not ultimately achieve quite the same result.
Some may be tempted to ask the question: how did the Commission become involved at all? It started before Maastricht. We were not blessed or cursed, as the case may be, with concepts of ever-closer European union and all that kind of bureaucratic nonsense. It was at a time when we were seeking to co-operate in establishing the single market, the free trade area and so on. There was no obvious reason, other than the wish to get their infernal bureaucratic feet into the picture, for the Commission to become active in this matter at all.
I would not dissent from the fact that some members of the committee advocated the amalgamation of DG VIII and DG I within the Commission structure. That might have some result. In all, the committee felt—I would not wish to misrepresent it in any way—that the Government's attitude towards the whole question was on very sound lines. I say that with some regret because coalitions between myself and Her Majesty's Government are a little unusual. But certainly we believe that that was right.
There can be no doubt that the efforts made by all the countries involved, and by the Commission, have resulted in very significant benefits being conferred on developing countries. I want to leave noble Lords with a contrast. There are people on all sides of the House who are still in the first degrees of innocence. They really believe that bankers are the benefactors of mankind. So much so that they even want bankers to determine the parameters within which our economic destinies may progressively unfold.
Let us contrast the aid provided out of taxpayers' pockets —including those who pay VAT, and not only those who pay income tax—with what has happened with the banks. Let us consider the massive loans that were advertised and almost forced on the various South American states and many other developing countries at exorbitant rates of interest which they are now struggling to repay. They are events so daft as to disentitle the banking community at large from any effective say over the economic destinies of the United Kingdom, let alone Europe. There are actions still being taken against individual depositors and account holders in the United Kingdom by way of charges in recoupment of the colossal losses which the banks have made.
There is a moral in this. I am pleased to support the noble Baroness. It shows the political purpose enshrined in a policy in which one believes, delivered by people who do not necessarily have an interest in the market results of what they are doing, but only in its goodness. Ultimately that is far more effective than the free market forces which have led the banking community into imperilling almost the financial structure of the civilised world.
5.16 p.m.
Lord Butterworth: My Lords, as a member of the sub-committee I too would like to thank and add my gratitude to the noble Lord, Lord Hunt, for guiding us

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through this most interesting but sometimes impracticable material. It became clear that secretaryship of the Cabinet must be an excellent training for the chairman of Sub-Committee A and we are all grateful to him.
I would like to make a few comments on essentially the first report. I should like to hang what I have to say on two events. The first is the Budget, and then, secondly, the report of the Comptroller and Auditor General referred to by the noble Lord, Lord Bruce of Donington, on the Pergau hydro-electric project in Malaysia, which came out in the course of our work and which I believe has important lessons about capital aid.
First, the Budget. Our aid policy has undergone a major strategic change which has been continued in this year's expenditure round. Although there is a 4 per cent. rise in cash terms until 1996–97, that will mean a real cut in total aid. But the problem is that it is impossible to say what the actual level of aid to developing countries will be because the ODA is discontinuing the practice of having separate lines for development aid stricto sensu on the one hand and, on the other, aid to central and eastern Europe and the former Soviet Union. However, the ODA itself forecasts an absolute cut in aid between 1995–96 and 1996–97, and, if the recent trend is continued, it suggests that it might fall on developing countries.
I would like to say something briefly about a matter which we commented on in our report; that is, the squeeze on bilateral aid because of the rising amount of our aid which is channelled through multinational agencies such as the European Community when our total aid is not increasing. British aid channelled through multinational agencies has risen from 27 per cent. of the total aid budget in 1980 to 45 per cent. now. It is forecast that in the mid-1990s it will pass 50 per cent.
As we pointed out, the consequences for our bilateral aid become more and more serious. Our bilateral aid is judged to be good. In July 1993, the report of the Select Committee on Foreign Affairs on ODA expenditure considered that Community programmes
"are not as well managed as bilateral aid".
That underlines the conclusions which our committee reached in paragraphs 47 and 48 of the first report about the high standards achieved by our bilateral aid. If your Lordships were to talk to our directors in the field—for example, to members of the British Council—I am sure that they would tell you that the Community delivery machine lacks quality compared to our bilateral aid and that it is less well designed and generally inferior.
The noble Lord, Lord Bruce of Donington, quoted the aphorism that we heard earlier that it is quality rather than quantity which is important. I would quarrel with him. I should like to put before your Lordships a different thesis in view of the figures in the Budget and that is that it is impossible to maintain quality on a shrinking performance. That is about the most important thing that I shall say tonight so I shall say it again: it is impossible to maintain quality on a shrinking performance. That is especially true of the increasing vulnerability of the British Council. Denied sufficient core funding, the council increasingly finds it necessary to bid for project work, for instance, against the Crown
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Agents, consortia of universities and consultants. Such bidding is a good thing, provided that it is kept in moderation.
In passing, however, I invite your Lordships to notice that when the British Council bids (as it does frequently) for Community projects, further problems arise. The Community lays it down that to be successful a project will be supported only if at least two sponsors come from different European countries. It is now commonly alleged that the British Council has embraced a completely new concept—"a contract with an uncommitted Greek"—to fulfil that condition. It seems sad that the Community should lay down such conditions because that suggests that Brussels is putting the advancement of the Community before the efficiency of its aid. That is a criterion which the committee heard in evidence in connection with the creation of ECHO.
A not dissimilar criticism has also been levelled about the selection of the countries to which the Community supplies aid. Largely I suppose because of the early date of the first Lomé Convention, there is no doubt that a disproportionate amount of European aid has been channelled to the, former overseas French possessions.
We should welcome the recent decision to increase the aid that is given to Asia. If we are seriously interested in the poorest people, we should never forget India, where the British Council has done such excellent work. There are more poor people in India than in the whole of Africa.
I turn now to my second event, the report by the Comptroller and Auditor General upon the Pergau project. It has for some time been well known that all over the developing world hundreds and hundreds of dams have been built, absorbing colossal amounts of aid and wreaking all kinds of damage, human, ecological and economic. Sometimes the damage has been so severe as to counteract any benefits that the dams may have contributed. An early lesson could have been learnt from the Akosombo dam on the Volta River in Ghana in the 1950s and 1960s, but identical mistakes have been repeated time and time again: large numbers of people displaced from their homes, lands and livelihood; local people too poor to pay for the electricity that is eventually generated; the enormous spread of parasitic water-borne diseases, river blindness and the like; half the world's irrigated land so salinated that yields are affected and finally sedimentation—the reservoir ultimately fills up with silt and other detritus and has to be decommissioned, becoming a useless block of concrete.
As those of us who have spent years seeking sustainable development know, what is needed is a better understanding of technology in development. Aid programmes should be designed to make use of local available resources. Too often unsuitable Western hardware is chosen or installed by foreign "experts". Participation by the end user in project design and technology selection is vital. In the Arun hydro-electric project in Nepal, the only technology which was considered was a large high technology dam, in spite of the fact that there was in Nepal the technical ability to

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design, construct and install smaller scale schemes capable of supplying the same amount of power more quickly, more cheaply and with less risk.
Then came the report of the Comptroller and Auditor General on the Malaysian Pergau hydro-electric project. It would seem that because of an earlier undertaking to the Malaysian Government, £234 million was sanctioned towards the biggest single project in British aid history. The money came from the aid and trade provision referred to in our report which can only be used in credit-worthy but poor countries for projects which are "financially and environmentally sound". I repeat the words "environmentally sound". The consultants reported their concern about the depletion of forest resources, encroachments into ecologically sensitive areas and the risks of disease transmission which might result from the project. As has already been mentioned, the Overseas Development Administration concluded that the project was "a very bad buy" and would cost Malaysian consumers over its 35-year life about £100 million more in electricity costs compared with locally gas-fired electricity generation.
I shall not go on further. However, I wonder whether I may be allowed to adopt the principle which was put before your Lordships earlier by my noble friend Lord Carr that as a general rule in this area technical aid is much more effective than capital aid.
My noble friend the Minister has of course been at the forefront in enhancing the reputation of British aid in its concentration upon sustainable and successful development. The ODA, the British Council and others have a deservedly high reputation in the field, but many of us tonight are concerned about a system which gives constantly increasing funds to the Community when our own bilateral aid is being shrunk considerably to provide it.
5.30 p.m.
Lord Thurlow: My Lords, it is difficult to sustain a kind of dialectical vitality in a debate when we all agree so much with one another. That reflects the quality of the report, for which we are indebted to the noble Lord, Lord Hunt. As his contribution was quantified in notional terms by the noble Lord, Lord Bruce, perhaps I, in passing, may say what an enormous sum his predecessor, the noble Lord, Lord Aldington, would have chalked up had he been able to benefit in the same way. As I have now retired from the sub-committee, I should like warmly to endorse the tributes paid to the noble Lord, Lord Hunt, and, previously, to his predecessor.
I cannot disagree with most of what the noble Lord, Lord Butterworth, said. In the early part of his remarks, he took as his text the aphorism that quality cannot be sustained on a shrinking budget. How true! We are deeply indebted to the Minister for the way that she fights her corner and her grasp of the whole subject. But in real, budgetary terms British aid is declining and will decline. Quality cannot be sustained on a shrinking budget however splendid the exertions of the ODA, to
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which I pay tribute. I worked with it in the field for many years. I have been involved with it at times in Whitehall. I have the utmost respect for it.
What lies behind the problem of the shrinking budget? I suggest that it reflects a certain disenchantment in public opinion. Over the years, the problems of bad government, in Africa in particular, and the stories of corruption which, alas, remains rife in many countries, are served up to us by the media in colourful terms, and, inevitably, the voting public has begun to question whether the whole apparatus of aid is directed properly and gives value for money.
I have to confess that, many years ago when I first became involved, I saw myself to some extent as a disciple of our colleague the noble Lord, Lord Bauer, who pioneered the criticism of the general concepts of intergovernmental aid. If the noble Earl, Lord Onslow, were still in his place, he would probably be glad to stand up now for the principles of the noble Lord, Lord Bauer. What has been said about a certain capital aid project, of course, is grist to the mill of those who question the whole field of overseas aid. But we have to go on slogging away. We need to increase our contribution.
Some of your Lordships may have noticed an OECD report that I saw yesterday which gave the figure of the net contribution by the so-called developing countries to the economies of the developed countries in the years 1982–1990. The figure that the OECD identified as that contribution to our economies (the economy of this country and of others of the better-off industrialised countries) is equivalent to 418 billion dollars. I find it difficult to struggle with that magnitude of figure. But it means that, if total annual international aid for the same period—I am afraid that I do not carry these figures in my head, but I give them in rough and ready terms—is about 30 billion dollars a year, multiplied by eight years, that gives a figure vastly below what the developing countries are contributing to us.
On those grounds alone, there seems to be an unanswerable case for doing everything that we can, within our acknowledged budgetary stringencies, to prevent our aid contribution from being reduced in real terms. Reference has been made to the squeeze on our contributions to our bilateral programme resulting directly from the inexorable increase of the central Community programme. I say "inexorable" because pressures from the European Parliament and elsewhere for a continued increase in Community aid to developing countries will continue. We must accept that. If we did not maintain proportionately the amount we contribute to our own bilateral programme, eventually it would vanish. I do not suggest that that is a practical likelihood, but we must accept the fact of the squeeze, and that, however good the quality of our aid programme, it cannot be maintained against a continual squeeze.
The centralised Brussels administration has been criticised this afternoon. Certain criticisms were made in our report. We do not wish to be purely negative about Brussels' administration and programmes. As has been said, much in the formulation of programmes is excellent, imaginative and innovative. However, there

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remain notable flaws in the administration of the programmes. The evaluation, the monitoring and the follow-up do not exist. There is in Brussels a lack of professional staff of the right calibre and with sufficient experience. We in this country used to have a Colonial Office manned by home civil servants and a colonial service working in the field. It produced the most wonderful professionals. Brussels maintains such a split and it is not healthy. One cannot have good professional administration at the centre unless one can draw on the experience of competent professionals in the field. I hope that such problems will be corrected in time, but let the time not be too long.
There is need for a stronger central policy unit in Brussels. We referred to that in our report. The Council should have a more effective set of arrangements for keeping track of what the Commission is proposing and doing. I understand that the Government do not entirely share the views which the committee expressed on that matter but I wish to commend them to the noble Baroness.
Furthermore, the Court of Auditors needs to be strengthened. Indeed, the staffing of the Commission in the aid sphere generally needs strengthening. I see the noble Baroness shaking her head and I know that she does not agree. However, I wish to commend the point to her. We know that as regards the Commission's staffing there may be a certain amount of fat in certain areas. That is inevitable in an international organisation which is staffed on an international basis. But we believe that increases require to be made.
Reference has been made to the prospect of a GATT settlement. It has been suggested that, while in the long run that may be of general benefit to the poorer countries, there are strong grounds for thinking that the immediate effect of the projected lines of the GATT settlement will positively damage the trading interests of a number of the poorer developing countries. That is a serious prospect for them and it raises the question of whether more should not be proposed as regards compensation to offset that prospective damage.
If we achieve the GATT settlement to which we all look forward, one problem that will arise is that, in order to meet the considerable reduction in tariffs, we can expect the powerful industrial lobbies throughout the world effectively to lobby for a further increase in non-tariff barriers. Our second report traversed that subject a little. I believe that, because of the strength of the lobbies, there is no means in sight of preventing the Commission and member state governments accepting such a proliferation of non—tariff barriers. The consumer interest does not have the same kind of voice; certainly not a voice that can be brought to bear quickly. There is an international organisation of so-called consumer unions, which I commend to your Lordships. It brings together organisations such as the Consumers' Association in this country and its equivalents in other countries. They try to raise their voice and did so yesterday with Sir Leon Brittan at the final stage of GATT. I suggest that such an international consumer effort needs strengthening if only as a counter to the prospective increase in the efforts of the industrial lobbies.
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Earlier I gave the frightening figure of the net inflow of resources from the developing countries to the developed countries. That is a challenge to all the member state governments and to the Community generally to maintain their efforts. I extend to the noble Baroness every good wish that in fighting her corner in budget terms she will have as much success in the future as she had in the past and will go even further.
5.48 p.m.
Baroness Flather: My Lords, I too greatly welcome the two reports and express my admiration and appreciation for the hard work of the chairman and the committee. The result is two reports which are clear and informative even to a newcomer to the subject. I hope that they will be widely used. After all, as the chairman said, it is our money which goes to fund the aid programme under Lomé.
I should like to take this opportunity to express a concern which was probably not strictly within the terms of reference of the inquiry. The noble Lord, Lord Hunt of Tanworth, told my noble friend the Minister that the committee was not primarily concerned with objectives but more with who does what. Before coming to your Lordships' House in 1990 I was a delegate to the Economic and Social Committee, the Consultative Assembly of the European Community. During my three years I was closely involved in the ACP/EC economic and social interest groups. As one of the three members of the contact group I had the good fortune of attending five joint assemblies. We were commonly known as the social partners group and our main function was to put forward the views of the trade unions, farmers, NGOs and other representatives of the people of the ACP states at those joint assemblies. Therefore, it is the objectives of aid on which I wish to concentrate.
Let us for a moment picture ourselves as living in an average African country at around subsistence level in 1980; that is, we should be able to look forward to two reasonable meals a day. Thirteen years later, with a convention which has provided for an increase in real terms, the chances are that we can look forward to only one meal a day.
Since the signing of the first Lomé Convention, most of the ACP countries' economies have not developed and that applies to every sector of the economy. Roads, schools and hospitals have all deteriorated and poverty has gained ground. Clearly that does not mean that the aid money has not been spent on development programmes. It simply means that no sector of the economy seems to have taken off, whether it be agriculture or industrialisation, so as to improve the lives of the ordinary people.
Paradoxically, while there is an increase of qualified people from the ACP states in Western Europe, they still have to look for technical assistance from outside. Would the Marshall Plan ever have produced any results if the people in charge had not had the clearest objective; that is, the economic and social reconstruction of Europe? Can one blame the members of the farmers group for wondering why the price of chocolate climbs higher every year in Brussels when the bottom

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has dropped out of the cocoa-bean market? It is not surprising that they feel that they are locked into a system in which they cannot bargain for what they grow but in which they must pay greatly enhanced prices for what they need to buy.
At joint assemblies I have always felt uneasy about the unrealistic expectations of the ACP states as regards aid. Perhaps it will always be so, but it is the filtering of aid through to the lowest level which is most important and which concerns me most. I am extremely pleased that my noble friend Lord Can has already put that matter so firmly on the agenda. Under Lomé IV opportunities have opened up for all kinds of initiatives specifically designed to help those in the lowest strata. It is extremely heartening to see Article 153 on women in development, but if that is to be more than just an article in the convention it is necessary first to see what programmes are in place and then to evaluate their impact. It is not much use starting training programmes for rural women if they are not fixed at a time at which the women can attend those programmes.
I know the interest which the Minister has in population issues. I am sure that she was as encouraged as the rest of us by the inclusion of Article 155 on population. However, I should like to draw attention to Article 230 on eligibility for financing, which in paragraph (g) makes it possible for aid to be given directly to community groups, NGOs, trade unions, co-operatives and teaching and research institutions to undertake economic, cultural, social and educational programmes in the ACP states.
One may wonder why that should be surprising in any way whatever, but your Lordships may not be aware of the opposition to that clause by many of the ACP states. The social partners group from the economic and social committee had lobbied for direct project aid for many years. We should have liked it to be totally independent of the ACP governments but that was not acceptable and their approval is still required. Nevertheless, I believe that that is an important advance and is an opportunity to put money where it is most likely to reach down or, as my noble friend Lord Carr said, bottom up rather than top down. That is so in particular because all the categories mentioned can be from either the EC or ACP countries or both together, jointly.
The Minister spoke of value for money in her evidence and many of your Lordships have dealt with that matter. I believe that that is the way to achieve value-for-money projects which would help to improve the conditions for the poorest. Those projects could be run by the local people with help, if necessary, from our own experienced NGOs.
However, I am deeply anxious about the possible complexity of making that clause work. I have seen Commission representatives behave in ways which reminded me of the British residents in preindependence India. It is interesting that the noble Lord, Lord Thurlow, mentioned the British officials in those colonies. However, I am referring to remoteness and I am sure that he was not. I have found the Commission representatives to be extremely remote from the people
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about whom they should be most concerned. Many of the groups do not even know where the Commission offices are situated.
There may also be problems as regards obtaining approval from ACP governments. Some ACP governments have stopped their representatives from attending the social partners' meetings because the social partners have failed to praise those governments to their satisfaction.
I am also extremely concerned about all the paperwork which goes with any help from the EC. I am extremely pleased that my noble friend Lord Boardman mentioned that. I hope that the Minister may be able to discover for us whether that clause has been used much or at all. It is too early for evaluation but it will be good to know whether all the efforts used in order to get that through are bearing fruit.
Finally, perhaps I may say that quality and quantity must go together. They are both essential. Neither would suffice without the other.
5.58 p.m.
Lord Bonham-Carter: My Lords, I join with other noble Lords in paying tribute to the chairmanship of the noble Lord, Lord Hunt of Tanworth. I thank also our specialist adviser, Clerks and those who gave evidence before the committee.
Throughout the debate there has been a great degree of unanimity among those of your Lordships who sat on the committee as regards the report that has been produced. I suppose that that is not altogether surprising. I join in with that unanimity. I believe that it is an extremely good report and I thank the noble Lord, Lord Hunt. He has been very clever in producing this report from the contributions of all of us who sit around on these Benches.
I propose to comment briefly on four issues: aid, trade and debt; the effect of GATT; multilateral and bilateral aid; and, finally, the focus of our own bilateral aid programme. As the noble Lord, Lord Hunt, suggested, when we started on our report on aid, we were told that trade was much more important than aid. Therefore, we produced a report on aid. When we started our report on trade, we were told that debt was far more important than trade or aid. We decided that we could not do a report on debt because it was really outwith our terms of reference and involved discussions with international financial institutions of countries that are not members of the Community and so on. However, we recommended—and I hope that the recommendation is accepted—that an ad hoc committee be set up to look at debt because, until debt is looked at alongside aid and trade, it is not possible to survey properly the total effort which is made by the developed world, its effectiveness and the way in which it is helping the poorest countries in the developing world. That is all I have to say about trade, aid and debt.
I should like to say a few words about GATT. Other noble Lords have mentioned that there is a downside, as it were, to GATT. A successful conclusion—and we hope it will be successful—to the GATT negotiations will be justifiably greeted with euphoria. However, we should not forget that, for the poorest countries, GATT

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is not altogether good news. The figures from the report given by the noble Lord, Lord Rea, show the extent to which they will suffer.
Whereas OECD calculates that there will be a gain in the income of developing countries of 195 billion dollars, the poorest countries will be losing 7 billion dollars a year. We must not avert our eyes from that very important fact. We must turn our minds to deciding how we can compensate them and what compensatory measures are appropriate. In the report, we suggested tariff preferences. In the course of today's debate, the noble Lords, Lord Carr and Lord Boardman, and others, quite rightly pointed out that tariff preferences are not a very effective way of helping. Therefore, let us consider urgently how those poorer countries—and the whole idea is that we should help them —can be compensated in the circumstances of a successful GATT negotiation.
Nearly every speaker who has spoken has talked about the consequences of the decision of the Edinburgh Council of 1992 that the EC's aid should be increased by 60 per cent. in 1999 and the effect that that will have on British bilateral aid. Unless the latter is increased, it will automatically be squeezed; and, as it is automatically squeezed, so our programmes will also be squeezed. Moreover. whether EC programmes are good or bad, it is certain that if such programmes are squeezed further, their quality will suffer, as the noble Lord, Lord Butterworth, admirably pointed out in dealing with what is known in chess as the Chalker defence of British aid policy; namely, that quality is more important than quantity. At a certain point quantity starts to affect quality. I suggest that that point has come and has come very sharply at this time, not least because human and financial resources have been diverted since 1989 from aid to the developing world to aid to Central and Eastern Europe. That presents a very real problem and one which must be confronted.
I am the last person to complain about aid to those Central and Eastern European countries. I believe that their political future depends on economic reforms which are visible to the inhabitants of those countries. Unless those economic reforms are delivered, the political reforms will not materialise.
However, that being said, we must recognise that that diversion of resources is a diversion to purposes which are rather different from their original objectives. For example, the standard of living in Poland cannot be compared with that in sub-Saharan Africa. The aid that we were giving to the latter was of a different nature and for a different purpose from that applicable to Poland. It is my simple view that new demands require new resources and that different demands, such as essentially political demands—which are what the Central and Eastern European aid programme was designed to meet—should not diminish the resources which are devoted to the fight against poverty.
As has already been mentioned, because the budget lines have been amalgamated, it has become much more difficult to assess what has been happening. That means that we cannot tell what is going to Central or Eastern Europe and what is going elsewhere. Can the Minister say why that has been done? Why should we be deprived of that information? It makes one suspicious.
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If we are properly to asses what is being done, we need such information. Further, if we are to help the Minister fight her "corner", as it has been called on many occasions, we should like to have as much information as possible in order to defeat her enemies.
If, as, regrettably, I have to say I fear, the Government cannot bring themselves to increase the British budget for bilateral aid, it will be necessary urgently to reconsider the focus of our aid programme both geographically and in terms of projects. We cannot spread it thinly over the same area for all those projects. Here we come to an important question which neither of the two reports addressed and to which the noble Baroness, Lady Flather, referred. What is the most effective use of aid? I asked most of our witnesses that question in one form or another. The answers were, shall we say, not very precise. Yet the effectiveness of aid is at the heart of the matter. I should have thought that it was high time that some kind of systematic study comparing and contrasting different types of aid was undertaken.
The noble Lord, Lord Carr, pointed out that technical aid is much better than capital investment and the noble Lord, Lord Butterworth, pointed out that dams were disastrous. If I may say so, those are broad-brush statements. We need rather more precise information. For example, why is it that south-east Asian countries have taken off and, on the whole, African countries have not? Was it due to aid? I do not know, and I do not know if anyone knows the answer. Was it due to culture, whatever that may mean? Was it due to political stability, though not democracy? Was it due to market economies? Well, perhaps not altogether. Well, what was the reason? We should surely know. Why have we failed in Southern Africa to the extent that we have? I believe that a more coherent study would be very useful.
However, if one looks at south-east Asia and compares it with Africa, one factor stands out; namely, literacy. The figure runs to the order of 80 per cent. there and to the order of 40 per cent., very broadly, in Africa. Therefore, one can almost say that literacy has a direct connection with success. I must, therefore, return to my hobby-horse. If we have to refocus our aid by narrowing and concentrating it as regards both projects and geographical areas, I suggest that we should put literacy very high on the agenda. Moreover, I believe that we should put literacy of women high on that particular agenda. I say that because, on the whole, literate women are more interested in literacy in others than appears to be the case with literate men. They seem to use their literacy to help in population control, or whatever one may like to call it. They carry out most of the agricultural work. Therefore, if one wants to improve standards of agriculture in many developing third world countries, the women, if they are literate, will do more than the men sitting around on their haunches. For all those reasons, if we have to concentrate our programmes, I hope that we shall concentrate on education and that, within education, we shall focus on literacy and, in turn, within that focus, on literacy for women.
6.8 p.m.
Lord Judd: My Lords, like the noble Lord, Lord Bonham-Carter, I am sure that we are all deeply grateful to the noble Lord, Lord Hunt of Tanworth, and his fellow committee members, together with their advisers and their Clerks, for the two very clear and closely related reports. We are also grateful to those who spared the time and the resources to give evidence. The noble Lord, Lord Hunt, brought to the task not only his outstanding experience in Whitehall but also a considerable personal commitment to third-world issues as evidenced in his past patient but deft chairmanship of the Disasters Emergency Committee made up of some of the key humanitarian voluntary agencies in the United Kingdom.
We are also glad that the Minister is back from her important visit to South Africa to share in our deliberations. Looking ahead, South Africa will be an immense challenge to the European Union. The political settlement will be the beginning, not the end. Expectations and aspirations will be unlimited in health, education, employment, housing, land, agriculture and industry. The test of our real European Union commitment to a democratic, non-racist, post-apartheid South Africa will be the resources and support that we make available for that great country's future. For the European Union to fail the people of South Africa in their hour of emancipation and hope would be the ultimate betrayal, playing into the hands of chaos, disorder and extremism.
To do these reports justice it is essential to measure them against the needs. As we approach the new millennium the realities are stark. Somewhere every 2.4 seconds of every day a young child dies unnecessarily of poverty. Average life expectancy is still 12 years shorter in the south than in the north. Some 1.5 thousand million people are deprived of even primary health care. Some 1.75 thousand million people have no access to safe water. Some 3,000 million people still live without adequate sanitation. The south's maternal mortality rate is still 12 times higher than that of the north. It is estimated that by the year 2000 there may well be 2,000 million people living in absolute poverty and 100 million refugees and displaced people in the world. That is a grim prospect as we approach the Christmas season and hardly the basis for a stable, peaceful global community.
I have no shred of doubt that the European Union will ultimately be judged not by its selfish social and economic indices and its introspective materialist preoccupations but by the dynamic part it plays in building a fairer, more just and altogether more viable world community. And what of our own Government's record, which the noble Lord, Lord Carr, so rightly stressed? The Minister may well seize on the reports before us to argue that an increasing proportion of our aid budget is pre-empted by inescapable commitments to the European Union. But the truth is that, while to its credit the European Union has been expanding its total aid budget, the UK aid budget has by contrast remained frozen. The obvious way to reduce the proportion of our aid going to the European Union is to expand our own
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aid budget. Indeed against the challenges I have described the record of the present Government is deplorable. The noble Lord, Lord Thurlow, with others, has gently but firmly made that point
As in so many spheres with this Government, the rhetoric comes cheaply but it contrasts with the action. Despite the Conservative Party manifesto commitment to the United Nations target of 0.7 per cent. of gross national product for official aid, under present stewardship the percentage continues to plummet. Even before the recent Budget the Foreign Affairs Select Committee in another place projected that as things stood the percentage would be down to 0.26 per cent. of gross national product by 1995–96 as compared with 0.51 per cent. when the Conservatives originally came to office. That figure is virtually halved as a percentage of our national wealth. The Budget has made things worse. It really was disingenuous of the noble Baroness to issue a press release, which I have before me, which states:
"Britain's total external assistance programmes are to be maintained at their previously agreed levels".
That is "Yes Minister"-speak for a continued freeze which represents a cut in real terms of almost 10 per cent. over the next three years.
It is that cash freeze, as my noble friend Lord Rea has argued, which reduces the funds available for our bilateral aid programme every bit as much as the expanding European Union budget. But that is not all. The reports before us have drawn attention to the demands of Eastern Europe and the former Soviet Union and express anxiety about diversion of staff and resources. We must see this in the light of our own bilateral programme. Speaking to the Commonwealth Heads of Government in Harare in October 1991, the Prime Minister emphatically stated:
"UK assistance to Eastern Europe and the Soviet Union is additional to, and not at the expense of, our aid to developing countries".
But we now learn that in future the Government are to combine aid to developing countries and aid to Eastern Europe in an integrated budget. The noble Baroness has tried to reassure us that there is no threat to developing countries, but while aid in the current year to developing countries has gone up by 3.5 per cent. in cash terms, hardly matching inflation, aid to Eastern Europe has shot up by 23.4 per cent. While a freeze has been imposed on third world aid for the next two years, aid to Eastern Europe will go up by more than 19 per cent. What is this in real terms but a significant shift to Eastern Europe at the expense of the third world?
There is also emergency aid. In 1992–93 the Government spent £92 million in Bosnia alone. That is three times the amount available for Mozambique. I am frankly saddened to see the noble Baroness caught up in this juggling with figures. This is a Treasury game and certainly not one for the ODA. As I have repeatedly said in this House, and as my noble friend Lord Bruce has so well said today, the Minister's personal, humanitarian commitment is real, as all who have worked with her know well. I greatly enjoyed working with her during my time as director of Oxfam. But the tragedy is that she is repeatedly deserted by her colleagues, who do not begin to share in her commitment. How long, I ask

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myself, can she stay as this feeble administration's humanitarian fig leaf. I care for her reputation for integrity at the bar of history.
What lessons do we learn from these reports and from other relevant research? There is obviously a balance sheet in the European Union aid performance. On the one hand, between 1988 and 1991 a high proportion—48 per cent.—of European Community aid went to the least developed countries and a further 40 per cent. to low income countries. A high proportion—95 per cent. in 1991—of European Community aid is provided as grants. Some 14 per cent., as compared with the Development Assistance Committee average of 4.2 per cent., was dispersed in 1990 through non-governmental organisations, which are frequently one of the most effective channels. Much of the aid is targeted to rural areas, where the poorest people predominantly still live, but it has to be said that there is room for more evidence that it reaches the poor in these areas. On the other hand, the most populous poor countries receive small amounts of aid per capita. For example, between 1988 and 1991 India received one-tenth of a dollar and Bangladesh six-tenths of a dollar per capita compared with 19 dollars for Guyana—a middle income country—and 12.5 dollars for the Ivory Coast.
Much European Union aid is still tied, with African, Caribbean and Pacific countries awarded only 17.4 per cent. of contracts for supplies and a mere 7.2 per cent. of technical assistance contracts. Too much aid is arguably still provided to countries which on poverty criteria should be ineligible, for example, Turkey, Jordan and Tunisia. The proportion of aid going to support basic needs such as education—to which the noble Lord, Lord Bonham-Carter, so well referred—and health is still too low, with 2.9 per cent. allocated to education, as compared with a Development Assistance Committee average of 10.2 per cent., and with only 4.1 per cent. allocated to health.
Management of aid leaves a great deal to be desired, with a grave lack of delegation to field staff, sparse evaluation and far too little involvement of the local population in identifying and designing projects. That problem was tellingly described by the noble Baroness, Lady Flather, this afternoon. There is a lack of accountability and transparency and this is aggravated by the complexity of administration, with the fragmentation of management between Directorate-General VIII and Directorate-General I which makes it difficult to make comparisons between programmes.
There is a need for more expertise in some areas and for a more rational deployment of staff. I find it worrying that there are only 10 dedicated and overworked members of staff to deal with the food aid which accounts for 25 per cent. of all European Union aid. In this respect it is significant that the ODA has been paying out of its own budget for experts to work in Brussels to strengthen European Union capacity. It is clear that any supposed co-ordination of member states' programmes is a myth. There is as far as I can see no co-ordination of responsibility according to predetermined criteria. Developing countries outside the
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African, Caribbean and Pacific regions receive a smaller share of European Union aid and less favourable trade terms.
What are the priorities therefore for the future? A number of NGOs throughout Europe have been working together—I believe this is a good indication of what can happen in the European Community—including Oxfam and Action Aid from the United Kingdom. They have given a great deal of thought to these issues and I have been impressed by what they have argued. Some of it was well reflected in the evidence submitted to the Select Committee by the British NGOs.
Clearer policy objectives than those outlined in the Maastricht Treaty are essential. The focus on poverty should be sharpened by increasing access to health care, education, water and sanitation. There must be far greater availability of credit, coupled with improved access to markets. Those two together are an unrivalled investment in the earning capacity of the poor. Genuine priority must be given to sustainable economic and social development, with an emphasis on labour-intensive methods. Europe, not least the United Kingdom, should put its resources where its words were at Rio last year. How right the noble Lord, Lord Butterworth, was in what he said on that subject and in so much else of what he said today.
The first step in a campaign against poverty must be to enter into policy dialogue with individual recipient governments with the aim of designing poverty-reduction blueprints for each country. The objective should surely be to target 50 per cent. of European Union aid on poverty-related programmes. That should be co-ordinated with the World Bank, the IMF and regional banks. Conditionality should insist that the disadvantaged are targeted—the elderly, the handicapped, women and children. At least 20 per cent. of European Union aid should be focused on the social sector and social infrastructure. Indeed, the Inter-American Development Bank has already shown the way. It has reached 18 per cent. and aims to reach 35 per cent.
Integration of administration is essential. The European Community Humanitarian Office should on no account be seen as a separate division or institution. It has to be inherently part of the relief, rehabilitation and development operations. At the same time dialogue and co-operation with the NGOs should generally be improved.
In all of the Commission's projects the impact on poverty must be rigorously and consistently measured. Apart from the Commission's own programme, it is high time that member states got their act together in ensuring cohesion and greater effectiveness of their aggregated bilateral programmes. Above all, policy coherence between trade, foreign and aid policies needs to be improved. Trade and foreign policies can too easily be in conflict with poverty alleviation when there is insufficient co-ordination. The effect of non-aid foreign policy ought to be kept regularly under review.
The World Development Movement regularly reminds us—and rightly—that while aid accounts for 5 per cent. of the income of third world countries trade accounts for more than 80 per cent. The European Union

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market is particularly important. For many of the least developed countries it accounts for 50 per cent. or more of their exports. It is interesting that the Select Committee concluded that import tax relief would be one of the most important ways of generating trade with developing countries. However, the committee was also right to point out, first, that the tariff preference tool is very imprecise and, secondly, that with any future global trade liberalisation it would anyway decrease in significance.
In this debate many noble Lords, including the noble Lord, Lord Boardman, have stressed the significance of GATT. Whatever the theoretical commitment in the GATT negotiations to multilateralism, the Uruguay Round has been dominated by the United States, the European Union and Japan. The failure to address the third world's agenda has illustrated the undemocratic nature of the GATT structure and the subordination of genuine multilateralism to the strategic, not to say selfish, interests of the North. So far as I can see, the newly-proposed multilateral trade organisation as planned will do nothing to correct that.
UNCTAD has calculated that 83 per cent. of manufactured exports from the third world to the European Union currently encounter trade barriers, reducing their earnings by 3 per cent. a year. The 1992 World Bank Report Global Economic Prospects and Developing Countries estimated that a 50 per cent. reduction in the trade barriers of Europe, Japan and the United States would increase developing countries' exports by 50 billion US dollars a year, just less than the 57 billion US dollars aid which they receive.
However, as the noble Lord, Lord Hunt, stressed, it is also true that the figures produced by both OECD and GATT indicate that, if international income were to increase by 215 billion US dollars following a so-called successful conclusion to the Uruguay Round, some three-quarters of that would accrue directly to the northern economies and many developing countries would be net losers, with African countries standing to lose 2,600 million dollars a year by the year 2002. In any case, the proposed GATT does not, I fear, deal adequately with the problem of escalating tariff barriers. By the same token, while it includes the phasing out of the Multi-Fibre Arrangement, it does so only over a period of 10 years, with the benefits stacked at the end of the period. God knows what the human cost will be in that decade.
I conclude by saying that, while in theory the extension of GATT to cover agricultural projects should be of benefit to developing countries, where agriculture typically accounts for two-thirds of employment and 25 per cent. of gross domestic product, in practice the agricultural agenda has been dictated by the narrow interests of the European Union and the United States, where farming accounts for less than 5 per cent. of GDP and employment. The proposed Final Act and Blair House accord fail to tackle the issue of central concern to developing countries, the ending of subsidised export dumping by the European Union and the United States. If the GATT makes it more difficult for developing
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countries to foster food sufficiency by protecting their agricultural sectors from cheap imports, that will seriously undermine their food security.
These reports of the Select Committee are crucial. They, and the debate today, have illustrated the wisdom of the committee's recommendation that we must find more parliamentary opportunities and time to monitor the European Community's aid and trade policies. It is high time that what the Commission does in our name was open to detailed scrutiny. It would be beneficial if for its next report the Select Committee were able to make visits in the field to take evidence from the supposed beneficiaries on how they see it all. A special report on debt is certainly urgently required. Meanwhile, we look forward to the Minister's reply.
It is clear that the Government's influence on improving the European Union's aid and related trade performance will be dependent upon the demonstrable commitment of the Government themselves to the battle against poverty and to the building of a dynamic, outward-looking European Union. Frankly, I fear that, whatever the personal inclinations of the Minister, the Government's response collectively to both those challenges can, sadly, only be described as repeatedly lamentable.
6.27 p.m.
Baroness Chalker of Wallasey: My Lords, I begin by congratulating the noble Lord, Lord Hunt of Tanworth, and his committee on two outstanding reports which have led to this very interesting debate. The noble Lord, Lord Rea, rightly said that they are good, informative reading, and even educational.
I thank many of your Lordships for kind remarks about the ODA and about me personally. I appreciate the tease from the noble Lord, Lord Bruce of Donington, about quality and quantity, which was picked up in the speeches of a number of other noble Lords. I shall always say that quality must be maintained. I may have my battles over quantity, as your Lordships' House will know, and I want to increase quantity as soon as the British economy will allow that, but I will not give up battling for quality. That applies not only to quality in our bilateral programmes but also to quality in the programmes carried out in the EC, to which the two reports refer, or in the international financial institutions, the UN or any other body to which we contribute.
It would be fair to say that the probing of your Lordships' committee over the last year has acted as a spur to the Commission. I have to report a better attitude on the part of many in the Commission to the ideas which are contained in your Lordships' first report on EC development aid. I see some change coming about, and I shall deal with that in my reply.
I well recall giving evidence at the start of your Lordships' inquiry last February. On that day we focused on the need for an effective EC development programme, not least because 23 per cent. of the UK's aid budget is channelled through the Community. The first report has some useful suggestions in areas such as pre-project planning and the use of evaluations. There is also a large degree of consensus now within the

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Community about the importance of ensuring that aid is used as effectively as possible in achieving its development objectives. Those objectives are now formalized in Title XVII of the Maastricht Treaty: to combat poverty, promote sustainable development and assist the integration of developing countries into the world economy. Our partners share our concern that aid should be targeted towards the poorest of the poor and directed where it can make a real impact. Your Lordships' report on development aid recognises the importance of that.
The first report also led the committee into the second major inquiry on EC aid and trade policy, which raised further fundamental questions of whether trade policies are a useful means of promoting development. Perhaps I may say how much I welcome this thoughtful and serious contribution, in particular at a time when the Community's trade policies are in the focus of world attention. I shall turn later to the Uruguay Round which we all hope will he rewarded with success in a couple of days' time.
What is absolutely clear is that the right trade policies are vital. However, they are only part, but an important part, of the story because trade is three-quarters of the income of developing countries and aid is only one-quarter. In some parts of the world such as Asia, as the noble Lord, Lord Rea, remarked, trade becomes eleven-twelfths of the income of those countries. Sadly, that is not so in Africa. We have always known that aid needs buttressing by trade and agriculture. But by far the most important element in development is the correct pursuance of policies by governments of the developing countries themselves.
At various times during the debate I was asked about our approach to a number of issues in terms of budgeting. In a moment I shall come to that very issue. However, first, I should like to touch on four slightly separate issues which are not directly part of the reports but on which the reports reflect by their comments. I could not agree more with the noble Lord, Lord Judd, when he spoke of the importance of the future European Union/South Africa relationship. I can tell the noble Lord that we signalled that point at the November meeting of the Foreign Affairs Council. It is perfectly true that imaginative thinking will be required. I am delighted to say that the establishment of a British Development Division in Pretoria is really in the vanguard of the work that will need to be done in South Africa; and of course we have been active in South Africa for most of the past eight years working through non-governmental organisations, which was all that was possible until now. In addition, we agreed at the Anglo-German summit in November that the UK and Germany would work closely together on the tasks in South Africa.
Perhaps I may now turn to the vexed question of ATP and I Pergau. I well understand noble Lords' interest in the issue. However, I should refer your Lordships to the answer that I gave to the noble Lord, Lord Taylor of Gryfe, on 24th November at col. 258 of the Official Report. I have a difficulty. I understand that the PAC will be inquiring about this. It is our convention that we
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do not refer to those matters publicly until that hearing has taken place. However, I note carefully the comments of all noble Lords on the matter.
The third matter to which I wish to refer—it is not really a separate issue—is the subject of debt to which the noble Lords, Lord Hunt, Lord Bonham-Carter and many others referred. Debt is truly a matter of deep concern. It certainly is a problem of great importance for developing countries. But it remains an area in which the European Community has no powers to act. It remains a matter of national policy on which member states, rightly in my opinion, combine to work through the International Monetary Fund, the World Bank, and with other partners to seek to produce a better relief of debt programme. Your Lordships will be well aware of the initiative of my right honourable friend the Prime Minister in the Trinidad Terms. That is an example of the way in which we believe debts should be handled on the international stage. However, perhaps I may say, because of my deep interest in the matter, that should your Lordships have a Select Committee looking into the issue it will run very wide because every donor nation is deeply concerned. In several fora we have managed to persuade better language, even from our Japanese partners.
The noble Lord, Lord Thurlow, asked me about OECD net transfers and gave some rather worrying figures. I shall look at what the noble Lord said. However, the flow of funds between developed and developing countries is always large and the concepts complex. The net flows of financial resources to developing countries in 1992 were put by OECD at 165 billion dollars, which was a 23 per cent. increase over 1991, accounted for by a sharp rise in private investment and other private flows. Those figures I know for certain. I shall look at the figures which the noble Lord quoted and write to him.
The noble Lord, Lord Bonham-Carter, and others made comment about the combining together of all our aid resources in one budget. I have always believed that we should learn the lessons in different parts of the world which are applicable to other parts of the world. Managing everything separately does not always mean that that occurs. However, I can assure your Lordships that when we allocate the funds available we take into account the balance of expenditure between the regions. I can further assure noble Lords that Asia and Africa have long been our major priorities and that they will continue to be so. I was interested in the Africa/Asia comparison which the noble Lord, Lord Bonharn-Carter, gave. Like him, I believe that the advanced literacy of many Asian people is the reason that they have progressed so much more quickly. It was interesting that that issue was raised at the Tokyo International Conference on African Development, with real acceptance from the African countries that they needed to be a little more like the Asians in that specific respect.
Poverty focus is central not only to the UK bilateral programme but multilaterally too. It is an issue being adopted by the European Community. It is certainly central to the European Development Fund which deals with the ACP countries. In future it will be perfectly

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possible to see expenditure country by country and region by region because that will be published in the annual British aid statistics. There is no question of hiding that. Over the coming weeks we are reviewing the aid given to all nations. However, Africa undoubtedly will continue to be a main focus of our bilateral aid. As your Lordships know, support will go to the countries with good government and those pursuing economic reform. I hope that we shall be in a position to make a substantial pledge to SPA III.
In the light of that combined budget, fears were raised about the money spent in Eastern Europe and the former Soviet Union. Let me assure the noble Lord, Lord Bonham-Carter, that we shall regularly look at the balance between Eastern Europe and the former Soviet Union. No one is more sure than me that we have to transfer the lessons learned from one programme to another. I do not wish to end up in the situation so well underlined in the report of the noble Lord, Lord Hunt, of the separateness within the Commission of the management of aid. I do not intend to let that happen in the British bilateral programme or, if I have influence on it, in the European or any other programme to which we contribute.
My noble friend Lord Carr in, to me, a moving speech, talked about the need to maintain the critical mass of UK bilateral aid. So did the noble Lord, Lord Rea. I strongly agree that we must maintain a critical mass of bilateral aid. I am seeking to do just that by keeping up the overall level of our aid and by critically reviewing all new multilateral commitments. That is certainly among my highest priorities at the moment.
Our increased contribution to the EC aid budget will affect our bilateral aid programme, but it may be that the smaller bilateral programme can be buttressed by the amount we do within the EC programme overall. It is perfectly clear that the Community has looked to British experts and British know-how in the development of its programme. When it comes to evaluation, we find the Community going through the manner in which we do things, to adapt it for its own purposes. So I believe that we are having an influence, by our own progress, on many of the issues of which the noble Lord, Lord Hunt, and his committee spoke.
Perhaps I may turn now to evaluation. Having shared our ODA evaluation experience with the European Commission, it is reviewing the matter. It has not been popular, but the Commission seeks to bring the experience together. At present, evaluation and monitoring of projects during their performance takes place at a number of different levels. We believe that the work carried out by the Court of Auditors is an important tool in ensuring that the principles of sound financial management are applied to all Community funds.
In the past, the court has rightly expressed concern as to the value for money, as does the committee in its report. There is already an active evaluation in DG VIII, but it is now taking over responsibility for evaluation in Asia, Latin America and the Mediterranean countries as well. We must see how it goes, but we will not be slow
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in giving advice if we think that we have appropriate advice to offer the Commission in this all-important matter.
In due course, I hope that the full implementation of DG VIII's project cycle management, an integrated approach and logical framework policy, will lead the Commission to feed the lessons of its evaluation back into the planning process. That is what we have sought to do in Britain and it has served us well. We already provide summaries of our own evaluations both to the Commission and to other member states on a regular basis. I strongly support the exchange of evaluation results between donors. Where I think the committee was wise in its advice was in suggesting that the Development Council should take an even more active role in setting the overall policy framework.
There is already some monitoring of implementation of the programme through the various working groups. But I believe that in addition to representation on management committees, there needs to be a greater opportunity to scrutinise certain areas of policy from time to time. That may take a new form of co-ordination and it is something to which at present I am giving thought.
We are making efforts to improve co-ordination between the Commission and the bilateral donors. A part of the so-called Horizon 2000 initiative is to improve co-ordination. There is a link here between that and the debate on complementarity to which I shall move in a moment. Last May we had a debate on policy co-ordination with a good resolution and we have asked for reports from the Commission on the implementation of that policy co-ordination. In the 2nd December Development Council meeting we agreed on a co-ordinated approach towards measures to fight poverty. We have a future timetable to include other areas of key interests such as health and education. I hope that will all serve to make the programme more effective, because what we are after is an increase in operational co-ordination, not only in Brussels but particularly in the field. Next May, the Development Council will specifically address the question of co-ordination in the field and we have said that we are ready to take the lead in at least one country and to give ideas about how better co-ordination can be achieved in the field. Frankly, I see that as one of the most serious problems. I have asked all my high commissioners and ambassadors to gather their colleagues together and let me know when it does not work. That way, I hope practically to get the issue right.
In addition to those matters, we have also in recent council meetings adopted resolutions on poverty alleviation and family planning. In each of those areas we are drawing up a framework for the Community and member states so that we act in a co-ordinated manner. I look forward to seeing the results of the work. We have already done work on social indicators such as life expectancy, infant mortality rates, literacy and access to drinking water, and have seen improvements over the past 30 years. But while some developing countries have developed economic growth, they have not had the right domestic policies; therefore, their social indicators have not improved. But without the right domestic

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policies for their economies, there will be no external aid programme, apart from humanitarian aid. So there is a great deal to be done. I hope that that answers my noble friend Lady Flather's question.
On the population issue, we have made some good progress in the councils, particularly under our own presidency last year. That is one of the other areas of policy co-ordination which seems to be moving ahead quite fast. However, we need to see operational implementation by the Commission. In particular, I wish to see a real increase in Commission spending on family planning in the Lomé Convention to mirror the large increases that we are making bilaterally.
The noble Lord, Lord Rea, asked whether by giving 100 per cent. joint funding on population issues to the bilateral programme I would be cutting back on other Joint Funding Scheme funding. The answer is no; the 100 per cent. funding was as a spur to get population programmes moving. I am very much in favour of persuading the Community to do something similar because I believe that, along with education, family planning is one of the most basic and critical elements of any development programme.
Horizon 2000 has been the kind of change which I believe your Lordships' committee wished to see. The committee wished to see an integrated policy, a clearer policy approach, improvement of monitoring, evaluation and more delegation to the field. Bit by bit, we are working through all those recommendations to make them part of the EC aid programme, just as they are part of our bilateral programme. But the key issue will always be to make sure that good policies, worked out by the member states and the Commission in Brussels, are translated into good policies in the field. That is where the non-governmental organisations can be of immense help to us. I know that they have been very critical at times in the relations they have had with the EC. I am determined that those will improve. They are already better and one good sign is the co-ordination between the non-governmental organisations them-selves.
Your Lordships' committee made many comments, as has happened in the debate, on the diversity among directorates-general in the Commission. Like your Lordships' committee, I believe that it is unsatisfactory. We have long held that DG VIII and the DG I north-south division should be re-united and at least it was a step forward last year that there is now a single commissioner for both, who also happens to be responsible for ECHO. I know that the commissioner shares my views on the need for a more unified approach and already there are some services in DG I and DG VIII which are being brought together: structural adjustment as well as evaluation. But with the agreement of the European Council last week and enlargement to 21 commissioners, it is too soon to say what the outcome will be for development co-operation. I can assure your Lordships that it is something that I am carefully watching.
The noble Lord, Lord Thurlow, my noble friend Lord Carr and other noble Lords spoke about the need for specialist staff. The inquiry on EC aid raised such questions about staffing. After investigation I am
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inclined to believe that the problem is not with overall numbers, as I explained to the inquiry. DG I, DG VIII and ECHO have over 1,500 people in Brussels and the field. Although the responsibilities are not directly comparable, it is worth noting that we have a total of 1,200 staff. I believe that the Commission has to address the issue because it is quite clear to me that it is weak in an all-important area of expert advice. In many areas the Commission relies on recruiting consultants on three-year contracts or staff seconded from member states. I have currently four members of my staff seconded to the Commission and the new secondment of a social development adviser to DG VIII is particularly important because the Commission had not previously had the benefit of any professional advice in that all important area. We shall examine further possibilities. Certainly a statistician will go in the new year to work on improving the statistics for Africa and we are discussing several other opportunities, particularly in the health field.
I believe that such secondments may be one of the better ways to improve the quality of the EC aid programme. Member states have a lot of experience in these matters. I know from my Danish, German and Dutch colleagues that they believe that it is a very valuable way in which to improve the effectiveness of the programme.
With regard to complementarity, it is quite clear that the debate in the Community is only just getting under way. It is certainly not clear where it will lead in terms of responsibilities. I believe that the key question is whether complementarity contributes to making aid more effective. It must not start to become an end in itself. In our December Development Council meeting we agreed to establish a high level group of officials to study the scope for greater complementarity between the Community and bilateral aid. The United Kingdom will participate fully.
The noble Lord, Lord Hunt, asked me about the Lomé mid-term review. We agreed Lomé IV for 10 years in 1990, but the EDF finances it for only five years. That is why we have a mid-term review which will take us until early 1995. Currently the ACP as well as the EC are identifying the items that each side wishes to reopen. We shall not know the ACP concerns until next March, but we shall work very hard on this matter.
My noble friend Lord Carr and a number of other noble Lords spoke about food surpluses and food aid as being, frankly, one of the worst ways of helping the developing world. I believe that we are right to emphasise the need to avoid distortions caused by exporting EC surpluses as did the committee. Certainly one of our achievements in the UK presidency in 1986 was the food aid regulation which effectively changed the basis of EC food aid from being supply-led to being demand-led. It is still far from perfect, I know, but we hope that we can concentrate on the longer-term rather than emergencies. As the NGOs so clearly said to the committee, and as your Lordships are aware, if there is better supply for the long-term, fewer emergencies will arise. But at least we now have the food aid regulation, which is no longer a creature of the shortcomings of the CAP.

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Like your Lordships, I deplore the well-known cases in which subsidised EC exports have harmed local agriculture in a number of developing countries. While the CAP is still far from perfect, at least the reforms of 1992 bring some welcome changes in the right direction. Surplus production is being cut and export subsidies are to be phased out. I can certainly show a reduction in the subsidies and an improvement over the past two years.
In the specific case of beef, the total for refunds will fall from 1,333 million ecus in 1992 to 902 million ecus in 1994. That is certainly an improvement. We have worked on the problems of subsidised beef exports which were causing such awful problems to local producers in West Africa. It is good to note that in July the Commission cut the subsidy on beef exports to West Africa by 15 per cent. I understand that the Commission has reduced the amount sent there by 25 per cent. It is still not enough but I believe that we have to press for the effects of exports on local markets to be monitored and take action case by case until we have a better system on preferences and a better overall trade situation. As I said, it is three-quarters of the income of developing countries.
Let me turn briefly to the situation that we have now. I was asked about prospects for the Generalised System of Preferences review.
Lord Bruce of Donington: My Lords, I am grateful to the noble Baroness for giving way. She has given some undertakings in regard to specific commodities such as beef. Will she give an unequivocal undertaking that the situation in regard to tobacco will be looked at and that the whole wretched fiasco will be scrapped as soon as possible?
Baroness Chalker: The noble Lord knows very well that I thoroughly share his view on the fiasco of tobacco. But the problem is not quite so easy to resolve as our fury might indicate. There are many countries which have not diversified. This may be a good moment to say that I believe that it is undesirable to let a preference mentality build up among developing countries because they are then dissuaded from diversifying out of tobacco, which they might well do.
Certainly the private sector is the key to diversification. I believe that the donors in the European Community can help build up the private sector to a certain extent. But it is the policies of the developing countries themselves which will bear the largest responsibility for it. Certainly we acknowledge that diversification is not an easy solution, particularly when countries are heavily dependent on a single product. Structural adjustment is often needed to help a country move from making yesterday's goods to making tomorrow's. If it is done too quickly, sometimes severe strains come upon the economy. We need to look at structural adjustment in line with diversification, which will help countries to get away from their dependency on preferences, whatever the rogue element of preference may be.
The whole question of preferences is very complex. I am most grateful to the noble Lord, Lord Hunt, and his
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committee for the way in which they tackled all those issues in the report. Certainly the European Community trade preferences are not worked out for an ideal world. It is true that it would be much better if they were related to the poverty of the trade partner. But I hope that the European Community's response will enable us to make sure that we move away from preferences as far as is possible. The GSP review will begin fairly soon and I hope that we will make sure that the scheme that we have been rolling over on an annual basis since 1990 pending the resolution of the GATT round will enable us now to embark on a proper review in the light of the GATT round.
Your Lordships asked a number of questions about the GATT round itself. I believe that the recent OECD/World Bank study on the round, which concluded that the proposed liberalisation of trade in manufactured and agricultural products would raise incomes in non-OECD countries by some 78 billion dollars per year, will be an under-estimate. I say that because it ignores the immediate boost to worldwide business confidence which a successful conclusion to the round will bring. That study concluded that the developing countries stand to suffer most from a continuation, or even intensification, of protectionism, which is what we wish to get away from.
I was asked also about the effects on individual countries. It is difficult to predict. Some countries will lose out in the short term, particularly those who are agricultural importers, because world prices are likely to rise as subsidised exports are cut. But in the longer term they will benefit from the boost to their own agricultural production. In the meantime the GATT Final Act specifically includes special measures such as additional financing from the international financial institutions for any such disadvantaged countries. I believe that that is the right way to go to help them through this difficult period of transfer.
It is also worth noting that despite the anxieties expressed by some noble Lords, the developing countries themselves strongly favour a successful conclusion to the Uruguay Round. They realise that it is not a zero sum game; all will benefit from a boost to the world economy. The real threat to the developing countries is without doubt the increased protectionism which would result from a failure in the talks.
The most information that I have been able to gather on the talks this afternoon is that some problems are still outstanding. I hope that your Lordships realise that in the GATT round we are aiming for an agreement of unparalleled complexity. We always knew that we would be going right down to the wire on this. I was grateful for what the noble Lord, Lord Bonham-Carter, said in regard to Sir Leon Brittan. I remain optimistic that there are overwhelming benefits for all from a successful round that will encourage the necessary flexibility on all sides.
In closing perhaps I may say that this has been one of the best debates that we have had in your Lordships' House since I was privileged to join it. I can assure the noble Lord, Lord Hunt, and his committee that we will endeavour to direct EC aid towards those countries that can make the best use of it. They too must show the

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donor community that they are following sound economic policies and that they have the institutional framework to provide the conditions for all individuals, however local, to make their maximum contribution to the programmes; in short, countries which strive toward the principles of good government and respect for human rights.
We are contributing as much as we can to the sort of reorganisation which the noble Lord, Lord Hunt, indicated would serve the developing countries well. I believe that whereas we can show that British money is used through the bilateral programme most effectively, we could do better in the case of the EC. As a member state we intend to play our full part with the Commission in attaining development objectives just as good as those in the bilateral programme.
The committee served us all extremely well. I am grateful to all its members and all noble Lords who spoke in the debate. We will work on the reports and continue our work with the Commission in a firm effort to obtain a much more effective EC development programme.
7.3 p.m.
Lord Hunt of Tanworth: My Lords, I thank the Minister for that full and informative reply. I thank also all other noble Lords who took part in the debate for their constructive comments and, in some cases, their kind remarks. At this stage I wish to make just two brief points.
As I said at the beginning, we started by accepting the EC aid programme as a fact of life. We did not consider the justification for its existence. Had we done so we would certainly have had two—possibly three or four—different views on it in the committee. However, one aspect was not touched on in the debate. The noble Baroness, Lady Flather, talked of the ACP states and the noble Lord, Lord Judd, suggested that next time we should get away from London and Brussels and go to the field. We did not do that. However, we took evidence from Dr. Berhane, the Secretary-General of the ACP group, and saw the ACP ambassadors in Brussels. A point that they all made forcefully to us was the advantages of multilateral as distinct from bilateral aid. In a debate where all the emphasis was on arguments for bilateral aid, it is worth remembering that there are arguments on the other side relating to a guaranteed minimum contribution; obtaining contributions from countries which might not otherwise be making them; and also, according to some recipients, being more free of political strings or connections. Therefore, there are arguments both ways. But if there is to be an EC aid programme, which clearly there will continue to be, it is vital that the money is well spent. The debate has shown a general feeling among your Lordships that there are grounds for improvement and obtaining value for money.
My second point concerns the general feeling, about which almost every noble Lord spoke, relating to the squeeze on our bilateral programme. It is extremely difficult to define what is a critical mass—the point at which the squeeze results in consequences which are intolerable. I do not believe that any member of the
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committee wanted to give the impression that that had yet occurred or that we were anything but impressed by the way the ODA carried out its functions. However, we felt that we were getting near to that precipice, and every noble Lord who spoke endorsed that. I hope that the House will continue to be vigilant and ensure that that precipice is not crossed—where the critical mass of our own bilateral programme deteriorates to the extent where quality is lost.
On Question, Motion agreed to.

EC Aid and Trade Policy: ECC Report
Lord Hunt of Tanworth: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That this House takes note of the report of the European Communities Committee on EC Aid and Trade Policy [27th Report, Session 1992.93, HL Paper 123]. —(Lord Hunt of Tanworth.)
On Question, Motion agreed to.

Broadcasting (Restrictions on Holding of Licences)(Amendment) Order 1993
7.7 p.m.
Baroness Trumpington Baroness Trumpington rose to move, That the draft order laid before the House on 29th November be approved [2nd Report from the Joint Committee].
The noble Baroness said: My Lords, this order is made under powers in Schedule 2 to the Broadcasting Act 1990. On 24th November my right honourable friend the Secretary of State for National Heritage announced that he proposed to make changes in the regulations governing the ownership of the regional ITV companies. He made it clear that the proposed changes were subject to parliamentary approval. The purpose of this draft order is to give effect to those changes.
The draft order amends the present order restricting the holding of licences, which was made in May 1991. Article 2(1) amends Article 3 of the 1991 order. Its effect is to remove the distinction between licences for the nine areas with the largest advertising revenue and those for the other six areas. Article 3 of the 1991 order prevents anyone from holding two licences in the nine large areas. The draft order would remove that. restriction, except that no one could hold both the London licences. The overall limit on holding no more than two licences remains. The other changes are technical. Article 2(2) removes from the 1991 order provisions which have already ceased to have effect, and the references to them.
Although I am a comparatively new recruit to the broadcasting scene, I know that your Lordships have taken a particular interest in ITV ownership matters, both during the passage of what became the Broadcasting Act 1990 and subsequently. During the last year there have been a number of Questions on those issues and on 31st March there was a debate on a Motion by the noble Lord, Lord Buxton of Alsa. A number of your Lordships have also taken opportunities

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to discuss these matters with my right honourable friend the Secretary of State as well as my noble friend Lord Astor and with me.
During the debate in the spring, a number of your Lordships urged the Government to extend the so-called moratorium. That is the provision in the Broadcasting Act 1990 which requires the Independent Television Commission to approve any takeovers of companies holding Channel 3, or ITV, licences before they take place. Under the terms of the Act, it is due to expire at the end of the year.
The impression is sometimes given that this provision prevents any takeovers of ITV companies. That is not the position. It is an inhibiting factor, and I accept that its existence would tend to discourage hostile takeovers.
I know that my right honourable friend the Secretary of State considered carefully whether or not to extend this provision, particularly as he recognised the strength of feeling in your Lordships' House on the issue. There was no consensus among the ITV companies. Some were in favour of extension while others were against.
My right honourable friend made a particular effort to hear a wide range of views on the issues on ITV ownership. He made sure that all the companies, both large and small, had an opportunity to explain their position to him directly. He consulted the Independent Television Commission. Other interested organisations, including representatives of the advertising industry, discussed their views with him or his officials.
During the year it has become increasingly clear that broadcasting throughout the world is going through a period of considerable and rapid change. The number of services has been increasing, particularly satellite and cable services. More services will become available in the next few years with the introduction of digital transmission technology. The technologies of broad-casting, telecommunications and computers are beginning to converge, and this development is likely to proceed rapidly in the years ahead.
It has also become clearer that traditional broadcasting services of the kind we have had for the past 40 years will be only a small part of a very large range of services of entertainment, information and education which will be available. By the year 2000, people will be able to pick and choose from a wide variety of sources of news, information and entertainment, including films, videos, music and computer games. Some of these services will be interactive. People will be able to pay for individual items as well as whole services. This is a complete change from the small number of general television services which we have had until comparatively recently. It was only last year that we were celebrating the tenth anniversary of the introduction of Channel 4.
The changes are taking place not only in the United Kingdom but throughout the world; they are opening up a global market for broadcasting services. My right honourable friends the Secretary of State and the President of the Board of Trade are anxious to ensure that United Kingdom broadcasters are well placed to take advantage of these opportunities, building on their
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successful exports of high quality programmes. The ITV companies have, for many years, sold programmes successfully to overseas broadcasting organisations.
These developments world-wide may help to explain why my right honourable friend concluded that extending the moratorium, and the ITC's control over takeovers, was not a sensible approach to a world which was opening up new markets. It is unrealistic to believe that we could, through legislation, provide a period of stability for ITV, when rapid changes are taking place in the rest of the broadcasting world. In these circumstances, trying to stand still is likely to develop into rigor mortis.
The moratorium has achieved what it was intended to achieve —a short period of stability during the transition from the old ITV system to the one introduced in January this year. But we cannot protect the ITV companies indefinitely from the disciplines of the market and this should not be necessary. The Government want the British public to continue to have the television services which they value. ITV services are watched by more than 90 per cent. of the people in this country every week. We also want to sustain the production base for the broadcasters' programmes throughout the United Kingdom. Nearly three-quarters of the programme output of the ITV system is original programming, made specifically for ITV's audiences. The programmes reflect the United Kingdom's traditions and culture, and that of its regions. The Government want programme production to continue and to grow throughout the United Kingdom.
One of the important features of the ITV system is its regional nature. My right honourable friend would not have proposed these changes if he thought they would put at risk the regional programming and regional production which are valued features of the ITV system. The Broadcasting Act places requirements on the ITV licence holders about regional programming and production. These are reinforced by conditions of the ITC licences, which include the promises about programmes made by the companies when they applied for licences. The ITC's licence conditions also require that 80 per cent. of the regional programming is produced in the area.
We know that the commission will enforce these conditions. It is required, by the terms of the Act, to assess each year how far the ITV companies have complied with their licence conditions. If any licence holders do not comply, the commission has to include information about those failures in its annual report, presented to Parliament.
The ITV companies believe that the regional nature of the system is one of its strengths. They know the regional programmes are valued by their audiences. Whatever the legislative or licence requirements, it will remain in the ITV companies' own interests to keep their regional programming and production. I understand that regional production has increased in the first nine months of this year, compared with 1992.
However, not all the companies consider that regional licences have to be supported by fragmented ownership. There are, of course, a variety of views among the ITV companies about the best way for the

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system to develop. But they all accept that some consolidation of ownership is inevitable. They differ about the degree of consolidation, and the speed at which it should take place.
It is the Government's view that some consolidation at this stage could help the ITV companies to flourish in the new global market for broadcasting.
Under the terms of the draft order there would have to be at least eight companies in the ITV system, holding the 15 regional licences. The conditions of the licence about regional programming and production remain, even if there are changes in ownership. I commend the draft order to your Lordships.
Moved, That the draft order laid before the House on 29th November be approved [2nd Report from the Joint Committee].—(Baroness Trumpington.)
7.18 p.m.
Baroness Birk: My Lords, as the noble Baroness pointed out, a great deal of the feeling about the order is concerned with the question of the moratorium. The period of moratorium was inserted into the Broadcasting Bill in this House. There was nothing in the original Bill. There was a feeling on all sides of the House that a period of stability was essential to enable the legislation to proceed in a way that was to the benefit of television. The ITC supported the idea of a moratorium and was ready, like many of your Lordships, to have a longer period. Many of us wanted a year while the Act was being prepared and then a period of two years afterwards so that it could get into its stride without having to look over its shoulder all the time to see whether somebody was creeping up to take over a particular company.
We want the question of ownership to be looked at with consideration, together with that of the BBC charter. Broadcasting is a total environment. To break it up in this way, so that we have this part now for independent television, and then at the same time to have consideration about the future of the BBC does not make much sense. It should all be considered together. The various Green and White Papers should be linked so that one can look at broadcasting overall to see what the future holds.
As regards the regional dimension which the noble Baroness mentioned when she introduced the order, the ITC believes that it can be held. But nevertheless there is a potential for damage here where some of the companies do not feel that they are an intrinsic part of a region but somewhat semi-detached. We have had promises that there will be no redundancies when the mergers or takeovers take place. But I believe that to be phooey. I believe that there will be redundancies, and so do many people working in broadcasting at all levels, particularly in programming and production.
The Government are trying to clear up the mess they made with the 1990 Act, but in a piecemeal fashion rather than as a whole. So there are a great many misfits, and perhaps I may give one example. If the ITV mergers are allowed, the Government, the ITC and the other regulatory authorities must turn their attention to the issue of ITV advertising sales houses. At the moment these companies are allowed to sell no more than 25 per
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cent. of ITV air time. But ITV dominates the advertising sales market and could squeeze out new competitors like Channel 4 if its power is uncontrolled. Therefore, the 25 per cent. limit must be kept for the foreseeable future. It is time that the Government went back to basics on this occasion, which the Prime Minister often talks about. There is no time to lose. Quality has already deteriorated and repeats are tripping over each other all the time.
The idea that this relaxation will prevent the European giants like Berusconi and Bertelsmann from swallowing up our companies is absurd. They are probably bigger than all of our companies put together.
For 35 years our television has been an engine room of creativity, serving the viewer well. Now we have corporate bun fights. I believe that the first many of us knew about the Carlton Central takeover or merger was in the news, when people were seen throwing champagne over each other. The merger had not been through Parliament and nobody knew about it. I had tabled a Question on the subject and I did not know what had happened. I thought that something had occurred of which I was unaware. This was a case of jumping the gun, which was very bad.
Less and less time goes into programme-making and the two takeovers or mergers currently to be read about in the press mean that about £2.5 million a week has to come out of programming funds in order to repay the Treasury for the moneys which are still being paid for the auction that preceded the 1990 Act. It would be ludicrous if it were not doing so much harm. The whole exercise has shown contempt for Parliament, for ITC and for the viewer. All that matters now seems to be the bottom line—that is to say, with a broadcasting system ever more geared to financial performance and less concerned with producing programmes of interest in our cultural life. It is for those reasons that I feel very sad at the thought that this order will undoubtedly go through tonight. But the Government can still change their mind and extend the moratorium. I wish that they would, but I do not have much hope.
7.26 p.m.
Lord Armstrong of Ilminster: My Lords, I should declare an interest in this matter as a non-executive director of Carlton Television, the wholly-owned subsidiary of Carlton Communications plc which has the television franchise for London midweek. Carlton Communications has made an agreed bid for Central Television, subject to parliamentary approval of the order now before the House. If the order is approved and the bid goes through, Carlton Television and Central Television will in effect be sister subsidiaries of Carlton Communications.
I should like briefly to commend the order for your Lordships' approval. It represents a sensible, if modest, relaxation of the arrangements resulting from the moratorium imposed in 1991 and will enable, the independent television industry to carry out a degree of consolidation and rationalisation which should further strengthen the industry in the face of competition from overseas, particularly from European companies. It will

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enable it to achieve a degree of synergy and a sharing of overheads which should increase the resources available to be put into programming.
As the noble Baroness, Lady Birk, said, it has been suggested that it would be preferable to extend the moratorium for a further year. I understand the attractions of that suggestion, but I share the views expressed by the noble Baroness, Lady Trumpington, about the reasons why it would be preferable not to extend the moratorium. In any case, I am not sure that it would really be a viable option. As I understand it, it would not prevent European companies from moving in to acquire blocks of shares in independent television companies which would be insufficient to provide immediate control, but would be sufficient to provide a useful platform for subsequent bids for control once the moratorium came to an end. As a protection, therefore, the moratorium is by no means watertight.
I do not believe that the passage of this order would put at risk the distinctive regionality of existing services. As the noble Baroness, Lady Trumpington, pointed out, that is laid down as part of the conditions of licences and the terms and conditions of such licences will be unaffected by this order. Certainly, so far as Carlton and Central are concerned, the two services will continue to be distinct in regional terms as they are now. I doubt whether the viewers will be able to detect any loss of regionality in the programmes. Indeed, I believe that they will continue to see very much what they have already become accustomed to seeing. The benefits behind the scene, if I may put it that way, in terms of sharing production facilities and overheads are expected to release, if anything, more resources for the programme making which is after all the raison d'être of the companies concerned.
I therefore commend the order as a necessary if modest contribution to the strength and effectiveness of the independent television industry in this country, and as an enhancement of the industry's ability to resist incursions from overseas, particularly from European television companies, into the British market.
7.30 p.m.
Lord Colwyn: My Lords, I am delighted this evening to be the sole supporter from these Benches of my noble friend Lady Trumpington on this order.
The new rules which are proposed for the ownership of ITV licences are both necessary and sensible. They are necessary because ITV cannot grow, or, longer term, even survive, if it is restricted by an ownership structure which was devised nearly 40 years ago. They are sensible because they allow existing ITV licensees to take a modest first step forward towards rationalising their organisation.
Resistance to change and progress has been a factor which has damaged many British industries in the past. The fragmentation of ITV, and the duplicated costs which came with it, was not a burning issue when the channel enjoyed a monopoly of television airtime. That monopoly has now gone, and ITV must be given the opportunity to respond to a period of growing competition.
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Within the UK, ITV now competes directly with Channel 4, which is clearly in commercial good health. It also competes with a growing number of cable and satellite channels. Soon we shall have digital television and many more UK terrestrial channels. ITV must be allowed to move with the times and to respond creatively and effectively to those challenges.
This year, ITV will spend over £500 million on new programmes for British audiences but, despite that, our trade balances are already starting to fall behind the rest of the world. They are moving steadily into the red. In 1985, Britain enjoyed a £25 million surplus. In 1991, that had fallen to a £100 million deficit. By the year 2000, that deficit is forecast to reach over £600 million as new channels are filled with cheap, imported programmes.
That makes it even more important for ITV companies to be able to combine their strengths. The old 15-company fragmentation is simply too inefficient and managerially slow to respond. The British television production industry, including the BBC, needs to take money out of the overhead and put it on to the screen.
ITV companies must be allowed to grow to a size which will allow them to compete with international media companies. Broadcasting has changed beyond recognition since the 15-company area map was introduced in 1955. ITV needs a strong domestic base and the confidence to meet new players from the US, Europe and Japan.
I think that any objection to changing the rules is misplaced and see no reason why a change should threaten ITV's regional services. Ownership has never been a regional requirement, but programmes have been and will continue to be. Opponents of the new rules should be aware that there is not now, nor ever has been, any requirement that each ITV licence should be owned within its region. Most of them are already controlled from London, which is irrelevant to their viewers. Quite simply, regional ownership is not an essential guarantee of regional programmes. The real guarantees of regionality are five-fold. They are the terms of the 15 licences granted by the ITC in 1991; the powers of the ITC to enforce them; good regional management; the popularity of regional programmes; and the ability of the owners to support and sustain the broadcasters.
Whatever mergers may take place, each of the 15 regional Channel 3 licences has to be delivered to the satisfaction of the ITC. Each licence enshrines the promises of the winning bidders in 1991—setting the precise number of hours and minutes of programming which must be broadcast. Specific categories are listed and regional production, as my noble friend has reminded us, is protected by the requirement that 80 per cent. of regional programmes must be transmitted in the licence area.
The ITC has the power to deal with any situation where these quotas are not being met and is ultimately able to withdraw a licence, making any company which is seriously defaulting on its obligations liable to losses running into millions of pounds.
It is entirely right and proper that the commercial opportunities which the Government wish broadcasters to develop should be accompanied by rigorous scrutiny

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of the output by the regulators. That is their function and, if we cannot trust them to monitor the regional obligations of the 15 ITV licences, then we cannot rely on them for their scrutiny of the rest of the output. The ITC has an important role in the years ahead and it is simply absurd to pretend that commercially restrictive ownership rules are a more workable way of protecting the public interest.
A more practical guarantee for regionality, and one on which the ITC will insist, is that each licence should maintain its own district identity, with its own committed regional management. Indeed, it makes commercial sense for any licence owner to engage the best regional talents to work in and manage the television station.
Common sense also suggests that regionality is a valuable commodity in ITV, valued by both viewers and advertisers. ITV is the only commercial channel in the UK with this distinctive regional character. As competition grows from the satellite channels with national coverage only, it makes sense to maximise the impact of regionality.
The final support for regionality is of course the financial health of the licence owner and of the ITV system as a whole. No promises about programming have any value unless they are backed up by the ability to meet production budgets. The 1991 franchise round produced a wide range of winning bids and now some licensees look less able than others to keep up a high level of commitment to network and regional programme budgets. Only if an orderly process of amalgamations takes place will the duplicated overheads of the old system be made available to programme making in the future. Ownership mergers are not a threat to regionality; on the contrary, they will provide the efficiencies through which regional programmes are sustained in the future.
In conclusion, I should like to turn to a final misconception. There are still those calling for an extension of the so-called moratorium on takeovers, claiming that we should take time carefully to consider ITV ownership together with all the other issues which the changing world of broadcasting is throwing at us each day. I am not sure there has ever been a moratorium. The word does not appear in any legislation and the ITC has no power under the 1990 Act to ban foreign takeovers. It does have power, under Section 21 of the Act, to refuse a change of ownership, if it considers this "appropriate". According to its evidence given to the Select Committee on National Heritage in October, in paragraph 38 "appropriate" meant that it would oppose a change of ownership only if it believed that a prospective new owner was unlikely to maintain the quality of service. There was nothing about foreigners or hostile take-over bids.
If the so-called moratorium was extended for another year or two or three, I cannot see that it would stop a well-founded European company from buying an ITV licence, nor prohibit it from taking minority stakes in ITV licences in anticipation of future full bids.
Even if this order is not supported because of false claims that it threatens the regional traditions of ITV, from 1st January 1994 European companies will have
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the ability to take over ITV licences while we continue to forbid existing large licensees to merge. Does anyone believe that it will be a better way of maintaining the quality of ITV or enabling UK broadcasters to play a bigger role internationally if they are penalised in their home market in favour of foreign interests?
The clock cannot simply be stopped. In Britain we are good at television and proud of our television production industry. The new rules offer a first step to ensure that we allow it to succeed in the challenging years ahead.
7.40 p.m.
Lord Hollick: My Lords, I declare an interest. I am chairman of Meridian Broadcasting, a licence holder for the south and south-east of England. As the Minister pointed out, we have discussed this and associated issues in the House on a number of occasions. The most extensive recent debate was possibly the one introduced by the noble Lord, Lord Buxton, when we discussed the moratorium. We have discussed many other issues, however. We discussed some of the problems that arose from the Broadcasting Act 1990; some of the structural faults in the industry; and some of the technological changes of the past few years, which require the Government to look again at the provisions of the Broadcasting Act.
With one exception, noble Lords were broadly in agreement in the debate on the moratorium that there was need to extend the moratorium so that matters could be looked at. There was also agreement that change was necessary. It is important to understand that there is no one in the industry standing against change. The argument is about the pace and scope of change. What we have in the order is a narrow, rather timid, and, I would suggest, somewhat illogical step which takes us not too far down the road that we need to travel to have a properly liberalised, deregulated industry.
The choice, as mentioned by my noble friend Lady Birk, was between a piecemeal change to ownership and a comprehensive review. The ITV companies themselves were broadly split down the middle on the issue. There were those who wanted immediate change on ownership and those who wanted the broader approach. We have ended up with neither. What we have is a half-baked measure.
In the other place, the Secretary of State indicated that the purpose was to strengthen the competitiveness of the UK industry generally. He cited two issues:
"First, I want to ensure that the British public keep the television services that they value and that the diversity of choice that they have is maintained and extended".—[Official Report, Commons, 8/12/93; col. 436.]
I am not sure what the order does to ensure that the British public keep the television services that they value and that the diversity of choice is maintained. Perhaps the Minister will tell us.
The second objective was to sustain the production base for broadcast programmes in the UK. Here again, I am somewhat puzzled to see how the order achieves that objective. Your Lordships will remember possibly that the most devastating blow dealt to the production base in the UK was the provision in the Broadcasting

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Act 1990 which called for competitive bids. The competitive bids, while they enriched the Treasury, unfortunately impoverished the industry. The industry is a great deal more efficient now, and can become more so, but several hundred millions were taken out of the kitty and that money is not available for production.
Far more important than ownership arrangements is the fact that the production industry in this country relies upon money going into regional programming. The proposed measure does nothing to eliminate the error made in the Broadcasting Act 1990. I should again be grateful if the Minister will explain what help it does offer.
In the debate on the moratorium I described the present ownership laws as quaint. I said that they prevented the natural coming together of companies into larger, more efficient units which could eliminate the duplication of selling and administrative costs. So I am with many of your Lordships on that point. However, I was somewhat understating the case when I said that the rules were quaint. I believe that the rules are bizarre. The changes being made today do not make them any less bizarre.
The Secretary of State said that he wanted to strengthen the competitiveness of the UK industry generally. Competition is normally measured by reference to the share of a particular marketplace. Indeed, the competition authorities, competition law and competition practice seek to ensure that no one unit gains too large a share of the market. Conventionally, 25 per cent. is considered to be about the size of the market, as defined by the monopolies authorities. What we have here is a new definition of "competitiveness"—one that I believe would probably fit neatly into the world of Alice in Wonderland, because if we look into the wonderland of the new competitive world of ITV we see that it is not decided by reference to market share but by reference to the number of licences that one holds.
The Secretary of State, in his wisdom, and the Government deemed that two licences equal one big competitive force on the international market. My noble friend referred to one takeover proposal already announced—the merger of the London weekday franchise with the franchise for the Midlands. That would create a company having more than 30 per cent. of the market—well over, your Lordships will note, the 25 per cent. Parenthetically, I should like to ask the Minister whether the order deprives the competition authorities of the power to review and to define the market. Are we talking about 25 per cent. of terrestrial advertising or 25 per cent. of just Channel 3? By one measure, that is well in excess of the normal 25 per cent. rule.
Continuing in our Alice in Wonderland world, we have the prospect of two companies—one with 1 per cent. of network advertising spending and the other with 2 per cent. —joining together to create a powerful competitive unit which will no doubt send shudders around the media conglomerates of the world. It is an absurd situation. It is doubly absurd because it ignores completely what is already permitted under the selling arrangements. Here, as my noble friend pointed out, 25
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per cent. of the network can be sold by a single sales point. So we have the position at the moment where, let us say, the London Weekend company may wish to extend its arrangements with the Yorkshire and Tyne Tees companies beyond the sales house arrangements that it currently has. The sales house arrangements give it something like 20 per cent. of the network sales but would prevent it acting as I have described. Where is the logic in that? Where can it be logical to supply up to 25 per cent. of sales—one of the primary services supplied by the industry—but not logical for the ownership rules to follow that? I should be grateful for some illumination from the Minister.
What we are left with is an unsatisfactory and incoherent model. Noble Lords have stated that this is a first step. Indeed, it is a faltering and a rather false first step. The Secretary of State promised a further review of ownership rules. He said in response to a question in the other place that in the coming months the present restrictions on cross-media ownership should be looked at again and, indeed, that that was the intention. When pressed he said that he intended to do that within the next few months. I wonder whether we can be told by the Minister what is intended and when the Secretary of State will pronounce on the issue. I urge the Secretary of State to consider not just the cross-media ownership, which is an important issue, but a number of other problems and concerns raised by the television industry.
Above all, the television industry needs to know where it is. We have had a tremendous amount of change. We had the Broadcasting Act 1990; we have had new licences starting; we have had new network agreements that are only just being put into place; and we have all the problems and growing pains of the new network arrangements. What we now need is a period of stability. I have operated in a number of industries which have been deregulated. I have to say that it was done in a far more efficient and less cack-handed manner than is proposed in the order. The relevant regulator set out clearly, "This is what we are going to do and this is how we are going to work and to operate for the next five or 10 years". We have had no such guidance from the Government as regards this measure. We have had one step with the promise of another step, which leads we know not where.
I suggest that the Government commit themselves to a comprehensive review of ownership—and I mean also cross-media ownership—and that they remove the illogical and bizarre structure that they are in danger of creating in ITV. They need also to review the role of the regulator which should cover the entire industry. At present we have a somewhat anomalous position, of which I am sure noble Lords are well aware. The regulator has a particular interest in the programmes that are broadcast terrestrially but has little or no influence over programmes broadcast by satellite. As far as the viewers and the British production industry are concerned, that should be immaterial. But it is not. The regulator is unable to have any real influence over satellite broadcasting.
The Secretary of State should also review the structural problems arising from the 1990 Act. I wish to name three. The first is the arrangement whereby small

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companies receive, in effect, a subsidy. They pay less into the network pot. Approximately £36 million is paid by the larger companies towards the running of the smaller companies. That is a long-standing arrangement but in the new deregulated world it is out of date.
Secondly, I suggest that the Secretary of State reviews the basis of the cash bid. In particular, he should enable companies to have their bids renewed after four years as opposed to the present six years. There is considerable merit in doing that. It would enable the ITC to make an earlier adjustment to compensate for the cluster of unexpected changes in the broadcasting environment and to underpin the resources for meeting or increasing licence obligations. The Government have argued that the new system for awarding TV licences would enable the Treasury to obtain a fair return from a scarce resource. However, the scarcity value of that resource—the ability to broadcast on the Channel 3 spectrum—will be reduced by the proliferation of new channels sooner than anticipated.
There is a strong case reviewing the cash bids and levelling the playing field to some extent. That would enable more money to be put into programming and would also leave ITV better equipped to deal with the proliferation of channels, most of which are unregulated, and able to buy their programmes inexpensively from abroad. That would level the competitive playing field.
The third issue which the Secretary of State should address is the fact that our licences cover only analogue broadcasting. As was mentioned by several noble Lords, the "digital revolution" will enable many signals to be broadcast on the same wavelength. If the technology is introduced and implemented, it is important that the ITV companies secure the right to broadcast on that digital spectrum, otherwise they will again be further hampered in the competition with satellite.
In summary, I find the measure disappointing, illogical and incoherent. It is a fudge by the Government. It is a step on the way they are not quite sure to where. They are not quite sure when they are going to make the next move and they are not sure what the next move will he. We should be told. The Government have said that they regard the broadcasting industry as important not only in cultural and domestic terms but internationally. It is important that the industry is told the rules of the game for the next five years. We cannot continue with a system in which the rules are changed every 12 months, in this case by ministerial diktat. The Government should stop tinkering and should address the fundamental issues if they are to assist the competitiveness of the industry, benefit the viewer and sustain the British production base.
7.55 p.m.
Viscount Chandos: My Lords, in speaking for the first time from these Benches, and after several years of absence, I fear that my rustiness will be only too apparent—perhaps like a television presenter whose autocue is on the blink.
I too declare my interests. I am a former member of the General Advisory Council of the IBA, serving at a
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time when the noble Lord, Lord Thomson of Monifieth, was the distinguished chairman of the authority. I advised on the only completed merger of Channel 3 licences, and I continue to advise a Channel 3 licensee. I work with a number of film and television production companies. Finally, I am on the board of an advertising agency. I hope that that variety of interests at least encourages a balanced view, even if I cannot claim the depth of involvement and experience that applies to other Members of your Lordships' House; for instance, the noble Lords, Lord Hollick, and Lord Armstrong of Ilminster.
While I may have taken a special interest in the television industry, which has encouraged me to speak this evening, I believe that this subject is of substantial importance in a wide range of areas. It may be a coincidence of timing that the GATT negotiations today hinge on resolving the impasse between the USA and the European Union over the treatment of film and television production, but it is also a powerful reminder that we are dealing with an issue that is more than a sideshow on the world stage—or screen.
US film and television production represents that country's second largest export earner after the aerospace industry. While that may explain the vigour with which the United States has fought its audio-visual corner in the GATT negotiations, it is also an example to the United Kingdom, with the natural advantage in the world markets of the English language, of what an important part of the economy the television and film industry can be.
The counter-position of the European Union, and of France in particular, in the GATT talks also reflects anxieties which are prevalent in the UK and are at the centre of some of the worries expressed by your Lordships tonight and by the country at large. Television is the most popular manifestation of our national culture—and that of most other developed countries—and very few people in this country will feel indifferent about the way in which television programming develops or how it affects film, theatre, art and other parts of our cultural life.
The tension between the development of television as an industry and its role as a flagship for popular culture is what the Government and their appointed regulator, the ITC —and the IBA and the ITA before—have sought to resolve. Within the Government it is symbolised by the revived interest of the DTI in the industry and the differing viewpoint which that department may have from the Department of National Heritage.
It is difficult for the regulator of any industry, or for the Government acting in an essentially regulatory capacity, not to fight yesterday's battles. In a market economy it is likely that the initiatives for growth and expansion will come—and should come—from the participants in the commercial marketplace, with the Government or the regulator testing, when appropriate, whether any particular step is in the public interest.
In looking back and taking a broad view of ITV's development and the role of the Government and their appointed regulator, it is difficult not to feel that the balance between regulatory promotion of a cultural

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ideal and the creation of a framework within which a successful industry could grow was rarely achieved. While the commitment to local programming and the regional nature of the ITV network, which the regulators promoted, undoubtedly brought benefits, too often the regional tail wagged the industry dog. In the 1970s and the 1980s ITV companies, which may have seen their franchises as the base for building a larger media business, tended to see this adversely affect their chances of franchise renewal. I have no doubt that this was one factor which contributed to the decline during this period of the British film industry, for which the ITV companies should have been the natural long-term partners.
Even if the Broadcasting Act sought to establish a lighter regulatory touch and a more market-based system, it was clear even at the time that, in detailed implementation, that was not the case. Although the ITC has advanced its arguments as to why it decided to re-advertise licences in 1991 based on an unchanged map of regions (while all the time expecting consolidation to occur at a later stage), that decision caused acute problems for the applicants or re-applicants for the smaller licences because of the uncertain cost for them of network programming, to which the noble Lord, Lord Hollick, referred; and that has led to an early change of regulation, with the resulting disruption, uncertainty and arbitrary allocation of value. It must have been better to advertise licences, with whatever sub-regional programming requirements were needed to provide the desired level of local service, which were already viable and strong potential members of the network without artificial subsidies or arrangements.
I believe, therefore, that the lesson we can learn from that particular piece of history is that gradualist change is likely to create as many problems as it solves, although the abolition of the distinction between large and small licensees is welcome in starting the process of consolidation. The maintenance of a limit of two licences can only lead, as other noble Lords have argued, to the weakening of some of the licensees which, for predominantly arithmetic reasons, may remain outside the major groupings that form, like wallflowers at a teenage dance. While that, in the short term, will be to the disadvantage of those particular licensees, in the longer term, through the continuing destabilisation of the network, it will disadvantage the industry as a whole to the detriment of its contribution to employment, exports and the country's economic prosperity and of the quality of programmes available to viewers.
In that then I have common cause with what I understood the Labour Party spokesman in another place to believe; namely, that there should be no restrictions on the number of ITV licences that could be held and that normal competition policy should determine the ceiling, whether that be achieved through the control of two or five licences. However, I must differ with the Labour Party and noble Lords on those Benches as regards the belief that an extension of the moratorium would in any way have been beneficial to
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anyone. This is not a very complicated issue and, even if the Government have managed once more to snatch a degree of muddle from the jaws of logical deregulation, there is little evidence that more time would have necessarily enhanced their decision-making. And while it would be wrong to paint a portrait of continental European invaders poised to set sail from the Bay of Biscay on 31st December, it cannot have made sense for any relaxation of rules relating to intra-ITV mergers or takeovers to have been held back and introduced only in response to a specific bid by a continental European or other unrestricted company.
Although the ITC had advocated an extension of the moratorium, during which it could have maintained a greater degree of control over any consolidation process, the reality is that once the ITC had approved a merger or takeover, it would have found great difficulty in justifying blocking any other offeror for the relevant licensee which would not otherwise have been ruled out or disqualified. I believe then that the ITC should feel relieved that it has not been placed in that position, and if its response to that is that the extension of the moratorium would have led it to block all mergers or takeovers, then I suggest that we are very much better off, even with this imperfect step.
The argument that the moratorium should have been extended to prevent any further change of licence ownership, pending a full review of the cross-review media restrictions, seems to me to be equally unconvincing: first, because it seems quite fair to allow a degree of consolidation within the industry after 40 years of restrictions that were clearly tighter and more arbitrary than those applying to the newspaper industry; and, secondly, because I see no reason why any such consideration requires a further extended period. Television and newspapers have coexisted for over 50 years, if the BBC is to be included, and it is three years since the passage of the most recent Broadcasting Act. Consideration has a tendency to fill the time available.
If my speech is not to risk conforming to the same principle, I shall not address in any detail the issue of cross-media ownership. I would suggest only that there is often a confusion in the anxiety felt about the concentration of commercial interests and market share on the one hand and concentration of editorial power on the other. The former anxiety can and should be addressed once again by the normal competition procedure of the Office of Fair Trading and, where appropriate, the Monopolies and Mergers Commission. The latter concern is obviously the one unique to the media industry and requiring specific attention. In that respect, it is worth noting that the federal network system of ITV, which is likely to continue even after substantial consolidation, does not lend itself easily to the imposition of editorial views by any one owner of a licence or licences. Moreover, in most countries television has tended to be relatively unpoliticised, although the surprising recent intervention of Mr. Berlusconi in the Italian political arena is an exception to that rule.
I believe that the consolidation of the ITV companies can be achieved with the powers already afforded to the ITC under the Broadcasting Act and under the terms of

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the individual licences without any change to the quality of local services. Even though some mergers, such as that of Carlton and Central, are likely to strengthen network production outside London, it would be naive to believe that there may not be in other cases some rationalisation of network production between merged companies.
In her desire to maintain the quality of programmes, with which I and all other noble Lords undoubtedly agree, I believe that the noble Baroness, Lady Birk, is misguided in seeing profitability as the enemy of that quality. In fact, it is a condition for it. Quality programming, whether regional or prime time, should not be pursued by broadcasters only because it is required by their licence, but rather because audience ratings, as is demonstrated every day of the week, respond to good programming, which in turn generates the advertising revenues on which the ITV companies' operations and profitability are dependent.
In conclusion, I commend the order to the House, with regret only that it does not introduce more complete and balanced change and will inevitably need to be succeeded in the foreseeable future by a further order. This and future regulatory changes may place the onus very heavily on the enlarged ITV companies to achieve the economic benefits that a vibrant television and film industry offers. But that, in a market economy, is surely how it should be.
7.58 p.m.
Lord Thomson of Monifieth: My Lords, I begin by thanking the Minister for the very clear way in which she explained the Government's position on the order. She played a sturdy innings but it remained a very, very sticky wicket on which she was playing, although that was not her personal responsibility.
The defects of the order arise directly from the blunders of the 1990 Broadcasting Act; in particular, its auction process. Two thousand pounds for the lucrative Midlands region but £37 million for a licence in neighbouring Yorkshire clearly left distortions which cannot be sustained in the long run. I believe that there is general agreement in the House on that point. However, this is not a long run; it is a very short run of a Government retreating before pressure. The present system has been running for less than 12 months. Indeed, the companies that have been putting on most of the pressure and which are at present scrambling to merge are those that have not been in any difficulties. One of the ironies of the order is that the company most protected by it is Yorkshire, which is the one with the most financial difficulties.
If there was a case for any short-term immediate change in the Broadcasting Act, it was some measure to provide reciprocity as between other countries in the European Community and ourselves as regards takeover bids. We pressed that point strongly in Committee, failed to convince the Government and it has now caught up with us. It is the Government's responsibility that that is so.
The Minister is absolutely right to say that the technology of broadcasting is changing radically and steadily towards a multi-channel world. However, from
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these Benches, we strongly believe that the sensible course for the Government would have been to look as a whole at the likely landscape of broadcasting in the 21st century and make coherent and consistent changes. The noble Lord, Lord Colwyn, thought that those of us who urged that line were simply taking a standstill position. I do not think that that is right. A perfect opportunity lies in front of the Government for following that course, bearing in mind the fact that they have to produce a White Paper on the future of the BBC next spring. That would present an opportunity for a major new broadcasting Act covering the whole field of broadcasting in the following year.
I believe that the future of the BBC should be decided alongside the future pattern of ownership for ITV, together with the creation of fair conditions for competition with the new providers of satellite and cable services to the family television screen, many of which, as the Minister said, are providing more than television services. Equally, a new broadcasting Act should introduce fair deals for other media owners other than Mr. Rupert Murdoch. We look for an assurance from the Government that the future of the BBC will not be treated in isolation and that there will he no more piecemeal tampering with ITV ownership. Instead, we should have a new, comprehensive and rational broadcasting Act by 1996.
In the meantime, what are the short-term consequences of such a misconceived order, if the Government are able to carry it through your Lordships' House this evening? I should point out to the Minister and her colleague on the Front Bench that there would be a very strong case for voting against the order tonight in the light of the almost total unanimity that there was on the issue in March, which was the last time that your Lordships' House debated such matters. If the proposed mergers do go through, it will put a great deal of power in the hands of one or two companies. Those that are presently joining in what the Independent Television Commissioner calls the equivalent of a "scramble for Africa" include Granada and Carlton.
It is true to say that Granada is a distinguished programme maker. I listened with interest to the comments made by the noble Lord, Lord Armstrong of Ilminster. I profoundly hope that he is right in his belief that a merger would improve programme making. However, Carlton is not a programme maker with a programme making tradition behind it; it is a programme publisher, and is none the worse for that as that is part of the provisions of the present. Broadcasting Act. But it has still to win its spurs in the programme field. As regards the responsibilities it is seeking to take on, it would be better to be well aware of the situation.
The present scramble is no doubt good for the shareholders, some of whom are doing extremely well out of it. However, I am not at all sure that it is equally good for viewers. It is true that there will be some savings of overheads, although I think that they have been greatly exaggerated in the merger ideas that have been canvassed. However, such takeovers do involve the deployment of very substantial resources in bidding

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to take over the other company. I suspect that there will be some considerable pressure at the end of the day on the resources left for programme making.
The Independent Television Commission recognises, as I do, that consolidation within ITV and a reduction in the number of owners is inevitable. However, the commission argued for an orderly approach, as we are doing to changes in ownership. Of course, its wise advice has been disregarded by the Government. The noble Lord, Lord Colwyn, indicated his belief that all would be well because the ITC would be able to hold the ring. It will certainly be left holding the baby, with the tough task of preserving programme commitments against powerful economic pressures pulling the other way.
My favourite television company is Grampian, in the north-east of Scotland on my old home ground. Rightly or wrongly, it feels seriously threatened by the consequences of the order. It commissioned a nationwide NOP poll which showed the value placed by viewers on regional services. Interestingly enough, Grampian was considered the most popular across mainland Britain with its local news and local interest programmes. It is also equally interesting to note that by far the worst performers in the poll, in the view of viewers in London, were the London companies. I do not quite know what conclusions one can draw from that, but I believe that it is worth giving it just a little meditation.
Channel 4, the remaining jewel in the commercial television crown in this country, I believe is also at some risk as regards the consequences of the order. Channel 4 has done well in providing a measure of distinctive competition for advertising time on television. But it remains a minnow in comparison with the ITV companies whose commanding position in the marketplace enables them to demand premium rates for their advertising time and to earn together 75 per cent. of Independent Television revenue. Channel 4's ability to compete and maintain its present remit depends to a substantial extent on the ITC maintaining its rule that no individual ITV sales operation can offer for sale more than 25 per cent. of ITV total revenue. Now that the Government have given way on their merger rules, the heat is now on for a retreat on the 25 per cent. rule. I echo what the noble Baroness, Lady Birk, said. I hope that that pressure will be resisted.
As has also been mentioned, there is also a legitimate interest of the advertising industry in the change. It has an interest in the regional vitality of the ITV system just as the viewers do. Satellites cannot provide regional coverage. Even Channel 4 sells in macro regions which are considerably bigger than the ITV regions. A national ITV plc, even with regional opt-outs, as has been urged in some quarters, would be a monopolistic monster for British advertisers.
The noble Lord, Lord Hollick, who knows about such matters, was right to mention the question of cross-ownership in relation to ITV sales houses. In some ways that issue is as important as the cross-ownership of ITV licences, perhaps even more important. The sales houses in which Carlton, Central, Granada and LWT are
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involved together handle 60 per cent. of all ITV advertising. In order to introduce a degree of competition into the marketplace and to protect the minor players—whether Channel 4, the national breakfast contractor GMTV, the fledgling satellite industry —or to look after the proper interests of the advertisers, it is vital that that power is limited by a curb on the potential sales points. That should clearly remain at the current level of 25 per cent. of potential ITV revenue, thus restricting concentration to a minimum of four ITV sales operations. This would provide the necessary competition for national advertisers and a degree of protection from abuse at the local level. It would, of course, still be possible for two licensees generating over 25 per cent. of ITV revenue to be owned by a single group provided that they were represented by separate sales teams with real and effective Chinese walls in operation. There will still be need for great vigilance as regards the pernicious temptation that undoubtedly exists for sales teams representing different contractors to engage in conditional selling. The noble Lord, Lord Hollick, was quite right to underline those matters. He asked some searching questions and I look forward, with interest, to hearing the answers.
Finally, I wish to say a few words about the new justification for the Government's ITV merger changes; namely, that it would build mega-companies capable of contributing to our balance of payments with massive global sales of programmes. This vision is said to have come to Mr. Michael Heseltine, the President of the Board of Trade, with such a flash of light and such force that it dissuaded Mr. Peter Brooke from following the more sensible course of taking the advice of the ITC about orderly change.
We were all sorry to hear about Michael Heseltine's illness and we are all glad to see him back on form. However, I am a little sorry that he seems to have spent too much of his convalescence watching television. I know from my own experience that it is a dangerous addiction. I must tell Mr. Heseltine and the Government that in exporting TV programmes to other parts of the world bigness is not enough. The matter is much more complicated than that. Both the BBC and ITV, who have reasonable-records of selling abroad, can tell of the special difficulties of selling British programmes in the USA, and that has nothing to do with the relative bigness of the BBC or the relative smallness of the ITV companies. There are much bigger companies in the rest of the European Community that are owned by people such as Mr. Berlusconi and the Bertelsmann Group. They do not find that simply being big enables them to gain access to the international market place.
American programmes are created first and foremost—one ought to remember this—for American consumption. Their export trade is a bonus on top of that. They reflect a continental American culture which, over 70 years, Hollywood has made a secondary culture for much of the rest of the world. Western Europe, with its diversity of cultures and its internal language barriers, can never be a second America in this sense. The noble Viscount, Lord Chandos, made some interesting and thoughtful remarks about the audio-visual issue in GATT. I agreed a good deal more with

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those remarks than with some of the later remarks in his speech. The GATT row over audio-visual protection gives ample evidence of the complications in this field.
Of course, the BBC and ITV sell overseas, and they will sell more as the multi-channel marketplace expands, but the appeal of British programmes to British viewers is that they reflect our own society and values. That is the way it ought to remain. Of course ITV programmes have to be paid for and make a profit, but they are much more than a purely commercial product that can be traded across frontiers like cars and cans of beans. It is, sadly, the failure to see this that remains the blind spot at the heart of this Government's approach to broadcasting policy.
8.24 p.m.
Lord Donoughue: My Lords, apart from regretting that these proposed changes in ITV were announced to the world outside two weeks before Parliament had an opportunity to discuss them, I should begin by conceding that the new TV arrangements could be worse. The Secretary of State was undoubtedly under great pressure to allow a complete and immediate commercial free-for-all in British TV. There are certainly many Conservative Party supporters who believe big is always beautiful and enjoy the thought of total free markets and the media jungle.
The process of mergers which would accompany that would almost certainly conclude with British media—terrestrial TV, satellite TV, radio and news-papers—owned, apart from the diminishing public sector broadcasting, by only two or three media moguls, of whom Mr. Murdoch, by arrangement with the Government, would certainly be one. That would, of course, mean that the British media were safely in Right Wing hands.
Therefore we are grateful to the Secretary of State for resisting pressures for a total free-for-all, or at least so far. That, I fear, may be the next step. But I must say that what we have here, as some other noble Lords have said, is just a muddled compromise—half baked, as the noble Lord, Lord Hollick, rightly stated—which is why it would be appropriate for this House to have a chance to vote against this order, especially as the usual arrangements between the parties in Parliament are, I am told, no longer operating very happily. After all, what the Government have done allows enough mergers to create uncertainty in the industry, especially as regards whether there is any future at all for the smaller regional companies, such as Grampian, Border and HTV, but not enough to allow consolidation on a large scale and to satisfy the free marketeers.
Basically, it is a disguised admission by the Secretary of State that the ludicrous 1990 Broadcasting Act, with its farce of blind auctions, was a botched job. We on these Benches knew that, and said so at the time, but we did not expect to see it unravelling in the first year of the 10-year licensing system. The basic question is, why? The Secretary of State, and the noble Baroness at Question Time last Thursday, have given no proper explanation. The Hambros Bank document announcing
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the recommended offer by Carlton for Central gave, as far as I can find, only one explanation on page 3, where it stated that both partners believe,
"that larger UK television companies are needed to compete effectively on the world stage. The offers for Central represent a significant and logical step in that direction".
The words "consolidation" and "rationalisation" are littered around as concepts that are assumed to be good.
That argument is typical City bunkum and was comprehensively demolished, in my view, by the noble Lord, Lord Thomson. These companies do not, and will not in any significant way, compete as world players on the world television stage. Their size remains relatively small; their programme audience and their advertising audience is domestic and will mainly remain so. As programme makers they have relatively little world presence and that will continue to be the case after these mergers. As for their regional programming, in so far as they stick to their licence pledges, that will inevitably be unsuited to the world stage.
If we were looking at different proposals to allow the restructuring of the whole media field, for example to allow the creation of multi-media companies able to compete internationally across the whole media field, that would be different. There is a plausible case for that, but that is not what is before us. This is mini-tinkering of a botched kind.
Hambros was understandably shy of giving the obvious reasons for these takeovers. The reasons are: first, to satisfy the desire of some to become bigger media moguls; secondly, to secure large profits for the director shareholders; and, thirdly, to reduce costs by sacking some skilled and experienced staff and reducing the quality of the programme output. I can see no other practical, financial reasons for doing it. Admittedly, there might have been a case, in terms of financial rescue—this has been mentioned by others—for allowing a merger in the one case where a company is in difficulty as a consequence of the 1990 Act; namely, Yorkshire. But, ironically, at present any way, that company is excluded because of its poison pill; namely, that it has already carried out its merger.
I look forward to hearing a convincing explanation as to why the Government have taken this half bite at deregulation. I am even more interested to learn why they have done it now. Even if one were committed to loosening the 1990 franchise regulations in due course there are good reasons for not doing it now. A number of those reasons have been mentioned in the debate by other noble Lords and have been clearly set out by the relevant regulatory body—the ITC. It has formally and publicly advised the Government and the public of the case for not deregulating now but for extending the so-called moratorium on take-overs until 1995. That is not long, and there is a strong case for it.
The ITC has given three convincing reasons for doing that. First, it would allow a period of stability in the new system of networking. After all, that system was set up with licences for 10 years and is still in only its first year after the upheavals of the franchise auction inspired by that ludicrous 1990 Act. Secondly, it would enable the future shape of the BBC to be decided. That process is well advanced. Last week we had the Select

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Committee report on the BBC. In the spring we expect the Government White Paper on the BBC. The BBC is and will be an important part of the future broadcasting picture. Surely we should wait until that piece is ready and in a shape to fit into the media jigsaw.
The third reason for delay given by the ITC is to sort out the shape of those other pieces in the media jigsaw, cable and satellite. They need urgent consideration, particularly the intolerable situation in relation to satellite under which the rules for the Murdoch satellite TV channel are different from and looser than those applying to terrestrial television and Murdoch's satellite channel is apparently allowed brazenly to breach the EC rules on the European origin of programmes. In the case of cable there is the odd situation in which access to cable will almost certainly be totally controlled in North America and, for example, British Telecom is statutorily forbidden to send films down its lines.
We also need and have been promised a thorough review of cross-media ownership. It is surely illogical that national newspapers are allowed to control 100 per cent. of satellite TV but are constrained to only 20 per cent. of terrestrial TV. Surely, as the noble Lord, Lord Thomson of Monifieth, argued convincingly, with so much of the media world fluid and currently under review now is the wrong time to take a decision on the ITV part of the jigsaw. Surely the rational and sensible decision would have been, if I may change the image from jigsaws to birds, to get all the ducks in a row—the BBC, cable, satellite and newspaper ownership—and then to take coherent decisions covering those interrelated media sectors. The ITC—the expert body in this area—was right to call for a period of stability and for an extension of the moratorium on take-overs. Why have the Government rejected that sensible advice? I suspect that they may have given way to a self-interested lobby from some of the Conservative Party's main supporters in the media industry.
One consequence is that British TV companies are now open to takeover by predators from Europe, as has already been mentioned. This House discussed that threat in a debate in the spring, as my noble friend Lord Hollick mentioned. At that time it was pointed out how European companies could take over British companies but British companies could not take over any of them in return. They are protected either by private controls or by national state protection. Our only protection in this country is the ITC, whose views and advice the Government obviously do not greatly respect. With one exception, it was the unanimous view from all sides of this House, on the basis of great experience and expertise in the industry, that the moratorium should be extended. The Government have chosen to ignore this House, as they have ignored the ITC. That is why it is tempting to take the opinion of the House.
Britain is now the only country in Europe where foreign companies can take a 100 per cent. interest in domestic commercial broadcasters. It will be of only small consolation to us on these Benches to see the embarrassment of the Secretary of State and the
1200
Government when Bertelsmann from Germany, Berlusconi or a French water company bids for, say, Anglia or even for the combined Carlton/Central.
One of the ironies of this situation is that a larger British company, after merger, will not be protected from take-over as has been suggested. It will probably be more attractive to European giants when it covers a substantial part of the market than when it is a tiddler in its pre-merger form. Therefore, I do not accept those arguments.
I should also like to ask the Minister about two regulatory limits which are breached by the proposed Carlton/Central takeover. The point has been raised and I should like to press the Minister to reply. The first was described from behind me as an Alice in Wonderland world. It is the 25 per cent. limit on advertising revenue for any one operator. Carlton and Central together have 31 per cent. I hope that the Minister will explain the position in that regard. There is also a 20 per cent. statutory ceiling on any single shareholding in ITN. Carlton and Central now have 36 per cent. Will the Minister tell us what the Government and the ITC propose to do to prevent those breaches? Can she give us an assurance, especially, that the 25 per cent. limit on advertising revenue for one operator will not be removed?
One of our main anxieties on this side of the House, as in another place, is the regional dimension to television in this country. The commendable desire to protect and enhance that has underpinned all existing and previous legislative organisation of UK television. ITC surveys have found that appreciation of the regional dimension remains high. Will the Minister give an absolute guarantee that the regional dimension will be maintained?
We also need assurances about quality. Central Television has a good reputation for quality of programmes, especially its documentaries. Carlton has not yet established any such reputation. I watched part of a programme called "A Woman's Guide to Adultery" last week and I did not think that it was up to the mark. If the result of the merger is to impose and spread that kind of material over the larger region while losing Central's documentary quality, it will be a bad move for television watchers. I should like assurances on that aspect.
In relation to programme quality one should make the point that the main damage has been imposed by the Government. The costs of bidding for franchises under the 1990 Act and the cost now of mounting hugely expensive bids must inevitably drain money out of the system. Those costs can only be met to some extent by cutting expenditure on programmes.
This has been an interesting and important debate. Many who study the media may feel that the main danger for us is of being out of date and that we should not treat ITV with such great concern because very soon it will no longer be a major player. The dynamic technological change means that the future lies with a multiplicity of satellite and local cable channels. Therefore, by the end of the decade our ITV terrestrial companies will be of little consequence. That may be the case at some time in the future, and I appreciate the

1201
forces which may bring that change about. However, tonight we are dealing with the here and now—the mid-1990's—, and ITV's regional television matters to millions of people.
It is crucially important that the future landscape of the media in Britain be surveyed in a rational and measured way. That should mean that the structure of ITV is considered alongside the imminent proposals for the BBC, cable, satellite and cross-media ownership, to establish a rational and coherent picture. But the Government have not done that. They have merely tampered with a part of it. They have also snubbed and ignored the ITC, which is the body upon which we rely to protect the regional quality and programme quality of broadcasting. They have created uncertainty where we need stability and have left us with the Alice-in-Wonderland tangle that my noble friend Lord Hollick described. For all those reasons we regret this muddled and half-cocked measure and hope, with little belief, for some reassurance from the Minister on the many doubts and questions raised.
8.40 p.m.
Baroness Trumpington: My Lords, in my opening remarks I endeavoured to give the reasons—perhaps the noble Lord, Lord Donoughue, would like to listen to me, or perhaps not—why my noble friend the Secretary of State took the decisions embodied in the order. Let me now take up the various points made by noble Lords.
I would immediately say to the noble Baroness, Lady Birk, and the noble Lord, Lord Donoughue, that, when the Secretary of State for National Heritage made a public announcement about proposed changes to the ownership rules before informing the House, no disrespect to Parliament was intended. The announcement was always going to be very market sensitive and it was important to minimise the effects on the stock market. The Secretary of State wrote personally to several interested Members in both Houses as the announcement was made to keep them fully informed; and Answers were given to Parliamentary Questions in this House and in another place later in the day.
I do not intend to spend a lot of time on the subject of regional broadcasting. I should like to commend the remarks in my opening speech to the noble Baroness, Lady Birk, and the noble Lord, Lord Donoughue. I remind them that at the very end I said:
"The conditions of the licence about regional programming and production remain, even if there are changes in ownership".
The noble Baroness, Lady Birk, the noble Lord, Lord Armstrong, and my noble friend Lord Colwyn mentioned the moratorium. I was grateful for the remarks of the noble Viscount, Lord Chandos. The noble Lord, Lord Donoughue, also returned to the subject. I have to say yet again that the moratorium was only ever intended to provide a short period of stability at the start of the licence period, not long-term protection against the normal disciplines of the market. Extending the moratorium would provide little, if any, real or long-term protection to the ITV companies in the future.
I turn now to the Independent Television Commission and the issue of consultation. I am not a
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cricketer but I believe that the noble Lords, Lord Thomson of Monifieth and Lord Donoughue, bowled many a maiden over. However, for all that, I must repeat that, as my right honourable friend the Secretary of State made clear in another place last week, he discussed the issues with the chairman of the ITC on a number of occasions. He understood the commission's view, which it held during the passage of the Broadcasting Bill, that the moratorium should have lasted longer. However, the Government were not obliged to accept the commission's view on that any more than they did in 1990 when they decided that the moratorium should last for only one year after the new ITV arrangements came into force. The Government's decision was market sensitive and the Government's conclusions could not be disclosed in advance. The chairman of the commission has made it clear that he believes that on matters of regional programming it is the licence conditions, not the ownership, that matter.
The noble Baroness, Lady Birk, stated that mergers would result in job losses. That is a matter for the companies. Some jobs may be lost but others may be created, especially if British broadcasting is allowed to develop its export potential.
The noble Lord, Lord Hollick, referred to the role of the Office of Fair Trading. The position of the Director General of Fair Trading is not affected by the order. The Director General of Fair Trading operates independently of the ITC. The Broadcasting Act states clearly that the responsibilities of the commission do not affect the discharge by the Director General of Fair Trading or by the President of the Board of Trade of their functions in connection with competition.
The noble Lord, Lord Hollick, also asked what the order would do for programme production. The production base is safeguarded by the financial health of industry. That could be helped by greater consolidation than was allowed under the 1991 order. The Government decided on an evolutionary approach to ownership, not sudden deregulation. The question of how to define the market share was considered at the time of the broadcasting legislation. The share of audiences and advertising revenue fluctuates. Ownership seemed a clearer basis for determining questions of ownership.
The noble Lord, Lord Hollick, the noble Viscount, Lord Chandos, and the noble Lord, Lord Donoughue, also referred to cross-media ownership. I believe that I stated in answer to a question last week—I may not have done so—that the Government were carrying out a review which would include all forms of broadcasting, including radio, cable and satellite, as well as the press, and which may go wider.
The noble Lord, Lord Thomson of Monifieth, spoke of the size of bids for ITV licences. ITC did not award a licence if it thought that a company could not maintain the quality of the service throughout the period of the licence. The BBC charter does not expire until the end of 1996. We cannot hold up all changes for broadcasting until then.
The regulation of advertising sales arrangements is a matter for the Independent Television Commission. The commission's present policy is that it would not expect

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any joint arrangements for selling advertising time to account for more than 25 per cent. of ITV's regional revenue in 1993. When it announced its policies in 1991, the commission said that it would review the rules in 1994. I understand that that is still the commission's intention. In accordance with the commission's usual practice, I would expect it to consult widely and seek views from interested organisations. Meanwhile, the 25 per cent. limit remains in force.
The noble Lord, Lord Donoughue, stated that while circumstances are fluid it is difficult to get the ducks in a row—and other bird-like remarks. The 25 per cent. limit on the advertising revenue is a matter for the ITC, which will review the policy next year. Therefore, exactly what I have stated before remains true.
The noble Lord, Lord Donoughue, also referred to ITN. Under the provisions of the Broadcasting Act the Channel 3 licences must together hold less than a 50 per cent. stake in ITN and no one participant, person or body connected to that participant can have more than a 20 per cent. interest in ITN. Those restrictions are planned to come into force at the end of 1994, a date chosen by the ITC. We have no plans to amend the legislation on the ownership of ITN. However, the ITN ownership restrictions would be included in our wider review of ownership issues.
The noble Lords, Lord Thomson and Lord Hollick, spoke about the dominance of a few ITV companies. Fears have been expressed that the ITV system will be dominated by a few companies as a result of some of the proposed mergers or takeovers, such as that between Carlton and Central or Granada's bid for London Weekend Television. Under the proposals in the order there would have to be at least eight companies, since no one can hold more than two licences. The companies that have held the franchises in London, the Midlands and the North West have been the leaders of ITV for many years.
We want to make sure that there is a strong base of programme production in this country so that there is plenty of UK material to be distributed by the new technologies. That should create new jobs and the UK could become a centre for broadcasting, production and distribution. That will not be achieved if we live in the past and assume that we can hold back the tide of change and technology and prevent sensible partnerships which aim to make the most of the opportunities that the changes in technology are creating.
It takes two sides to tango and we have certainly seen two sides this evening. I am most grateful to the noble Lord, Lord Armstrong of Ilminster, and my noble friend Lord Colwyn for their remarks. It has been interesting to hear all noble Lords' remarks. If I have omitted answering any of your Lordships' questions, I shall of course write to any noble Lord who wishes me to. But in the meantime I commend the Motion to your Lordships.
On Question, Motion agreed to.

British Nationality (Hong Kong) Bill [H.L.]
8.51 p.m.
Lord Bonham-Carter: My Lords, I beg to move that this Bill be now read a second time.
Your Lordships will remember that on 15th July this summer, by a majority of 60 to 48, your Lordships called upon Her Majesty's Government to give full British citizenship to members of the non-Chinese ethnic minorities who will be without a right of abode elsewhere after 1st July 1997.
Since the Government have taken no steps to implement the will of the House, it has been necessary to introduce a private Member's Bill to give legislative effect to that resolution.
I need not remind your Lordships of the roll-call of supporters of that resolution in July this year, but it included two former governors of Hong Kong and the noble Baroness, Lady Dunn, who flew here from Hong Kong especially to support the resolution. And support it most eloquently and effectively she did. She cannot be here today, to her regret, but she has written to me to express her support for the Bill.
Everyone who spoke on that occasion, with the exception of the noble Earl, Lord Ferrers, spoke in favour of the resolution. I would not be surprised if the same were not the case tonight. I am delighted to see the noble Earl in a sufficient state, despite his walking wounded condition, to deal with the subject. It is gallant of him.
The Bill will give British citizenship to that small and unique group of people who, after 1997, will have to rely on what is known as BN(O), British National (Overseas) status. That is little more than a travel document. It provides no right of abode outside Hong Kong and those people will, as the noble Baroness, Lady Dunn, said, have no right to Chinese nationality. In the opinion of many eminent authorities—that is to say Justice, the International Commission of Jurists, the Commonwealth Human Rights Advisory Commission—that group of people will be rendered effectively stateless.
This is a unique case. What is taking place in Hong Kong and will take place in the next year or so until 1997 is absolutely without precedent. Hong Kong—unlike any other British colony—is not being granted independence. It and its sovereignty are being transferred to another state where British nationals will not have the right to become citizens. That is the heart of the matter: people who are British nationals are being transferred to the sovereignty of another state and under the nationality rules of that state they will not have the right to become citizens.
Finally, and perhaps most irrationally, Her Majesty's Government have undertaken, if the worst comes to the worst, to take those people in. There is no evidence, unless the worst comes to the worst, that they have any desire whatever to come to live in this country, though many of them would be a great asset to us if they did. But, that being the case, why not do one's duty and get

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the credit for so doing, instead of being forced, should the worst come to the worst, to accept the worst of every world? That is the position which Her Majesty's Government have adopted. They will not be, or have not to date been, prepared to give those people British citizenship. They have said that if they come under pressure—and that phrase was repeated by the noble Earl in the debate in July—those people will be taken into this country.
Perhaps I may now explain the Bill in somewhat greater detail. It is drafted to provide British citizenship for the non-Chinese ethnic minority groups after 1st July 1997. That small group of people are at present British Dependent Territories citizens, BDTCs. I am afraid that there are many initials to which we shall have to become accustomed in the course of this evening. After July 1997 they will become British Nationals (Overseas), BN(O)s.
The Bill is necessary because of the nature of Chinese nationality law, which is quite frankly and overtly racist. The BN(O) status provides nothing more than a British travel document, it provides neither the right of abode outside Hong Kong nor the right of consular protection within China, which is the one place where one would expect them to want to have consular protection. It is to that group of people that the Bill offers British citizenship. The only consequential provision is taken care of in Clause 2(2), to which I shall turn later.
Now perhaps I may say a word about the clauses. Clause 1 confines the scope of the Bill to those to whom have already referred, that is BDTCs, British Dependent Territories citizens, who are that by virtue only of a connection with Hong Kong. Subsections (1) (b) and 1(3) of Clause 1 make clear that the Bill applies to Hong Kong BDTCs, whether or not they have become BN(O)s. That is because quite a lot of people who are BDTCs do not know that they have become BN(O)s, or rather they do not know that they are still BDTCs. The application form, which is like that for a passport, is such that when the passport comes back it simply tells them that they are BN(O)s. There is no reference in the document to their being BDTCs so there may be a certain amount of confusion. To add to that, if I may put it more obscurely, as all BN(O)s are BDTCs because of the connection with Hong Kong but not vice versa—I am sure that noble Lords are quite clear as to exactly what I am saying—the Bill is phrased in terms of BDTCs. I am sure that that makes everything absolutely crystal clear.
Clause 1(4) and the schedule describe who is a BDTC by virtue of his connection only with Hong Kong. It is borrowed almost word for word—almost verbatim—from Article 2 of the 1986 order. I understand that the noble Earl, Lord Ferrers, will not find that in any way contentious. I shall be shocked if he does.
Lord McIntosh of Haringey: My Lords, perhaps the noble Lord will forgive me for interrupting him. I fear that he is misinterpreting his Bill. He said, "by virtue of his connection only with Hong Kong". He means:
"by virtue only of a connection with Hong Kong".
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It makes a difference.
Lord Bonham-Carter: I meant "by virtue only of a connection with Hong Kong". I am most grateful to the noble Lord for correcting me.
Clause 2 must be read in connection with Section 14 of the British Nationality Act. I have it by me if any noble Lord wants me to read it. It gives an exhaustive list of British citizens who are citizens—here we have another nice distinction—"by descent" only as opposed to those who have British citizenship "otherwise than by descent". I point out to those who are not learned in these matters that, oddly enough, it is better to have British citizenship otherwise than by descent than it is to have British citizenship by descent. The importance of that is that, if you have British citizenship by descent, you cannot generally transmit that citizenship to a child born overseas.
Clause 2(1) states that those who have been BDTCs by descent will become British citizens by descent. Clause 2(2), which I find the most obscure clause in the Bill, must be read in connection with the British Nationality (Hong Kong) Act 1990 and keeps those who have become British citizens under the 1990 selection scheme in step with those who have become so under Clause 2(1). If any noble Lord wishes me to explain that point, I can do so; but I do not want to try your Lordships' patience.
Clause 3 brings the Bill into line with the 1981 Act. Clause 4 provides for a two-month delay before commencement for administrative reasons; i.e., for the preparation of passport applications and passports.
That is the end of my explanation of the Bill, except to say that the Bill is drafted in support of the measure that we discussed in July, which, as I said, had the support of every single person who spoke to it with the exception of the noble Earl. The purpose for which it is drafted has the support of two former governors of Hong Kong and the present governor of Hong Kong, as well as the unanimous support of LEGCO. It also has the support of the noble Lord, Lord Glenarthur, who was formerly Minister of State responsible for Hong Kong, of Justice, of the International Court of Jurists and the Commonwealth Human Rights Commission. There is only one group of people who appear to oppose it and that is the Home Office. I hope that the Home Office will think better of it. I beg to move.
Moved, That the Bill be now read a second time.—(Lord Bonham-Carter.)
9.3 p.m.
Lord Geddes: My Lords, I am delighted to be able to support the noble Lord, Lord Bonham-Carter, today and the more so because I was unable to be in my place earlier this year on 15th July when this subject was debated in your Lordships' House. Perhaps I may also say what a pleasure it is to see my noble friend Lord Ferrers active in his place on the Front Bench. We much look forward to hearing from him at the Dispatch Box and—dare I say it?—on his foot.
The arguments in favour of the Bill have just been well rehearsed by the noble Lord, Lord Bonham-Carter. As he said, they were also eloquently expressed on that

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occasion in July by both the noble Lord himself and every one of the other 14 noble Lords who spoke except, sadly, my noble friend Lord Ferrers for the Government. It will not be good enough if my noble friend states again tonight that the Government see the ethnic minorities in the same way as all other British nationals in Hong Kong. They are not the same.
As the noble Lord, Lord Bonham-Carter, said, the BN(O) passport, which is the only one to which that ethnic minorities group will be entitled, is little more than a travel document and will, anyway, disappear after three generations. It does not grant the right of abode anywhere except in Hong Kong and it grants no nationality whatsoever.
As for the argument that members of the Hong Kong ethnic community can apply for Chinese nationality, I remind your Lordships, as did the noble Lord, Lord Bonham-Carter, that Chinese nationality laws are based on race and that (so I am advised) there has been only one instance since 1949—that is, in 44 years—when Chinese nationality has been given to a non-ethnic Chinese. It does not bode terribly well for the prospects for the ethnic minorities in Hong Kong achieving Chinese nationality. Therefore, I most sincerely hope that the Government will acknowledge the will of the House, as expressed on 15th July and will support the Bill tonight.
Noble Lords will not be surprised if additionally I press the case for another, even smaller group of people, to whom I have referred on various occasions in recent months; namely, the locally employed personnel (known as the LEPs). There are approximately 300 Hong Kong LEPs in the British Navy and 1,000 in the Army. They are ethnic Chinese personnel who have loyally and directly served this country —that is to say, the British Crown, not the Hong Kong Government—for many years. They are now becoming only too well aware that their close association with the UK military will hardly endear them to the Chinese and they are deeply worried about their future. Their anxiety can only have been increased in recent weeks as they, along with the rest of the world, watched the negotiations with China break down. I made my views plain on that subject on numerous previous occasions, most recently last week. But I feel it is nonetheless relevant to reiterate that I am most concerned at Her Majesty's Government's stance; not least because I believe that it places the future of the people of Hong Kong, and in particular that of the LEPs, in such jeopardy.
Whenever the subject has been aired in the past the reply from the Government has always been that the LEPs, like other members of the discipline services, were entitled to apply for places under the British nationality Hong Kong selection scheme. That is true. But evidence of their extreme concern, if it were needed, is contained in the fact that in the case of the LEPs demand for places greatly exceeded supply while in other sectors demand was far more in line with supply and the consequent disappointment far less.
The actual numbers are so few and our obligations towards them so great that it seems to me to be
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astonishing that they should not be treated as a special case, similar to those who are the direct subject of the Bill. Were it not for my reluctance to jeopardise in any way the success of the Bill I should have been minded to table an amendment to it providing for identical treatment for the Hong Kong military LEPs. I have so far refrained from so doing for the reasons I have just given. However, that does not mean that I shall in any way desist from pressing their case; nor does it mean that the Government can fulfil their responsibilities unless they acknowledge that the Hong Kong military LEPs must also be granted full British passports. Indeed, should my noble friend the Minister fail to give me real encouragement in that context when he speaks, I may still table a suitable amendment to include such Hong Kong military LEPs.
Meanwhile, I strongly support the Bill. When—and I sincerely hope that it is "when", rather than "if"—the Bill, amended or not, becomes law, it will demonstrate to Hong Kong and to the world that this country has not discarded its tradition for recognition of honour and moral obligation, as was so succinctly expressed by the noble Baroness, Lady Seear, during our debate on 15th July.
9.10 p.m.
Lord Wilson of Tillyorn: My Lords, the time is late and it would probably be a kindness to be brief. But that is not in any way to suggest that the subject is not an important one. As the noble Lord, Lord Bonham-Carter, said, when we last discussed it in July there was widespread support for doing something for this unique group of people. We owe him a debt of gratitude for persisting in pursuit of that solution.
The wording "non-Chinese ethnic minorities" has the drawback of rather dehumanising the group. It is perhaps not as bad as BOCs, BN(O)s and BDTCs; but it suggests a category rather than a group of people. They are real people with real problems, to whom we owe real obligations. Those real people are, above all, from the Indian sub-continent—between 5,000 to 7,000 of them, the number decreasing all the time. They have real problems, uniquely so. There are arrangements for them after 1997. They receive a specific form of travel document. If otherwise stateless, their children receive another form of travel document and so do their grandchildren. However, at the end of that time, there is nothing—unless they obtain Chinese citizenship. As the noble Lord, Lord Geddes, pointed out, that is no easy thing. It is rather like generation after generation climbing up a ladder, the rungs of which become weaker and weaker until eventually the ladder gives out. Perhaps at this time of year one should say it is a beanstalk and the beanstalk eventually gives out!
We have a real obligation to those people. They came to Hong Kong, many of them generations ago, because it was British territory. They served Hong Kong well, many of them in the government and in the disciplined services. Others contributed enormously to the prosperity of Hong Kong. Therefore there are real obligations.
At one time there were plausible reasons for not tackling the problem. It was argued, correctly I believe,

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that it would be divisive to do so. But, since the British nationality package, that is no longer so. We had clear evidence of that earlier this year when, in an excellent speech, my noble friend Lady Dunn said that doing something for those people now had the unanimous support of the Legislative Council. So far as I know, there has been no opposition in Hong Kong to such a move.
All nationality questions are enormously complicated. The noble Lord, Lord Bonham-Carter, made that very clear. Because of that, I should like to see the Government take on the Bill themselves. I should like to see officials of the Home Office using all their ingenuity and skill to draft a measure which would hit precisely the problem we are all trying to aim at and nothing else rather than using their skill to block any proposals.
Apart from my noble friend Lady Dunn, another very eminent person who has great experience of Hong Kong is unable to be with us today. I refer to my noble friend Lord MacLehose of Beoch. He has asked me to say how sorry he is not to be present and that he supports what I have said about the need to do something for this group and my hope that the Government themselves will act.
I believe that the ball is now being kicked in the right direction. I should like to see the Government pick it up and run with it themselves. But above all I should like to see it get beyond the goal line.
9.15 p.m.
Lord Beaumont of Whitley: My Lords, about 25 years ago when, with the exception of the noble Earl, Lord Ferrers, none of your Lordships present today was in your Lordships' House, we had a debate which went even later than the debate today. The House was considering a Bill. We had the Second Reading, the Committee stage, the Report stage and the Third Reading all between half-past two in the afternoon and eight o'clock in the morning, when we staggered out of the Chamber. On that occasion the Bill was about some Asians who had been domiciled in British colonies for some time—for generations—and had been promised that if they came under pressure from the successor governments in the colonies they would be given citizenship and right of entry to this country.
The pressure arose chiefly in Uganda under a dictatorship but in Kenya as well. The government of the time ratted on the agreement and, supported by the official opposition—the parties were then on opposite sides of the House to where they are now—passed a Bill which denied citizenship to those people. It was a very shameful episode in the history of this country's decolonisation. It was a complete going back on a pledge. Mr. Iain Macleod acknowledged that he had made the pledge on behalf of the Government of which he was a member and that we should stand by it. There was very little doubt that the pledge had been made.
With that memory of my blooding in your Lordships' House—I remember in Committee trying to move amendment after amendment at one o'clock, two o'clock and three o'clock in the morning, with the support of Lord Brockway and my noble friend Lord Foot—it is not surprising that I do not believe that we should take the Government's word for what they will
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do under pressure. They did not then and I see no reason why in the future they would do so. Let me put it like this. We ought to be safe rather than that those people should be sorry. It is very important that we not only get an undertaking but that we actually put the Bill on the statute book so that those people have rights on which they can rely.
9.20 p.m.
Lord Willoughby de Broke: My Lords, I strongly support the Bill of the noble Lord, Lord Bonham-Carter. This matter has been debated before as well as being the subject of a Starred Question earlier this year. I find it disappointing that Her Majesty's Government have not so far shown any sign of being willing to appreciate the case which has been so clearly made for the Government to look again at their stance on this matter.
The arguments for a change of heart have been strongly put outside this House by the Governor of Hong Kong; the Hong Kong Legislative. Council and the All-Party Foreign Affairs Committee. The case was put to your Lordships in the debate on 15th July by two distinguished former governors, the noble Lords, Lord MacLehose of Beoch and Lord Wilson of Tillyorn; by the senior member of the Executive Council of Hong Kong, and also by my noble friend Lord Glenarthur, with all his experience as past Minister of State with responsibility for Hong Kong.
Do Her Majesty's Government not think that this collective wisdom and judgment of so many people, with such a depth of knowledge of Hong Kong, suggest that a more generous attitude should be taken towards the concerns of the non-Chinese and the non-Chinese ethnic minorities of Hong Kong?
The Government have maintained that the BN(O) passport will give its holders a proper nationality. Exactly the opposite view is taken in Fransman's British Nationality Law (1989 edition). It states on page 436:
"a person who is a B.N.O., like one who is a B.O.C., possesses not so much a nationality as a qualification for U.K. travel facilities".
So it comes down to a matter of opinion as to whether a BN(O) passport holder has a recognised nationality or not. This, of course, need not worry the Hong Kong Chinese holders of BN(O) passports because they will be able to take up full Chinese nationality and would be possessors of a special autonomous region passport after 1997. That is not the case for the non-Chinese minorities.
But even assuming that this minority, who for the most part are of Indian or Pakistani origin, wish to become Chinese, it is unlikely that they will be given the chance because, as we have heard, the Chinese nationality law is based largely on ethnicity or race. They will be left with a travel document and not a valid passport.
As regards the right of abode, certainly they have that right in Hong Kong after 1997 as long as one accepts that they will be at the mercy of any amendment to the Basic Law that may be carried out. That is a point which will not be lost on them, as it was amendments to our

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Immigration Act 1962 which stripped them of their right to assume full British citizenship in the first place. And, of course, right of abode does not confer nationality.
Concerning statelessness, the Minister, my noble friend Lord Ferrers, has admitted that even such attenuated nationality as that held by the non-Chinese BN(O) passport holders cannot be passed beyond the second generation and that subsequent generations will indeed be faced with the possibility of statelessness. Do Her Majesty's Government believe that this properly discharges their duty as the sovereign power?
The Government have justified their refusal to respond to suggestions made in this House and elsewhere by falling back on the assurances given on several occasions that, were this minority to,
"come under pressure to leave Hong Kong",
as it is delicately phrased, the Government of the day,
"would be expected to consider with sympathy their admission to the United Kingdom".
In his speech to this House on 15th July, my noble friend Lord Glenarthur referred noble Lords to his words of May 1986, when he stated,
"we should consider it an obligation upon any future government to treat with considerable and particular sympathy the case for admission to the UK".—[Official Report, 16/5/86; col. 1437.]
But what do these phrases and words mean, above all to the 6,000 or 7,000 people whom we are talking about? Who is to decide what level of pressure triggers their admission to this country?
What are these expectations and obligations? I rather doubt whether they would be binding on successor governments; they would merely be something for them to consider. As the noble Baroness, Lady Dunn, pointed out in her speech in this House. on July 15th, it has been the case in the past that Ministerial assurances on Hong Kong have been watered down.
Those undertakings are no doubt well-intentioned but they are imprecise. As my noble friend Lord Glenarthur pointed out, they may not necessarily have stood the test of time. Perhaps my noble friend the Minister will clarify whether those obligation are a guarantee. If not, will he make that perfectly clear? If those words are a guarantee that non-Chinese minorities will be given British citizenship, I believe that we have nothing to lose and everything to gain by giving them that nationality now.
9.25 p.m.
Lord St. John of Bletso: My Lords, I am delighted that the noble Lord, Lord Bonham-Carter, has introduced this Bill following the resolution that was passed by your Lordships when the matter was extensively debated on 15th July. It is difficult to raise new arguments from those that were so convincingly explained in that debate, so I should like to reiterate a few of the arguments that I raised on that occasion.
We are all aware of the enormous contribution both socially and economically that the non-Chinese ethnic minorities have made to the development of Hong Kong and of the fact that many have lived in Hong Kong for generations and have few relations elsewhere in the world. As my noble friend Lord Wilson of Tillyorn has already mentioned, the numbers are between 5,000 and
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7,000. I find it difficult to accept the Minister's statement in his closing speech on 15th July when he said:
"It would be difficult to make a special provision to give the ethnic minorities British citizenship".—[Official Report, 15/7/93; col. 414.]
A central objective of Her Majesty's Government in their negotiations with China on Hong Kong has been the desire to protect the rights, freedoms and prosperity of all of the peoples they will hand over to Chinese rule in July 1997. Surely one of those basic rights must be the right of nationality. Despite the guarantees in the Joint Declaration and Article 24(6) of the Basic Law guaranteeing the ethnic minorities the right of abode in Hong Kong, there is a fear among many non-Chinese ethnic minorities that they will at best be granted second-class citizenship by the Chinese Government and could even be excluded from holding executive positions in business and the civil service. I speak with a little experience in this matter because I studied Chinese law at London University and spent a year living in mainland China in 1982–83.
As much as the Government argue that Article 6 of the Hong Kong (British Nationality) Order of 1986 satisfies those rendered stateless by granting them British National (Overseas) status, many notable jurists claim that that will not be the case. In our debate on 15th July, the noble Lord, Lord Bonham-Carter, said that the view of Justice is that non-Chinese ethnic minorities are rendered effectively stateless.
Almost all noble Lords who have spoken this evening have said that the status of being a BN(O) does not give a person the right of abode outside Hong Kong and does not give British consular protection in mainland China. Furthermore, it is regarded by most as purely a travel document.
Although the Minister argued on 15th July that there had been a 60 per cent. success rate for those applying for British citizenship under the new selection scheme, is it not the case that points are allocated on the criteria of age, experience, training, education and special circumstances? Surely that points system could favour the more affluent and successful applicants over those who are less privileged.
In reply to the Starred Question which was tabled by the noble Lord, Lord Bonham-Carter, on 20th October, the Minister said that, while there are strong arguments for granting British citizenship to non-Chinese ethnic minorities, there are equally strong arguments against. The point has already been made that there has been unanimous support from LEGCO, from the Foreign Affairs Select Committee of the other place, from Justice and from the International Commission of Jurists, so surely the not-contents are up against a formidable opposition which is in favour of the Government showing some flexibility in this case. It is with flexibility in mind that I hope they will consider the passage of the Bill.
As a Member of the Cross-Benches, I tend to be an observer of party politics in your Lordships' House. I am not surprised that such a humane approach has been made from the Liberal Democrat Benches. I should have been surprised and delighted if the Bill had been

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introduced from the Conservative Benches. Surely with the support of so many Conservative Members during the debate of 15th July., and following the excellent speeches of the noble Lords, Lord Geddes and Lord Willoughby de Broke, the Government should take the idea of a flexible approach more seriously. It is for those reasons that I support the Bill.
9.31 p.m.
Lord Marlesford: My Lords, I suppose that there are a number of us on this side of the House, and the other side as well, who believe that a strong and rigid immigration policy is desirable for this country. They believe it for the obvious reasons that immigration from other countries, especially countries where people are badly off, seldom helps those countries. They believe it also, because it does not always help us. It sometimes damages race relations in this country.
I start from the proposition that a strong immigration policy is desirable. It was first introduced some 30 years ago, I think, with much opposition from the then Opposition parties, but has subsequently in general become accepted by all parties in this country. Having said that, I believe that there are exceptions. So what are the circumstances in which there should be exceptions?
First, a need has to be shown. The debate in this House on 15th July, and elsewhere, has proved clearly that there is a need for these people to be given the right of sanctuary. We also have to be satisfied that we in this country have an obligation to these people. If we were in doubt this evening, we should have been persuaded by the words of the noble Lord, Lord Wilson of Tillyorn, who described the particular obligations which exist in respect of this group of people. Were we to abandon them when we leave Hong Kong, that would, without doubt, be an act of dishonour which I should have thought we would all be reluctant to see as one of the last acts of decolonisation for this country. I should have thought that we would do much to avoid such an action.
The third criterion for making an exception is that it should not create a difficult-to-fulfil precedent of obligation. There has been no suggestion that to do what is asked for in the Bill would create such a precedent.
Sadly, I feel that we all have a pretty shrewd idea as to what my noble friend the Minister is likely to say at the end of the debate. He is likely to say that the Home Secretary has considered carefully what was said in the debate on 15th July; that he recognises the strength of feeling in the House and elsewhere; but that he has concluded that no new considerations have been advanced which would lead him to take a view different from the view which was taken when the whole matter was considered in 1990. Indeed, he may say that he sees no grounds for changing the Government's long-standing policy on this issue and therefore will not support the introduction of legislation.
In a way the problem is illustrated by the fact that he will be referring to his right honourable friend the Home Secretary. It was interesting that when the batting order for the debate was published we were offered as the chief Opposition spokesman the noble Baroness, Lady Blackstone. That is understandable because it is seen by
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many of us to be an issue relating to Hong Kong and to the relationship between Hong Kong and Britain. But of course it is a Home Office issue and that is why the noble Lord, Lord McIntosh of Haringey, will reply to the debate.
I believe that the issue should be decided by Ministers collectively. My right honourable friend the Home Secretary has many admirable qualities. I am not sure that flexibility is one of them. He is a personal friend of mine and I admire him for much of what he stands for. But he is by instinct and by trade an advocate; to him winning his case is a great deal, if not everything. He will take a bad brief and make the best case for it. The worse the case the heavier the blinkers with which he enters the court room. We saw that and the disastrous results that followed in respect of the poll tax, when he led for the Government in arguing the case for it. I believe that flexibility in the design of the poll tax could well have enabled it to work. Indeed, it might have enabled the Prime Minister of the day to survive. I do not ask for a unanimous view about whether that would have been the outcome; I merely give it as the view of one who in those days was not part of the political frame but was a mere observer of politics.
To a lesser degree we saw it when the present Home Secretary, who was responsible for taking the legislation for water privatisation through the House of Commons, was extremely reluctant to concede what was politically essential; that was the access to land owned by water undertakings which were to be privatised. Although the legislation came to this House before I became a Member, I believe that it was in this House that the Government were forced to change their minds on that issue too.
Of all the departments of state, the Home Office has the longest track record of putting forward bad cases for Ministers to argue. The Home Office, as I saw when I spent three-and-a-half years in Whitehall some 20 years ago, is a reactionary, indeed inward-looking—one might almost say constipated—department. There are few Home Secretaries who master it; for far more Ministers it is a political graveyard.
The issue which we are discussing tonight will not go away, nor should it. I support this Government;. I want this Government to succeed. That is why I believe that this issue should once again be reconsidered by Ministers collectively but not with the Home Secretary in the chair.
9.40 p.m.
Lord McIntosh of Haringey: My Lords, I am sorry to disappoint the noble Lord, Lord Marlesford, by not being my noble friend Lady Blackstone. Although my defects are so much greater than hers, I assure the noble Lord that my noble friend's views on this matter are the same as mine. To drag the noble Lord, Lord Marlesford, into such an attack not just on the Government in general but on particular Ministers and Members of the Cabinet requires quite some skill by the Government as regards the way in which they have misunderstood the political and moral climate of this country.
The case for the Bill has been so convincingly made out that very little can be added to that. The noble Lord,

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Lord Bonham-Carter, has rightly capitalised on the victory which he masterminded in July. He has given this House an opportunity to show the Government that a vote of 60 to 48 in which 13 Conservative Peers, most of whom are not normally rebels, voted against the Government needs to be confirmed. It needs the House to pass legislation because the Government and the Minister in October of this year conspicuously refused to recognise the strong and unanimous feeling expressed by the House on 15th July.
The facts are entirely clear. It is obviously the case—it has never been denied—that the non-ethnic Chinese living in Hong Kong were brought to Hong Kong by a deliberate decision and invitation of British governments of Hong Kong over a period of many years. Those non-ethnic Chinese have performed valuable service to the Government and the people of Hong Kong. They left their own communities many years ago and often have extremely limited connections with those communities.
When the change takes place in 1997, a range of alternatives appear to be open to those people: first, it is suggested that they should have rights along with the other 50,000 citizens of Hong Kong who will benefit from the 1990 and 1993 orders. In July it was suggested that a number of them have taken advantage of those facilities. But of course that can hardly apply to the majority of non-ethnic Chinese, any more than it can apply to the majority of any of the other citizens of Hong Kong. The 1993 orders, which were approved by your Lordships' House in July, make it more difficult, rather than easier, to apply by imposing a series of deadlines on applications in order, the Government say, to avoid there being a logjam at the end of the period in 1997.
Let us assume—we must do so—that most of those people will not fall into the 55,000 category. What happens then? We are told that they can remain protected by the Sino-British Declaration under the Basic Law. They cannot become Chinese citizens, because it must be said that Chinese citizenship law is racist. Nevertheless we were told in 1986 by the noble Lord, Lord Glenarthur, and again by the Minister in July, that, if there are difficulties, their applications to come to this country would be dealt with with considerable and particular sympathy.
But none of those is an adequate answer for a community of hardworking people who have served Hong Kong well. None of those answers solves the problem which was made clear by the noble Lord, Lord Bonham-Carter, when he introduced the Bill; namely, that those people will, effectively, become stateless and that their grandchildren will be totally stateless.
There are additional arguments. The noble Lord, Lord Geddes, who was not able to be with us in July, made a case for locally enlisted personnel of the discipline services very similar to that made by my noble friend Lord Shackleton and I in July. I agree with the noble Lord. I do not believe that it is worth risking the Bill by moving an amendment to it, but the case which the noble Lord made is nevertheless extremely sound.
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As has been said, it is very difficult to find new arguments because the Government have not answered the arguments which have been advanced. Those points were made in July and achieved the agreement of your Lordships. This Bill, moved so ably by the noble Lord, Lord Bonham-Carter, should also achieve the agreement of your Lordships.
9.45 p.m.
The Minister of State, Home Office (Earl Ferrers): My Lords, Hong Kong always strikes a note of concord and sympathy with people back here in this country, and quite properly so. Of course, it has done so this evening. The Bill introduced by the noble Lord, Lord Bonham-Carter, deals with a subject about which not only the noble Lord but also other noble Lords feel strongly. We saw that in July when we had a debate on Hong Kong Orders in Council. The noble Lords, Lord St. John of Bletso and Lord McIntosh of Haringey said that it is very difficult to find new arguments. I am bound to say that I rather agree with them.
The arguments previously put forward were deployed both forcefully, strongly and quite correctly at that time. The Government also had to put forward their view. It was an important debate and one which ended in a vote whereby the majority of your Lordships took the view that the ethnic minorities of Hong Kong who had no other form of citizenship ought to be granted British citizenship. The Government took very seriously the matters which your Lordships raised and took note of all that was said in the debate. My right honourable friend the Home Secretary reconsidered the whole position. However, despite your Lordships' views, the Government did not feel that it would be appropriate to bring forward legislation to Parliament which would change the existing arrangements.
My noble friend Lord Marlesford said that he had a pretty shrewd idea of what I would say tonight. I congratulate him on his prescience. I do not think that that is very difficult. I also congratulate him on his versatility in being able to mention such matters as the poll tax and the privatisation of water in a Second Reading debate on a Bill about Hong Kong.
I am bound to tell your Lordships—and I shall disappoint not only my noble friend Lord Marlesford but also my noble friend Lord Geddes—that the Government's view remains the same as it was when we last debated the matter. I should also tell my noble friend Lord Marlesford that I have always admired his knowledge of Whitehall. However, if he thinks that the Home Office (of which I have had the privilege of being an ornament for some six years now) is reactionary, inward-looking—and I think he also used the very unparliamentary word "constipated"—I am bound to tell him that, whatever he knows about Whitehall, that shows he does not know very much about the Home Office. It has always impressed me as being avant-garde, forward looking, exhilarating and an organisation which, in many respects, has to have a little bit of a rein put on it from time to time as regards its enthusiasm to move very abruptly in certain directions.
I do not blame the noble Lord, Lord Bonham-Carter, for taking the cudgel into his own hands and for

1217
introducing such a Bill to try to effect that which the Government do not feel disposed to effect. The noble Lord is quite good at riding hobby-horses until he and the horse—and everyone else—gets totally exhausted by the process. He rode his hobby-horse tonight. The noble Lord will not be surprised to realise that, despite all his blandishments and persuasive oratory—and, indeed, that of other noble Lords —the Government are unable to support the Bill.
The noble Lord, Lord Wilson of Tillyorn, whose knowledge of Hong Kong is, of course, remarkable and well respected, said that he wished the Government would pick up the Bill and run with it. I can understand him taking that view; indeed, if I had been in his position I believe that I would also have taken that view. However, I am bound to tell the noble Lord that I must disappoint him because we cannot do so.
The Bill before us is a Private Member's Bill and, despite the Government's views, we do not propose to vote against it. That would be quite inappropriate and against the tradition of your Lordships' House. However, I am hound to tell your Lordships what is the Government's view. The Bill is really concerned with statelessness. The noble Lord, Lord Bonham-Carter, explained that the Bill is concerned primarily with those Hong Kong British dependent territories citizens or British Nationals (Overseas) who have no other nationality and who, therefore, without one of those forms of British nationality, would be stateless. Most of the ethnic minority population in Hong Kong besides having British nationality have citizenship elsewhere—usually of India or of Pakistan. Those who are the subject of the Bill are those who have no second citizenship.
It has been argued strongly—the noble Lord, Lord St. John of Bletso, argued this—both today and in July that because of their unique position the 7,000 members of the ethnic minorities with whom the Bill is concerned should be given the security of full British citizenship. It has also been argued in the past that special arrangements should be made on the basis that the ethnic minorities concerned would otherwise be stateless after 1997. As I have explained on previous occasions, that is not the case. The Bill of the noble Lord, Lord Bonham-Carter, acknowledges that the ethnic minorities do and will continue to have a national status and it is only if they did not have a national status that they would be stateless.
Specific provision was made in Article 6 of the Hong Kong (British Nationality) Order 1986 to deal with the possibility of statelessness. Under that order people who only had British nationality before 1997—that is, those who had British dependent territories citizenship or who were British nationals (overseas)—would retain British nationality after 1997. They would not therefore be stateless. The ethnic minorities will also continue to have a right of abode in Hong Kong. The Joint Declaration and Article 24(6) of the Basic Law guarantee that the ethnic minorities will have the right of abode in Hong Kong if they do not have a right of abode elsewhere. The Beijing authorities have said that ethnic
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minorities are welcome to remain in Hong Kong and that they can apply, if they so wish, for Chinese citizenship.
The ethnic minorities do not at present of course, have a right of abode anywhere else other than in Hong Kong. This position will be no different after 1997. In the Government's view there is no reason to suggest that the change of sovereignty should threaten this particular group and that they should, therefore, he given special treatment in the form of a right of abode not in Hong Kong but in the United Kingdom. My noble friend Lord Willoughby de Broke was worried about what would happen to these people in the future. If problems do arise, and if the ethnic minorities were to come under pressure to leave Hong Kong and had nowhere else to go, we have said many times—the noble Lord, Lord Bonham-Carter, referred to this this evening—that the government of the day would be expected to consider with considerable and particular sympathy their case for admission to the United Kingdom.
The noble Lord, Lord Beaumont of Whitley, said he remembered the case of the Asians in Uganda. I also remember that. The noble Lord said he did not trust the Government. Perhaps he did not, or does not do so, but of course the government at that time was a different one to the present Government. However, I realise he was talking about governments in general, irrespective of political parties, and I can sympathise with the general scepticism that automatically flows from all people as regards governments.
Of course one cannot ever tie any government into the future because one does not know what situation will emerge. But I can only repeat the assurance that, if the ethnic minorities were to come under pressure to leave Hong Kong and if they had nowhere else to go, the government of the day would be expected to consider with considerable sympathy their case for admission to the United Kingdom. However, these people do not want to come to the United Kingdom. They want to remain in Hong Kong. There would, therefore, be no long-term benefit in their becoming British citizens.
I always think there is something mildly incongruous in saying that in order that these people should stay in Hong Kong, where they want to stay, we should give them citizenship of the United Kingdom, which would enable them to come to the United Kingdom where they do not wish to come. What they want to do is to stay in Hong Kong. At present those who hold British dependent territories citizenship passports are free to come to the United Kingdom without a visa, but they do not have any superior rights of stay or employment over those who come from other countries and who are subject to normal immigration controls. After 1997 the position of these people will be exactly the same as it is now.
I do not wish to get into all the technicalities of Clause 2 of the Bill and the legal and citizenship minefield which that encapsulates. I would only say this. I noted that the noble Lord, Lord Bonham-Carter, was wise to steer clear of that issue, although he referred to BDTCs and BN(O)s and British citizens by descent and British citizens otherwise than by descent. He nearly got himself confused, as well as the rest of your Lordships,

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and I do not propose to add to that confusion. However, if the proposals of the noble Lord, Lord Bonham-Carter, in Clause 2 were to be put into effect, they would in fact give citizenship benefits both to the ethnic minorities and to the spouse and child beneficiaries of the selection scheme which are not enjoyed by other British citizens who are born abroad. Clause 2 would enable those people to pass British citizenship to their children and, to a limited extent, to a further generation. That would be a privilege which is not enjoyed by other British citizens who are born abroad. In schoolboy language, "That's not fair".
These are complicated matters. We took the action which we considered was necessary for Hong Kong in 1990 when we passed the British Nationality (Hong Kong) Act. It was our view at the time, and it was also Parliament's view, that the selection scheme arrangements, together with the immigration assurance, struck the right balance between maintaining confidence in Hong Kong and limiting potential immigration to the United Kingdom. That has been achieved and there are no new special circumstances which would justify our making different arrangements for the ethnic minorities now. Their ties are with Hong Kong rather than with the United Kingdom, and our primary objective has been to ensure their security in Hong Kong.
My noble friend Lord Geddes referred to the LEPs. That is an extension of the arrangements which is not mentioned in the Bill. The LEPs, like all others in the disciplined services class, have been given places in proportion to their total numbers, which are relatively small. Making more provision for them would undoubtedly result in pressure from other occupational groups where the number of places has been insufficient to meet demand. Parliament decided on a 50,000 limit on places.
For all those reasons the Government cannot support the Bill moved by the noble Lord, Lord Bonham-Carter, even though I admire his pertinacity, his perseverance and one might almost say, but I will not say, his obduracy in pursuing the issue. He likes to push his boat through the water as far as he can. I admire him for having done so, but I am afraid that the Government cannot be rowers in the boat as well.
9.57 p.m.
Lord Bonham-Carter: My Lords, I shall not keep your Lordships long. I must confess that I am disappointed, though not surprised, by the nature of the noble Earl's reply to the debate. I do not propose to engage in a conversation with him and the noble Lord, Lord Marlesford, about the precise nature of the Home Office, with which I worked for 11 years between 1966 and 1977. I have a fairly clear view of the degree of its adventurous and romantic disposition and its ability to plough forward in a progressive direction.
I should like to take this opportunity to thank all those who have spoken in the debate and for their support for the Bill. I would simply say this about the reply of the noble Earl, Lord Ferrers. The fundamental difference between the two sides in this controversy can be summed up in his statement that the Government
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took the view that there was no reason to suppose a change of government threatened this group. I would say in response that the figures given by the noble Lord, Lord Geddes, concerning the number of applications under the selection scheme indicate that this group do not take that view. All that the Bill tries to achieve is to provide them with a safety net.
The noble Earl said that it was odd that we should advocate giving a right to come to this country to people who do not want to do so. It is not odd at all. They do not want to come to this country unless they are forced to. They fear that they may be forced to and they feel that they should have a safety net. That is what we provide in the Bill, and that is what the Government refuse to provide. That seems to me very sad.
A number of noble Lords in the course of today's debate set forth the reasons of practice and of principle as to why the Bill should be supported. One reason was the need for reassurance, to which I have referred. Another was the need, to which my noble friend Lord Beaumont referred, to be safe rather than sorry. Another reason was mentioned by the noble Lord, Lord Glenarthur, in the debate in July—and was repeated tonight—that the situation had changed since the decision was taken and that the fear that to make a special case for this group of people was divisive no longer existed. That point was made by the noble Baroness, Lady Dunn, and the noble Lord, Lord St. John of Bletso.
The noble Lord, Lord Wilson of Tillyorn, and other noble Lords made the point that such a measure is an obligation of honour. We owe it to these people. It is rather shocking that the issue should simply be brushed aside as an inconvenience.
I am glad that the Government do not propose to put the Second Reading of the Bill to a vote. We should carefully consider the point made by the noble Lord, Lord Geddes, about the LEPs. They are a special case. They deserve consideration and are particularly vulnerable.
I wish to thank all those who have participated in the debate and to ask that the Bill be given a Second Reading.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

London Hospital Services
10.1 p.m.
Baroness Jay of Paddington Baroness Jay of Paddington rose to ask Her Majesty's Government what proposals they have for hospital services in London following the Tomlinson Report and the reviews of medical specialties which they established earlier this year.
The noble Baroness said: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. I do so because it is over a year since the report by Sir Bernard Tomlinson on London's health care service and medical education. It is 10 months since the Government made their proposals in Making London Better and six months since the review of medical specialties in the capital. At the same time, London's

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NHS is facing the imminent threat to its financial resources through the introduction of weighted capitation funding in the next financial year—capitation funding which, it has been estimated, may mean cuts of £100 million over the next five years.
Although throughout 1993 the Government have been promising a speedy resolution of all those problems in which all the pieces of the complex London jigsaw will be firmly welded together, so far there has been a resounding silence. No strategic plan has appeared; and at present London's health care is suffering a particularly destructive form of planning blight.
Nearly everyone who has looked at London's health services agrees with Sir Bernard Tomlinson's general conclusion that some rationalisation and reorganisation should occur. Equally, everyone agrees that there must be proper extensive consultation and, above all, that changes must not just mean cuts.
I am certainly not asking for rapid decisions, which simply lead to hospital closures; particularly if there is no adequate primary care to replace hospital out-patient clinics and accident, emergency and casualty departments, which today many Londoners use because GP services in the capital are so inadequate.
My Question is simply a plea for an end to uncertainty. It is not an invitation to axe wielding. Since the Question was tabled I have been inundated by approaches from those who use the NHS in London and those who work in it. Their general message is that something must be announced soon. I hope that tonight the Minister will be able to respond.
Many of the most heartfelt comments have come from health service managers; those who are charged with making the new internal market work. I quote one chief executive who, perhaps with rather typical British understatement, wrote:
"We are making dramatic and difficult changes—we have reduced bed numbers by almost 20 per cent. We have reduced our prices for next year by 12 per cent. To maintain that rate of progress and maintain, any degree of confidence among the staff—in an environment which combines threat with ambiguity—is not the easiest thing I have ever done".
At the same time, the Greater London Association of Community Health Councils, representing users' interests, has produced its own assessment of the current situation. The one I have here is called not Making London Better but Making London Worse. It shows that some hospital waiting lists have lengthened by 19 per cent. in the past year, while this hiatus has been going on and that accident and emergency departments are being substantially cut back. The CHCs say:
"Changes are happening in a haphazard chaotic way".
They, too, call for decisive planning.
I recognise that it is philosophically difficult for the Government to abandon the concept of the market and to adopt "decisive planning" to intervene to manage London's health care, but if they do not there will be chaos.
I shall resist the temptation to re-open the general argument about the overall validity of the market approach to the NHS, although I suspect some of my noble friends will not do so. However, I remind the Minister that there were those gloomy soothsayers who
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predicted that the internal market would collapse in year three, precisely because of the kind of problems thrown up by the types of configurations of providers and purchasers that we see in London and, indeed, in other large cities. They are configurations which really cannot be reconciled without a strategic plan. For example, there is little point in a specialty review recommending that cardiac surgery should be removed from hospital A and expanded at hospital B if the purchasers, the local providers of funds, continue to prefer hospital A and finance contracts accordingly. We have seen many examples all round London of that kind of problem arising.
However, I hope that in the future all this may be academic because some of the nods and winks and some of the unofficial briefing that has come out of the Department of Health suggest that Ministers are going to intervene. They are going to dilute the pure milk of the market and take responsibility for managed change. The Secretary of State for Health, in her February statement on Making London Better, spoke of grasping the nettle. We have recently seen special central funding for special health authorities to ease their way into a new system and new funds for some primary care development.
There are also indications that the headlong dash to allow market forces to change everything all at once may be slowing down. I hope that is true and that if the Government are prepared to take time to direct and manage they will take time to consider again three particular issues of London' s health services.
The first question is the old one of whether or not there is over-provision of hospital beds in London. This always seems like Alice in Wonderland to those who use London services, those who are on the lengthening waiting lists or being treated in beds in hospital corridors. Nonetheless, the statistical consensus has been that London should lose about 2,500 beds. But since both the King's Fund Commission and Tomlinson said that in 1992, Professor Brian Jarman and other community health experts have done some additional work on the realities of medical and social care for Londoners. They point out the need for hospital beds to cope with the inner city's ageing, deprived population which is not being supported by scarce community care. Figures have also been produced to show that although London has 12 per cent. of the population, it has only 9.6 per cent. of psycho-geriatric beds and only 4.2 per cent. of the country's voluntary and private nursing home beds.
Of course, in an ideal post-Tomlinson world, those gaps would be filled. However, not surprisingly there is a certain cynicism about new money for appropriate community care and a wish to hang on to acute beds while there is nothing else available. The example of what has happened with the reorganisation of mental health care is the awful spectre which many people consider. It really seems to be an exact illustration of the Belloc dictum that you should,
"Always keep a-hold of Nurse,
For fear of finding something worse".
I hope that tonight the noble Baroness will tell us whether or not the Government are really still convinced that there is over-bedding, in the jargon, in London.
The second major question is about the so-called "centres of excellence". That has become an unfashionable phrase but it is one that describes the special London medical institutions which have world status in both teaching and research. I recognise, as I said earlier, that the Government have given special transitional help to special health authorities—the SHAs. But that does not meet the concerns about the potentially fatal disruption of research and the break-up of specialist teams which could well occur if, for example, local purchasing priorities are exclusively allowed to determine the reorganisation of the Hammersmith and Charing Cross Hospitals in West London, with the Postgraduate Medical School at the Hammersmith being threatened with closure. Nor does special funding for SMAs meet the problem of hospitals like UCH and the Middlesex, which do not fall into the favoured category but have the highest national ratings for undergraduate teaching and research. Their first class work is now threatened by the purchasers in the market, as my noble friend Lord Ashley of Stoke showed in his Question to the Minister last week.
Those centres of excellence have made the National Health Service what it is. They have given national leadership to national care, national teaching and national research. They have meant that the National Health Service is not just a safety net for the poor but a real world leader in the development of medicine. It is crazy to try to downgrade their work. After all, if we are to look at the NHS as a business—I hope that we do not have to do that exclusively—any good business would put huge resources into research and development. To try to abandon that, simply in order to pursue the ideology of the market at the local level, is purely destructive. I ask the Minister tonight: does every hospital have to be an all-purpose district general hospital, or can managed change encompass both district general hospitals with all their marvellous services to local communities and the centres of excellence which provide the outstanding contribution to national health care?
Thirdly, there is the question of special resources to facilitate change. In a recent letter to The Times the chief executive of the King's Fund echoed many others by saying that there must be clear guidelines for next year which crucially include money to fund capital expenditure. He said that there was all the difference in the world between telling people to merge and giving them the means to do it.
Your Lordships will have seen last month's proposals by the Joint Trust Board of St. Thomas's and Guy's, which wants to co-ordinate their services but to retain both sites because:
"The capital funds to achieve a single site are unlikely to be made available … at this time".
Similarly, the plans geographically to concentrate Bart's, London and the London Chest Hospital on the London's Whitechapel site are meeting financial scepticism even from those who support the merger in
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principle. There is mounting concern that if a merger is pushed through without adequate investment there will be a piecemeal division of specialties between the sites, which could well lead to a reduction of overall services rather than consolidation and expansion. Therefore I hope that, even if the Minister is unable to give details of the Government's plans, she will be able to reassure your Lordships that overall, adequate capital investment will be made to facilitate change when it does occur.
There may well be a case for managing change in London steadily but slowly—perhaps, for example, using one part of London as an area of action research to see how well services will settle down; or first making strategic decisions about siting accident and emergency departments and then building the pattern of specialty services and acute bed provision on the basis of those. As I said earlier, my Question is certainly not designed to provoke macho management, let alone an immediate scorched earth policy towards London hospitals. It is to try to get the Government to break their vow of silence on what they intend.
Fourteen months ago Sir Bernard Tomlinson forecast a "spiral of decline" if action were not taken. Ten months ago the Secretary of State said:
"We have accepted the need for radical change. We will deliver it".
I hope that tonight the Minister will tell us how and when delivery will happen.
10.15 p.m.
Baroness Robson of Kiddington: My Lords, when I saw that the noble Baroness, Lady Jay of Paddington, had tabled this Question on the Order Paper for today, I hoped that it would not come up at quarter past 10; above all I hoped that we would have had more of an indication from the Secretary of State in regard to what she is planning to do. It was mooted in the press that an announcement would be made before the Christmas Recess. I sincerely hope that that will happen and that an indication will be given this evening regarding what the future holds.
I agree 100 per cent. with the noble Baroness, Lady Jay, that the most devastating effect to the health service is the feeling of not knowing where it is going at the moment. As she stated, it was in February 1992 that Tomlinson reported. I remember clearly the Government's response shortly afterwards when the Secretary of State was expected to make an announcement in early February 1993. She did; she set up the London Specialty Review, which was a step in the right direction. But that did not quiet the worries of people in the various large London hospitals.
At that time the implementation committee was appointed. No doubt it is necessary; we need an implementation committee. but I should have thought that we would need some guidance on how to implement before we needed an implementation committee.
There is no doubt that the rationalisation of services is based on the assumption by the Government that there will be financial savings, presumably of revenue. But, above all, what worries me is that there does not seem to be any estimate of capital expenditure to implement

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rationalisation. There is limited knowledge and that knowledge is highly underestimated. For instance, the Royal Marsden and the Royal Brompton hospitals commissioned Ernst & Young to provide costings for closure and relocation to Charing Cross—at one time that was a suggestion. It was found that Ernst & Young estimated costs of £76 million as compared to Tomlinson's figure of £15 million. That is a huge discrepancy. Having been married to a chartered accountant I believe that the chartered accountants are more likely to be correct.
Another example is that of the problems of the Royal London and Bart's, and the new consultative document which was circulating, and to which one had to respond by 10th December, in regard to the amalgamation and creation of one trust for the two hospitals. Can the Minister say how much money has been wasted over the past year in creating the Royal London Trust, which will now need to be dismantled and amalgamated with Bart's? There is a great danger that money was wasted on that exercise. As the noble Baroness, Lady Jay, asked: what will it cost to relocate the departments in Bart's at another site?
We all know about University College Hospital and Middlesex. Those two hospitals managed to work well together. But almost every month one hears a different answer to what the solution may be. That is not helpful. It has been said that the same thing applies to St. Thomas's and Guy's.
We cannot decide to close established institutions; we cannot assume that their facilities and expertise are transferable like pieces on a chessboard. Centres of excellence, at the forefront of their fields, which have built up a body of skills, research, loyalty and repute cannot simply be broken up, redeployed and recreated at regional or district level elsewhere. The value attached to tradition, length of service and the corporate ethos may be difficult to quantify but its dismissal would be unwise. That is what concerns me very deeply about the latest proposal that the Royal Postgraduate Medical School may be moving to Charing Cross, abandoning Hammersmith where it has lived very happily and very successfully for many years.
Then there are other hospitals which feel vaguely safe—they know that they will survive as such—like the Royal Free. However, their services are nevertheless to be broken up. The suggestions for the Royal Free, for instance, are that all the transplant services should go, that the dialysis should stay and the children's dialysis should go. It is good that the dialysis is staying because that has to be within reach of patients. But equally, every patient who has a transplant is required to attend at the hospital for a long, long time afterwards to be checked and monitored. A move would mean patients having to travel a long way. Most of the patients at the Royal Free come from north of the location of the hospital.
What disturbs me most of all about the Royal Free is the danger of breaking up its paediatric department, which is one I admire very much. Most of the paediatrics except for accident and emergency are to go to Great Ormond Street. If accident and emergency
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remains there it means that the patient will have to be transferred after his initial admission. That jeopardises the very excellent special care baby unit in that hospital.
One could go on repeating examples of the fragmentation of services that we all require. What worries me is that in many cases this will mean patients having to travel long distances. That is not easy in London. It is so easy to say that it is only two or three miles from here to there but to travel two or three miles in London is a lengthy exercise and does not always land you up at exactly the place where you want to be. There is not always a convenient Underground station and there is hardly ever anywhere to park a car.
That is quite apart from all the disruption that has happened to the morale of staff in the hospitals. I know that the Secretary of State gave certain assurances that senior staff, medical professionals and nurses would all be helped to relocate. I have said before that it is not only the top grades in the hospitals that we have to think about. It is all the staff in the hospital. To relocate is not all that easy. People have a life apart from their job. They have a home. They have children who go to a certain school. It is not necessarily possible to accept an alternative appointment somewhere quite different.
I should also like to ask the Minister whether she is perfectly happy about the fact that we have in place, or we are within reach of having in place, the right community services to undertake this enormous exercise of streamlining all the London hospitals and all the specialist hospitals. I do not believe that we have. And, until we have, we do not have the right to deprive Londoners of their services, which are mainly based in the hospitals and not in the community.
I would like to finish with a word of thanks to the Minister and to the Secretary of State for having solved the problem of one hospital. We are all delighted that St. Mark's Hospital will move to Northwick Park in Harrow; that this has been agreed on both sides and that everybody is happy.
10.25 p.m.
Lord Carr of Hadley: My Lords, this is one of those occasions when I would have preferred to speak after the Minister rather than before her. I should know much better what I wanted to say if I knew first what she was going to say. However, such is life. I must also admit that when I put my name down last Thursday to speak in the debate I expected it to be on a much narrower front. I was motivated by the reports of the great fears that the decision which the Secretary of State announced as regards the Royal Marsden Hospital last February was in grave danger of being reversed. I confess that that was my motivation in wanting to speak in the debate. I shall attempt to broaden my remarks although I shall use the Royal Marsden as an example of the points want to make.
From the beginning of the proposed reforms of the health service by this Conservative Government some three or four years ago I have consistently and strongly supported the principles of those reforms. I am wholly unrepentant about that. As each year goes by I become more convinced that they were right in principle. I have criticised them pretty heavily at times on detail, but I

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have always strongly given my support in principle. I feel sure that the basic principles now being operated will persist and will never be repealed and changed fundamentally no matter what government come to power.
The changes are leading to a much better health service although of course there are serious teething troubles in the transformation of a huge organisation like the National Health Service. After all, it is the biggest employer in this country, if not in Europe. My approval of principle extends to the way in which the Government have tackled the London problem which has been hanging over us for a hundred years. The Government have had the guts to tackle it head on and to provide the Tomlinson Report. Having got that report and following a due but certainly not over-long period of consideration, the Secretary of State made her Statement which my noble friend repeated in this House last February.
I was among most Members of your Lordships' House in believing that the way in which the Secretary of State dealt with the report was admirable. She had come down to a number of what seemed to me firm, basic decisions of principle while reserving a number of more doubtful points for further consideration. My concern now is that it appears that some of those decisions of principle are being threatened. It seems to me that my right honourable friend the Secretary of State and my noble friend the Minister have saddled themselves—perhaps I should say, have been saddled—with a very strange system of decision-taking. It may not be strange to those on the inside, but it is extremely strange to those on the outside. It is not that the matter takes time, because decisions of this kind should take time. Although the issues are extremely urgent they are also very deep and important and basic decisions should not be rushed.
I understand that the Tomlinson Report included the proposal that specialty groups should look at different specialties in the different hospitals. I understand that that was a process which had to go on. I understand fully that that is not a policy-making but more a fact-finding and fact-recommending exercise, which the Secretary of State has to take into account. What has surprised me—indeed, I would say shocked and almost angered me—is that these specialty groups seem to have charged into their subjects as if no decisions of principle had previously been taken by the Secretary of State. Had they come along, looked at all these matters and said as regards the Royal Marsden Hospital, "The Secretary of State has decided that that hospital should stay. What is our recommendation given that fact?" Instead, they have plunged into the matter not only as regards the Royal Marsden, but also other hospitals, as though the Secretary of State had given no thought at all and had made no decisions at all. I find that tiresome. I am sure that patients, doctors, nurses and administrative staff, as well as interested members of the public, are equally exasperated. I understand why there is pressure on the Government to make a final announcement as quickly as possible, and I certainly want them to do so. However, I do not want them to do so without mature
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consideration. Therefore, although the matter is urgent, haste may not be a good thing. I say to the Secretary of State, "Please take as little or as much time as you need to form your final decisions and then announce them to us".
My plea tonight is that the Secretary of State should stick to the basic decisions she announced, so far as she was able to, in Parliament last February. I cannot remember whether we in this House actually had a debate or merely questions on a Statement. Those were wise decisions which set people's minds at rest. To a certain extent, people knew in which direction they were heading. They knew that some things were still to be decided, but they believed that certain basic decisions had been made—and firmly made. All the reports which have now been given or leaked to the press—I do not know which—seem to call all that into question. That is immensely disturbing and worrying, not only to staff, but also to patients.
My main purpose tonight is to make a plea to the Government to stick by the decisions they made—in so far as they made them—and which they announced last February. Then, as quickly as possible, they should produce their final decisions in full detail.
Perhaps I may say a little more about the Royal Marsden. It seems to me that we in London face a problem. For many years there has been an over-provision of resources in London in relation to the rest of the country and relative to need. In addition, needs are changing because the quality of general hospitals and other facilities outside central London has improved. Therefore, some reductions have to be made, and they are bound to be painful. The Government have faced up to that and are going that way. However, it is still extremely important that we keep within London centres of excellence—centres of excellence for treatment in particular specialties, centres of excellence in research and development and centres of excellence which patients can visit easily.
When I look at the complex of the Brompton Hospital, the Royal Marsden, the new Chelsea and Westminster Hospital and Imperial College Medical School, it seems to me that tucked into a fairly neat geographical area we have a university city in medical terms, and that to start sending parts of those facilities out to general hospitals in Chelsea and elsewhere is madness. It is a waste of resources to break down a centre of excellence which is of great benefit to patients and which has a great reputation throughout the world. That is not the way to reform.
Specialty groups have now come along, looking at the subject narrowly and with blinkers on. They cannot look to the right or the left but only straight down the ends of their noses. That tends to produce a short-sighted result. I say strongly to the Government, in the interests of staff, doctors, nurses, scientists, students and patients, "Please stick to the basic decisions announced last February and do not allow yourselves to be diverted by the special pleading of people who, I believe, have a very blinkered outlook on the needs of the country."
10.33 p.m.
Baroness Masham of Ilton: My Lords, I thank the noble Baroness, Lady Jay of Paddington, for giving your Lordships the opportunity this evening of asking the Minister some questions about the life and death situation of people living in and coming into London who need health-care. I speak from these Benches with no political axe to grind, but I want to speak from a patient's point of view and to say that, whatever the Government's intentions were when they instigated the Tomlinson report, they have managed to cause patients anguish beyond any person's comprehension.
Maybe the Government realise how insecure hospital workers feel over the upheaval caused by the report and the reviews. All I can say is that it is minimal compared to what is felt by ill and dying patients whose lifeline is a specialist hospital unit. What has this country come to when patients suffering from cancer or renal failure who are fighting for their lives are having to expose themselves to try to save the hospital, or hospital unit, which they know and trust and which is their only hope of survival?
No one would argue that we do not need efficiency and cost-effectiveness in the NHS, but the market culture seems to have a hardening effect on the staff's attitude towards patients. Can the Minister, for whom I have the highest regard, put her hand on her heart and say that the report Making London Better has made it, or is making it, better? The emphasis is on cost-effectiveness. The most cost-effective procedure is to let ill patients die. That is what is so worrying when one has a hard and uncaring society. I hope that the debate will do something to alert the Government, who have a mania for closing down so many things, to a realisation that ill people need good management at their bedside as well as at board level.
Beds are needed for patients, and senior staff are needed to support patients and junior staff on the wards. I witnessed, at first hand in a London hospital, a sister on an acute ward on which patients were undergoing serious operations who never went onto the ward. When patients queried why they never saw the sister they were told by junior nurses that she was interested only in management, not in patients. Hospitals are increasingly using temporary staff—known as "bank" nurses—to cut costs. Lack of continuity of care is bad for patients, especially children. Managers who do not know the nurses create a dangerous situation, for many different reasons. One is that nurses sometimes do two jobs to make more money, and fall asleep on their feet.
Two weeks ago I visited a desperately ill patient at one of London's teaching hospitals. The patient and his parents told me that by far the best nurse came from the bank. She had the highest qualities, an abundance of TLC and several qualifications. The hospital would not take her on the permanent staff because it was cheaper to keep her coming from the bank.
Last Friday, I saw my GP in Yorkshire. He had just returned from an international conference in Edinburgh, where Bart's Hospital was discussed. The Americans present said that, if the British Government closed down Bart's, it would be like closing the Mayo Clinic in the
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US. Hospitals such as Bart's and the Mayo Clinic are valued throughout the world. Does a good reputation mean nothing to this Government? I heard also last week that Britain is short of doctors. The medical and nursing schools of St. Bartholomew's Hospital are world famous. No wonder we are short of doctors: we have already amalgamated several medical schools. Are we going to shut down more? Is it true that we may have to import doctors?
Why are we getting ourselves into this unnecessary and dangerous situation? A cousin of mine who graduated as a junior doctor last year from Bart's is now working in Plymouth. Young doctors do not all stay in London. They move all over the place. Neither the Government, nor Professor Tomlinson in his report, seem to take that factor into consideration. It is easy to close down a good hospital with the stroke of a pen, but it takes years to build up experts who trust one another and work together.
London is a popular place. Hordes of tourists come to visit and many people come to work here. They become ill and take up acute beds. Has Tomlinson taken that into account? Tonight's London Evening Standard states that London hospitals are full. What are the Government going to do when they close more beds?
The break-up of the medical teams causes disharmony and fear among patients. It destroys teaching and research, and in the long run the operation is expensive in so many ways. In order to conquer some of the difficult problems now facing us, which seem to be insurmountable, does the Minister agree that there needs to be a concentration of good brains, good morale and good co-operation, with decent research facilities?
What do the Government intend to do about the drug-resistant tuberculosis present in the East End of London among the homeless and refugee population? That is not just a health matter; it is to do with bad housing and poverty. But as shown in America, the disease is very dangerous to people who have HIV and AIDS. Why should that type of TB be spreading among women? I mention that because it is a new development since the Tomlinson Report. Furthermore, why has Britain such a bad record of breast and ovarian cancer? It is generally recognised that all forms of cancer should be treated in cancer specialist centres. The Tomlinson Report, the review of medical specialties and the Government's wish to close the world-famous Royal Marsden Hospital has thrown into dismay and disbelief the people with cancer, the people who have been treated and have recovered, the loyal supporters who have done so much to raise money for this frightening disease and the expert staff.
Both the Secretary of State and the Minister responsible for health issues in your Lordships' House are women. Women feel that more should be done—instead of sending the morale of specially trained staff and cancer patients spiralling down to rock bottom. What could be worse? It is not only Londoners who are worried about health services. The ripples of hope of new drugs and research have spread from the Royal Marsden Hospital throughout the country.
One of the six specialty reviews is that of children's services. Many families face financial hardship as a

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result of visiting their children in hospital. A survey carried out by Action for Sick Children, called "Too Dear to Visit", showed that nearly 6 per cent. of families go into debt as a result of visiting and 26 per cent. said that they would like to visit more. The importance of parents visiting their children every day is recognised by professionals, the Government and everyone else involved in the health and welfare of children.
Families who are suffering emotional strain as a result of a child being in hospital are suffering financially too. The campaigners have met the Minister for Health, John Bowis, who said that the Government would keep the position under review. With Christmas so near, I hope that the Minister will be able to give more hope today. Sick children in hospital should not feel isolated and rejected by their families. Children do not understand poverty and debt and the expense of travel. They just need their parents.
Many people are anxious about the ever-increasing management costs in both primary and secondary medical care. Whole new departments have been established for the marketing of services. I ask the Minister whether her department is monitoring those extra costs and balancing them against direct patient care services.
Last week I sent the Minister a letter from a young man from Wandsworth who telephoned to tell me that he had been in agony because of a rod in his back due to scoliosis. He went to his GP to ask whether he could have an opinion from scoliosis experts at the special unit at Stanmore Orthopaedic Hospital. The GP told him that because of lack of funds that was not possible. He says that he cannot tolerate the pain so he has been given pain killers. That is not a very satisfactory situation for a young man in his twenties.
In The Times on 9th December there was an article headed:
"More consultants to be appointed. Minister pledges to improve patient care".
How can he do that if doctors are telling patients that there is not enough money to send them to the expert
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units which can help them? What Ministers and GPs or purchasing authorities are saying does not seem to add up. It is no wonder that patients are confused.
Every time we have a debate on the health of the nation, the Minister says that the health service is treating more patients than ever before. I am sure that that is true, but until the admission figures are broken down each year to new admissions and re-admissions, it is difficult to see a true picture. It may be that a person is admitted several times because of complications. Would that not be useful information to have?
Re-organisation always seems to be very expensive, but is it better? With the contracting culture has come a hard line of treating patients as numbers rather than as human beings. Patients respond to a personalised approach.
With the increasing violence in London through drug-related crime and the use of the gun and the knife, the population of London feels increasingly vulnerable each time an accident and emergency department closes down. We live in a very difficult society but it would be made easier if the needs of communities and individuals were dealt with in a more sensitive and understanding way.
On Friday of last week I was telephoned by a member of the press who is making a film about patients who have died from pressure sores. How can people whose friends and relations have died from such preventable conditions accept that millions of pounds should he spent on managers' cars? It seems to be the patients who are coming off worst. It is tragic that health authorities cannot afford to provide the health care needed by their populations because they have spent so much money on litigation claims.
I asked the Minister a supplementary question on 2nd December about the burns unit at Queen Mary's Hospital, Roehampton. She replied that there are 14 such units which serve London. That may be true for plastics, but the burns unit at Queen Mary's Hospital is the only such specialty with a London postal address. If the Department of Health gets the answer wrong to such a simple question, how can we be sure that the Tomlinson Report and reviews are not also wrong in some of their recommendations?
10.49 p.m.
Lord Bruce of Donington: My Lords, the House will have listened with the deepest sympathy and appreciation to the speech that has just been made by the noble Baroness, Lady Masham. I say to her and to the House that it has been an honour to be here and listen to her, because she has gone back to basics.
The general attitude of the noble Lord, Lord Carr, is, "For God's sake say something, if only goodbye". That is his attitude towards the Minister. But then, of course, I am familiar with that attitude. I am sorry to have to go back a little into the past, but when the noble Baroness, Lady Cumberlege, was five years old, I was in this Chamber helping to pilot the National Health Service Bill through the House of Commons (which was sitting here at that time). Moreover, the Secretary of State for Health, Mrs. Bottomley, had not yet been born. I shall forgive her for that because it was an event beyond her control.
However, this much I do know and I shall recount it to the House quite truthfully—and, indeed, it can be gathered from the records which are still available here; they are not subject to the 30-year rule or anything of that kind. When the Health Service Bill was introduced, I well remember that it was met with the unremitting opposition of the Conservative Party in the other place (sitting opposite to where I am standing now). I remember that, day after day and night after night, they fought it line by line and clause by clause both in Committee and on Report. They even went to the extraordinary step of voting against it on Third Reading.
Of course, the Bill struck right at the roots of Conservative philosophy that the free market—that is, market and commercial forces—should determine everything. The reason why the Secretary of State is in some difficulty today in arriving at the decisions that she is supposed to take is precisely because she has learnt as a matter of practical experience since the publication of the Tomlinson Report, to which I shall refer presently, that the idea of planning the resources of a health service while having it run on commercial and profit-making lines, subject to market forces or the alleged consumer choice of the customer (the patient) does not work; they simply do not mix. You cannot run a service which depends on the vocational dedication of people whether as doctors, nurses, specialists, ancillary workers, or whatever they may be, as a service to humanity within our country and reconcile that with the necessity to subject it to what are called "internal market forces".
The Secretary of State has now found that out, although it is a bit late. Of course, it may well be in conformity with current government practice that she prefers to leave the announcement of any changes that she makes until the Recess. That is the customary device employed by Conservative Governments in recent years: they either put a stooge Question down for Written Answer in the other place or they make the announcement during the Recess when there can be no parliamentary row and when there is always the possibility that additional publicity directed towards the domestic troubles of the Royal Family will drive what they decide off the front pages of the newspapers. We
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are well familiar with that technique. However, I hope that that is not the case. I hope that the Secretary of State is in genuine anguish as to the decision that she proposes to take.
I do not propose to become involved in the merits of the opening or the closure of individual hospitals because that is exactly what the Government want. They want everyone to be involved in an internal row, preferring the opening or closure of one or another favourite hospital. In any event, I am not falling into that trap. I am against the whole thing in principle and for a very good reason. The Secretary of State originally commissioned Sir Bernard Tomlinson to draw up a report and the terms of reference were quite correctly set out in Sir Bernard's ultimate report.
Sir Bernard is a distinguished member of the medical profession and the noble Baroness herself has considerable experience, going back over a number of years, in hospital administration. I would not therefore accuse her of acting in anything other than good faith. But as a professional I have examined the report by Sir Bernard Tomlinson. It is a curious document. I repeat that Sir Bernard is an eminent member of his own profession and widely respected as such and I would not wish to detract from that. However, he does not have the remotest clue about writing a report or carrying out an investigation leading up to the rendition of a report. I speak as one whose profession has for many years involved the writing of reports and the carrying out of investigations that are necessary for the production of such reports.
I should have expected Sir Bernard to set out his terms of reference. I should have expected him to go to the Secretary of State to correct any points of detail about which there might have been some misunderstanding. I should then expect his report to state the steps that he or his team had taken in their investigation. We do not know, for example, how many hospitals he visited. I believe he visited three, perhaps four. People may or may not consider that an adequate number, but in point of fact the report does not state how many hospitals were visited. It does not state the authentic source data from which his initial factual analysis was derived.
I should have expected, for example, as the health service involves individuals (they are called customers now) patients, doctors and nurses, that there would be some analysis of the journeys made from patients' addresses into the various hospitals. Such data can easily be obtained from computer records if it is required, allied with data on patients' ages, illness profiles, and other such data. I should have expected that data to be collected as regards those in the hospitals. I should have expected such a factual, objective approach as regards what individuals were doing whether as patients, members of the medical profession, or nurses, engaged in particular hospitals.
Then I should have expected an evaluation of the data that had been obtained. Data are never all one way: there are pros and there are cons. I should have expected the arguments to be deployed in this report for or against a particular course of action. However, there is nothing of

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the kind. I should have expected the advantages to be set out in considerable detail so that the whole thing could have been checked.
Finally, I should have expected balanced conclusions with cross-references to the evidence. This is an amateur's report drawn up by a distinguished professional physician but who is not capable of drawing up an objective report at all and who has operated purely on assumptions which he already shared with the Secretary of State as to the way in which the health service should be run. It is what we call in the profession a hatchet report.
It is no wonder that when the Secretary of State considered the report and its implications, he issued the document Making London Better. Incidentally, all these reports have glossy covers and are produced on glossy paper. They are produced at considerable expense so that people cannot afford to acquire them or even read them. They propose a series of steps to be taken.
Then came the difficulties. We know what happened. I know from personal experience, because I have been to the accident and emergency departments of many London hospitals. Therefore, I know what I am talking about. I have listened to patients. The BMA is quite right to say that there is already a two-tier service. I challenge the noble Baroness to deny it. She knows perfectly well that fund-holding doctors get preference for their patients.
The noble Baroness may not know, but I can tell her because I have listened to conversations, that if your doctor (whether or not you are on the NHS) contacts a hospital asking for a particular service the first question asked is whether it is private treatment or on the health service. If you happen to be insured, the second question they ask is what is the credit card number.
That is the way the service is being run at the moment. It is being run half-heartedly, and to the misery of its staff because of the uncertainties. It is also being run to the misery of the patients, who are indebted not to the system but to the people with whom they come in contact. The patients' regard for the nursing staff and doctors is undiminished, because there is a bond of personal conduct, kindness and professionalism. They hold in the utmost contempt the people revealed in the two reports from the other place relating to the West Midlands Regional Health Authority and the Wessex Health Authority. There were grossly inflated salaries. Waste and even fraud occurred among the ever-growing band of administrators, all of whom have various titles—function finders, I imagine, ancillary assessors, or whatever it may be. They are all involved with the internal market, passing bits of paper, because one department has to buy a service from another and assessments have to be made as to costs and the various additional overheads before the service is even provided. This parade of paper drowns the paperwork of the old National Health Service.
As the noble Baroness knows, in spite of all that one or two matters which have occurred since the publication of the Tomlinson Report have been overlooked. Readers of The Times for 11th December will have seen the report of the Mental Health Act
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Commission. I do not know whether that was taken into account in the Tomlinson Report. I can find no specific mention of it. The commission concluded that:
"there was an urgent need to change the allocation of NHS resources to give more to health authorities in deprived areas where the pressure on mental health services is the greatest".
That Mental Health Act Commission report devoted special attention to the inner cities, not only in London but also to Birmingham and elsewhere.
This morning there was mention on BBC radio of a new menace which was not even mentioned in the Tomlinson Report: intense pollution in the inner cities. Those are matters which have arisen since the Tomlinson Report.
Therefore, in technical terms the Tomlinson Report is a worthless document. I do not wonder that the Secretary of State is hesitating over it. She may hesitate; she may not hesitate. It matters not. The lie that the National Health Service is safe in the hands of the party opposite will be dispelled, and sooner or later it will redound against the Government and they will he hounded from office.
11.5 p.m.
The Earl of Limerick: My Lords, the noble Lord, Lord Bruce, always speaks entertainingly and provocatively. But he will not be surprised if I do not follow him down that road.
It is good that we discuss this important topic this evening and perhaps elicit from my noble friend on the Front Bench responses which may allay some anxieties. For that opportunity we should rightly thank the noble Baroness, Lady Jay.
The worlds of institutional health, research and funding are dangerous areas for the layman to roam. But I am moved to do so today on two grounds. First, I have a general anxiety about the soundness of methodology and process of inquiry underlying reports upon which decisions crucial to the future of London's health care will be based—in short, the quality of the data. Secondly, moving to the particular, I am apprehensive about the future, or even the lack of a continuing cohesive future, for a specific hospital with which I have had recent association.
I have had a scientific background but I am not a medical man. The interest which I declare is as treasurer of the Cancer Appeal which in recent months raised £25 million for the Royal Marsden Hospital. During that time I naturally became very personally involved. I came greatly to admire the specialist skills concentrated at Fulham Road and at Sutton. Inevitably I shall draw my argument by reference to the situation which I have come to know, but the points to be made have a much more general validity.
First, on the quality of the information, Tomlinson's proposal to close the Royal Marsden Hospital and the Royal Brompton Hospital buildings and to relocate to the Charing Cross Hospital was based on a statement by the North-West Thames Regional Health Authority that the consequent saving would be £10.6 million. Disbelieving that figure, the two hospitals sought a costed study from Ernst & Young which showed that, far from saving £10 million, the extra costs involved,

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depending on some variable assumptions, would be between £47 million and £62 million. In consequence, we were not alone in suspecting that the problem of the Charing Cross Hospital—a poor building in an unfavourable location—lay behind the proposal.
Be that as it may, having started the blight, that particular Tomlinson proposal was not followed by the Secretary of State. However, hard on its heels came the specialty reviews which in good part resurrected the Tomlinson proposals.
One might therefore ask: what has changed? Certainly not the costs, my Lords. What has changed is the line of argument. As a scientist I was taught that one assembles facts and seeks to draw from them logical conclusions. To start with a conclusion and then seek facts to support it is not good science. Yet the Tomlinson review and the specialty reviews seem to start from the conclusion—it is not substantiated by the evidence—that,
"Single specialty hospitals are on the whole less than ideal for patient care and for research and teaching".
Let us note the construction of that sentence. It is therefore assumed from the outset that each and every one—patient care, research and teaching—is better served on a non-specialty basis. Can that thesis be sustained?
In my view the thesis cannot be sustained on the evidence of the specialty review on cancer. It is a flawed approach, which, equally badly, has been shown to base its conclusions on wrong or misleading information. The principle of peer review is a sound and well tested one. That peer review, however, was not good.
The composition of the expert advisory group which was leading the peer review contained in the event few members with a knowledge of cancer, and even then only in limited fields. None, it seemed, of the review group had experience in managing research and development in a large organisation and at least three of the review group would be seen as direct competitors for research funds with the Marsden Hospital and the Institute for Cancer Research.
Then the method employed: it seems that certainly one of the review team has complained that there was no standardised questionnaire, there was no practice of the same group of people visiting each of the hospitals reviewed. Therefore, one asks, how can useful comparisons be made or sound comparisons reached?
Result: a report so full of inaccuracies and dubious conclusions that legal action is contemplated. Demands for its withdrawal, I am led to understand, received the rather strange response that it has never officially been published, so it cannot be withdrawn. Whether or not it has been officially published, it is easy enough to get hold of a copy. I mentioned it to my wife and she produced a copy for me within about 60 seconds. That specialty review required pages of detailed response to the points it made. This is not the occasion for detail: suffice it to say that the rebuttal ran to no fewer than 13 pages.
Therefore, I would have to say that I share the exasperation expressed by my noble friend Lord Carr with the approach of the expert advisory groups. I say this in sadness because, like him, I support the thinking
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underlying Tomlinson. I make it clear that I am not merely arguing for the status quo, I am not relying on the doctrine, "If it ain't broke, don't fix it". What concerns me is that, because the approach starts with the disputed conclusion, it is, in the area of cancer at least, swimming against an important international tide.
Maybe outsiders can see us more clearly than we see ourselves. The International Union Against Cancer picks out the Royal Marsden Hospital, together with the Sloan-Kettering in New York and the Gustave-Roussy institute in France, as the chosen model for other countries to follow, citing success—and note this particularly—in all the areas of patient care, research and teaching for basing that model.
In forming that judgment, what does the international union see? It sees world class teaching: 90 per cent. of the UK medics and nurses and a large number from overseas are trained by the Royal Marsden. It sees a critical mass of patients providing a spectrum of disease from the common to the rarest, often in the form of tertiary referral. It sees the synergy of co-location with the Institute of Cancer Research, both in the Fulham Road and at Sutton, over 100 cross-appointments, shared accommodation, a single research and development strategy, joint departments, joint prospects. It sees the synergy from the proximity of other institutions, from Imperial College, the Chelsea and Westminster Hospital and the Royal Brompton Hospital, each producing new interfaces. It sees the potential for discovery from clinical research, when parallel specialists are readily able to call in colleagues with whom they are already familiar, with developments in treatment, as it is said, from the bench to the bedside. In short, the informed observer must see what we have come to call excellence.
Excellence is won by sweat as well as by brilliance. It is won only by assembling individuals or teams with complementary skills, and it is won inch by laborious inch. It is earned of set purpose but imperceptibly over a long period. But that same excellence can be dissipated almost overnight by the disruption of established working patterns and the dissipation of unique skills.
Such a culture of excellence needs a broad balance between doctors, academics, researchers mainly at postgraduate level, nurses, carers, statisticians and whoever - teams which harmonise because they encourage and inspire one another. Break the links and where go the tertiary referrals? Break the links and what inspires the original research? Who trains the expert doctors and nurses?
The Marsden sees its own best future clearly to be on those lines, as a centre of excellence, and has presented its case accordingly. That case seemingly has been brushed aside by the specialty review.
What drives such reviews? Is it dogma? There is at least a large measure of that in evidence. Or is it cost? Here the signals become considerably confused. The Institute for Cancer Research was found by the UFC survey in 1992 to have 89 per cent. of its research categorised as being of international stature, with the remaining 11 per cent. being of national excellence. That placed the ICR 16th out of 175 assessed

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institutions and placed it in the top eight medical schools and institutes in the country. If dogma decrees that research of such excellence should be divorced from its integral partnership with the Marsden, why then was the Marsden recently directed by the Secretary of State to apply for trust status from April next year, spanning the period when decisions will be given - or at least may be given - on the specialty review?
I have seen the submission. I have it with me. It is impressive and forecasts small operating surpluses through the year 1996–97. Are minds already closed on that application? I believe that that would be a disgrace.
That brings us to cost. There is a case stated that two-site hospitals are inefficient. The trust proposal does not support that view. Furthermore, Fulham Road and Sutton are 12 miles apart. Working between the two has been shown to be feasible. If Fulham Road were closed and Sutton put into the St. George's trust, as proposed, it is conceded that use of the operating theatres in Tooting would be necessary. Tooting is seven miles from Sutton. Is that so very different? It is argued that good financial management would lead to treating more patients for the same money.
There is a further point which is important but not often mentioned. Many top cancer specialists have one leg in private practice in or near Harley Street. A Sutton-Tooting axis sits less easily with that than Sutton with Fulham Road.
As to cost, so far as I am aware a cost driven argument cannot be sustained. Ernst & Young in its second report estimated a cost of £21 million for the proposed relocation plans. On the other hand, the total provision of West London cancer services as set out in the trust application would cost only £1 million.
Doctors and nurses are opposed to the specialty review proposals. Managers and administrators are opposed to it. Above all, 900,000 patients and supporters who signed a petition to Downing Street are opposed to it. So what is there left to say?
I believe that there is one thing more. Most hospitals depend in part on voluntary financial support. Before its recent appeal, the Marsden could expect in the region of £2 million per annum from voluntary donations. I know what enormous effort went into raising that £25 million over the past three years for purposes which were precisely defined. The flagship of that appeal was the new block in Fulham Road, with its specialist theatres and equipment. It opened in October, just over a year ago—a few weeks before Tomlinson, as it transpired—at a total cost of £17.5 million. We have to ask whether we were flying in the face of government policy, or even warned of any risk of change. We were not. Should we therefore be punished for some indiscretion? Hardly so. Half the cost of that block, almost £9 million, was provided by the Department of Health to match money which we raised ourselves.
How do we explain to the people who gave that money that their money may be wasted? I am left with one conclusion: if closure takes place in those circumstances, with no comprehensible justification or countervailing advantage to be demonstrated, there will
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be no such future appeals without cast-iron guarantees of the status quo for long enough to valorise the projects which they are announced to support and to fund.
11.21 p.m.
Baroness Dean of Thornton-le-Fylde: My Lords, at the beginning of my contribution I should declare an interest. I am a non-executive director of University College Hospital's shadow trust. Although I declare that interest, it is not my intention to say why University College Hospital should be given any kind of preferential treatment. I agree totally with my noble friend Lord Bruce of Donington. We should be looking not at the parochial but at the overall provision of good health care for people in London.
However, being a member of that shadow board, I have witnessed at first hand the bewilderment and confusion and the feeling of insecurity, instability and low morale that emerged as a result of lack of decisions in regard to Tomlinson, the specialty review, and the other statements that were made. I too congratulate the noble Baroness, Lady Masham, who so clearly articulated what many people—consumers of the health service, as we are now supposed to called them—are saying and feeling.
One wonders whether the lack of strategy that is making people feel so insecure arises partly from some hope that the problem areas will wither on the vine before decisions are finally taken. I hope that that is not the case. I want to believe that the changes in the health service were motivated, in at least one dimension, by improvements for patients.
There have been leaks in the newspapers this week. I agree with the noble Lord, Lord Carr, that it would have been preferable if the Minister had made a statement at the beginning of tonight's discussion. But that is not the way of things. It is crucial that a statement be made soon—not, as one would say in business, of the salami-type variety with a piece-by-piece revealing of the policy which may be evolving. We need a strategy for London. I say that as a non-Londoner. I am from the provinces; I look in awe sometimes at the areas of excellence that exist and wonder why Londoners feel so defensive about their health service. I said that I would not make a special plea for UCH, and I do not. But on any independent assessment it has the best medical college in the country. It trains doctors for various hospitals in the provinces.
Some hospitals are being tempted to say, "Please save us because we are better than them". That should not be what the debate is about. It should be about an overall strategy for the people of London, for the people who visit London and need health care and for the people who come to London for health care which may not be available elsewhere. It is not good enough to say that the intention is to decentralise some of these areas of excellence. One cannot simply pick up a plant which has taken years of nurturing, through commitment and through experience, until it grows into a capital facility and acquires an international dimension and say, "We will now put it outside." It takes years to build up that international accreditation.

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I would like to be proved wrong in my view that withering on the vine may be one of the lines of approach. I certainly hope that it is not. I should like to share with noble Lords a situation which has arisen. It is one from which I hope the Government will learn. The Tomlinson Report said in October last year that there was no reason why University College Hospital should not remain. As late as September this year the Secretary of State said that she saw no reason why UCH should not remain as a national and international centre of excellence so long as it could get its budget into line. It had a major deficit problem. It has done that. It took the view that it could not sit there and do nothing as its deficit would increase. So one of the main buildings was closed. There was the pain of staff reductions and redundancies, bed reductions and everything that accompanies that. The hospital was then faced with an announcement, not from the Government but from the Camden and Islington Health Authority, which I have to accept had a serious budget problem of reduced funding over the following three years. There was a consultative document which, if carried through, would have meant the possible closure of University College Hospital. It had nothing to do with the Government; it was the local policy which was put forward.
The authority said that it would not send any routine work to University College Hospital. One cannot do that and at the same time say that there is no reason why the hospital should not remain. We know that a hospital is an interdependent unit. The accident and emergency unit relies on the routine back-up. The routine back-up relies on the specialist provision. The first-class training of doctors in University College itself relies on its links with University College Hospital. The Government imply one thing in their independent Tomlinson Report and then, because of the situation locally, even that perceived policy is knocked sideways.
When the Government eventually make their statement I should like answers to the following questions. Without those answers any policy for London will fall flat on its face. What will be provided for the implementation of any changes? What are the Government's intentions, whatever Ministers may decide in their announcement, to ensure that the purchasers also follow that strategy and do not go off at a tangent on a different strategy because of their financial problems? The back-up for that is essential. What funding will be available for the changes that are necessary?
Tomlinson was not just about health service provision. It was also about education and research related to health care. I know that the Government have indicated that within the next three years they will bring forward a national formula for the funding of education in the medical field. Three years is a long time in anyone's book, and in medical education it is a lifetime. In the meantime the facilities which are available could falter and wither, as I said earlier.
Will the announcement, which we hope will be made before the Christmas Recess and not during it, state what arrangements are to be made for the transition
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between now and the national formula for the funding of education in the medical field? What will be the provisions for that?
11.30 p.m.
Lord Sharp of Grimsdyke: My Lords, those of us—and there are at least 1 million citizens—who feel passionately about the future of the Royal Marsden, welcome this debate initiated by the noble Baroness, Lady Jay. It is also timely in view of the impending decision on the future of London hospitals and medical services by the Secretary of State. In my experience it is much more productive to influence a Secretary of State before she comes to her decision than to assail her afterwards, although we shall not shrink from that task either in this House, outside in the country, or through the courts, if that, regrettably, proves necessary.
As my noble friends Lord Carr and Lord Limerick have illustrated, there are a number of Peers who feel strongly on the imperative need to retain the Royal Marsden as a centre of excellence. My noble friend Lord Peyton of Yeovil, who, because of family health reasons, cannot be present for tonight's debate, has asked me to say that he wishes to identify himself with my remarks. We each have our own personal reasons for that commitment to the Royal Marsden and I shall declare my own a little later. While it is our heart that makes us determined to prevent a scandalous destruction of a unique medical asset specialising in that dread disease of cancer, it is our head that we use to reveal the mistakes, incompetence, distortion of facts and sheer prejudice of the so-called "evidence" provided by the advisers to the Secretary of State. These are harsh words, but I propose to justify them.
Let me say at the outset that none of us is against the proposition that a review is timely on the distribution and allocation of resources to meet London's medical needs and services. London should not be immune from such critical cost-benefit analysis any more than all aspects of resource allocation, whether in the public or private sector, should not from time to time be reviewed. It is, however, not necessary, in justification of such a review, for Ministers to trot out the provocative assertion that London is consuming 15 per cent. of medical resources with 10 per cent. of the population.
Even Tomlinson recognised the unique position of London as a capital city and its concentration of research centres, medical schools and teaching hospitals—a service for the whole country. London is an international centre for tourism, with 8 million tourists in a year and a vast commuter population of 1½ million who have also to be taken into account. In any event, who is subsidising whom? As a trenchant editorial in the Evening Standard of 28th October pointed out:
"Is it not true that Londoners pay almost £1,800 more in taxes to the Treasury than they get back in grants and subsidies? Is it not also true that families outside the capital receive an average subsidy of £3,730 from the Government? Is it not true that Londoners pay, on average, £730 more in taxes and National Insurance than someone working in the provinces? Does not, in fact, London subsidise the rest of the nation to the tune of £8.2 billion? Is not, in short, London the milch cow from which the rest of the nation and the National Health Service greedily feeds?"

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So let us hear no more about London getting more than its fair share of National Health Service resources.
I now turn to the quality of the advice that the Secretary of State has received on the basis of which fundamental and permanent decisions will be made, including the possible closure of the Royal Marsden. I name two main sources of tainted advice: first, the North-West Thames Regional Health Authority and, in particular, its chairman, and, secondly, the Specialty Review Group on Cancer. The campaign to close the Royal Marsden stems from the disastrous decision by the North-West Thames Regional Health Authority to build the Chelsea and Westminster Hospital, a decision which was severely criticised by the National Audit Office and which resulted in a massive overrun of £100 million. The Public Accounts Committee was even harsher in its criticism of that authority. It stated:
"In view of the very high costs of building in London and the generally recognised view at the time that surplus beds were increasing in the capital, we are surprised that the Management Executive in deciding to build this hospital, did not have regard to the wider pattern of hospital facilities in London and the relevant areas of the Home Counties".
The consequence of this disastrous decision was that the gross misuse of scarce resources on that hospital resulted in the cancellation or delay of 24 other major schemes in the region. The ripple effect of that gross management now reaches the Charing Cross Hospital just down the road. As a result of that entirely unnecessary new hospital, Charing Cross Hospital has surplus capacity. So the chairman of the North-West Thames Regional Health Authority and his colleagues in seeking to cover up or minimise the damage of their decision seizes the opportunity afforded by Tomlinson to propose the closure of the Royal Marsden and fill up the Charing Cross Hospital. To justify this, inaccurate estimates were submitted to Tomlinson on the costs of such transfer. The previous scandalous underestimate of the costs of building the Chelsea and Westminster Hospital has now been matched by the deliberate gross underestimate of the costs of closure of the Royal Marsden, as pointed out by the noble Baroness, Lady Robson.
Within the past few weeks it has been reported that the Chelsea and Westminster Hospital is heading for a £1 million deficit and has a surplus of 112 empty beds. What a bureaucratic disaster! And this is the health authority which has the temerity to advise Tomlinson, the Specialty Review Group on Cancer and the Secretary of State on how to rationalise the cancer needs and services in London by recommending the closure of the magnificent centre of excellence of the Royal Marsden. It seems to me that the only way for this regional authority to avoid further public scrutiny and censure for its incompetence is to be rescued by the Secretary of State in her welcome decision to abolish all regional health authorities as presently constituted.
I now turn to the second tainted source of advice—the Specialty Review Group on Cancer set up to advise the Minister on service, teaching and research in cancer in London. The composition of this group has not commended itself to leaders in this specialist field of oncology. Be that as it may, as the chairman of the
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group was assisted by the chief executive of a purchasing agency in North-West Thames Regional Health Authority it is not very surprising that the group resurrected the Tomlinson proposal to close the Royal Marsden and transfer cancer services and research to the Charing Cross Hospital. This despite the fact that the Department for Education in assessing the research quality of the nation's academic institutions graded the Royal Marsden as sixth in the country and the Charing Cross Hospital as low as 53rd.
The report of the Specialty Review Group on Cancer has been justly condemned as tendentious, misleading and full of inaccuracies and deliberate mis-information. It is like something out of Alice in Wonderland, "First the sentence and then the verdict".
It is now clear that the North-West Thames Regional Health Authority in its desire to cover up its fundamentally flawed decision to build the Chelsea and Westminster has exploited the assertion made by Sir Bernard Tomlinson that,
"single specialty hospitals are on the whole less than ideal for patient care, and for research and teaching".
That is an assertion made by one man—sincere no doubt, but challenged by his peers not only in the country but throughout the world. I say "assertion" because no evidence is adduced in the Tomlinson Report.
Sir David Weatherall, the distinguished professor of clinical medicine, in his presidential address to the British Association said that improvement in environment and life style together with better ways of delivering health care would not be enough on their own to reduce heart disease, stroke and cancer. What was needed was better understanding through basic medical research. Identifying the genes responsible for pre-disposing people to disease offers us a route to the cause and mechanism of many of our intractable killers.
Leading health experts in the US and Europe have similarly identified single specialist hospitals as the best way forward—particularly in cancer treatment and research. As my noble friend Lord Limerick pointed out, a report issued by the International Union Against Cancer in 1990 states that throughout the world the independent cancer centres, including the Royal Marsden, have been named as the most successful in patient care, research and teaching.
It will be an outrage if this country's unique centre of cancer treatment and research were to be closed, and I dread to consider the impact of such a bureaucratic decision on the lives of present and future sufferers of that dreaded disease.
I have two things more to say. I referred in my opening remarks to the personal reasons which have led a number of Peers to be passionate in their willingness to undertake any action to prevent the closure of the Royal Marsden. In my case, my daughter suffered from cancer and eventually died from that disease. I have experienced and seen the heartbreak and the hope as patients and doctors battle together to combat the ravages of that terrible disease which affects one in three of the population. I have spent days, weeks and months pacing the corridors of the Royal Marsden. Sir Bernard Tomlinson spent four hours at the Royal Marsden and

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the chairman of the Specialty Review Group, Dr. Christoper Paine, spent three hours. Those fleeting visits, coupled with the prejudiced and inaccurate data I have referred to, are not the basis on which the Secretary of State should make her judgment.
My second personal comment refers, as did my noble friend Lord Limerick, to the £25 million raised by voluntary donations to the Royal Marsden Appeal. I was chairman of the City and Industry Committee of that appeal and in that capacity approached business and workers throughout this country and abroad to raise millions of pounds. The chairman of the City Committee has written to me expressing the concern of institutions and individuals who had generously supported the appeal and warning that if the Royal Marsden closed, thus wasting millions of pounds, then it would be most unlikely that they would support any future appeal for a NHS hospital. If the Royal Marsden did close, I would feel, as a matter of honour, that I would have the responsibility to write to all those who had responded to my committee approaches, apologising for the Government's action. I could do no less in conscience.
What then is the way forward? I urge the Secretary of State to spurn what my noble friend Lord Peyton has described as the poisoned chalice of misinformation offered by her advisers. She should be guided by her own sound instincts when on 16th February she said in another place:
"After studying further information during our discussions on the Tomlinson report and further appraisals that we were able to undertake, we took the view that it was not a cost-effective option to move the Royal Brompton and the Royal Marsden hospitals to the Charing Cross site" —[Official Report, Commons, 16/2/93;col. 141.]
She went on to say:
"We are persuaded that there is scope for the development of a Chelsea health sciences centre".
The Chelsea Health Sciences Centre would link together the Royal Marsden, the Royal Brompton, the Institute of Cancer Research, the National Heart and Lung Institute, Charing Cross and Westminster Medical School, Hammersmith Hospital and the Royal Postgraduate Medical School. Sir Ronald Oxburgh, Rector of Imperial College, described that idea, which was commended in February by the Secretary of State, as a,
"once in a lifetime opportunity to create a grouping of medical capabilities and talent that could challenge any in the world of quality and size".
The Secretary of State should be bold enough and courageous enough to grasp this opportunity which she herself so wisely identified last February.
11.45 p.m
Lord Rea: My Lords, I have listened to all noble Lords who have spoken in the debate tonight. I agree with almost everything that has been said about London's hospitals. As a general practitioner, I shall take a somewhat different line and ask about the progress that has been made in the plans for developing primary care in the wake of the hospital closures and other changes which are proposed as a result of the two reports that we are discussing.
I wish to follow up the Written Answer given by the Minister, Dr. Mawhinney, in another place on 30th
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November (col. 464). It was in reply to a Written Question by Mr. Jeremy Corbyn. The Minister stated that in the 12 family health service authorities in the London initiative zone—otherwise known as LIZ—£40 million would be spent on more than 100 capital schemes in the coming financial year. There would also be 31 voluntary-sector projects, at an additional cost of £5 million, to help prevent admissions or facilitate early discharge. That works out at £400,000 per capital project and £129,000 per voluntary-sector project. I should be grateful if the Minister could describe in as much detail as she can the type of project that is being financed in each category. I shall soon be tabling a Written Question asking her to name each project and to give its cost.
The new health centre in Camden, about which I know, is estimated to cost upwards of £2 million. Will the capital projects involve the completion of new health centres or will they involve merely the alteration of existing buildings? The voluntary-sector projects seem a lot more modest. The developments would be welcome without any hospital changes, but they will be unable to prevent many hospital admissions or permit early discharges without a significant extra investment in primary health care personnel. I refer to nurses and home helps in particular and to investment in more housing. It is impossible to look after an ill, homeless person in the community and difficult to look after someone living alone or with a disabled partner without labour-intensive, expensive caring services. Building up caring primary health-care teams, just like building up hospital specialty teams, is a slow process. It may not be as complex as building up a major specialty team but it takes at least five to 10 years.
Perhaps the Minister will tell us what steps are being taken to attract and retain more district nurses in London. At present, nurses having a great deal of difficulty in finding affordable accommodation. Are FHSAs to be empowered to allow GPs to be reimbursed for employing at least two, if not more, staff? Will FHSAs and community trusts pay nurses directly or in addition to the reimbursement scheme and second them to doctors?
The Question that we are debating concerns hospitals, but we must know what services will be in place in the community before beds are closed. In north-east London, most GPs are not finding it any easier to admit patients to hospitals. In Camden and Islington it has become, if anything, more difficult. The decline in patient demand which is predicted in Tomlinson and in Making London Better is just not occurring. That may be because beds and wards are being closed.
According to a parliamentary Answer given last week by Tom Sackville to Dawn Primarolo, London has lost nearly 5,000 nurses in the past year and has gained nearly 3,000 men in grey suits. I cannot see that that is helping matters with regard to looking after the needs of London's patients.
I had intended to speak briefly in addition about some of London's hospitals but it is very late. I shall confine myself to picking out one or two matters which have not been raised by other noble Lords.

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Despite the fact that the retention of the accident and emergency department at UCH was recommended both by Tomlinson and in Making London Better, there has been a hint that it will be closed. I should warn the Minister that, if it were to be closed, it would leave a dangerous hole in the West End. Not only are there three rail terminals close by but the whole area is criss-crossed by Underground tube train routes. A disaster could occur at any time. The victims of the King's Cross disaster were cared for admirably by the accident and emergency department at UCH. Such a disaster could stretch a fully equipped accident and emergency service to the limit.
I hope that the noble Baroness will realise also that the proposed centre of clinical and scientific excellence at UCH Middlesex needs, as my noble friend Lady Dean said, a fully functioning acute hospital at its heart to provide a basis for teaching for clinical medical students and to provide a source for clinical research. As my noble friend said, costs can be, and have been, brought down. The hospital will be and should be trimmed, rationalised and smaller than it is now. But it should exist. Those services at any centre of excellence where teaching and research takes place are likely to be more expensive. They are in any teaching hospital. But they are more expensive because they are better staffed and better run, as they should be in a teaching hospital.
I echo the stalwart defence that was made for the retention of the Royal Marsden. The decision to move it seems to be a grave mistake.
Finally, I stress, as nearly all noble Lords have done, how important it is to preserve specialist teams of excellence which have been built up over years. Once they have gone, it is extremely expensive and takes a very long time to rebuild them.
11.55 p.m.
Lord Hayhoe: My Lords, perhaps I may begin by saying that my sympathies go out to my noble friend the Minister, who has to reply at this late hour to such a wide-ranging debate about hospital services in London. Of course, we are all grateful to the noble Baroness, Lady Jay of Paddington, for initiating the debate, though I was sorry that her contribution was not more constructive in that she reiterated the problems with which we are all familiar but did not propose solutions to them. I wondered whether the debate was going to be more about politics than health care in London and I was left in no doubt as I listened to the noble Lord, Lord Bruce of Donington, who made absolutely clear what he thought about politics in relation to the subject.
However, perhaps I may return to health care in London and declare my interest as chairman of the Guy's and St. Thomas' Hospital Trust. The trust, merging two famous hospitals, in in effect a child of Tomlinson. It was born or established eight months ago and I suppose that it might be right and proper for me to give a very brief progress report because much has been accomplished. The hospital administrations and the clinical managements have been merged effectively and economically. A unified structure is now in place and working constructively for the future. The trust's formal
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reponse to the Secretary of State's request, made in establishing the trust, that it should consider whether and how all its clinical services should be concentrated on one site, and whether it should retain two accident and emergency departments, was submitted by me to to my right honourable friend at the end of last month.
Our conclusion is that the retention of clinical services on both our main sites represents the best way forward for the trust, but that they should be provided in ways radically different from the current pattern. We have accepted and endorsed the view of our main purchaser that we need retain only one accident and emergency department, and we are recommending that that service, together with its appropriate support services, should be located at the St. Thomas' site. We are recommending that Guy's should develop as the major specialist, tertiary care centre in South London, building on the opportunity offered by Phillip Harris House to provide those services in the state-of-the-art accommodation, designed specifically to integrate clinical, research and teaching facilities for those services.
I should like to make it abundantly clear that our recommendation is not a quick fix or fudge, but a long-term strategy arrived at slowly and after very careful consideration of detailed analyses, largely prepared by independent consultants, and of advice, much of it conflicting, based upon strongly-held but very different convictions, opinions and interests.
The trust board's strategy has been spelt out in detail in the report sent to the Secretary of State. That strategy has the advantages and disadvantages of any consensus conclusions based upon the careful weighing and judgment of varied evidence. Like any fabric of consensus, I well appreciate that determined picking, or special pleading, can begin to unravel the woven threads, but to what purpose? I see no other pattern for progress which can command similar support or general acquiescence. Almost inevitably, continued uncertainty will bring its own harvest of conflict and controversy. There is no doubt that clinical opinion would much prefer a tidy, single-site solution—fully funded of course—but there is no similar agreement about which site should be chosen and financial considerations are evenly balanced between one site and the other. I believe anyway that any such choice—let me put it in stark and straightforward terms—between closing St. Thomas', with its well placed accident and emergency department, or closing Guy's, including its near completed phase III development (Phillip Harris House which, at £140 million plus, at current estimates, is the second most expensive hospital development in the United Kingdom, second only to the Westminster and Chelsea, which has been referred to by a noble Lord who spoke earlier) would not be for the board to make. As I have said, the matter is evenly balanced on financial and other considerations. It would be for Ministers to decide.
The trust board's strategy is not, I frankly admit, the idealistic best solution, but it is both realistic and good and, as such, has a number of important advantages. It can be achieved rapidly and much more quickly than single site solutions which would require significant

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extra capital expenditure. That point was referred to by the noble Baroness in opening the debate. It will keep disruption of patient services to a minimum. Perhaps more importantly, I believe it will allow the Government and the trust to achieve three major objectives in London. It will provide a distinctive and radical approach to reshaping acute care in London. One of the major criticisms of London teaching hospitals has been their inability to provide good basic local acute and emergency care alongside specialist departments. There has been a natural tendency for the latter to edge out the former. We have the opportunity to create at Guy's a world-class tertiary care centre and at St. Thomas' the highest class of care for people who live and work locally. These distinctive roles can develop within the context of a single university hospital trust. It will free space sufficient to allow the plans for the amalgamation of King's College and the United Medical and Dental Schools. of Guy's and St. Thomas' to proceed. Our solution will make significant revenue savings, for we are aiming to reduce spending overall by about 30 per cent. with job losses of similar dimensions. That is a tough and demanding objective.
My advice, therefore, to Ministers is quite clear: end the present uncertainty as quickly as possible, if not even sooner. Make your decision so that all concerned can build upon the substantial progress already made in bringing these two great and historic institutions, Guy's and St. Thomas', ever closer together.
I had hoped to turn from the particular to more general issues at this stage but perhaps at this late hour it would be wise for me to limit myself to a very few. First, I shall mention weighted capitation. I have made this point in your Lordships' House before. Tomlinson recommended an urgent review and made a number of important suggestions to improve funding for deprived areas like those surrounding Guy's and St. Thomas'. The Government accepted that a review was required and it has been put in hand. I hope the Minister will be able to indicate, if not this evening at least fairly soon, when this review will be completed, the report published, and I hope implemented, to the advantage of disadvantaged areas within the capital and other great cities in the country.
There has been much reference to specialty reviews, or at least to one of them, during the course of this short debate. There has been particular criticism of the treatment meted out by the cancer specialist review to the Royal Marsden. Without entering this dangerous area, let me say at least a word of welcome to all six reviews which recommended that their specialties should be continued or, in the case of neuro-sciences, relocated at Guy's and St. Thomas'. We thought the reviews were pretty good so far as our immediate interests were concerned.
I cannot end without commenting on and complimenting the Government on the financial settlement that they have achieved for the coming year. Treasury Ministers as well as health Ministers, so ably led by my right honourable friend the Secretary of State, have provided greater real term resources for our National Health Service at a time when pressures on public expenditure are as great as I have ever known. It
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is always easy to ask for more money. Indeed, all of us who have held ministerial positions have done just that in our contacts with the Treasury. But to obtain more in this year's public expenditure round is a very worthwhile achievement, and I hope that the noble Lord, Lord Ennals, who has ministerial experience of negotiating with the Treasury about health care, will join me in congratulating Mrs. Bottomley, the Secretary of State, and her ministerial team on their achievements this year.
12.5 a.m.
Lord Ennals: My Lords, the noble Lord hopes for too much. I shall not make any such statement. At the beginning of his interesting speech he implied that this may have been a political debate. There are dangers of this issue becoming a party political debate, partly because those who hold the leading posts in trusts, district authorities and other positions of authority in the health service today are found on the other side of the House or have the politics of the other side of the House. There are few with the politics of this side of the House. It is sad that that is the case.
I welcome the fact that the noble Lord, Lord Hayhoe, was so optimistic. I am afraid that I do not share his optimism. In my mind there is no doubt that health care in London is on the brink of a massive crisis. The combined effects of consistent underfunding and the commercialisation of the National Health. Service have significantly undermined the quality of health care. The Minister will say that every year more patients are treated. Every year since the National Health Service was created more patients have been treated and more funding has been provided. That has always been the case. There has not been a year when it has not happened.
Inevitably the Tomlinson Report has placed a question mark over the future of some of the great teaching hospitals and centres of excellence. Many arguments have been put forward this evening, and I am in total agreement with those who have spoken up about the absurdity of the possibility that the Royal Marsden might go when the announcement is made at the end of the review.
We ought to realise that it is not only the great teaching hospitals of Guy's, Bart's, St. Thomas', Charing Cross, UCH, the Middlesex, the Brompton and the Royal Marsden which are in a state of flux. There is uncertainty right across the health service throughout London. For example, the Ealing Hospital has an overspend of £3.2 million. The Wellhouse Trust in Barnet has a continuing deficit of £4 million. UCH/Middlesex is being supported by a temporary grant from the North East Thames Regional Health Authority. The Rush Green Hospital is closing, reducing to two the number of hospitals in Barking and Havering. There is consultation on removing all in-patient services from Barnet Hospital, downgrading accident and emergency to a minor casualty service and transferring services to Edgware Hospital. All medical and surgical beds at Orpington Hospital in Bromley have been transferred to Farnborough. Ashford Hospital in Hounslow and Spelthorne is under threat of closure.

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Several wards at Dulwich Hospital have been closed and the closure of the entire hospital is expected within two years. In-patient surgery at St. Charles' Hospital in Parkside has been closed, downgrading accident and emergency to a minor casualty service. Orthopaedic services have been transferred from Sutton Hospital to St. Helier's Hospital, with acute elderly services to follow shortly, putting the future of Sutton as an acute hospital in grave danger. Management at King's College Hospital has written to all staff asking them to consider voluntary redundancy. Ealing Hospital has cancelled all elective surgery for those who have been waiting less than 18 months. I could go on with a list three times as long.
There is a state of flux and uncertainty throughout the National Health Service in London. No wonder there is low morale among doctors and nurses. That is in part due to the dramatic changes to which reference has been made. We have seen a reduction of 5,000 in the number of nurses in London, with three times the number of managers. That is an appalling development. It causes great anxiety among many who work in the National Health Service.
The disintegration to which I refer has caused great concern to Sir Bernard Tomlinson. Speaking a few weeks ago, he said that the Government must step in to prevent a piecemeal disintegration of the hospital service in the face of market forces. Sir Bernard said that it would be a disaster. He said that market forces should not be allowed to destroy the planned programme of rationalisation, and called on the Government to provide special money to carry the hospitals in the interim. He said that it would be quite disastrous simply to let hospitals be destroyed piecemeal by market forces. If we are going to have to remove a hospital it has to be done in a planned way over a considerable period. Sir Bernard Tomlinson is horrified by the way in which the Government have handled the report and the piecemeal disintegration which seems to be following even without an announcement for which we have been waiting.
I believe that Sir Bernard Tomlinson was quite right. I do not know what attention the department is now paying to the wise words of Sir Bernard Tomlinson as he utters his warning. Kenneth Clarke and Virginia Bottomley have destroyed the concept of a National Health Service. That is the main consequence of the reorganisation that has been introduced with the culture of the market place, purchasers and providers, and setting one sector of the service against another.
Different levels of pay are now appearing. I have no doubt that Mr Tim Matthews, at 42 the manager of the trust of which the noble Lord, Lord Hayhoe is a chairman, is a very able man. But that he should earn £96,000 with up to £8,000 in performance related pay, plus a £20,000 car is intolerable for those others in the National Health Service who receive nothing extra for the rate of inflation. That causes a loss of morale. I do not know what the chairman of the trust has done about it. Perhaps he is happy with the situation. However, I believe that it causes great concern among those in the service.
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There have also been enormous payments to external consultants. Tens of millions of pounds have been paid to firms to produce advice on this, conclusions on that, and reports and audits on the other. That has been at the expense of patient care.
The government policy of rationalisation is based on the assumption that London is grossly overbedded. I simply do not accept that conclusion. I accept that there has had to be a reduction and that there has had to be rationalisation of the teaching hospitals. We have already lost about 1,700 beds since the Tomlinson Report was published. In the course of that rationalisation waiting lists have gone up, as inevitably they would. But if Tomlinson's recommendations are to be carried out, another 2,500 beds will be closed in the London area with, I believe, disastrous results. The consequence of that would be that between 450 and 680 fewer consultants would be needed under this scaled-down service. There would be more administration, fewer consultants and fewer nurses. That is a serious point.
As the noble Lord, Lord Sharp of Grimsdyke, said, a few years back the Government made a disastrous decision to build the most expensive hospital in Britain, at a cost of about £250 million—the Chelsea and Westminster Hospital. The site was absolutely wrong and the cost was almost four times the original estimate. It is a hospital for 650 beds, not all of which have been opened, as the noble Lord said, and which the Government now say they do not need. It was sited not only at an inadequate site, because of travelling difficulties and narrow roads, but it was sited one mile from the Charing Cross Hospital. That questioned the need for the Charing Cross Hospital and, as we now know, it presented a grave threat to the Royal Marsden. I have to say that the present Minister was not involved, but I spent years trying to persuade the Government that it was an absurd decision to take, They said that there was no other alternative, so we produced another alternative. We produced a great deal of documentation as to how that could be done at a cheaper rate in a different area, so that it did not produce this absurd concentration of beds in one area. I went to see the Secretary of State, then Ken Clarke, to put the case to him. But the Government simply did not listen, they had taken the decision and it was going to stand. That was a terrible decision. The hospital would make a fine five-star hotel, and perhaps eventually it will he turned into a five-star hotel, but I do not think it has a future as a hospital.
So what should the Secretary of State now do? I hope that she takes no precipitate, rushed, cost-cutting service-depleting decisions for at least two years. I accept that certain decisions will need to be taken in order that those working in some of the great hospitals know what their future is; but I refer again to what Sir Bernard Tomlinson said. He said that by hurrying ahead and trying to achieve in a matter of months changes intended to take years the Secretary of State was allowing hospitals to disintegrate. I believe that we need, as soon as we can, to have a strategic health authority for London to look at the problems of London, not of everywhere else. It would be far better if the

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Secretary of State, while taking certain decisions to relieve the worries that exist in the minds of many who work in some of the specialist hospitals, would start by announcing a decision and then establishing a London strategic health authority. If the Secretary of State goes ahead now and demolishes so much of the London health service without, as my noble friend Lord Rea said, providing the primary health care services which are absolutely needed and closing hospitals before services in the community are available, I am fearful of what the situation will be, once the Secretary of State has made her Statement.
I think that the Government have dug themselves into such a deep and horrid pit that the citizenry of London will be devastated when the result comes.
12.18 a.m.
Baroness Cumberlege: My Lords, I am indebted to the noble Baroness, Lady Jay, for giving us the opportunity tonight to debate these issues. I believe that this is the first occasion in your Lordships' House, other than for Starred Questions, when she has spoken for noble Lords on the Benches opposite. I congratulate her on her thoughtful speech. I think she brings experience and insight to our counsels, not least as a non-executive member of the Kensington, Chelsea and Westminster Health Authority, which is itself at the sharp end of some of the issues we now face.
It is now a little over a year since we debated the Tomlinson Report. In my speech at the conclusion of that debate I made it clear that the Government had no intention of shelving the report as the 20 previous reports in the last century have been shelved. Most of your Lordships who spoke in that debate, even those who disagreed with some of the specific recommendations, acknowledged that its broad thrust was correct.
I do not wish tonight to repeat in too great detail the analysis which the Tomlinson Report contained, save to say that the problems which it identified have not gone away. As the noble Baronesses, Lady Jay and Lady Robson, reminded the House, parts of our capital city remain poorly provided for in terms of good community health services: GP premises, health clinics, district nurses and day centres for mentally ill people.
That leaves a gap in NHS provision and increases the pressure on hospitals. As a result, we see an alarming paradox. Despite the fact that London has one-and-a-half times as many hospital beds per head of population, it is harder for patients to get access to them. That is why, despite progress in the past year, waiting times in London are too high. The sum of £10 million is being targeted on the problem this year, but the key to reducing waiting times lies in developing better primary and community care so that patients can leave hospital to be more properly cared for closer to their homes and families. That releases beds for those on waiting lists.
As the noble Lord, Lord Ennals, illustrated, London hospitals are rightly coming under pressure to reduce their historically high costs. As the Tomlinson Report pointed out, even allowing for excess London costs, spending per inner London resident on hospital services is around 20 per cent. higher than the average for England. As in hospitals throughout the world, London
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needs to embrace medical advances such as day surgery to enable it to treat patients as they wish to be treated and to use fewer beds. In addition, patients from outside the capital are finding that hospitals nearer to their homes can meet their needs. As the noble Baroness, Lady Dean, said, that is in part due to London teaching hospitals whose graduates have pursued their distinguished careers in the provinces and have spread clinical excellence well beyond the confines of the capital.
With regard to funding, an issue that was raised by the noble Baronesses, Lady Jay and Lady Robson, the Government are setting aside money to ensure that the transition can be made as smoothly as possible. We estimate that the cost will be £105 million this year and there will be continuing costs in years to come. But that investment must be related to the changes that are needed. That demonstrates our commitment. But it also shows how London health services affect the whole NHS budget.
Many of your Lordships have expressed concern about weighted capitation. As people move away from the capital, it is right that the money should follow them. Despite the plea made by my noble friend Lord Sharp of Grimsdyke, the rest of the country is growing increasingly impatient at the cost of subsidising London's hospitals. Why, they ask, does London need one doctor for every 500 people when the national average is one to every 1,100?
The noble Baroness, Lady Masham of Ilton, movingly described the difficulties in bringing about change. But Sir Bernard Tomlinson warned of a "spiral of decline" if we did not act now to address the issues. That is why, when I spoke to your Lordships a year ago, I warned that "no change is no option".
Despite the late hour I crave your Lordships' patience as I set out what the Government have done in the intervening year. The publication of the Tomlinson Report itself showed that the Government are committed to a process of managed change. Although the problems which we face have been brought to a head by the pressures of the internal market—and I make no apology for that—and despite the view of the noble Lord, Lord Bruce of Donington, which was so forcefully put, it was clear from the outset that the size and complexity of the problem demanded more than the unrestrained hand of market forces.
The Government responded in February with the publication of Making London Better. That set out a clear framework for change. At the same time we set up the London Implementation Group to work through with those involved the options for reshaping hospital services and to broker change. As the noble Baroness, Lady Robson, reminded your Lordships, we also announced that further independent reviews would look at the best ways of strengthening specialist services in the capital, addressing the duplication and fragmentation. The specialty reviews concluded their work on time, three months later. I know that their findings were not universally supported, especially by my noble friends Lord Carr of Hadley, Lord Sharp of Grimsdyke and Lord Limerick. But the methodology used by the specialty review teams was the same methodology used by the MRC in its reviews, and its membership was

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composed of people of national and international reputation. It is interesting that it is only one review out of six which has been criticised, and that by a relatively small group of people.
The day after the reviews were published, the Guardian newspaper said in a leader that,
"fewer but larger centres will help to raise standards by providing a more comprehensive service. Bigger units allow doctors to branch into sub-specialties and improve their technical skills".
We endorse that view. Over the next few years there will be a reduction in the number of specialty centres in London. Some will merge and strengthen; others will move out of London into areas where specialist care is not as well developed.
The noble Baronesses, Lady Jay and Lady Dean of Thornton-le-Fylde, were critical of the Government for not producing an overall strategic plan. But it was not the purpose of Making London Better to lay down a definitive and final blueprint for the future. Throughout, we have taken time and trouble to consult widely, openly and genuinely. The Government will not be deflected from what has to be done overall. But equally we wish to be sensitive and constructive towards the representations we have received. As my noble friend Lord Carr urged, we have sought to strike a balance between undue caution and unseemly haste.
There was, and is, widespread acceptance and support for what we are trying to achieve. There was, and is, a strong feeling that the time has come to grasp the nettle. There was, and is, a willingness to look imaginatively towards the future rather than remain rooted in the past.
We have succeeded in moving the debate forward. We have achieved ownership of our proposals well beyond the Department of Health. We have won new allies to our cause in the NHS and in the professions. We do not underestimate the loyalty and affection which many people feel towards institutions. But the voices urging us on are just as loud.
We have won support partly because we have shown ourselves to be serious about improving primary care. As the noble Lord, Lord Rea, said, we have committed £170 million of capital investment to that cause over the next six years. This year alone, £40 million of new money is funding over 100 new projects. That figure will increase substantially next year. The hour is too late to describe all the schemes as requested by the noble Lord, but examples are that five new centres are being built in Greenwich and Bexley; five in Enfield, Tottenham and Edmonton; and minutes from your Lordships' House there is the new South Westminster Centre for Health.
Added to that are 23 new hospital at home schemes and 31 new voluntary sector projects which are helping to prevent unnecessary hospital admissions or are enabling patients to be discharged earlier from hospital than would otherwise be the case. We are developing new community facilities for the care of mentally ill people. For example, a home nursing team has been set up in Ealing, Hammersmith and Hounslow. We have also recruited over 400 new staff—not predominantly
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men in grey suits, but largely health visitors and district nurses. And we are spending £2.2 million on the professional development of GPs and nurses.
Those examples give just a flavour of the huge improvements being made to the capital's primary health care. There will be more to come. In Making London Better we set out a vision for the future; we are making that vision a reality.
The noble Lord, Lord Bruce of Donington, mentioned the Mental Health Act's biannual report. That is a report we take extremely seriously. Prior to receiving it we set up a mental health expert reference group to advise us on the situation in London. The emphasis of the group will be to seek practical solutions and ensure that health authorities take full account of their responsibility to purchase appropriate mental health services in the capital.
Part of the reason why we are so determined to improve primary care in the capital is because of the beneficial impact that that will have on London's accident and emergency services. Most of us would accept that a large number of patients are obliged to seek help at their local accident and emergency unit because they feel that they have no other doctor to turn to. That cannot be right for them; nor can it be right overall for the hard-pressed accident and emergency services. I welcome developments such as those now in place at King's, St. Mary's, UCH and the Royal London as a result of which GPs are working inside A&E departments. The minor injuries clinic at St. Charles' is a further example of successful innovation in that area, and one that I believe is supported by the noble Baroness, Lady Jay.
The Government's first priority in respect of accident and emergency services must be to ensure that all those who live in, work in and visit our capital city have quick access to high quality services when they need them. I am happy to repeat the assurance given before in your Lordships' House that we shall not close any accident and emergency department unless and until we can be sure that this fundamental condition is satisfied.
I should, however, point out to your Lordships the professional advice given to Ministers, which is that annual attendance at an A&E department should be of sufficient volume to ensure the right balance of staffing, space, equipment and critical back-up facilities such as resuscitation and intensive care. Consultation on the closure of the accident and emergency department at St. Bartholomew's has recently ended. A decision is expected very shortly. A decision on the accident and emergency department at Charing Cross awaits the results of the joint study on the possible merger of the Hammersmith and Charing Cross hospitals. Our commitment to comprehensive accident and emergency coverage for the capital is not negotiable. But it is essential that the services which are provided are of sufficient quality if the best possible outcome for patients is to be achieved.
The London Ambulance Service is, of course, crucial to the equation. I fully accept that the London Ambulance Service has given rise to genuine cause for concern and it is vital that it improves its response times to the standards we expect and have laid down in the

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Patient's Charter. This is a matter of better management and better working relationships, but it also calls for greater investment in the service so that it can modernise and expand its facilities. The Government have invested substantially in the London Ambulance Service in recent years. My right honourable friend the Secretary of State will be saying more about how we will improve the service shortly.
Decisions about accident and emergency departments are clearly relevant to the wider decisions which must be made about hospital services. It is to specific hospital services that I now wish to turn.
Consultation and assessment on trust applications for University College London Hospitals, incorporating the Royal National Throat, Nose and Ear Trust, the National Hospital for Neurology and Neurosurgery and Great Ormond Street, will end in January, following which my right honourable friend will announce her decision. Work to consolidate services at the UCL/Middlesex site has been taken forward with the closure of the Cruciform building on Gower Street. As the noble Baroness, Lady Dean, reminded your Lordships, the hospital has also made other savings to reduce its costs, in response to the pressure exerted by purchasers. This is clearly welcome. The noble Baroness also asked where the purchasers fit into the picture. The London Implementation Group works closely with health authorities as purchasers and recognises their crucial role.
So far as the accident and emergency department at UCH is concerned, I appreciate that there is uncertainty on this front. The position will become clear quite soon.
I am aware of the very strong views and the respect and the admiration in which your Lordships hold the Royal Marsden Hospital, but perhaps I may remind my noble friends Lord Limerick, Lord Carr and Lord Sharp that Making London Better did not accept the case for moving the Royal Marsden into Charing Cross Hospital. There are no plans to close the Royal Marsden. The special health authority is currently consulting on a trust application which the Secretary of State is due to consider in January. Likewise, the Royal Brompton Hospital is submitting a separate trust application.
Consultation on a new joint trust between St. Bartholomew's, the Royal London and the London Chest Hospital has now finished. It is well known that that group is examining options for consolidating services in the long term at the Royal London Hospital site in Whitechapel. This is in line with the policy set out in Making London Better. Such moves, together with improvements to the Homerton Hospital and local primary care, form part of the Government's commitment to improving NHS services in this area of the capital.
The first phase of development work at the Homerton Hospital, at a cost of £11 million, began in June. This will enable the services currently provided at the Hackney Hospital to be moved to a far better and more modern setting. The buildings which currently accommodate the Hackney Hospital have clearly outlived their usefulness. Further improvements to the Homerton are expected to be announced shortly.
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Among other things, the improvements at the Homerton, and related developments in the community, will enable substantial advances to be made in caring for mentally ill people in this part of London. To this end, the East London and the City Health Authority has made mental health services one of its key priorities this year.
As my noble friend Lord Hayhoe told us, the new Guy's and St. Thomas's Trust was set up in April under his distinguished chairmanship. The Trust Board has just completed an evaluation of its site options. The preferred option of the board is to integrate services on both sites and to reduce the size of the estate. This proposal is now being evaluated by the London Implementation Group and the trust outpost who will make recommendations to Ministers shortly.
The Hammersmith and Charing Cross Hospitals are currently considering the possibility of creating a new powerful teaching, research and hospital centre for West London, possibly on a single site. A team is taking this work forward. The possible relocation of Queen Charlotte's will depend on its findings.
A major review of hospital services in south west London is also being carried out by the. South West Thames Regional Health authority, and it will be making its recommendations to the London Implementation Group shortly. In each of these areas, the debate must move away from buildings and concentrate on the services inside them. Centres of excellence are not built of bricks and mortar but on the skills of doctors and their teams. It is this excellence which we are determined to conserve.
Let me illustrate the point by one decision already taken and warmly welcomed by the noble Baroness, Lady Robson. As she said, St. Mark's, the specialist hospital for intestinal disorders, is to move from its outdated accommodation on the City Road to Northwick Park Hospital. The move will allow the excellent clinicians at St. Mark's to develop their expertise and knowledge in more modern surroundings and with access to a wider range of services.
Staff are our greatest asset. That is why, after full and detailed consultation with the trade unions, we set up a clearing house and helpline to identify new vacancies countrywide and are matching displaced staff to vacant jobs. Already we have managed to place over a third of the staff who have registered.
I turn now to the vitally important area of education and research. These are areas where London deservedly has an international reputation which we are determined should flourish into the next century. There are several free standing undergraduate medical schools in London, each with a distinguished list of alumni. These schools will continue to thrive. However, it is widely recognised that medical students need access to strong departments of life sciences to strengthen their clinical training. The partnership of University College with the University College London Hospital is a shining example.
The Tomlinson Report proposed that these free standing medical schools should merge with established university colleges, a view which we endorse in (Making

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London Better. Very good progress has been made in this area under the auspices of the Higher Education Funding Council for England.
Proposals are currently being explored to merge the Charing Cross and Westminster Medical School with Imperial College, the Royal Free and UCLH medical schools as part of University College London; the London Hospital and St. Bartholomew's medical schools with Queen Mary and Westfield College, and the united medical and dental schools of Guy's and St. Thomas's with King's College.
There is also good progress in developing ever closer links between the independent postgraduate institutes and their neighbouring major university colleges. There are many details to be worked through, but we believe these measures will help maintain first class under-graduate and postgraduate education for the capital.
The noble Baronesses, Lady Jay and Lady Dean, raised the issue of research. We are determined that London should remain at the leading edge of medical research. It enjoys worldwide renown in this field and should continue to do so. A peer review of the quality and importance of research of the postgraduate special health authorities was chaired by Sir Michael Thompson, Vice-Chancellor of Birmingham University. It reported in the summer. Following this the Government announced that they would continue to provide central support over the next three years to
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protect high quality work. The details of the allocation will be made known shortly. I believe that the support that we shall give shows the clearest possible commitment to the capital's medical research.
I am aware that I have not done justice to your Lordships' debate and have not answered many questions, but I will read Hansard carefully and try to follow up the unanswered questions.
In conclusion, the Tomlinson Report was greeted with relief by some, by some with despondency and by some with a few tears. I recognise that it is impossible to avoid a period of uncertainty, which affects staff morale, and the Government are committed to bring that uncertainty to an end as soon as possible. In the meantime, I should like to pay tribute to the professional manner in which the vast majority of staff in London have continued to provide a quality service to patients.
In particular, I commend to your Lordships the words of Mr. Peyton Beale, a distinguished surgeon of King's College Hospital. He called for medical change to meet the needs of the population no longer living in such numbers in or near London and to address the great advances in medical science. The fact that he made this call in 1902 underlines the long-standing nature of the problem and the vital need to address it. Ninety years later Mr. Beale's call is being answered.
House adjourned at nineteen minutes before one o'clock.