Pigs' Kidneys: Consumer Safety

HL Deb 25 January 1993 vol 541 cc1029-120

Lord Stanley of Alderley asked Her Majesty's Government:

Whether the sale of pork chops with the kidney attached poses a risk to health; whether their sale is now prohibited; and, if so, whether this is by United Kingdom or European Community law.

The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe)

My Lords, diseased pigs' kidneys may show signs of nephritis, tumours, cysts or chronic abscesses and pose a risk to human health. In order to undertake a thorough check for these conditions—which can also have a bearing on the fitness of the carcase as a whole—the kidneys must be separated from their fatty and perirenal coverings. Separation is a requirement under the Fresh Meat (Hygiene and Inspection) Regulations 1992, which implement in Great Britain the EC Red Meat Directive 91/497.

Lord Stanley of Alderley

My Lords, I thank my noble friend for that delightfully bureaucratic reply to my Question. Why is it easier to diagnose such fearful diseases when the kidney is attached to the body as opposed to the chop when it is cut in half? Is my noble friend's new title "Minister of Deregulation", in which case can he do all in his power to make sure that such regulations as these are cauterised because, frankly, they make the lives of those of us in productive industry or in agriculture quite impossible?

Earl Howe

My Lords, as regards my noble friend's second point, many of us in this House have considerable sympathy with the sentiments that he has expressed. In MAFF and certainly in many other government departments the deregulation initiative is progressing with considerable energy. As regards his first point, the diseases and conditions which may be indicated by an examination of the kidneys are not easily detected unless the whole kidney can be seen. To carry out a proper examination of the kidney without splitting the perirenal capsule would be rather like trying to read a letter without opening the envelope.

Lord Monk Bretton

My Lords, how is it that these regulations have only now appeared? Was it only in 1992 that it was realised there was a serious danger from kidneys being attached to pork chops?

Earl Howe

My Lords, the separation of kidneys from the fatty and perirenal coverings has been a requirement for all pigs in this country since May 1991. However, it has been a requirement in EC legislation for many years prior to that, but only for the export market.

Lord Carter

My Lords, is the Minister aware that there appears to be some confusion on this important matter? The Institute of Environmental Health Officers has said that it is entirely acceptable within the regulations for the meat inspector to remove the kidney from the perirenal sac while still attached for visual inspection and then to replace it in the sac so that the chops can have attached kidneys. To put it another way, the inspector could take the kidneys out, shake them all about and then return them in a sort of porcine hokey-kokey. What increase in human welfare and reduction in food poisoning is expected as a result of these regulations on the supply of pork chops and kidneys if kidneys were to be separated rather than being allowed to cohabit with pork chops?

Earl Howe

My Lords, eating kidneys containing tumours, cysts or abscesses could lead to illness in humans. A failure to detect their presence could lead to carcasses with diseases such as leptospirosis entering the human food chain with consequent risks to consumers or to people who handle the meat.

Lord Hailsham of Saint Marylebone

My Lords, while paying tribute to the immense scientific learning displayed in the answers, as the regulations are comparatively recent can the Minister give us any instance of any damage to humans having been suffered from having eaten a pork chop with the kidney attached?

Earl Howe

My Lords, I must confess to my noble and learned friend that I can cite no case histories but we should not overlook the benefits which arise from this directive, the chief of these being an improvement in public confidence accorded to the British meat industry at a time when the scares over salmonella and BSE have done considerable damage.

Lord Stoddart of Swindon

My Lords, is the noble Earl aware that this welter of regulations not only from Europe but from our own Department of Health is very worrying? Is he aware that, as far as one can see, if these regulations continue to be imposed as at present half of our abattoirs will be closed down? What will happen then?

Earl Howe

My Lords, I fully agree with the noble Lord, Lord Stoddart, that new regulations should be resisted wherever possible and that existing regulations should be the subject of a root and branch examination by all government departments. That is exactly what is now happening.

Lord Finsberg

My Lords, does my noble friend agree that as he cannot cite any cases of illness having arisen, the testing of kidneys may be a matter which could be re-examined under subsidiarity so that this nonsense can be removed?

Earl Howe

My Lords, although I said that I could cite no specific case histories, that does not mean that there are not potentially serious consequences which could arise from failure to implement the directive. I cannot emphasise that strongly enough.

Lord Bruce of Donington

My Lords, can the noble Earl inform the House whence this idea originated? Have any medical papers been published on the subject, either at home or abroad? Has it been enlarged on in the veterinary journals, or in the Lancet or the BMA Journal? It seems to have come into the public eye very suddenly. Does not the noble Earl agree that the regulation is a lot of nonsense and the sooner we get rid of it the better?

Earl Howe

My Lords, when examining the burden imposed by any regulation or directive one has to consider the cost of complying with it. I suggest to the noble Lord that the cost of complying with this regulation is minimal in terms of the extra effort required in the slaughterhouse.

Lord John-Mackie

My Lords, what happens to the kidney when it is detached? Is it sold or is it destroyed?

Earl Howe

My Lords, if the kidney is found to be healthy it is naturally concluded that the carcass itself is healthy. There is then no reason why both should not be sold on to the market in the normal way.

Lord Marlesford

My Lords, will my noble friend respond to the question asked by my noble friend Lord Finsberg? It strikes me that the question of subsidiarity is relevant in this case. If the British Government decided that the regulations were not necessary would it be possible not to apply them in Britain on the grounds of subsidiarity?

Earl Howe

My Lords, I cannot agree with that proposition. The new regulations are a key element in the Government's strategies for improving public protection and helping the meat industry to compete effectively in the single market, where meat hygiene is very important.

GATT Negotiations: Progress

2.45 p.m.

Lord Boyd-Carpenter asked Her Majesty's Government:

What progress has been made in negotiations to conclude the Uruguay Round of GATT.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Baroness Denton of Wakefield)

My Lords, since the European Community and the United States reached agreement on the agricultural elements of the Uruguay Round last November, discussions have accelerated in Geneva on the remaining issues in other areas. However, while negotiators are close to agreement on all the main issues it has regrettably not yet been possible to reach a final agreement.

Lord Boyd-Carpenter

My Lords, I thank my noble friend for that Answer. Can she tell noble Lords where the difficulty in reaching agreement arises and from which country?

Baroness Denton of Wakefield

My Lords, considerable discussion is still taking place among various countries on a number of issues. For example, there has been discussion with Japan, Indonesia and Korea on the subject of rice. Canada raised the issue of dairy products and poultry, and the United States attempted to re-open some of the Dunkel text. I am pleased to say that my right honourable friend Sir Leon Brittan made it quite clear that the latter was unlikely.

Lord Ashley of Stoke

My Lords, when the noble Baroness considers the many countries which will be affected by the Uruguay Round will she bear in mind the interests of our friends in Australia and New Zealand who would be seriously damaged if anything went wrong at this stage? Will she ensure that progress is made before the deadline of 1st March when the American fast-track procedure is completed? Will she also keep in touch with and consult the governments of Australia and New Zealand?

Baroness Denton of Wakefield

My Lords, I am pleased to reassure the noble Lord, Lord Ashley, that the Government recognise that it is crucial that the agreements should be signed before the deadline for the fast-track procedure in the United States. I am pleased that the Council meeting in Edinburgh, under the chairmanship of my right honourable friend the Prime Minister, also agreed on the need for very early conclusion of the matter.

Lord Mackay of Ardbrecknish

My Lords, can my noble friend tell the House whether there has been any indication so far from President Clinton's new administration as to whether that new administration takes the settlement of the Uruguay Round as seriously as the administration of President Bush?

Baroness Denton of Wakefield

My Lords, I am pleased to say that President Clinton has stated his support for a GATT settlement and that he is committed to reaching agreement. He has a full economic agenda at the start of his term, and we have to ensure that he continues to focus on GATT.

Lord Dean of Beswick

My Lords, bearing in mind the serious employment situation, highlighted in your Lordships' House at Question Time last Thursday, will the Minister give an undertaking that she will impress most forcibly on anyone conducting negotiations on behalf of the United Kingdom that no agreement will be signed which benefits other nations but puts further jobs in the United Kingdom at risk?

Baroness Denton of Wakefield

My Lords, such is the benefit of signing the GATT agreement to the whole of the world's economy—we estimate that it is probably worth 60,000 British jobs—nobody could be keener about, and more dedicated to, ensuring that it is signed than this Government.

Lord Boardman

My Lords, can my noble friend confirm that her answer means that all parties to the proposed GATT agreement accept that it should not have further implications for agriculture than are now contained within the CAP?

Baroness Denton of Wakefield

My Lords, I am pleased to assure my noble friend that the agricultural deal struck with the United States last November is a good one for the Community. Commission analysis shows the deal to be compatible with reforms to the CAP regimes agreed last summer.

Lord Cledwyn of Penrhos

My Lords, will the noble Baroness tell the House whether the French Government support the reforms to the CAP?

Baroness Denton of Wakefield

My Lords, I am sure noble Lords will appreciate that I find it difficult to speak on behalf of the French Government. Perhaps I may suggest that with regard to their farmers and an election, there could well be various scripts in France. However, France will gain much from GATT agreement—for example, as the world's third largest exporter of services. French Ministers agree that they will need to review the whole agreement once it is finalised. However, I repeat that the Edinburgh Summit was unanimous in agreeing the need for conclusion.

Lord Clinton-Davis

My Lords, will the noble Baroness indicate whether the United States has shown any sign of relaxing its iniquitous ban on the liberalisation of its coastal trades in the maritime sector which prevents foreign ships from trading directly between American ports? Will she also indicate whether the United States' present administration has made a detailed offer on textiles?

Baroness Denton of Wakefield

My Lords, I prefer to stick to the straightforward question of a GATT settlement. However, I am pleased to say that in order to ensure that the textile industry has some stability it has been agreed under the UK presidency that we shall continue to extend the provisions of existing bilateral agreements for a further two years. That should ensure that matters go forward.

Lord Clinton-Davis

My Lords, does not the Minister recognise that the liberalisation of services is an important part of the current negotiations? Am I to understand from her answer that the British Government have made no impact on the negotiations via the Commission on behalf of the Community about this iniquitous ban on maritime trade so far as concerns coastal ports?

Baroness Denton of Wakefield

My Lords, I believe that everyone is agreed that the pressure and predominance that this country gave to the successful negotiations on all fronts of GATT during its presidency was second to none.

Lord Boyd-Carpenter

My Lords, would my noble friend care to forecast the date by which agreement will finally be reached?

Baroness Denton of Wakefield

My Lords, I must confess that I wish I could be helpful to my noble friend. I cannot. I simply say that I suspect the wish of everyone in this House is that it is at the soonest possible moment.

St. Bartholomew's Hospital: Tomlinson Report

2.53 p.m.

Lord Molloy asked Her Majesty's Government:

Whether they have received any representations from the consultants, doctors and other staff of St. Bartholomew's Hospital following publication of the Tomlinson Report; and whether they will ensure the future survival of the hospital.

The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege)

My Lords, we have received a number of letters from members of staff of St. Bartholomew's Hospital. We have taken account of all those comments and of the proposal to restructure the hospital as suggested by the management of Bart's. We shall shortly make clear our proposals for individual institutions when we outline our policy for the future of London's health services.

Lord Molloy

My Lords, I thank the noble Baroness for her reply and acknowledge the research that has taken place. Is she aware that many people, including the staff of St. Bartholomew's Hospital, believe that while the Tomlinson proposals are quite reasonable in some areas the axe is being wielded rather fiercely on one of Great Britain's hospitals of international fame? St. Bartholomew's is a hospital which undertakes so much that even the businessmen of the City of London have launched an appeal not to damage or wreck it. Such damage could have a serious effect on the City of London's business. Will those points please be considered?

Baroness Cumberlege

My Lords, yes.

Lord Braine of Wheatley

My Lords, does my noble friend agree that in the light of a red alert regarding hospital bed shortages in the region issued by the North-East Thames Authority, the Tomlinson Report's recommendations to close down a London hospital are now seen to be seriously flawed? Is she aware that since Christmas St. Bartholomew's Hospital—it is surely one of the finest hospitals in Europe—has had up to 17 patients sleeping in casualty wards although it has opened up 18 additional beds? Is my noble friend's department aware that it is necessary to carry out a realistic reappraisal of hospital closures in London, and to do so quickly?

Baroness Cumberlege

My Lords, I agree with my noble friend that speed is of the essence. One of the things that we do not want in London is planning blight. We need to make the decisions quickly. My right honourable friend the Secretary of State will be doing that shortly.

I should like to say to my noble friend that the alert was not a red alert, which stops all but emergencies, but was in fact a yellow alert, which urges health authorities to reduce elective admissions. I understand the paradox of the beds in London. However, taking account of education and research, London has more acute beds per head of population than elsewhere. We know that inner London hospitals are less efficient in their use of beds and that the concentration of specialty provision skews the way the beds are used. That makes it more difficult for London GPs to gain access to hospital beds.

Lord Mellish

My Lords, the Minister will be aware that St. Bartholomew's has had an orchestrated appeal. For example, the Evening Standard has done nothing else but state that St. Bartholomew's should be kept open. Is the Minister aware that some of us, not only on this side of the Chamber but on the other side too, are also much concerned with the Tomlinson Report as a whole? It is suggested that Guy's Hospital should be merged with another. I think that that is monstrous. Is it not time that we had a statement saying, for example, that Guy's will be left alone?

Baroness Cumberlege

My Lords, there is great acceptance in the country that something has to be done to grasp the nettle of London. Otherwise it will continue to spiral downwards, giving the people of London a very poor service and sucking in resources from the remainder of the country. This year alone we are propping up London by £50 million. London receives 20 per cent. of the NHS resources although it has only 15 per cent. of the population. It really is time that the nettle is grasped.

Lord Hayhoe

My Lords, will the Minister accept that within both Guy's and St. Thomas's the proposals to merge the management and to move towards further provision for improving services of those two great hospitals have wide support? I declare an interest as a potential candidate for the chairmanship of that combined institution. Perhaps I may also urge upon my noble friend that in all these matters the weight of the argument should be what determines the decision rather than the loudness of voices of protest which are raised.

Baroness Cumberlege

My Lords, my noble friend is absolutely correct. It is important that the issue is well debated. We have consulted on it. My noble friend the Secretary of State will be making her decision shortly. I shall bring it with pleasure to this House.

Lord Bruce of Donington

My Lords, will the noble Baroness give the House the assurance that when coming to a conclusion as to the action that they propose to take on the Tomlinson Report, the Government will bear carefully in mind that the report discloses few, if any, visits made by the author to the installations recommended for closure? Will they bear in mind that it requires a physical review of the facilities to be removed and/or sold before any conclusion is reached? Will the noble Baroness bear in mind that there are dangers in relying too heavily upon statistical data and less on practical experience and visits to the installations when considering this important matter?

Baroness Cumberlege

My Lords, Sir Bernard Tomlinson and his team made a number of visits to institutions. My noble friend the Minister for Health has spent the last three months visiting all the institutions concerned, in some cases making a second visit where he felt that that was necessary. I agree that seeing is worth a thousand words.

Baroness Faithfull

My Lords, does the Minister agree that the noble Lord, Lord Mellish, is absolutely right? Should not all the great hospitals that have been mentioned, not just one, recognise that primary care is of the greatest importance? We must have a primary care system as well as having good hospitals.

Baroness Cumberlege

My Lords, I totally agree with my noble friend. A major plank of the Government's strategy will be to improve primary care in London.

Lord Desai

My Lords, does the noble Baroness agree with the BMA that the crisis at the heart of London is caused by the internal market and underfunding? Will she promise to pay attention to whether the internal market rules could be revised to help London?

Baroness Cumberlege

My Lords, the BMA usually plays the same song; we know it well. I believe that we should listen to Sir Bernard Tomlinson, who came in as an independent adviser. He said that the issue in London was not under-resourcing.

Lord Molloy

My Lords, the management consultants—the well-known firm of Ernst and Young—said that the restructuring proposals were flawed. They did not take sufficiently into consideration that 300,000 commuters come into the area every single day. Ought that not to be taken into consideration before St. Bartholomew's is savagely axed?

Baroness Cumberlege

My Lords, Ernst and Young were employed by a certain hospital. On the question of commuters, 300,000 come into London, many to the City. That area is also served by six other teaching hospitals which are in close proximity to Bart's.

Trustees: Demerged Shares

3.2 p.m.

Viscount Brentford asked Her Majesty's Government:

Whether they will amend and clarify the law relating to the treatment of demerged shares received by trustees.

The Parliamentary Under-Secretary of State, Department of the Environment (Lord Strathclyde)

My Lords, we have no plans at present to legislate in this area.

Viscount Brentford

My Lords, I thank my noble friend for that somewhat negative reply. Is he aware that the present state of the law means that trustees have partially to break the terms of their trust deeds? Where demerged shares are received by them, they no longer form part of the capital of the trust but have to be distributed to the beneficiaries.

Lord Strathclyde

My Lords, of course legal advice should always be taken in deciding these matters. But our feeling is that the demerged shares should be treated as capital and not as income.

House of Lords' Offices: Select Committee Report

3.3 p.m.

The Chairman of Committees (Lord Ampthill)

My Lords, I beg to move.

Moved, That the 3rd report from the Select Committee be agreed to.—(The Chairman of Committees.)

Following is the report referred to:

1. Membership of Sub-Committees

The Committee has appointed Lord Richard as a member of the Finance and Staff Sub-Committee in place of Lord Cledwyn of Penrhos.

2. Accommodation: 6–7 Old Palace Yard

The Committee has agreed that as recommended by the Administration and Works Sub-Committee plans should be developed for occupancy of 6–7 Old Palace Yard to include peers and their personal staff, a secretarial agency, certain staff in the Parliament Office and a residential flat relocated from the Palace of Westminster. The Committee has agreed that English Heritage be invited to advise on the installation of a lift in 6–7 Old Palace Yard.

3. Net Subheads

The Committee has agreed that the House of Lords should move to a net subhead regime from 1 April 1993.

4. Authorisation of Select Committee visits

The Committee has agreed to new arrangements for the authorisation of overseas visits by Select Committees. Such visits will be subject to the approval of the Chairman of Committees and the Clerk of the Parliaments, with the Finance and Staff Sub-Committee considering appeals from their decisions.

5. Shorthand Writer to the House

The Committee has approved a draft agreement between the two Houses and Gurneys, setting out a new basis for the services provided by the Shorthand Writer to the House and new charging arrangements.

6. Internal audit

The Committee has approved proposals for new internal audit arrangements for the House of Lords. The House will employ its own internal auditor instead of having a share of an auditor employed by the House of Commons on behalf of both Houses.

7. Parliamentary Data and Video Network

The Committee has agreed that the House of Lords should pay a share of the cost of certain staff employed by the House of Commons in connection with the creation of a Parliamentary Data and Video Network.

8. Additional expenses for disabled Peers

The Committee has approved the reimbursement of costs incurred by Lord Ashley of Stoke in having a transcription of proceedings transmitted to a monitor which he can read in the chamber.

9. Staff of the House

The Committee has approved the creation of additional posts, as follows—

• —Third Counsel to the Chairman of Committees, a part-time appointment initially for one year
• —additional Grade 7 in the Establishment Office.

The Committee has also approved the extension for a further year, until January 1994, of a temporary post of Hansard word processor operator.

10. Flexible grading

The Committee has approved a proposal that the ceiling on appointments of Principal Clerks (Civil Service grades 3 and 4) should be raised from 4 to 6, of which not more than 4 should be at Grade 3.

11. Appointments and promotion

The Committee was informed of the following appointments and promotion—

Mr J L Goddard to be a temporary Senior Clerk for two years with effect from 12 October 1992.

Mr D J Batt to be a Clerk with effect from 13 October 1992.

Sir James Nursaw KCB QC to be Third Counsel to the Chairman of Committees (part-time) from 9 November 1992, initially for one year.

Mr M G Pownall, Principal Clerk of Committees, promoted from Civil Service Grade 4 to Grade 3 from 19 October 1992.

12. Security and fire prevention

The Committee has agreed that Peers should carry their photo-identity passes when present within the parliamentary precincts. They do not need to wear them, but to do so would help the security force and could reduce inconvenience to Peers.

The Committee has taken note with approval of new and more stringent fire safety procedures with contractors which will be included in all new contractual documents.

Lord Cocks of Hartcliffe

My Lords, I wish to thank the Committee for the work it has put into producing the report. I should also like to thank the members for what is absent from the report—there is no mention of television documentary programmes about your Lordships' House. When we debated the second report there was mention of a series of six being done with the BBC. I suggested to your Lordships that we ought to see the programme produced for "Cutting Edge" before we committed ourselves to further programmes. Having heard some of my colleagues discuss the programme for "Cutting Edge", I feel that there should be no further talk of documentaries about your Lordships' House. I welcome the absence of any mention of them in the report.

I wish to concentrate on the matter of Nos. 6 to 7 Old Palace Yard. There is talk of English Heritage being consulted about the installation of a lift, and the necessity for a lift is recognised. There is a certain lack of mobility among Members of your Lordships' House which we all acknowledge, and I have been over there to inspect the building. Unless English Heritage can produce a magic carpet, I find it difficult to see how a lift of any size could be installed without doing substantial damage to the internal fabric of the building. Surely there can be no conception of having a lift on the outside of the building because it would spoil the appearance not only of the building itself but also the general view of the entire Palace. The area is increasingly familiar to most people in the country because so many interviews are conducted on the grass.

I am interested to know how the installation of a lift can be achieved. Even if it could be installed without serious damage to the building, the problem of your Lordships getting to Divisions would still need to be faced. There is a busy road and because of the restrictions of the building, the lift would probably not be adequate to take all those who wished to use it at any one time. I can imagine difficulties, particularly if the Government lost a vote by a very small minority.

There is also a matter which I noticed at the weekend. I apologise to the noble Lord the Chairman of Committees for not giving him notice of it last week, but I picked it up only over the weekend, principally because I went to pay a bill at the secretarial agency. I noticed that it is proposed that the agency should be moved to Nos. 6 to 7 Old Palace Yard. The original proposal was that it should go to Millbank, before the difficulties with that building were appreciated in this instance. I find it extremely worrying. It is quite inconceivable that Parliament should not have secretarial agency services within the building.

I was given a letter about that from the Lord President of the Council, who was replying to a Member of another place who had sent him representations about the projected possible moving of the secretarial agency to No. 7 Millbank. The letter from the Lord President is dated 24th July 1992. It states:

"Thank you for … the representations [about] the Susan Hamilton Services. I have checked up on this matter with the House of Commons authorities, although the responsibility for the locating of the Susan Hamilton Secretariat lies solely with the House of Lords, and they have reassured me that there are no plans to move them to Millbank. They recognise that this would be most inconvenient to Peers and Members alike".

It is not simply the distance to Millbank which is a great inconvenience. It is the crossing of the road outside, which must be one of the busiest in London. Since Members of your Lordships' House who make use of the secretarial agency outnumber those of another place, it is a most germane point. Perhaps we could be told whether there has been any study of the possible financial effect in terms of loss of business on the agency if it were to move across the road. It is conceivable that the thought of leaving the building, certainly in the inclement weather we have had in the past months, and crossing that difficult road might reduce the agency's business to the point where it was no longer viable. If it became non-viable, we should have to have services of some kind. They would either have to be provided by the House itself, or some other outside agency would have to be enticed into the building.

The present agency has been here for 27 years. I imagine that, if it did not survive, the difficulties of getting someone else to take on the task would be great. So I ask for serious consideration of the matter. Perhaps we can have reassurance that the sentiments of the Lord President in another place will find sufficient echo here for there to be reconsideration of the matter.

The Chairman of Committees

My Lords, the noble Lord raised the matter of the television programmes. There is no mention of this in the report, as he correctly diagnosed, because I believe we all wished to put behind us the unfortunate experience which we endured in the "Cutting Edge" programme. The Clerk of the Parliaments wrote an excellent letter to the chief executive of Channel 4 which elicited a reply that was less than satisfactory. The whole House might care to acknowledge that the best retort that could be made was made by the noble Baroness, Lady Hollis, in the "Right to Reply" programme, when she most eloquently turned the producer of that programme into what I hope I may be excused for calling "mincemeat".

The accommodation at 7 Old Palace Yard has been heavily discussed both by the accommodation group and by the Administration and Works Committee. There is naturally a reluctance on the part of all those who are presently accommodated in the Palace of Westminster to move across the road. But it is only across the road, and it is a great deal less distance to travel than it would have been had we been moving people into No. 7 Millbank.

The matter of the lift is fraught with difficulty. As it is a Grade 2 listed building, we have to defer to English Heritage; and we ourselves would not wish to do anything destructive to what is a very pleasant building. I would not say that it is one of the greatest beauty, but it is a good building and we do not wish to do it damage. There are two worries in the mind of English Heritage. One is that the overrun of the lift would have to go through the roof a bit. We have agreed therefore that we will stop it at the second floor. There is another worry regarding the basement, where there is a stone arch which it is anxious should not be interfered with. The director of works staff are still working on detailed designs for the lift. It will be a small one. We are anxious to make it big enough to take a wheelchair, but I think that that may prove impossible. No decision has yet been reached. We shall certainly treat the building with the respect which it deserves.

With regard to moving the secretarial agency, it was finally decided that this was one of the activities that could go across the road. I accept that it is not ideal, but one has to reach a balance between the best interests of Peers and those who serve them. If we are successful in our negotiations with the Westminster City Council we hope to have a Pelican crossing immediately opposite the building which will enable us to get across the road with due dispatch. But that matter is not yet resolved. I accept that it is arguable as to the inconvenience of moving this agency. There is a meeting of the Administration and Works Committee tomorrow and, if the noble Lord wishes, I shall see that the matter is brought up for further consideration.

Lord Bruce of Donington

My Lords, I rise to ask the noble Lord some questions. The first is one of principle. One observes from this third report that the committee has agreed a whole series of actions. I have been in this House for only 18 years so far, but I am bound to consider the possibility that there may be occasions when the House as a whole might disagree with some of the items which have apparently already been agreed by the Select Committee. Therefore my first question is this. What happens if the House as a whole—the House includes a majority of Back-Benchers as distinct from Members on the Front Benches on all sides—on reading the report says, "We don't like this. We don't think this is necessary; we don't think it is right"? There are a number of alternatives. I am afraid that the Standing Orders of the House are of no comfort to anybody on this matter because the House of Lords' Standing Orders are completely silent on it.

Suppose, for example, we moved an amendment to the report. First of all, is it a proper thing to do? And if an amendment deleting a certain item were carried, would the Select Committee in itself have power to cancel the agreement it had already reached in the name of the House? How is the House able to exercise some control?

I observe from the report that the Select Committee is appointed to consider the House of Lords' Offices. It can go on considering for as long as it likes, but I should have thought it would be more proper if it were to submit its report in the form of proposals to the House to agree that certain things be done or to recommend that certain agreements are reached rather than deciding on its own—with, quite clearly, the concurrence of both Front Benches —that certain things are appropriate, so that the House, after seeing the report, can either reject it in toto, which would be against the traditions of the House, but would be denied any way of amending it.

I should like to refer to certain specific instances in order to emphasise my point. Paragraph 4 states:

"The Committee has agreed to new arrangements for the authorisation of overseas visits by Select Committees. Such visits will be subject to the approval of the Chairman of Committees and the Clerk of the Parliaments, with the Finance and Staff Sub-Committee considering appeals from their decisions".

I am second to no one in your Lordships' House in my admiration for and respect for the Clerk of the Parliaments, who is the custodian of the procedures of the House and many other matters. However, I query putting the Chairman of Committees into a position where there might be a disagreement between himself and the Clerk of the Parliaments as to what ought to be done. I speak subject to correction, but surely that places the Clerk of the Parliaments in a rather unfortunate position. In any case (again I speak subject to correction) I believe that making arrangements between the House and the authorities concerned for Select Committees to undertake overseas visits is of sufficient importance to be referred to the House rather than left as it is.

I see that we are now to employ our own internal auditor, as distinct from having a share of an auditor employed by the other place. I think the House ought to be given some reason for that.

I note that paragraph 3 states:

"The Committee has agreed that the House of Lords should move to a net subhead regime from 1 April 1993".

The mind boggles at the consequences of moving to a "net subhead regime", whatever that may mean. Is it a question of identifying the Votes under which our expenditure is undertaken? Surely some explanation can be given.

I observe on the staff of the House that the committee has approved the creation of additional posts, including a third counsel to the Chairman of Committees. I am quite sure that the noble Lord needs to be assisted in these matters; but once again as a Back-Bencher I am not quite satisfied that these matters have received the attention of the House as a whole before decisions have been made. Therefore, will the noble Lord give some consideration to the question of coming to the House before agreements are reached, rather than afterwards? I should not have thought that that suggestion would involve him in very considerable inconvenience. The House is composed of very reasonable men and women who are in favour of established authority—apart from the occasional dissident who is inflicted upon us from time to time. I urge the noble Lord to give those matters consideration.

Lord Tordoff

My Lords, I was chairman of the accommodation group which looked at 6–7 Old Palace Yard. I should like to say in response to the noble Lord, Lord Cocks, that many people, including Peers, do not wish to move out of this building. Frankly, if Peers are to have desks in this building in the numbers that are required for us to do our jobs properly, somebody will have to move out. We put to the Offices Committee that precedence should be given to working Peers, even at the expense of people in the secretarial bureau, for example.

It is true to say that we could debate all those matters. Sub-committees of your Lordships' House often debate such matters for up to an hour at a time. If noble Lords wish to bring an issue to the Floor of the Chamber, we could debate it for six or seven hours at a time and everybody could join in. However, the present system whereby recommendations are brought forward from the various sub-committees and endorsed or otherwise by your Lordships' House is preferable.

The Chairman of Committees

My Lords, I, like the Lord Privy Seal, desire to make the noble Lord, Lord Bruce of Donington, as happy as possible. I hope that the noble Lord will agree that the House has to delegate some of the tasks of administration to other bodies. There are already two sifting committees. Matters begin at the Administration Committee and then go to the Offices Committee, which is a large body, although not so big as it once was. It numbers 30. Back Benchers are widely represented on that committee; in fact they outnumber all the usual channels, who make Back Benchers so frightened. The situation is therefore receiving all the attention that it deserves.

It is for the House to approve or not decisions that have been reached by the Offices Committee. We could make the reports longer, which would give more detail. But it is also possible for me now to attempt to fill in some of the details about which the noble Lord is curious.

The authorisation of overseas visits is a liberalisation of the previous policy whereby matters had to go before the Finance Committee. It is very rare that disputes arise as to whether visits abroad should take place. It is almost invariably the European committees that wish to do the travelling.

The Clerk of the Parliaments, as the accounting officer, is responsible for ensuring that too much money is not spent on such activities, but an appeals procedure is available. The Finance and Staff Committee can be brought together if anyone feels that they have been declined the right to do all the travelling that they feel it is right and proper for them to do.

I should like to turn to the subject of the internal auditor. As the noble Lord will know from his professional experience, it is common practice throughout industry and commerce for internal auditors to take on some of the work of external auditors. We found that we were ahead of another place in the implementation of Ibbs. It was felt that it would be helpful for this House to proceed. There is quite enough work to do under the new regime, bearing in mind the responsibilities that Ibbs has placed upon us to account properly for all our expenditure.

The net subhead regime is a matter upon which one requires guidance when one first hears about it. I certainly had to seek guidance. The changeover to a net subhead regime in the House of Lords votes means that in future money voted for expenditure by the House will be expressed net of receipts. At present, the subheads of the vote provide for gross expenditure and receipts, for example, from Private Bill fees and from the refreshment department, to be itemised separately as appropriations in aid. The change has been made, with Treasury agreement, as part of the reform of financial management within the House. The same change has been agreed for the House of Commons. The advantage of the House operating the system is that the House benefits from any receipts over and above forecast levels instead of surrendering the surplus to the Treasury. The downside is that if receipts fall below the estimated level, then expenditure must fall correspondingly.

As to the third counsel, I am in need of all the counselling I can get, as noble Lords are aware. In this instance we have been fortunate enough to bring on board Sir James Nursaw, who has recently ceased to be Treasury Solicitor. He is not, alas, going to counsel me, but will help the Delegated Powers Scrutiny Committee, of which the noble Lord, Lord Rippon, is the chairman. Sir James has been appointed on a temporary and part-time basis, but his services will be much appreciated by that committee.

I believe that I have answered all of the questions that have been raised by noble Lords.

Lord Boyd-Carpenter

My Lords, can my noble friend clarify a point that I did not clearly understand? He said something to the effect that the recommendations from Select Committees were subject to the approval of the House. In a sense the Motion which the noble Lord has moved is intended to give that approval. However, where specific expenditures are stated in this document to have been approved by the Select Committee, can the noble Lord state whether that means what it says or whether it means that they are recommended by the Select Committee for the approval of the House?

The Chairman of Committees

My Lords, the House could, if it so chose, negate the decisions made by the Offices Committee. That would create a great deal of difficulty. But it is one of its powers and, as the noble Lord states, that is the reason why I am moving the Motion. If steps were taken to refer the matter back, we would come forward with alternative proposals. I beg to move.

On Question, Motion agreed to.

Agriculture Bill [H.L.]

3.30 p.m.

Report received.

Clause 2 [Applications for approval]:

Lord Carter moved Amendment No. 1:

Page 2, line 18, at end insert:

("(1A) Any scheme which is approved by the authority in accordance with this Part of the Act shall cease to have effect at the end of the period of twenty-eight days beginning with the day on which the scheme was approved (but without prejudice to anything previously done under the scheme or to the approval of a new scheme) unless before the end of that period the scheme is approved by a resolution of each House of Parliament.

(1B) In reckoning any period for the purposes of subsection (1A) of this section, no account shall be taken of any time during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than four days.

(1C) Any document containing the details of a scheme produced for the purposes of subsection (1A) above shall exclude all matters which are in the view of the authority matters of commercial sensitivity.").

The noble Lord said: My Lords, the Bill is an enabling Bill. Only the marketing boards can bring forward reorganisation schemes for the successor bodies. The authority can suggest amendments to those schemes, or reject them, but the authority cannot bring forward its own scheme in substitution for that which is brought forward by the marketing boards.

The Bill lays down clear criteria in Schedule 1 that enable the authority to judge the various schemes. Those criteria can be amended and approved as the Bill is debated here and in another place. I congratulate the Minister on picking up a few points made at Committee stage. We welcome the amendments that he will be moving in order to improve the criteria in respect of consultation and competition.

One thing that is missing from the Bill is a provision for Parliament to examine whether the authorities have satisfied the criteria that have been laid down by Parliament. I should like to repeat remarks that I made in an earlier debate and wildly mix my metaphors. We are being asked to buy a cow in a poke, which would be the offspring of a cosy stitch-up.

This is not the place to debate the important matter of enabling Bills and regulation-making powers. I see the noble and learned Lord, Lord Simon of Glaisdale, in his place and he can speak with much more authority than I in that area. I note with approval the description that he gave regarding the approach to legislation within the Bill, an enabling Bill with virtually everything left to ministerial decision. He described it as "bureaucratic aggrandisement at the expense of proper parliamentary procedure"; we certainly agree with him.

The Bill goes further than that. There is no parliamentary procedure envisaged for the approval of the various schemes. We held a good debate on the subject in Committee and I do not propose to go over all the arguments then advanced. However, I should like to deal with a few of the objections raised then by the Government and explain the drafting of the amendment which is designed to deal with those objections.

At Committee stage the Minister seemed to imply that he saw the logic of the argument but that the practical problems he foresaw led him to reject the proposition. The amendment has been drafted precisely to deal with the problems that the Minister, and indeed others, foresaw in the amendment I moved in Committee. Once the Bill reaches the statute book, the marketing boards will submit their draft schemes for ministerial approval. Indeed, we all know that they are working hard on drafting them. There will then be a period of consultation as laid down in the Bill and no doubt amendment and variation of the schemes will be considered until the principles of the scheme are finally approved by Ministers.

At that point the marketing boards, producers, the trade and consumers will be informed of the principles of the reorganisation schemes. In fact, everybody will be informed except Parliament. At Committee stage the Minister made a great deal about what he described as the process of iteration; that is, the process of amendment and variation as the schemes are discussed. I am not suggesting that Parliament should be involved in that process; it should be involved only in the process of consideration of the principles—I emphasise, the principles—of the scheme as they are finally agreed by Ministers.

I can entirely understand that there will be variations of the detail of the scheme even after final approval. But it is inconceivable that the principles of the scheme will be amended once the Ministers have agreed them. Therefore, once the principles are agreed I would argue that Parliament should have the chance to pronounce on them.

In Committee the Minister produced a curious argument that Parliament should not be allowed to examine the scheme because it may be that Parliament may not like the scheme. To paraphrase an old saying, "Since Parliament might not like it, so Parliament isn't going to get it". Another problem envisaged by the Minister was delay. Your Lordships will note that the amendment specifies that the scheme must be approved within 28 days of the time it is laid before the House, but the 28 days does not include any time in the Recess.

Perhaps I can take an example, because much was made in Committee of the point that if the scheme was laid in the Recess the whole thing would be delayed. Were the House to rise for the summer break on 31st July and the scheme be laid on 1st August, everything that was done under the scheme would be entirely legal and irreversible. The House would meet on, say, 15th October and have to debate the resolution before 11th November. Everything that took place between 1st August and 11th November would be legal and could not be reversed even if, in the inconceivable eventuality, the scheme was rejected by Parliament. I emphasise the point, that everything done from day one would be perfectly legal even in the unlikely event that the resolution was rejected. As we know, a resolution can only be rejected by the House: it is not capable of amendment. In the much more likely event that Parliament is sitting, then the delay would be only four weeks from the time the principles of the scheme were agreed and when the Minister laid them before the House. I would argue that that is not a considerable delay.

I should like to emphasise the point that, if the House is not sitting, then the boards, the successor bodies and so forth can go on implementing from day one. They will not be faced with obstacles. The point has been made that competitors in the dairy trade will be out promoting their schemes; the marketing boards can go out on exactly the same timescale. The point was made also that the schemes will obviously involve in their detail matters of commercial confidentiality or sensitivity. The amendment is expressly drafted under paragraph (1C) to exclude such matters from the draft and the only point which would need to go before Parliament would be the principles of the schemes.

The fundamental question, therefore, is whether Parliament will be able to express a view on the schemes where Parliament has laid down the criteria for approval but which, as the Bill is drafted, are entirely a matter of ministerial fiat. When the new schemes are in place they will bring to an end 60 years of a marketing scheme which, in my view, has served the consumers and the trade well. Surely Parliament should be allowed at least to examine the new schemes in principle and pronounce upon them. I beg to move.

Baroness Carnegy of Lour

My Lords, the noble Lord, Lord Carter, is certainly an ingenious drafter of amendments. He has tried to overcome some of the problems which we unearthed at Second Reading on this point.

At Committee stage I spoke to an amendment proposing that the successor schemes to the milk marketing boards should be subject to parliamentary discussion under the affirmative resolution procedure. I am bound to say that my noble friend the Minister convinced me that the subject of successor schemes to milk marketing boards is not a suitable one for the affirmative resolution procedure. He convinced me that successor schemes, whether or not they contain commercially confidential material, would be placed in an extremely awkward position if, the milk marketing boards having been negotiated with the Minister of the day and every detail having been agreed, they were then turned down by Parliament.

The discussion as to whether a scheme is acceptable to Parliament inevitably involves representation from all kinds of people whom the scheme does not really suit. It would become a highly politicised discussion and probably also a commercial discussion. Therefore, I confess with reluctance, even though commercially sensitive issues are omitted from that which is put to Parliament, that I cannot support the amendment.

Earl Howe

My Lords, as the noble Lord, Lord Carter, said at the beginning of his remarks, we debated an earlier amendment of his in Committee with similar intention. At the time I made clear my strong opposition to the amendment, which the intervening pause for reflection has not in any way lessened.

In structural terms the presentation of the Agriculture Bill to Parliament means that Parliament decides on the principles by which a reorganisation scheme is to be judged. It is then for Ministers to judge a reorganisation scheme according to the principles in the Bill. That, in my view, is a logical and defensible way to proceed. Ministers may engage in a dialogue with a board, suggesting modifications to a scheme and possibly receiving counter-suggestions, in order to ensure that a scheme is acceptable. That too seems to me sensible and desirable. But then, once approval has been given by Ministers according to the rules of the game, the noble Lord, Lord Carter, would have it that Parliament can set all that aside and move the goalposts some way off.

I must ask once again how a board could possibly formulate a second reorganisation scheme in those circumstances, knowing that it had to meet not only the requirements of the Act but also the as yet unformulated and unpredictable demands of Parliament, which would not be bounded by the Act.

The scope for confusion and delay is considerable, with consequent risk of damage to investment, jobs and incomes. Even if Parliament did not go so far as to overturn a decision by Ministers to approve a scheme, the delays which could arise before an affirmative resolution was passed by both Houses would be considerable. It is no use at all saying, as subsection (1A) of the amendment implies, that the relevant board could get on with the implementation of its scheme in the meantime. We are talking about the real world here and not about some theoretical construct. No board is going to undertake changes of the kind envisaged while the threat of a parliamentary veto is still hanging over its scheme.

I am grateful to my noble friend Lady Carnegy for her remarks. I do feel that the amendment is misconceived. There are genuine and insuperable practical difficulties about accepting it and I hope very much that the noble Lord will have been persuaded to withdraw it.

Lord Carter

My Lords, that is a very predictable answer. It is the answer that Ministers always give when they are asked to bring things back for Parliament to look at. I am extremely grateful to the noble Baroness, Lady Carnegy, for her congratulations on the drafting of the amendment. I can tell her that it had a lot to do with Erskine May and not me. She said that this is not a suitable subject for the affirmative resolution procedure. But I have to ask her: what is Parliament for? We are now overturning a milk marketing scheme that, although it could be improved, has been operating for 60 years, with, I would argue, considerable benefit to producers, consumers and the trade. From the briefing we have received we all know of the concern that has been expressed from all sides on the way in which the scheme will operate. The noble Baroness said that any discussion on the procedure would be highly politicised. We are used to that. We are all good judges of the briefing we receive and we can make our judgments accordingly.

I thought that the Minister was talking about a different amendment from the one I proposed. His brief was almost designed to deal with the amendment that I moved in Committee. I repeat that I am referring to the principles of the scheme. Once these principles are agreed, we will all be told them. Everyone in the industry will be told them. The tremendous delay that the Minister talks about is a matter of a mere four weeks. He says that Ministers are to judge. The Bill says nothing. The Minister said that the Bill lays down the principles. It does indeed. But the Bill says nothing on the principles themselves. It is not intended to. It is an enabling Bill. There is nothing about the nature of the successor bodies or the principles of their operation. It refers to the principles on which the schemes are to be judged. All of us in the industry will have to make a judgment on whether the schemes will be to our advantage. However, we will not have the chance in Parliament to discuss these extremely important matters which affect the supply of milk and milk products in a market which at the producer end is worth some £2 billion.

The Minister implied that Parliament could somehow amend the resolution. That is not possible. The resolution could either be accepted or rejected in each place. He said that Parliament might attempt to move the goalposts. In fact, it would have to cancel the match, because it would have to reject the resolution out of hand. That is extremely unlikely in the circumstances. All I am asking for is the chance for Parliament, which lays down the criteria, to debate the issue. It is almost inconceivable that the resolutions, when they are laid, would be rejected. As the Minister will know, that very rarely happens. However, it would be a chance for Parliament, with only a four-week delay if the House were sitting, to discuss the schemes.

I pointed out that if the schemes were laid in the Recess everything could go ahead and all the arrangements reached in that period would remain legal even if the schemes were rejected. I think the Minister wishes to intervene.

Earl Howe

My Lords, I am grateful to the noble Lord. How does he think an affirmative resolution could be laid during the Recess if it so happened that that was the timing? Can he clarify that point?

Lord Carter

My Lords, the resolution is laid when Parliament returns. It has to be debated within 28 days or the scheme lapses. It is a well-known procedure. It happens with resolutions that have to be dealt with in the Recess. Everything that happens under the draft order is perfectly legal, but from the day Parliament returns the Government have 28 days in which to lay the resolution and for Parliament to debate it. This point does not arise. The draft resolution does not have to be laid during the Recess.

I have dealt with the point about delay. If the House is sitting, it is a matter of a mere four weeks. I think it is right that Parliament should have the right to examine and debate the principles of these important schemes which at the moment are a subject entirely for ministerial fiat. As we have discussed the subject in Committee and now on Report, I should like to ask the opinion of the House.

3.45 p.m.

On Question, Whether the said amendment (No. 1) shall be agreed to?

^*Their Lordships divided: Contents, 87; Not-Contents, 153.

Division No. 1
CONTENTS
Addington, L.	Kennet, L.
Archer of Sandwell, L.	Kinloss, Ly.
Ardwick, L.	Llewelyn-Davies of Hastoe, B.
Ashley of Stoke, L.	Lockwood, B.
Beaumont of Whitley, L.	Longford, E.
Birk, B.	Lovell-Davis, L.
Blackstone, B.	Macaulay of Bragar, L.
Bonham-Carter, L.	McNair, L.
Boston of Faversham, L.	Mais, L.
Bottomley, L.	Mar, C.
Broadbridge, L.	Marsh, L.
Bruce of Donington, L.	Masham of Ilton, B.
Carmichael of Kelvingrove, L.	Merlyn-Rees, L.
Carter, L.	Milner of Leeds, L.
Cledwyn of Penrhos, L.	Molloy, L.
Clinton-Davis, L.	Morris of Castle Morris, L.
Cocks of Hartcliffe, L.	Mulley, L.
David, B.	Murray of Epping Forest, L.
Dean of Beswick, L.	Ogmore, L.
Desai, L. [Teller.]	Peston, L.
Donaldson of Kingsbridge, L.	Plant of Highfield, L.
Dormand of Easington, L.	Ponsonby of Shulbrede, L.
Falkender, B.	Prys-Davies, L.
Fisher of Rednal, B.	Redesdale, L.
Fitt, L.	Richard, L.
Foot, L.	Ritchie of Dundee, L.
Gallacher, L.	Robson of Kiddington, B.
Galpern, L.	Sainsbury, L.
Gladwyn, L.	Seear, B.
Graham of Edmonton, L. [Teller.]	Sefton of Garston, L.
	Serota, B.
Gregson, L.	Simon of Glaisdale, L.
Grey, E.	Stallard, L.
Hampton, L.	Stoddart of Swindon, L.
Hanworth, V.	Strabolgi, L.
Harris of Greenwich, L.	Taylor of Blackburn, L.
Hilton of Eggardon, B.	Taylor of Gryfe, L.
Hirshfield, L.	Thomson of Monifieth, L.
Hollis of Heigham, B.	Tordoff, L.
Holme of Cheltenham, L.	Underhill, L.
Howie of Troon, L.	Wallace of Coslany, L.
Jenkins of Putney, L.	Wigoder, L.
John-Mackie, L.	Williams of Mostyn, L.
Judd, L.	Wilson of Rievaulx, L.
NOT-CONTENTS
Acton, L.	Brougham and Vaux, L.
Addison, V.	Butterworth, L.
Allenby of Megiddo, V.	Cadman, L.
Astor, V.	Campbell of Alloway, L.
Astor of Hever, L.	Campbell of Croy, L.
Auckland, L.	Carnegy of Lour, B.
Belhaven and Stenton, L.	Carnock, L.
Bessborough, E.	Carrington, L.
Blake, L.	Cavendish of Furness, L.
Blatch, B.	Cayzer, L.
Blyth, L.	Chalfont, L.
Boardman, L.	Chalker of Wallasey, B.
Borthwick, L.	Clark of Kempston, L.
Boyd-Carpenter, L.	Cockfield, L.
Brabazon of Tara, L.	Constantine of Stanmore, L.
Braine of Wheatley, L.	Cox, B.
Brigstocke, B.	Cranborne, V.

Crathorne, L.	Manchester, D.
Cullen of Ashbourne, L.	Mancroft, L.
Cumberlege, B.	Margadale, L.
Dacre of Glanton, L.	Marlesford, L.
Davidson, V.	Merrivale, L.
De Freyne, L.	Milverton, L.
Denham, L.	Monk Bretton, L.
Denton of Wakefield, B.	Montgomery of Alamein, V.
Donegall, M.	Morris, L.
Dudley, B.	Mountevans, L.
Dundonald, E.	Mowbray and Stourton, L.
Effingham, E.	Moyne, L.
Ellenborough, L.	Munster, E.
Elles, B.	Nelson, E.
Elliot of Harwood, B.	O'Cathain, B.
Elliott of Morpeth, L.	Orkney, E.
Elphinstone, L.	Oxfuird, V.
Erne, E.	Park of Monmouth, B.
Erroll of Hale, L.	Pearson of Rannoch, L.
Faithfull, B.	Pender, L.
Ferrers, E.	Platt of Writtle, B.
Flather, B.	Plumb, L.
Fraser of Carmyllie, L.	Plummer of St. Marylebone, L.
Fraser of Kilmorack, L.	Rankeillour, L.
Gainford, L.	Renton, L.
Geddes, L.	Renwick, L.
Goschen, V.	Ridley of Liddesdale, L.
Gray of Contin, L.	Rippon of Hexham, L.
Gridley, L.	Rodger of Earlsferry, L.
Hailsham of Saint Marylebone, L.	Romney, E.
	St. Davids, V.
Halsbury, E.	Saltoun of Abernethy, Ly.
Harding of Petherton, L.	Savile, L.
Harmsworth, L.	Seccombe, B.
Harrowby, E.	Selkirk, E.
Hayhoe, L.	Shannon, E.
Hayter, L.	Stanley of Alderley, L.
Henley, L.	Stedman, B.
Hesketh, L. [Teller.]	Strange, B.
Hives, L.	Strathclyde, L.
HolmPatrick, L.	Strathmore and Kinghorne, E. [Teller.]
Hothfield, L.
Howe, E.	Sudeley, L.
Hylton-Foster, B.	Swansea, L.
Ironside, L.	Terrington, L.
Jenkin of Roding, L.	Teviot, L.
Johnston of Rockport, L.	Thatcher, B.
Kimball, L.	Thomas of Gwydir, L.
Kintore, E.	Trefgarne, L.
Knollys, V.	Trumpington, B.
Leigh, L.	Ullswater, V.
Lindsay, E.	Vaux of Harrowden, L.
Lindsey and Abingdon, E.	Vivian, L.
Long, V.	Wade of Chorlton, L.
Lucas of Chilworth, L.	Wakeham, L.
Lyell, L.	Westbury, L.
Macfarlane of Bearsden, L.	Wharton, B.
Mackay of Ardbrecknish, L.	Willoughby de Broke, L.
Mackay of Clashfern, L.	Wyatt of Weeford, L.
Macleod of Borve, B.	Young, B.

[^*The Tellers for the Not-Contents reported 153 names. The Clerks recorded 152 names.]

Resolved in the negative, and amendment disagreed to accordingly.

3.54 p.m.

[Amendments Nos. 2 and 3 not moved.]

Clause No. 3 [Determination of applications]:

Earl Howe moved Amendment No. 4:

Page 3, line 5, after ("unless") insert ("(a)").

The noble Earl said: My Lords, in moving this amendment I shall speak also to Amendment No. 6 which is linked. The Committee of the House considered two amendments to the Bill designed to impose a requirement on Ministers to consult on a reorganisation scheme for which the Milk Marketing Board had sought approval. The first, tabled by the noble Lords, Lord Carter and Lord Gallacher, would have required Ministers, before granting the application, to consult with those persons who in their opinion represented the interests of producers, purchasers and consumers of milk. The second amendment, tabled by my noble friend Lord Mottistone, would in practice have required consultation with all interested parties.

As I explained to the Committee, I do not believe that it is either right or necessary for all the details of a reorganisation scheme to be made public. In addition, I stressed the undesirability of introducing an unreasonably onerous requirement to consult which would make it impossible to adhere to the timetable in the Bill for consideration of a scheme by Ministers and its implementation. I also touched on the difficulties which might ensue if a requirement to consult could be interpreted as a requirement to consult producers or consumers individually.

I went on to confirm however that the Government intended to consult on appropriate elements in a board's reorganisation scheme. I accepted in principle the amendment tabled by the noble Lords, Lord Carter and Lord Gallacher. I undertook to bring forward an appropriate amendment on behalf of the Government at Report stage. These amendments fulfil that commitment.

The amendments would require Ministers, before deciding whether to grant an application for approval of a reorganisation scheme, to consult about the principles of the scheme such persons as they consider appropriate and appearing to them to be representative of the interests of producers, purchasers, retailers and consumers of milk. They follow in most respects the amendment previously tabled by the noble Lords but, for the reasons which I have explained, they would limit the requirement to consult to the principles of a reorganisation scheme.

At Committee stage the noble Baroness, Lady O'Cathain, argued strongly that in considering a scheme of reorganisation Ministers should have regard to whether it is in the interests of retailers as well as producers and consumers. I am not convinced that retailers have a distinct interest separate from that of the consumer which needs to be taken into account to the extent of a mention in Clause 3(4)(a), but it is certainly true that they play an important role and that that they are necessarily well informed about what consumers want. I therefore thought it reasonable to include the retailers among those who should be consulted before a scheme is approved. They are covered by this amendment. I trust therefore that the amendment meets with the approval of the House. I beg to move.

Lord Gallacher

My Lords, I thank the Minister for tabling Amendments Nos. 4 and 6. On reading the details of Amendment No. 6 we are quite happy with it. We have noted the reason why the Minister has decided to include retailers as well as the other categories and accept that that is justified in the light of the expanding market which retailers have for milk at the expense, I am bound to say, of milk delivered by rounds, which may not be the best of solutions to the question of the distribution of milk in the long term. Nevertheless, that is the current trend and we must acknowledge its existence in legislation of this kind. I have noted the decision to consult about principles. I believe that it is a fair offer and one which we on these Benches readily accept.

Baroness Carnegy of Lour

My Lords, I too welcome the fact that the Government have responded as they have to the amendments tabled in Committee by the noble Lord, Lord Gallacher, and my noble friend Lord Mottistone. I wish to ask my noble friend two questions which arise after discussion with the Dairy Trade Federation. They are really questions of clarification of Amendment No. 6. What precisely are meant by the principles of the scheme on which consultation will take place? How far do the Government intend that those principles should extend?

At Committee stage my noble friend said: It is right and proper that the principles of a scheme, its main elements, should be in the public domain so that interested parties may make representations".—[Official Report, 8/12/92; col. 119.] He went on to suggest that the consultation must not be too detailed, too onerous or too lengthy, saying that many of the details would, in any case, be commercially sensitive. However, to mean anything, consultation must go into enough aspects of the scheme. So could my noble friend tell the House how far the principles—the main elements—extend? That is my first question.

The second question is: what is meant by the final phrase in Amendment No. 6? I refer to the words "as it considers appropriate". If I may say so, the meaning is a touch ambiguous. Is it the intention that it should be the producers, purchasers, retailers and consumers whom the Government "consider appropriate" or is it intended that the Government must have consulted on the principles of the scheme "as it considers appropriate"? Does that final phrase refer to the people (or the groups of people) who are consulted or to the principles about which they are consulted? If the latter, would it not be clearer to say, "it has consulted about the appropriate principles of the scheme", rather than the wording that is used in the amendment? It seems to me that it would be much clearer to refer to "the appropriate principles of the scheme". I think that I have bowled my noble friend a rather unexpected pair of questions, but I should be most grateful if he could clarify the position.

4 p.m.

Earl Howe

My Lords, I am glad to help my noble friend as far as I can. Her first question related to the definition of the word "principles". It is difficult to give a precise answer to that question in advance of a scheme being proposed to Ministers. However, the principles of a scheme are its main elements—those elements which are enough to give a sufficient picture of the scheme as a whole so that the consultees can reasonably be expected to form a view without needing the full details before them. They would exclude, for example, details such as the schedules of property or the commercially sensitive and confidential elements of a scheme.

In answer to my noble friend's second question, the phrase "as it considers appropriate" governs the phrase "such persons"; so it refers to the organisations mentioned in the amendment.

Baroness O'Cathain

My Lords, I welcome the amendment. As the Minister said, I have argued strongly that retailers should be considered and consulted. I am only slightly sorry that there has been some misapprehension in the House in our earlier debates. It was stated in Hansard that supermarkets were responsible for 70 per cent of grocery business. In fact, as has already been mentioned vaguely by the noble Lord, Lord Gallacher, when it comes to milk, the "rounds" refer to liquid milk, but, if it were not for the retailers, there would not be a market in yoghurt and cheese because they are the ones who have developed that market. It is imperative that there should be onward product development in the milk business and, if that is to be so, we need to consult —and there is a requirement to consult—with those who are developing the market. Therefore, I think that it is a great step forward that retailers have been included in the provisions and I thank the Minister for that.

Earl Howe

My Lords, with the leave of the House, may I say I am grateful to the noble Baroness for her remarks.

On Question, amendment agreed to.

Earl Howe moved Amendment No. 5:

Page 3, line 7, after ("of") insert ("persons who are").

The noble Earl said: My Lords, in moving Amendment No. 5, perhaps I may speak also to Amendments Nos. 7, 10, 20, 35, 36, 37 and 38 which are linked to it. These amendments specify whether references to registered producers in Part I of the Bill refer both to current and former registered producers of milk or simply to current producers. They would have three specific effects.

The first relates to the distribution of assets of a milk marketing board under a reorganisation scheme. Clause 3(4) (b) provides that in deciding whether an application for approval of a scheme ought to be approved Ministers must have regard to whether the scheme makes reasonable provision for the distribution of assets to registered producers. The intention is that producers with an interest in the board should receive reasonable compensation for the loss of that interest when a reorganisation scheme takes effect.

It is not straightforward to determine which producers effectively own a board and its assets as this is not specifically laid down in any legislation. Paragraph 5 of Schedule 2 to the Agricultural Marketing Act 1958 provides some assistance, however. It states that in the event of a winding up of a board those liable to contribute to the payment of its debts and liabilities would be producers who were registered with the board during the year before the commencement of winding up proceedings or revocation of the relevant milk marketing scheme, whichever was earlier. This is supplemented by Clause 14 of the Bill which would, in the event of a board being wound up without an approved reorganisation scheme, provide that any surplus would be paid to those who would have to pay in the event of a deficit. To the extent that the legislation covers the matter, therefore, ownership of a board can be said to lie in the hands of current registered producers and those who have been registered at any time during the past year.

In considering what provisions this Bill should make in respect of the distribution of assets to producers, the Government have had in mind the need to enable the boards to propose bases for distribution which respect the rights of those who have an interest in the board and are practical to implement. It would be difficult, if not impossible, to devise an equitable basis for distributing assets to all those who have been registered milk producers at some time since the boards were established. To begin with, tracking down the individuals concerned would be an immense task. Many are no longer alive. Any cut-off date would be purely arbitrary. To devise a scheme which dealt even-handedly with all those who have contributed to the boards since their inception would neither be a realistic proposition nor consistent with the provision in the 1958 Act which I have cited.

The Government therefore decided that it would be unreasonable to require a board to propose the distribution of assets to the full range of former producers. The provisions of Clause 3(5) were drafted with this in mind. They provide that a reorganisation scheme may not be taken to be unreasonable in its treatment of the distribution of assets to registered producers by virtue only of the fact that it specifies a date by reference to which any such distribution would be determined. The same would apply if the distribution was determined by reference to milk produced in a specified period of at least a year. The specified date, or the end of the specified period, would have to be after the board had drawn the principles of the scheme to the attention of registered producers. A board could thus propose distributing assets to all producers registered on a specific date or on the basis of their production over a period of a year or more.

Unfortunately, this provision does not altogether achieve its objective. The term "registered producers" is defined in Clause 21 as persons who are registered as producers under the relevant milk marketing scheme. Clause 3(5) as it stands does not therefore apply to producers who have ceased to be registered. Amendment No. 7 would therefore provide that a reorganisation scheme had to make reasonable provision for the distribution of assets to current and former registered producers. Amendment No. 10 would, however, ensure that Clause 3(5) applied to both current and former registered producers and therefore that an approved reorganisation scheme which provided for the distribution of assets on one of the two bases described in it could not be challenged as unreasonable on that basis. In other words, it would not be unreasonable to exclude former registered producers from a distribution if they had ceased to be producers before the relevant date of entitlement.

The remaining amendments, Nos. 5, 20, 35, 36, 37 and 38, do not introduce changes of substance. Amendments Nos. 5, 20, 36 and 37 are for the purposes of clarification, while Amendments Nos. 35 and 38 are purely consequential and for the sake of consistency. The main effects are to make it clear that the requirement on a board to bring the principles of its scheme, or of a variation, to the attention of registered producers refers to current registered producers. That is in Amendments Nos. 5 and 20. The reference to registered producers in Clause 17 is clarified in Amendments Nos. 36 and 37 as meaning "current" registered producers. I beg to move.

Lord Carter

My Lords, we understand the point of the amendments and we accept them. However, I believe that a situation could arise in which a producer who was not producing milk could be registered. One could have what is called in the jargon a "non-producing producer" who leases out his quota each year. As I understand the Bill, such a producer will remain as a registered producer even though he leases out his production each year. Therefore, assets could be distributed to a registered producer who was not in the business of producing milk but merely made a business out of leasing out his quota.

Earl Howe

My Lords, that is an interesting point that I shall look into. The key factor to remember is that any proposals which Ministers accept must be reasonable; Ministers must decide whether they are reasonable. The inclusion of non-producing producers in the body of people to whom assets are distributed must be justified in the normal way.

On Question, amendment agreed to.

Earl Howe moved Amendments Nos. 6 and 7:

Page 3, line 11, at end insert ("; and (b) it has consulted about the principles of the scheme such persons appearing to it to be representative of the interests of producers, purchasers, retailers and consumers of milk as it considers appropriate.").

Page 3, line 22, after ("to") insert ("persons by reference to their being or having been").

On Question, amendments agreed to.

The Deputy Speaker (Lord Strabolgi)

My Lords, I must inform the House that if Amendment No. 8 is agreed to I cannot call Amendment No. 9.

4.15 p.m.

Baroness Carnegy of Lour moved Amendment No. 8:

Page 3, line 28, leave out from ("scheme") to end of line 30 and insert ("satisfies the public interest test set out in section 84(1) of the Fair Trading Act 1973.").

The noble Baroness said: My Lords, I am somewhat embarrassed in speaking to this amendment before Amendment No. 9. However, the order of amendments in the Marshalled List makes that necessary. Had my amendment been grouped with Amendment No. 9 I should have found the matter easier to discuss because my amendment tries to do the same job. I must first point out that I shall not press my amendment at this stage. It was tabled before I had had the opportunity to study the Government's proposed improvement to Clause 3(4) (e) in Amendment No. 9. However, I have not withdrawn my suggestion because it is a useful peg on which to hang certain arguments.

My amendment arises as a result of considerable anxiety expressed by the National Farmers' Union of Scotland. That relates to a report of the Monopolies and Mergers Commission, which was published on the day your Lordships took the Committee stage of the Bill. Until then it appeared that there had been widespread acceptance that the two vertically-integrated successor bodies envisaged by the Scottish Milk Marketing Board and the North of Scotland Milk Marketing Board would not fall foul of Clause 3(4) (e). The impact of those organisations on the market was not perceived as significant. The European Commission was also reassuring on the issue.

The Monopolies and Mergers Commission has now ruled that the proposed acquisition of the Scottish Co-operative Wholesale Society milk business by the Scottish Milk Marketing Board should not go ahead. That ruling is not of itself of great concern. However, the report of the Monopolies and Mergers Commission goes further and suggests that the Scottish board's proposal for a vertically-integrated co-operative is also undesirable. Its conclusion is based on the premise that a separate milk market exists in Scotland. That is manifestly not the case. For many years and for obvious reasons milk prices in Scotland have been dominated and indirectly determined by prices in England. After the milk marketing boards have been wound up and as the EC single market develops that will be even more forcefully the case.

My amendment proposes that the test to be applied by Ministers should not be the likelihood of a successful challenge in the courts, which is the test the Bill provides, but the specific public interest test as set out in the Fair Trading Act 1973. That would be a test of how the structure of the proposed business would permit future behaviour in the public interest. Have the Government considered such an approach? Do they not believe that it will provide a more precise and satisfactory criterion than that contained in the Bill or that which the Government propose in Amendment No. 9? I appreciate that my noble friend might not be able to separate the two arguments, but that difficulty is not of my making.

It is important to know whether the grounds on which the Secretary of State for Scotland will decide the merits of vertically-integrated successor bodies are precise grounds which everyone can understand. It is especially important that the Secretary of State for Scotland should be able to make the decision without prejudice. He should not be inhibited by remarks made in, for example, a previous report of the Monopolies and Mergers Commission. That is important for the small successor bodies which may emerge in Scotland under the Bill.

Milk marketing in Europe is characterised by vertically-integrated co-operatives trading on a far larger scale than could ever be achieved in Scotland. The single market has brought about amalgamations of dairy co-operatives throughout Europe. My noble friend will be aware of the Danish dairy co-operative, the Lurpak brand, which has 66 per cent. of the Danish market. Its acquisitions in the UK have remained unchallenged. It now commands 11 per cent. of the liquid milk market in England and Wales. Likewise Avonmore Foods, the Irish co-operative, has been buying up diary businesses in this country. It is in that context that Scottish co-operatives will have to compete.

I should he grateful if my noble friend would comment on those specifically Scottish issues. Perhaps we can deal with the general issue of the Minister deciding without prejudice when we deal with the Government's Amendment No. 9. I beg to move.

Lord Gallacher

My Lords, we too would have preferred Amendments Nos. 8 and 9 to have been grouped together because we could then have had a better all-round discussion. My response to Amendment No. 8, which the noble Baroness moved most ably, is complicated by the fact that she is dealing with a situation which exists in Scotland as a result of the recent decision by the Monopolies and Mergers Commission in respect of the proposed sale of a business to the Scottish Milk Marketing Board. I do not wish to become involved to any marked degree in what is happening at present, although I agree with the noble Baroness's comments about the sales of businesses ahead of the Bill becoming law. I would not even claim that the Bill itself was the spur in the sales of which I am aware because there are other underlying reasons which have nothing to do with it.

However, I have noted that consequent upon the case to which the noble Baroness referred yet another proposed sale of a very large milk business in England —this time not to a Danish or Irish subsidiary but to a public limited company in England—is conditional upon there being no reference to the Monopolies and Mergers Commission. So we have a situation of some dissatisfaction in which major dispositions are being made of businesses for disparate reasons ahead of this Bill, which I am almost certain will have an impact upon the position of the co-operatives which emerge as a consequence of it. That is as far as I am prepared to go in a dissertation upon the situation as I see it at the present time.

I am assuming that the noble Baroness will not be pressing her amendment in the light of any reply that she gets from the Minister because, as I said at the outset, it seemed to me that she was more fact finding than policy determining. However, if she were to divide the House we on this side should have something of a dilemma because our preference is for Amendment No. 9 standing in the name of the noble Earl the Minister, not only because we think it is a superior amendment in terms but because it implements a promise which he made to the Committee when we discussed this part of the Bill some weeks back.

Without anticipating what the noble Earl will say, we feel the response to a very difficult drafting question is probably as good as we are going to get. Nevertheless, if we take simply the amendment we are discussing in the terms in which it has been drafted I can understand the skill and wisdom of the draftsmen in seeking to link Section 84(1) of the Fair Trading Act 1973, which defines competition and the public interest in very specific terms, with this Bill. The trouble about so doing, satisfactory as it is to the draftsmen of the amendment, is that it would inhibit Ministers from being able to do anything at all because if this were to become part of the Bill it would put the Minister in a situation in which he becomes a one-man monopolies and mergers commission. I think that that is thoroughly undesirable. If there are to be references, the Fair Trading Act makes provision for such references. If there are to be judgments, the Fair Trading Act states the criteria upon which those judgments are to be made. The matter is best left there.

To import this specific section of the Fair Trading Act into the Bill would have an inhibitory effect and would go some way to making what is going to be a very difficult period for milk marketing boards a great deal more difficult. We on this side would not wish to see that happen. Nevertheless, we look forward with interest, if not bated breath, to what the noble Earl has to say in response to Amendment No. 8.

Baroness O'Cathain

My Lords, I should like to support the comments of the noble Lord, Lord Gallacher, concerning Amendment No. 9 as opposed to Amendment No. 8, but that is not really why I rose to speak.

Scotland, England and Wales have been mentioned. A very serious situation could also develop in Northern Ireland with the Northern Ireland Milk Board and its processing and marketing functions. I hope that the House will not let the Northern Ireland situation go by default.

Lord Wade of Chorlton

My Lords, although I would not support the amendment for the reason that the noble Lord, Lord Gallacher, gave to my noble friend, I think the noble Baroness has raised a most important issue. The purpose of the Bill is to free the market for milk and to let us give the United Kingdom milk producers the opportunity of developing markets for their products throughout the whole of Europe. It seems to me rather odd that the British Monopolies and Mergers Commission then takes action which prevents our companies from developing to such an extent that we can become major players in the European milk market.

In addition to the examples given by my noble friend, the largest food company in the world, Nestle, started off as a dairy company. BSM, the largest food company in France, started off as a milk co-operative. It is clear that the passing of this Bill will enable British companies to become major food companies within Europe, to take advantage of the markets and to develop products that the markets need, which the noble Baroness, Lady O'Cathain, referred to earlier.

The point that my noble friend raised in laying down this amendment is an extremely important one. In looking at the competitive element of this Bill, which is to ensure that the new arrangements for the voluntary boards do not immediately prevent private enterprise from taking their share of the business, we must ensure at the same time that the companies created and developed out of this new opportunity do not find themselves restricted and unable to be fully competitive and to grow in the same way as the companies in Europe which are now our major competitors have done. The time should soon be near when British farmers are producing high quality milk products for aggressive sale to customers in Europe and one hopes even further away. It would be a great pity if those who deal with monopolies and mergers do not appreciate that we are now living in a world market and we must allow our industry to take full advantage of that.

Earl Howe

My Lords, I am grateful to my noble friend for introducing the amendment so clearly. Although I can see that she would have preferred it to have been taken together with my amendment which follows, I think there are two distinct lines of argument in our respective amendments and it is perhaps no bad thing that they have been kept separate.

The amendment tabled by my noble friend Lady Carnegy would require the agriculture Ministers to apply a test to a reorganisation scheme which the Fair Trading Act foresees should be applied in a different context by the Monopolies and Mergers Commission. That different context is supplied by a reference by the Director General of Fair Trading and the necessary examination takes place in relation to matters specified by him.

It is undesirable to require agriculture Ministers to carry out precisely the same test for a number of reasons. First, although the Fair Trading Act enables the Monopolies and Mergers Commission to take a view not only of present or past events but also of the future, it may not be reasonable to do the latter in all circumstances. But the agriculture Ministers would necessarily be looking only to the future and would have no experience of the actual operation of the new arrangements to inform their judgment.

Secondly, and even more fundamentally, the amendment would open up the possibility that Ministers might approve a scheme, having regard to the test in the Fair Trading Act among the other relevant considerations—and I emphasise that for agriculture Ministers the competition test would not be the only matter to be taken into account—only to see the Monopolies and Mergers Commission apply that test at a later date and decide that the arrangements were not in practice operating in the public interest. That is its prerogative, which the actions of agriculture Ministers would not, could not and should not forestall. But the consequence of that action, if this amendment were accepted, might well be a successful judicial review of the original decision of Ministers to approve the scheme. The result would be chaotic, as the vesting and other arrangements which had been implemented would be cancelled at a stroke. It is difficult to see how any reorganisation scheme could be carried out at all in the face of such a climate of uncertainty.

I believe it is far better for agriculture Ministers to address the somewhat different but still significant question contained in the amendment in my name. As the noble Lord, Lord Gallacher, said, we should not confuse the roles of Ministers and the competition authorities. The Monopolies and Mergers Commission has been established as an independent entity to do a particular job. The functions of agriculture Ministers are wider and we should not set up a conflict between the two.

My noble friend referred to the recently published report of the Monopolies and Mergers Commission into the proposed acquisition by the Scottish Milk Marketing Board of the liquid milk business of CWS in Scotland. As some noble Lords are aware, the report concluded that under the Scottish board's current proposals for successor marketing arrangements there would be scope for an abuse of a dominant market position. The commission took the view that unless adequate safeguards could be built into the proposals the acquisition would be against the public interest. The Secretary of State for Trade and Industry accepted the report's recommendation that the acquisition be blocked.

As noble Lords will understand, it is in the first instance for the board to respond to the Secretary of State's decision. Scottish Office Ministers are concerned, however, to discuss with the board the wider implications of the report on the SMMB's current reorganisation proposals. My honourable friend Sir Hector Monro has already had a useful preliminary discussion with the board chairman and talks will be continuing. It would be wrong of me to attempt to predict the outcome of those discussions. I hope my noble friend will understand that I cannot go further than that at this stage.

The noble Baroness, Lady O'Cathain, mentioned Northern Ireland. As she will be aware, Northern Ireland is not dealt with directly in the Bill. The intention is to introduce an Order in Council in due course to extend the provisions of the Bill to the Province. But Northern Ireland has definitely not been forgotten. The Northern Ireland MMB has produced reform proposals and these are the subject of discussions with officials from the Department of Agriculture, Northern Ireland and Ministers at the moment. With those explanations, I hope that my noble friend will be content to withdraw her amendment.

4.30 p.m.

Baroness Carnegy of Lour

My Lords, I thank noble Lords who have joined in this short debate and I particularly thank my noble friend the Minister. I take his point as to the problems of my amendment and as regards the test of the Fair Trading Act. I shall read his comments carefully and I suspect I shall be satisfied by them. I wish to return to the Scottish concern in the context of the next amendment, as the two measures overlap in a rather awkward way. I shall await the discussion on that amendment before taking those points further. I am absolutely delighted to hear that Sir Hector Monro, the Minister responsible for agriculture in the Scottish Office, is discussing the matter further with the Monopolies and Mergers Commission.

It is really good news that my noble friend's department and the Scottish Office are listening to one another on this point. The anxiety of the Scottish National Farmers' Union that they were not doing so was one of the reasons why it was extremely keen that the issues should be discussed in your Lordships' House. I thank the Minister for his comments. I have pleasure in withdrawing the amendment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Earl Howe moved Amendment No. 9:

Page 3, line 28, leave out from ("to") to end of line 30 and insert ("allow for the development of competition in milk marketing.").

The noble Earl said: My Lords, I hope and believe that the introduction of this amendment will bring comfort and relief to the many noble Lords who at Committee stage professed themselves perplexed or discomfited—or perhaps even both perplexed and discomfited—at the existing wording of Clause 3(4) (e).

It is clearly right that, in considering whether a reorganisation scheme submitted by a milk marketing board should be approved, Ministers should have regard to the implications for competition. After all, many of the less desirable consequences of the milk marketing schemes stem from the absence of competition and the consequent muffling of market signals or, to put it another way, signals from consumers. The Government's objective, in looking to the boards to produce proposals for reform, has been to facilitate a move to more open and competitive marketing arrangements, as my noble friend Lord Wade said a moment ago.

The existing wording of Clause 3 (4) (e), as I have argued on another occasion, attempts to require Ministers to identify in advance the competition hurdles at which a scheme might fall, with the important proviso that Ministers should not be expected to predict the reactions of the independent competition authorities. The considerations identified in the earlier formulation remain important matters to which Ministers will no doubt have regard in reaching a decision.

The amendment would, however, introduce on to the face of the Bill a rather more positive and, I believe, more easily understood test; namely, whether the proposed new structure would allow for the development of competition in milk marketing. The use of the word "development" is not fortuitous. It may be that in the period immediately following the ending of a milk marketing scheme the great majority of milk producers will continue to want the security which comes from collective action and will therefore join a board's successor body. What is important is that a scheme should not unreasonably inhibit those who wish to act independently from the start or who wish to do so at some time in the future. To take an extreme example, it is unlikely that Ministers would consider that a scheme allowed for the development of competition if the constitution of a proposed successor body locked producers into membership, once they had joined, for a period of, say, 10 years.

It is important to be clear, too, what is meant by the words, "allow for" the development of competition. They do not mean that the boards will have to provide in their reorganisation schemes some kind of blueprint for the development of competition throughout the sector. Rather they should be interpreted to mean "allow room for" or "allow scope for". Ministers will be looking to judge whether a scheme would place important obstacles in the way of competition developing.

Finally, in view of comments made at Committee stage I should seek to explain once more what is meant by the "structure" of the new arrangements. It would include matters such as the number and type of successor bodies, the proposed contractual arrangement between a co-operative and its members and it would include any specific mechanism, such as an auction system, which might be proposed as a means of selling milk. But the way in which a successor body actually behaved—whether it traded fairly or engaged in unfair or illicit trading practices, for example—would not be a structural matter. It would not be capable of judgment before vesting day and it would necessarily be for the competition authorities, not agriculture Ministers, to judge that behaviour and to take action if necessary. I trust that noble Lords will regard the new text as a great improvement on the existing Clause 3(4) (e). I beg to move.

Lord Gallacher

My Lords, we are grateful to the noble Earl for tabling this amendment which again implements a promise he made during the Committee stage. I believe he has met with considerable skill the challenge which faced him following that interesting debate in Committee. We are happy with the wording of the amendment and equally happy with the very full explanation the Minister has given in moving it. It will be of use to us, and it will also, I hope, be of use to the industry. For that reason, I believe that we served a useful purpose in querying the original draft and seeing it replaced.

It is not our wish—I am sure that this was inherent in what the noble Earl had to say—that Ministers should be so circumscribed that schemes, before overcoming the ministerial hurdle, had to be so restrictive that, in the rigour of the competition in the market place, the successor bodies as co-operatives would be put at a considerable disadvantage with the giants ranged against them. That is far from being the case. We wish to see the classic level playing field here. In saying that I wish to take account of a point which the noble Baroness, Lady Carnegy, raised in speaking to her amendment; namely, the structures which exist for co-operatives on the Continent. I do not think we should be seeking to make conditions for our milk marketing co-operatives any more difficult than they are for those on the Continent. Our competition supervisory machinery, to which the noble Earl also referred, must necessarily take account of that. I follow with great interest the articles which the retiring chairman of the Monopolies and Mergers Commission is writing about the respective areas of interest of his commission and the European Commission competition directorate and where these should lie.

The main issue from a British standpoint is that conditions should be equal. The figures which are required in order to achieve that equality are matters for connoisseurs or practitioners of the game. British firms will want to be assured that they have a level playing field. The milk marketing co-operatives which are to emerge from the Bill are entitled to ask for that. It is in that spirit and with those additional remarks that we welcome the clause and wish it every success and the approval of the House.

Baroness Carnegy of Lour

My Lords, I, too, welcome the amendment. It is excellent that my noble friend has removed what the noble Lord, Lord Gallacher, referred to in Committee as the almost impenetrable ambiguity factor of the Bill as it stands at present. However, it is still rather general and imprecise from the point of view of the people putting forward proposed schemes, although I expect that they can live with that. They would rather have that than something which is difficult to understand.

Having spoken to the Dairy Trade Federation I should like to ask an important question. How do the Government see the proposed subsection being interpreted? Will it give the Minister the opportunity to take a view without prejudice as to whether a scheme would allow competition to develop? In relation to that question my noble friend might cast his mind back to what I had to say about the Scottish situation in relation to the proposed integrated schemes which everybody thought would be in order until the Monopolies and Mergers Commission indicated that they would not be.

Will the amendment allow the Minister to make a realistic, up-to-date assessment of the nature of the market without prejudice when each proposal comes forward? Circumstances will change from time to time. There will not be hard and fast rules about what is competitive and what is not because the market in Europe and in the world will change. One will be able to look across the market and see, for example, Scottish market opportunities in the European and world context rather than merely in the domestic market in Scotland. The situation would be similar in relation to any other part of the United Kingdom. It is an important issue. Can the Minister elucidate?

Earl Howe

My Lords, perhaps I can help my noble friend by saying that every proposal will be considered on its individual merits. It will not be considered by reference to any other proposal that may have been put forward. It will certainly be considered with reference to the conditions in the market at the time the proposal is received, whatever they may be. As I said earlier, Ministers will have regard to what they consider to be reasonable in the circumstances. It is that test of reasonableness which is the most important hook on which Ministers will hang their decisions.

I take my noble friend's point about the Scottish situation. It is very different from the situation which exists south of the Border. As I mentioned earlier, there are matters to be resolved between the SMMB and Ministers. Those discussions are proceeding. I can give my noble friend a broad reassurance in relation to the concern which she expressed.

On Question, amendment agreed to.

Earl Howe moved Amendment No. 10:

Page 3, line 32, after ("to") insert ("persons by reference to their being or having been").

On Question, amendment agreed to.

4.45 p.m.

Schedule 1 [Qualifying scheme of reorganisation]:

Earl Howe moved Amendment No. 11:

Page 28, line 26, at end insert:

("(4) The scheme must not provide for the transfer of any right or liability of the board with respect to the supply of milk on or after the vesting day.").

The noble Earl said: My Lords, the amendment does not reflect a change in policy but rather aims to clarify the intention underlying the existing wording.

The Government want to ensure that vesting day for each reorganisation scheme marks a clean break with the past. Contracts between a milk marketing board and producers of milk on the one hand and purchasers of milk on the other should come to an end on vesting day so that the onus is on a successor body to seek and arrange its own contracts. That is part and parcel of the Government's objective of providing for a move to more open and competitive marketing arrangements. It would not be right simply to allow successor bodies to take over the boards' milk supply contracts.

As currently worded, paragraph 4 of Schedule 1 achieves part of the objective by ruling out the transfer of board contracts with producers to a successor body but does not do so in respect of contracts with purchasers. The amendment would result in a tightening up of the wording and remove any doubt about the scope of this provision. From vesting day it would be for a residuary board and not a successor body to make any remaining payments to producers and collect any outstanding payments from purchasers for milk supplied under the scheme. I hope that noble Lords can give it their support. I beg to move.

Baroness Carnegy of Lour

My Lords, I hope that the House will bear with me for one moment. Again following my discussions with the Dairy Trade Federation, I should like to ask the Minister three questions concerning the amendment. First, if it is accepted, does that mean that on vesting day all current purchasers' contracts will automatically come to an end? I am not sure from what my noble friend said what the position is.

Secondly, can the Government give an assurance that buyers will have as much notice as possible of the date of vesting day? Under Clause 1(3) it would be possible to delay the fixing of the date by order and in effect give buyers of milk only a few days' notice of the date on which contracts would end and the need to commence new ones. There is some anxiety in the trade about that. I should be grateful if the Minister would answer that question.

Are the Government prepared to give an undertaking that they will ensure that the date is fixed timeously so that buyers can make the necessary arrangements for their supply of milk on and after vesting day? If it is not possible for the Minister to answer that question today perhaps such an undertaking could be given in writing to me and to other noble Lords who are concerned about the issue. Will the Government undertake to give notice of that date timeously?

Thirdly, by the same token, what will happen to haulage contracts? Are they affected by the amendment? If they cannot be transferred automatically on vesting day time will be required to ensure that new haulage contracts are in place for vesting day. Can the Minister take that issue into account in any undertaking he gives as to the timing of the fixing of vesting day?

Lord Carter

My Lords, if the Minister gives such an undertaking I hope that he will agree that it should be circulated to those who are interested in the subject and perhaps placed in the Library.

Earl Howe

My Lords, with the leave of the House, I shall attempt to answer my noble friend as best I can, although it may be necessary for me to write to her in a little more detail. I can say that the contracts with purchasers will not necessarily end under the Bill, but they cannot be transferred. Having said that, a residuary body may not trade in milk but clearly it has the responsibility to collect money owed to it and to pay money that it itself owes.

With regard to notice, Ministers will have to have regard to the needs of all parties when they decide whether to extend the deadlines and what period of notice is appropriate.

The noble Baroness's third question referred to haulage. That is a matter for the contracting parties to determine unless they are transferred under vesting arrangements or similar provisions; and we do not know those yet.

Baroness Carnegy of Lour

My Lords, before my noble friend sits down, perhaps I may ask this question with the leave of the House. Is he saying that two or three days' notice of the changeover is out of the question? That period would not be unreasonable from anyone's point of view.

Earl Howe

My Lords, we would seek to avoid as short a period of notice as that. We would wish it to be as long as is practicably possible.

On Question, amendment agreed to.

Earl Howe moved Amendments Nos. 12 to 14:

Page 29, line 10, leave out ("specify who is entitled to share in") and insert ("make provision for").

Page 29, line 11, at end insert ("to be distributed to the persons who, under the scheme, are entitled to participate in the distribution of assets of the board by virtue of their being, or having been, registered producers.").

Page 29, line l2, leave out sub-paragraph (2).

The noble Earl said: My Lords, the noble Lord, Lord Carter, raised at Committee stage the question of what should happen if a residuary board has a surplus on winding up. As I explained at the time, the Bill as it stands would require a reorganisation scheme to specify who was entitled to share in that surplus, subject to the limitation that it must be distributed to registered producers or former registered producers.

On reflection it does seem more logical to require the surplus of a residuary board to be distributed to the same class of producers as are entitled to participate in the original distribution of the assets of the board to registered producers on or before vesting day. That is the same class of producers as is also liable to contribute to a levy if a residuary board—against all intention and expectation—has insufficient resources to meet its liabilities. In that way, both the levy and the distribution of any surplus may be conceived of as adjustments to the original distribution, which indeed is a logical outcome.

In view of the turn which discussion took at Committee stage, I should state quite categorically that there is not, and never was, any intention to restrict the class of potential beneficiaries of a surplus or contributors to a levy to producers who join a successor body.

The amendments which I have tabled would leave it to a reorganisation scheme to prescribe how any surplus should be divided among the eligible beneficiaries. Ministers would have to have regard under Clause 3(4) (b) to whether the proposal was reasonable, taking the initial distribution and the final distribution in combination. The basis might well be the same as that proposed for the earlier distribution. A board might, however, wish to propose a modification for perfectly good and practical reasons. However, that is speculation on my part as I have not discussed this matter with the boards. I hope that with that explanation the House will be content to accept the amendments. I beg to move.

Lord Carter

My Lords, the House will be extremely grateful to the Minister. It was an important point. He has now made the position completely clear. We can all understand the justice and equity of the system proposed. Amendment No. 12 deals well with the point.

On Question, amendments agreed to.

Earl Howe moved Amendments Nos. 15 to 19:

Page 29, line 27, leave out ("formed for the purpose of giving effect to the scheme and").

Page 29, line 28, at end insert ("which has not previously carried on business").

Page 29, line 37, after ("its") insert ("name, or").

Page 29, line 38, after ("it") insert ("is, or").

Page 29, line 39, after ("its") insert ("constitution, or").

The noble Earl said: My Lords in moving Amendments Nos. 15 to 19, I shall speak also to Amendments Nos. 24 to 27.

The Government consider on reflection that the current wording of paragraph 11(2) (a) of Schedule 1 is unnecessarily restrictive. As things stand, a co-operative or other body formed before formal submission of a reorganisation scheme would probably not count as a qualifying successor body under a reorganisation scheme submitted by a milk marketing board.

Your Lordships will no doubt have noted that the England and Wales Milk Marketing Board has already announced the setting up of a successor co-operative by the name of Milk Marque Ltd. The Government can see no reason to oppose its wish, or the wish of the other boards, to make an early start in preparing for what will be the most fundamental change in the dairy industry for 60 years.

There is no sound reason why we should prevent the boards from passing assets to a successor body established before a reorganisation scheme is submitted. It is, however, desirable that the successor milk marketing bodies nominated in the reorganisation scheme should be established for the express purpose under consideration and the Bill would continue to ensure this by specifying that they should not previously have carried on business.

With that brief explanation, I hope that I have convinced noble Lords that the proposed amendments to paragraph 11 of Schedule 1 are desirable in order to provide the flexibility necessary for successor bodies to be set up and to be ready to start trading from vesting day. The linked amendments, Amendments Nos. 24 to 27 to Schedule 2, are purely consequential. I beg to move.

On Question, amendments agreed to.

Clause 5 [Variation of approved scheme]:

Earl Howe moved Amendment No. 20:

Page 5, line 20, after ("of") insert ("persons who are").

The noble Earl said: My Lords, I have already spoken to this amendment with Amendment No. 5. I beg to move.

On Question, amendment agreed to.

Earl Howe moved Amendment No. 21:

Page 5, leave out lines 23 and 24.

The noble Earl said: My Lords, in moving the amendment I shall speak also to Amendment No. 22.

Clause 5 allows a milk marketing board to apply to Ministers for approval of a variation of an approved reorganisation scheme. This provides a mechanism for changes to an approved scheme to take account of, for example, a change in circumstances.

The possibility exists that an approved reorganisation scheme might turn out to have contained errors or omissions, such as the omission of an item of equipment from a schedule of assets. In that event the scheme would not technically have been a qualifying scheme to start with. Ministers would therefore be unable to satisfy themselves, in considering a proposed variation, that the scheme would "continue to" be a qualifying scheme as the existing wording of Clause 5(2) requires. That would be so even if the proposed variation was intended in whole or in part to correct the original mistake.

The amendment therefore adjusts Clause 5 so that, when deciding whether to grant an application for approval of a variation, Ministers would in effect be required simply to be satisfied that the scheme as varied was a qualifying one, rather than that the variation did not cause it to cease to be a qualifying scheme. I beg to move.

On Question, amendment agreed to.

Earl Howe moved Amendment No. 22:

Page 5, line 26, leave out ("the decision under section 3(3) (a)") and insert ("its decisions under section 3(2) (b) and (3) (a)").

On Question, amendment agreed to.

Clause 7 [Information]:

5 p.m.

Earl Howe moved Amendment No. 23:

Page 6, line 41, leave out from ("care,") to end of line 42 and insert ("subsection (3) above shall be treated as never having had any application in relation to it.").

The noble Earl said: My Lords, when assessing an application for approval of a reorganisation scheme, or for a variation or withdrawal of an approved scheme, Ministers will need to have available such information as they consider necessary or desirable to carry out those functions. This may not all be contained in the relevant application. Clause 7 therefore provides a mechanism for Ministers to obtain additional information from the board to which a reorganisation scheme relates and from third parties. It also sets out the consequences of failure to comply.

In the event that a milk marketing board to which a reorganisation scheme relates fails, without reasonable grounds, to supply information required by Ministers within the deadline laid down, Clause 7(3) would result in the board being treated as having withdrawn its application. Clause 7(4) deals with the case where a board purports to comply with the requirements of the notice but it turns out, after the deadline for compliance and before Ministers have decided on the application, that it has not done so. In this event the provision would require Ministers to give the board concerned notice of this non-compliance.

It is not our intention to penalise a board for a genuine mistake. Clause 7(5) therefore provides that, if the board can satisfy Ministers that its failure to comply with the original notice was accidental and not attributable to any failure to take reasonable care, then it should be treated as having complied with the requirement to provide information. Its application would then proceed.

On further consideration, we have concluded that the wording of these three subsections may not be sufficiently clear for there to be no doubt about their meaning. It would be argued that as soon as it was realised that the board had not complied with the notice, the effect of Clause 7(3) is that the application would have to be treated immediately as having been withdrawn. The provision in Clause 7(5) that the board should be treated as having complied with Clause 7(3) would, so the argument goes, not be sufficient to undo this withdrawal.

We wish to remove any element of doubt on the point. The amendment achieves this by altering clause 7(5) so that, in the situation I have described, Clause 7(3) would be treated as never having applied. The board's application could then be treated as never having been withdrawn. Ministers would then proceed with their consideration of it. I hope that that explanation is sufficiently clear. I beg to move.

Lord Carter

My Lords, the House will be extremely grateful to the Minister. If we had any doubts before, our minds are completely at rest now.

On Question, amendment agreed to.

Schedule 2 [Provisions relating to carrying out of approved scheme of reorganisation]:

Earl Howe moved Amendments Nos. 24 to 27:

Page 30, line 47, leave out from ("society") to ("registered") in line 48.

Page 30, line 49, at end insert ("which has not previously carried on business").

Page 31, line 32, leave out from ("society") to ("registered") in line 33.

Page 31, line 34, at end insert ("which has not previously carried on business").

The noble Earl said: My Lords, I beg to move Amendments Nos. 24 to 27 en bloc as they have already been spoken to.

On Question, amendments agreed to.

Earl Howe moved Amendment No. 28:

Page 38, line 54, at end insert:

("Restraints on alienation etc.

24.—(1) No right of pre-emption or other like right affecting any property or rights of a milk marketing board, or of a subsidiary of such a board, shall be exercisable by virtue of anything done in pursuance of this Part of this Act.

(2) Sub-paragraph (1) above shall not apply where the thing done is specifically identified by the right of pre-emption or other like right as a circumstance in which the right is exercisable.

25.—(1) Any provision which prohibits the transfer, or the transfer without consent, of any property or rights of a milk marketing board, or of a subsidiary of such a board, shall be treated as not applying in the case of a transfer under section 10 above.

(2) Sub-paragraph (1) above shall not apply in the case of a provision which is formulated specifically with reference to the possibility of the undertaking of a milk marketing board being transferred otherwise than to a board constituted by a scheme under Part I of the Agricultural Marketing Act 1958.

(3) For the purposes of this paragraph, any provision which penalises a transfer, or a transfer without consent, shall be treated as prohibiting it.

26.—(1) Any provision which prohibits the transfer without consent of any property or rights of a milk marketing board, or of a subsidiary of such a board, shall, if the prohibition is imposed for private purposes, be treated as not applying in the case of a transfer under an approved scheme otherwise than under section 10 above.

(2) Sub-paragraph (1) above shall not apply in the case of a provision which is formulated specifically with reference to the possibility of the undertaking of a milk marketing board being transferred otherwise than to a board constituted by a scheme under Part I of the Agricultural Marketing Act 1958.

(3) For the purposes of this paragraph, any provision which penalises a transfer without consent shall be treated as prohibiting it.

27.—(1) This paragraph applies to any provision which prohibits the effecting without consent of any description of transaction, other than a transfer, with respect to any property or rights of a milk marketing board, or of a subsidiary of such a board.

(2) Where the prohibition imposed by a provision to which this paragraph applies is imposed for private purposes, it shall, subject to sub-paragraph (3) below, be treated as not applying in the case of a transaction effected under an approved scheme.

(3) Sub-paragraph (2) above shall not apply in the case of a provision which is formulated specifically with reference to the possibility of the undertaking of a milk marketing board being transferred otherwise than to a board constituted by a scheme under Part I of the Agricultural Marketing Act 1958.

(4) For the purposes of this paragraph, any provision which penalises the effecting without consent of any description of transaction shall be treated as prohibiting it.

28.—(1) If the value of any property or interest of the person whose consent would have been required but for paragraph 26(1) or 27(2) above is diminished in consequence of the operation of that provision, such compensation as may be just shall be paid to that person by one or more of the parties to the transfer or other transaction.

(2) Any dispute as to whether, and if so how much, compensation is payable under this paragraph, or as to the person to or by whom it shall be paid, shall be referred to and determined by an arbitrator appointed—

1. (a) in the case of a dispute concerning anything which takes place under a scheme relating to the England and Wales Milk Marketing Board, in accordance with regulations made by the Minister of Agriculture, Fisheries and Food and the Secretary of State acting jointly, and
2. (b) in any other case, in accordance with regulations made by the Secretary of State.

29.—(1) For the purposes of this paragraph, a provision is a qualifying provision if

1. (a) it prohibits the effecting of any description of transaction, other than a transfer, with respect to any property or rights of a milk marketing board, or of a subsidiary of such a board,
2. (b) it is not a provision to which paragraph 27 above applies, and
3. (c) the prohibition which it imposes is imposed for private purposes.

(2) Where an approved scheme—

1. (a) identifies a qualifying provision as one to which this paragraph applies, and
2. (b) specifies one of the relevant bodies as the body against which any claim under paragraph 30 below is to be made,

the provision shall, subject to any provision of regulations under sub-paragraph (3) (c) below, be treated as not applying in the case of a transaction effected under the scheme.

(3) The appropriate authority may make regulations—

1. (a) with respect to the giving of notice of a provision of an approved scheme which identifies a qualifying provision as one to which this paragraph applies,
2. (b) with respect to the giving by the authority of a certificate of compliance in relation to the giving of notice under paragraph (a) above, and
3. (c) excluding sub-paragraph (2) above where no certificate of compliance under paragraph (b) above has been given at the time that a transaction is effected.

(4) Sub-paragraph (2) above shall not apply in the case of a provision which is formulated specifically with reference to the possibility of the undertaking of a milk marketing board being transferred otherwise than to a board constituted by a scheme under Part I of the Agricultural Marketing Act 1958.

(5) In sub-paragraph (2) (b) above, the reference to the relevant bodies is to—

1. (a) the milk marketing board to which the scheme relates, and
2. (b) the body or bodies to which property, rights or liabilities of that board are, under the scheme, to be transferred under section 10 above.

(6) In sub-paragraph (3) above, "appropriate authority" means—

1. (a) in the case of an approved scheme relating to the England and Wales Milk Marketing Board, the Minister of Agriculture, Fisheries and Food and the Secretary of State acting jointly, and
1071
2. (b) in any other case, the Secretary of State.

(7) For the purposes of this paragraph, any provision which penalises the effecting of a description of transaction shall be treated as prohibiting it.

30.—(1) If any person suffers a diminution in the value of any property or interest in consequence of the operation of paragraph 29 above, such compensation as may be just shall be paid to him by the nominated body.

(2) Any dispute as to whether, and, if so, how much, compensation is payable under this paragraph shall be referred to and determined by an arbitrator appointed—

1. (a) in the case of a dispute concerning anything which takes place under a scheme relating to the England and Wales Milk Marketing Board, in accordance with regulations made by the Minister of Agriculture, Fisheries and Food and the Secretary of State acting jointly, and
2. (b) in any other case, in accordance with regulations made by the Secretary of State.

(3) In sub-paragraph (1) above, the reference to the nominated body is to the body specified by the approved scheme concerned as the body against which any claim for compensation under this paragraph is to be made.").

The noble Earl said: My Lords, this is a lengthy amendment on the Marshalled List but I hope that I can encapsulate its content without too much difficulty for the House. However, it will take a few minutes.

One of the central features of Part I of the Bill is that each milk marketing board would be able to apply to Ministers for approval of a reorganisation scheme. Such a scheme could provide for the transfer of property, rights and liabilities of the board concerned to one or more successor bodies.

Our objective is that the transfer of a board's assets should be fully effective. Clause 10 therefore provides for all the transfers of assets of a board remaining on its vesting day to one or more successor bodies to take place automatically. The actual vesting of the property of a board in another person is however only one aspect of the sometimes complicated business of transferring assets from one person to another.

The series of amendments to Schedule 2 which I have tabled are designed to achieve a number of objectives. The primary aims are, on the one hand, to minimise the risk of disruption by third parties of the transfer of a board's assets under a reorganisation scheme and, on the other hand, to ensure that there is sufficient scope for compensation of third parties and that they are nonetheless not put at a financial disadvantage. Secondly, there is a need to ensure that those to whom property is transferred automatically under a reorganisation scheme can later prove ownership. Special provision is needed to ensure that transfers of a board's foreign property are given proper effect under the relevant foreign law. Finally, there are a number of technical provisions which I shall describe as I introduce the relevant amendment.

The first amendment, No. 28, concerns third party rights in property or rights of a milk marketing board. As many noble Lords will know, contracts relating to property of an individual or body often contain provisions which constrain in some way the freedom of that individual or body to dispose of it. These constraints are normally enforceable by the other contracting party. For example, mortgages would normally prohibit disposal unless the lender consented.

Technically, a transfer under a reorganisation scheme counts as a disposal. There is therefore the potential for third parties to disrupt the full implementation of a reorganisation scheme. Provision is accordingly needed to prevent this happening.

This amendment identifies a number of types of third party rights and specifies in what circumstances each is to be overridden. The specific treatment varies between the types of right. One principle applies throughout, however. Where a third party has specifically provided for a right to be exercisable in the event of the transfer of the undertaking of the relevant milk marketing board to a successor body, of the kind which would be envisaged by a reorganisation scheme, it would clearly be unreasonable to override that right. The board concerned will have entered freely into any agreement containing such a right and should be required to adhere to it.

The first type of right is dealt with in paragraph 24. This is a right of pre-emption. Such a right could take a number of forms. An example would be a right of a third party to purchase at a fixed price a property owned by a milk marketing board, should that board wish to transfer it to a new owner. Any such rights would in all likelihood continue to be exercisable against the successor body to whom the relevant property was transferred, whether before or on vesting day, should it wish to dispose of such property later. Paragraph 24 therefore provides that no right of pre-emption or other such right affecting an MMB or subsidiary of an MMB should be exercisable in relation to anything done in pursuance of Part I of the Act.

Paragraph 25 deals with cases where a third party has a right to prohibit, or prohibit unless it gives its consent, the transfer by a board or its subsidiary of particular property. This paragraph prevents such rights being exercised in a way that stops property being vested automatically in a successor under Clause 10. Instead the right will be available against the successor, should the successor wish to transfer the property later.

Paragraph 26 then provides a more limited protection for preparatory transfers carried out under a reorganisation scheme before vesting day. This type of transfer is not protected against restrictions imposed for public purposes; for example, a planning condition that the whole of an identified property should be in the same occupation. It is also not protected against an absolute prohibition on transfer. The preparatory transfers would, however, to an extent be protected against prohibitions on transfer without the consent of a third party if they had been imposed for private purposes; for example, where the consent needed is that of a landlord, paragraph 26(1) provides that such prohibitions would be overridden. Provided they fastened on to the property they would be revived to be used on a proposed subsequent transfer by the transferee. Scope is also provided in paragraph 28 for compensation to be paid to the third party whose right to refuse consent has been overridden.

Paragraph 27 goes on to provide a protection similar to the paragraph 26 protection in the case of preparatory transactions other than transfers; for example, sub-leases granted under reorganisation schemes in advance of Clause 10 vesting. Again, this type of transaction is not protected against restrictions imposed for public purposes. The example of a planning condition that the whole of an identified property should be in the same occupation could equally apply here. In addition, except where paragraph 29 operates, this type of transaction is not protected against any absolute prohibition. It is, however, to an extent protected against prohibitions which both operate for private purposes, for example to protect a landlord, and are capable of being waived by the consent of a third party, presumably the same landlord. Thus paragraph 27(2) provides that such prohibitions would be overridden. Scope is again provided in paragraph 28 for compensation to be paid to the third party whose right to refuse consent has been overridden.

A third party, whose right to refuse consent to a transfer or other transaction has been overridden by paragraphs 26 and 27, may suffer a reduction in the value of his interest in the relevant property of the board or subsidiary concerned. Paragraph 28(1) provides for one or more of the parties to the transaction, that is the relevant MMB or successor body, to pay such compensation as is just to the third party. Any dispute as to whether and, if so, how much compensation should be paid would be determined by an arbitrator appointed in accordance with regulations to be made by the relevant Ministers.

Finally, with gratitude for your Lordships' patience, I come to paragraphs 29 and 30. The milk marketing boards have a large number of legal agreements. They have not been able to identify so far all the categories of third party rights which these agreements might contain. Should evidence of rights which are not specifically provided for in this amendment materialise, there is a potential for disruption of an approved reorganisation scheme. Paragraph 29 would therefore permit a board to propose in its scheme that prohibitions imposed for private purposes on transactions not specifically covered in the amendment should be overridden. Ministers would then consider any such proposals when deciding whether the scheme overall ought to be approved. It is important that third parties affected by such provisions of an approved scheme should be informed that their rights are to be overridden. Paragraph 29(3) contains a procedure to ensure this.

Paragraph 30 establishes a procedure similar to that in paragraph 28 for the determination of compensation for any reduction in the value of a third party's interest in a property or right of a board or subsidiary as a result of the application of paragraph 29. The compensation would be paid either by the board concerned or one of its successor bodies. Whichever body was responsible for payment would be specified in the relevant reorganisation scheme. These provisions are technical and very detailed. I hope, however, that noble Lords will appreciate from my explanation their importance. I beg to move.

Lord Carter

My Lords, the House is extremely grateful to the Minister for his explanation. When he put down Amendment No. 28—indeed all the amendments right through to Amendment No. 32—I am sure the House was extremely grateful to him. It made for a very happy weekend trying to read and understand what on earth they meant.

I have only one point to make about Amendment No. 28, relating to paragraph 28(1) and paragraph 30(1). There is some rather curious wording dealing with compensation. Paragraph 28(1) states: such compensation as may be just shall be paid to that person". Almost the same wording is repeated in paragraph 30(1).

Why not say that "compensation shall he paid"? There should be no "may be" about it. If it says anything at all, it is that the compensation shall be just. There is provision for arbitration. I shall be interested to know why the lawyers feel it is necessary to put "compensation as may be just". There is going to be compensation. If they do not agree about it there is going to be arbitration. The matter should either not be mentioned at all, or it should say that the compensation, as I believe all noble Lords would agree, "shall be just", not "may be just". There should be no "may be" about it.

Earl Howe

My Lords, I take the noble Lord's point. If I am able to elucidate it, I will write to him.

On Question, amendment agreed to.

Earl Howe moved Amendment No. 29:

Page 38, line 54, at end insert:

("Certificates of vesting

.—(1) Where section 10(1) above applies on the vesting day under an approved scheme, the authority which approved the scheme shall give to each person identified by the scheme as a person to whom any property, right or liability of the relevant board is to be transferred under that section ("a relevant transferee") a certificate ("qualification certificate") stating—

1. (a) that he is identified by the scheme as a relevant transferee,
2. (b) whether the concurrence of any person is required to the issue by him of a certificate of vesting in relation to the relevant board, and
3. (c) if it is, whose concurrence is so required.

(2) For the purposes of sub-paragraph (1) above, the following are the persons whose concurrence is required to the issue of a certificate of vesting in relation to the relevant board by the person to whom a qualification certificate is given—

1. (a) where the scheme identifies anyone other than that person as a relevant transferee, that other person, or, if more than one, each of those other persons, and
2. (b) where the scheme does not provide for all the property, rights and liabilities to which the relevant board is entitled or subject on the vesting day to be transferred under section 10 above, that board.

(3) Where a person to whom a qualification certificate is given issues a certificate of vesting in relation to the relevant board, then, subject to sub-paragraphs (4) to (6) below, it shall be conclusive evidence for all purposes of any fact stated in it with respect to the effect of section 10 above in relation to any property, right or liability of the relevant board.

(4) Where a qualification certificate states that the concurrence of one or more persons is required to the issue of a certificate of vesting in relation to the board, sub-paragraph (3) above shall not apply in relation to such a certificate issued by the person to whom the qualification certificate is given unless it is issued with the concurrence of the person, or each of the persons, identified by the qualification certificate as a person whose concurrence is required.

(5) Sub-paragraph (3) above shall not apply to a certificate of vesting in relation to the relevant board to the extent that the certificate relates to land which is registered land at the time the certificate is issued if a person has, at that time, been registered as the proprietor of the land in reliance on the operation of section 10 above in relation to it.

(6) Sub-paragraph (3) above shall cease to apply to a certificate of vesting in relation to the relevant board—

1. (a) to the extent that the certificate relates to land which is not registered land at the time the certificate is issued, on the land becoming registered land, and
2. (b) to the extent that the certificate relates to land which is registered land at the time the certificate is issued, on a person being registered as the proprietor of the land in reliance on the operation of section 10 above in relation to it.

(7) In this paragraph—

1. (a) "the relevant board" means the milk marketing board to which the approved scheme relates,
2. (b) references to a certificate of vesting in relation to the relevant board are to a certificate with respect to the effect of section 10 above in relation to any property, right or liability of the relevant board, and
3. (c) references to registered land are to registered land within the meaning of the Land Registration Act 1925.

.—(1) This paragraph applies where an approved scheme includes provision for any property, right or liability of a subsidiary of the milk marketing board to which the scheme relates to be transferred under section 10 above.

(2) Where subsection (1) of that section applies on the vesting day under the scheme, the authority which approved the scheme shall give to each person identified by the scheme as a person to whom any property, right or liability of the subsidiary is to be transferred under that section ("a relevant transferee") a certificate ("qualification certificate") stating—

1. (a) that he is identified by the scheme as a relevant transferee,
2. (b) whether the concurrence of any person is required to the issue by him of a certificate of vesting in relation to the subsidiary, and
3. (c) if it is, whose concurrence is so required.

(3) For the purposes of sub-paragraph (2) above, the following are the persons whose concurrence is required to the issue of a certificate of vesting in relation to the subsidiary by the person to whom a qualification certificate is given—

1. (a) where the scheme identifies anyone other than that person as a relevant transferee, that other person, or, if more than one, each of those other persons, and
2. (b) where the scheme does not provide for all the property, rights and liabilities to which the subsidiary is entitled or subject on the vesting day to be transferred under section 10 above, the subsidiary.

(4) Where a person to whom a qualification certificate is given issues a certificate of vesting in relation to the subsidiary, then, subject to sub-paragraphs (5) to (7) below, it shall be conclusive evidence for all purposes of any fact stated in it with respect to the effect of section 10 above in relation to any property, right or liability of the subsidiary.

(5) Where a qualification certificate states that the concurrence of one or more persons is required to the issue of a certificate of vesting in relation to the subsidiary, sub-paragraph (4) above shall not apply in relation to such a certificate issued by the person to whom the qualification certificate is given unless it is issued with the concurrence of the person, or each of the persons, identified by the qualification certificate as a person whose concurrence is required.

(6) Sub-paragraph (4) above shall not apply to a certificate of vesting in relation to the subsidiary to the extent that the certificate relates to land which is registered land at the time the certificate is issued if a person has, at that time, been registered as the proprietor of the land in reliance on the operation of section 10 above in relation to it.

(7) Sub-paragraph (4) above shall cease to apply to a certificate of vesting in relation to the subsidiary—

1. (a) to the extent that the certificate relates to land which is not registered land at the time the certificate is issued, on the land becoming registered land, and
2. (b) to the extent that the certificate relates to land which is registered land at the time the certificate is issued, on a person being registered as the proprietor of the land in reliance on the operation of section 10 above in relation to it.

(8) In this paragraph—

1. (a) references to a certificate of vesting in relation to the subsidiary are to a certificate with respect to the effect of section 10 above in relation to any property, right or liability of the subsidiary, and
2. (b) references to registered land are to registered land within the meaning of the Land Registration Act 1925.").

The noble Earl said: My Lords, I can deal with this amendment more briefly. The implementation of a reorganisation scheme may result in the property, rights and liabilities of a milk marketing board being owned after vesting day by more than one body. The same applies to assets of a subsidiary of a milk marketing board. Should a successor body in such circumstances wish to dispose of any such asset, the prospective purchaser may want proof of ownership. The fine details of an approved reorganisation scheme will not be in the public domain. Where the ownership of the assets of either a board or a subsidiary is split between more than one body after vesting day, a procedure is required to enable such a body to prove ownership.

This amendment consists of two sets of provisions, one relating to the assets of a board, the other to those of a subsidiary of one. The provisions are equivalent. I shall therefore only refer to the assets of a milk marketing board.

The amendment lays down a procedure whereby each person to whom assets of a board have been transferred under Clause 10 in accordance with an approved reorganisation scheme will be able to issue a certificate known as a "certificate of vesting". This would be conclusive evidence for all purposes of any fact stated in it with respect to the vesting of the asset identified in it. It could thus certify ownership of a particular asset. Where assets of the board concerned have been transferred to more than one person under Clause 10 or where the board has retained some of its assets, the agreement of the other parties in whom assets have been vested, or by whom they have been retained, to the issuing of the certificate will be required. This would ensure, for example, that prospective purchasers could be satisfied that the person identified in the certificate as the owner was the actual owner.

I shall shortly be introducing Amendment No. 30 which concerns the registration of land transferred under a reorganisation scheme by virtue of Clause 10. Certificates of vesting issued under this paragraph would be particularly needed where a successor body wished to prove ownership of registrable land where change of ownership had not yet been registered. Clearly, once the change of ownership of a piece of land had been registered a certificate of vesting would be unnecessary to prove ownership. These provisions therefore provide for a certificate of vesting not to apply in relation to a piece of land transferred under Clause 10 once the change of ownership has been registered. The amendment is important in that it introduces a procedure to enable the avoidance of any doubt about ownership of assets of a milk marketing board after vesting day. I beg to move.

Lord Carter

My Lords, again the House should be grateful to the Minister for explaining so clearly. There is just one question. The amendment refers throughout to the concurrence of the various parties. What happens if the relevant transferee does not concur?

Earl Howe

My Lords, I think I would do best to write to the noble Lord on that point.

On Question, amendment agreed to.

5.15 p.m.

Earl Howe moved Amendment No. 30:

Page 38, line 54, at end insert:

("Land registration

.—(1) Where section 10(1) above applies on the vesting day under an approved scheme, the appropriate authority shall—

1. (a) give a copy of the order under section 1(5) above to each person from or to whom property, rights or liabilities are transferred under section 10 above in accordance with the scheme, and
2. (b) annex to the copy order a copy of the scheme certified by it to be a true copy.

(2) The copy of the scheme given under sub-paragraph (1) above shall be treated for land registration purposes in England and Wales as conclusive evidence of the terms of the scheme.

.—(1) This paragraph applies where any registered land in England and Wales is transferred under section 10 above.

(2) The transferee shall be entitled to be registered as proprietor in place of the transferor on an application in that behalf made to the Chief Land Registrar.

(3) On an application under sub-paragraph (2) above, the transferee shall supply to the Chief Land Registrar such information and produce to him such documents as he may require for the purpose of enabling him to deal with the application.

(4) Section 43 of the Land Registration Act 1925 (effect of transmissions) shall apply in relation to any person registered in place of the transferor as it applies in relation to any person registered in place of a deceased or bankrupt proprietor, but with the omission of the words from "upon the trusts" to "applicable by law, and".

(5) In this paragraph, "registered land" has the same meaning as in the Land Registration Act 1925.

.—(1) This paragraph applies where any land in England and Wales which is not registered land is transferred by virtue of section 10 above.

(2) Unless the transferee, or his successor in title or assign, has before the end of six months from the date of the transfer applied to be registered as proprietor of the land, section 10 above shall he deemed never to have had effect to transfer the legal estate in the land.

(3) The power conferred by the proviso to section 123(1) of the Land Registration Act 1925 (power of Chief Land Registrar, or court on appeal from him, to extend the period within which an application for first registration must be made) shall also apply in relation to the period mentioned in sub-paragraph (2) above.

(4) Any rules made by virtue of section 123(2) of the Land Registration Act 1925 shall—

1. (a) apply to dealings with the land which may take place between the date of the transfer and the date of the application to register as if the land had been the subject of a conveyance or assignment on the date of the transfer, and
2. (b) apply in relation to an application for registration under this paragraph as they apply in relation to an application for registration under section 123 of that Act.

(5) On an application for first registration under this paragraph, the applicant shall supply to the Chief Land Registrar such information and produce to him such documents as he may require for the purpose of enabling him to deal with the application.

(6) In this paragraph, "registered land" has the same meaning as in the Land Registration Act 1925.

. In relation to Scotland, any transfer under an approved scheme shall have effect subject to the provisions of any enactment which provides for transactions of that description to be given effect to by registration in any statutory register.").

The noble Earl said: My Lords, any transfer of property under an approved reorganisation scheme by virtue of Clause 10 may have land registration implications. For example, the register entry for registered land in England and Wales transferred under Clause 10 would not automatically show the new owner.

It is essential that the Land Registry should be kept up to date. So the first main effect of the amendment is to ensure that any person to whom land in England and Wales has been transferred by virtue of Clause 10 —land, that is, which was registered with the Land Registry—will be able to apply to the chief land registrar to have the change of ownership registered.

In the case of unregistered land in England and Wales which is transferred under Clause 10, the occasion of the transfer is a good opportunity to register ownership. So the second main effect of the amendment is to require the recipient of such land, or anyone to whom he may sell the land, to apply within six months of vesting to be registered as the owner. This deadline could be extended by the chief land registrar. Should the new owner fail to apply for registration within the deadline, the transfer of the land concerned would be deemed not to have taken place.

The other provisions of the amendment relate to matters such as the provision of evidence to the Land Registry that transfers of land in England and Wales under a reorganisation scheme have taken place. The amendment also provides for the supply to the land registrar by the person to whom land is transferred of sufficient information to enable him to register the change of ownership.

The procedures for land registration in Scotland are different from those in England and Wales. The amendment provides for the same rules to apply to transfers of land in Scotland which are made under Clause 10 as would apply if the same transfers had taken place by private contract. It deals with an important technical issue arising out of the implementation of a reorganisation scheme. I beg to move.

On Question, amendment agreed to.

Earl Howe moved Amendment No. 31:

Page 38, line 54, at end insert:

("Transfers under section 10: transition

.—(1) Any agreement, transaction or other thing which—

1. (a) is made, effected or done with respect to anything transferred under section 10 above in accordance with an approved scheme,
2. (b) is made, effected or done by, to or in relation to the transferor, and
3. (c) is in force or effective immediately before the vesting day under the scheme,

shall, on and after that day, have effect as if made, effected or done by, to or in relation to the transferee in all respects as if the transferee were the same person in law as the transferor.

(2) sub-paragraph (1) above shall not affect the construction of any provision which is formulated specifically with reference to the possibility of the undertaking of a milk marketing board being transferred otherwise than to a board constituted by a scheme under Part I of the Agricultural Marketing Act 1958.").

The noble Earl said: My Lords, this is a fairly straightforward amendment. Legal instruments or agreements relating to property, rights or liabilities of a milk marketing board or a subsidiary of one may be in force immediately before vesting day. Where such an instrument relates to an asset which is transferred by virtue of Clause 10 under an approved reorganisation scheme it is generally desirable that the agreement should apply to the transferee as if he were the transferor. The exception, in line with the principle that I have already outlined, is where a provision which specifically anticipates the transfer of the undertaking of a board to the type of successor body provided for in a reorganisation scheme prohibits that situation. In that case, it will be necessary for the board or subsidiary to renegotiate the terms of the agreement before vesting day.

The amendment therefore simply stands the transferee in the shoes of the transferor in respect of such agreements or transactions except in the circumstances which I have outlined. I beg to move.

On Question, amendment agreed to.

Earl Howe moved Amendment No. 32:

Page 38, line 54, at end insert:

("Provisions of scheme effective on statutory vesting

.—(1) Where section 10(1) above applies on the vesting day under an approved scheme, the provisions of the scheme shall, to the extent that they fall within sub-paragraph (2) below, have effect by virtue of this paragraph.

(2) The provisions of an approved scheme fall within this sub-paragraph to the extent that they purport—

1. (a) to impose on one of the relevant bodies an obligation on or after the vesting day under the scheme to enter into a written agreement with, or execute an instrument in favour of, another of the relevant bodies;
2. (b) to create for one of the relevant bodies, on the vesting day under the scheme, an interest in or right over property transferred under section 10 above to another of the relevant bodies; or
3. (c) to adapt, with effect from the vesting day under the scheme, references to members or officers of the relevant board in a document or oral agreement relating to anything transferred under section 10 above to a relevant successor body.

(3) The provisions of an approved scheme only fall within sub-paragraph (2) above by virtue of paragraph (c) of that sub-paragraph to the extent that their purpose is to prevent, so far as reasonably possible, the effect of the provisions in which the references concerned occur being materially altered as a result of the transfer.

(4) For the purposes of sub-paragraph (2) above, the relevant bodies, in relation to an approved scheme, are—

1. (a) the relevant board, and
2. (b) the relevant successor bodies.

(5) In this paragraph—

1. (a) "relevant board", in relation to an approved scheme, means the milk marketing board to which the scheme relates; and
2. (b) "relevant successor body", in relation to such a scheme, means a body corporate to which property, rights or liabilities are transferred under section 10 above in accordance with the scheme.

.—(1) Where section 10(1) above applies on the vesting day under an approved scheme, the provisions of the scheme shall, to the extent that they fall within sub-paragraph (2) below, have effect by virtue of this paragraph.

(2) The provisions of an approved scheme fall within this sub-paragraph to the extent that they purport—

1. (a) to impose on—
   1. (i) the relevant board, or
   2. (ii) all or any of the bodies corporate to which property, rights or liabilities of the relevant board are transferred under section 10 above ("the relevant successor bodies"),
   duties to take, on or after the vesting day under the scheme, such steps as may be requisite to secure that the vesting under section 10 above of any foreign property, right or liability of the relevant board in any of those bodies is effective under the relevant foreign law;
2. (b) to impose on the relevant board a duty, in relation to any foreign property, right or liability of its which is transferred under section 10 above to a body corporate, to hold that property or right for the benefit of, or discharge that liability on behalf of, that body corporate, until the vesting of that property, right or liability in that body corporate is effective under the relevant foreign law;
3. (c) to require a body corporate to which any foreign property, right or liability of the relevant board is transferred under section 10 above to act on behalf of that board (so far as possible) for the purposes of, or in connection with, the performance of any duty of the board under the scheme in relation to any foreign property, right or liability of its so transferred to that body corporate; or
4. (d) to require any of the relevant successor bodies to meet expenses incurred by the relevant board in consequence of provisions of the scheme which fall within this sub-paragraph by virtue of paragraph (a) or (b) above.

(3) Nothing in any provision which has effect by virtue of this paragraph shall be taken as prejudicing the effect, under the law of any part of the United Kingdom, of the vesting under section 10 above of any foreign property, right or liability in any of the relevant successor bodies.

(4) Where provisions of an approved scheme have effect by virtue of this paragraph, the relevant board shall have all such powers as may be requisite for the performance of any duty to which it is subject as a result.

(5) In this paragraph—

1. (a) "relevant board", in relation to an approved scheme, means the milk marketing board to which the scheme relates; and
2. (b) references to any foreign property, right or liability are to any property, right or liability as respects which any issue arising in any proceedings would have to be determined (in accordance with the rules of private international law) by reference to the law of a country or territory outside the United Kingdom.").

The noble Earl said: My Lords, this relatively straightforward amendment deals with technical matters relating to the transfer of property or rights of a milk marketing board under an approved reorganisation scheme.

The first paragraph deals with three such matters. In addition to proposing the automatic transfer of its property and those of a subsidiary in a reorganisation scheme a board may wish to provide in the scheme for the drawing up of agreements after vesting day between the residuary board and a successor body or between two successor bodies in relation to such property. A board may also wish to create for itself or a successor body an interest in, or rights over, property vested in a successor body. Finally, a board may wish to regularise its replacement by a successor as a party to an agreement. For example, where such agreements contain references to members or officers of the board concerned this could be achieved by the replacement of those references with references to the appropriate persons in the successor body.

Separate provision is needed to give effect to these potential elements of a reorganisation scheme and the amendment achieves that situation.

The second paragraph deals with the transfer of ownership of any foreign property, rights or liabilities owned by a milk marketing board. While any transfers of foreign assets under Clause 10 will take place automatically for the purposes of UK law, there will be no effect in relation to the relevant foreign law. It is therefore necessary to enable a board to specify in a reorganisation scheme who among the board and any successor bodies should be responsible for taking the necessary steps under foreign law to effect the transfer of such property. This paragraph gives effect to elements of a reorganisation scheme which make such a provision.

The amendments are important in that they tie up loose ends resulting from the implementation of a reorganisation scheme. I beg to move.

On Question, amendment agreed to.

Clause 13 [Position following reorganisation]:

Earl Howe moved Amendment No. 33:

Page 8, line 36, leave out ("This section applies") and insert ("Subsections (2) to (5) below apply").

The noble Earl said: My Lords, in moving the amendment I shall also speak to Amendment No. 34.

The amendments concern the establishment of the framework within which a milk marketing board operates after vesting day if an approved reorganisation scheme relating to it is implemented. If I may briefly recap, the Bill envisages that the board would continue after vesting day in residuary form for a period before it was wound up. A board would be required under paragraph 15 of Schedule 1 to specify in its reorganisation scheme what functions the residuary board would carry out. Those would be limited to functions relating to any retained assets and liabilities and its winding up. A residuary board would be debarred from trading in milk.

A board would therefore have very different functions after vesting day than it had before. Furthermore, the main provisions of the relevant milk marketing scheme would have been revoked. Provision is therefore needed to establish a new framework within which the board is to operate. Clause 13 would require Ministers to make regulations for the purpose of giving effect to that part of an approved scheme which related to the period after vesting day. In addition they could make regulations in relation to the constitution of the board or for the purpose of enabling it to wind up its affairs.

Clause 13 would only apply where an approved reorganisation scheme was implemented and Ministers would be unable to make those regulations until vesting day. Therefore, a board could not set up its new structure in advance. If the regulations did not come into force immediately there would be an interim period during which the residuary board might not be able to function properly.

It is clearly sensible therefore that a board should know its new constitution and powers in advance of vesting day and be able to begin operating in its new form on that day. The amendments would enable Ministers to make the necessary regulation in relation to a particular milk marketing board before vesting day in anticipation of a successful implementation of the relevant reorganisation scheme. I beg to move.

On Question, amendment agreed to.

Earl Howe moved Amendment No. 34:

Page 9, line 18, at end insert:

("(5A) Regulations under subsection (2) above may be made in anticipation of the application of that subsection.").

On Question, amendment agreed to.

Clause 16 [Levies]:

Earl Howe moved Amendment No. 35:

Page 10, line 29, leave out ("to") and insert ("by virtue of their being or having been").

On Question, amendment agreed to.

Clause 17 [Overriding nature of functions under Part I]:

Earl Howe moved Amendments Nos. 36 and 37:

Page 10, line 32, leave out ("to registered producers").

Page 10, line 33, at end insert ("to persons who are registered producers").

On Question, amendments agreed to.

Clause 21 [Interpretation of Part I]:

Earl Howe moved Amendment No. 38:

Page 12, line 26, leave out ("who are").

On Question, amendment agreed to.

Clause 22 [Application of sections 23 to 43]:

Earl Howe moved Amendment No. 39:

Leave out Clause 22 and insert the following new clause:

("Activation of Part II

22.—(1) If it appears to the Ministers that it is necessary or expedient that the Potato Marketing Scheme should be brought to an end, they may by order specify a day as the first day of the period mentioned in section 23(2) below.

(2) Where an order under this section is contained in a statutory instrument which is subject to annulment in pursuance of a resolution of either House of Parliament, then, if the instrument is annulled in pursuance of such a resolution, the order shall be treated for the purposes of this Part of this Act as never having been made.").

The noble Earl said: My Lords, in moving Amendment No. 39 I shall speak also to Amendments Nos. 41, 42, 57 and 60 which are consequential to Amendment No. 39 and to Amendment No. 70 which is linked.

The Committee of the House considered a number of amendments which either laid down conditions to be met before the potato marketing scheme should be revoked or called for the order stating that the scheme should be brought to an end to be subject to affirmative resolution procedure. I explained to the Committee that there was a strong chance that the introduction of an EC potato regime would necessitate the abolition of the Great Britain scheme and that in those circumstances the Government could not be bound by any criteria. However I agreed that Parliament should have the opportunity to debate any ministerial decision and undertook to bring forward an amendment providing that the order stating that the potato marketing scheme should be brought to an end should be subject to negative resolution procedure.

In that debate in Committee I very much appreciated the contributions that were made by my noble friends Lady Carnegy of Lour and Lord Renton, and the noble and learned Lord, Lord Simon of Glaisdale, who kindly corresponded with me subsequently.

Having reflected on the matter over the Christmas Recess and in the light of further discussions with the Potato Marketing Board, the Government have decided that they can move even further towards meeting your Lordships' wishes. We propose that the order should be subject to negative resolution procedure if revocation proves necessary in the light of an EC regime and affirmative resolution procedure in other circumstances.

We have not defined the circumstances in which negative resolution procedure would be used because until we see the final form of the EC regime it is difficult to foresee what constraints may be laid upon us. I should like to emphasise that the intention behind the amendment is that affirmative resolution procedure will apply to an order relating to the potato marketing scheme except in the very restricted case of the scheme being inconsistent with an EC regime. In that event, the provisions of the Bill provide a more constructive alternative to the abolition of the scheme under Section 2(2) of the European Communities Act and negative resolution procedure would avoid wasting the time of the House on a fruitless debate and allow the board to move speedily towards the evolution of a successor scheme. I hope that your Lordships will accept my assurances.

At this stage, before dealing with the amendments in detail I should like to take this opportunity, as I undertook in Committee, to report to noble Lords on the outcome of the discussions on the potato regime at the December Agriculture Council.

The Council asked for further work to be done by the Special Committee for Agriculture to progress the Commission's proposal, including the addition of provision for marketing standards, and for it to be referred back to the Council for decision as soon as the European Parliament had given its opinion. I must report that in the discussion no member state indicated that it would wish to adopt a quota system similar to that operated in Great Britain. Indeed, no member state has so far argued for the retention of its national measures.

Returning to the amendments, new Clause 22(1) provides that, If it appears to the Ministers that it is necessary or expedient that the Potato Marketing Scheme should be brought to an end, they may by order specify a day", which shall be the first day from which the 12-month period specified in Clause 23(2) shall commence. Clause 22(2) provides that if the order made under Clause 22(1) is subject to negative resolution procedure and is then annulled, the order will be treated as never having been made.

The amendment is drafted in that way because, although a negative resolution order would automatically become invalid if annulled, the Statutory Instruments Act 1946, which contains the general law on these matters, states that if an order be annulled, no further proceedings shall be taken thereunder". That does not deal with the situation where, as in this case, various actions may already have been taken before annulment whose legal validity would then be doubtful. The only way to undo that would be for a further order to be made. Clause 22(2) removes any ambiguity and any need for a further order.

Consequential Amendment No. 41 amends Clause 23(2) so that the potato marketing scheme will be revoked 12 months from the date specified in the order made under the new Clause 22(1) rather than 12 months from the date of the making of the order as is contained in the Bill. That 12-month period can still be extended by Ministers. Similarly, Amendment No. 42 amends Clause 24(1) so that the six-month period during which the Potato Marketing Board may submit a transfer scheme begins on the date specified in the Clause 22(1) order.

Amendment No. 57 amends Clause 37(1) so that elections for PMB board members, other than for casual vacancies, will cease on the day specified in the Clause 22(1) order rather than on the date that that order is made. Amendment No. 60 amends Clause 39 so that no calendar year may be prescribed as a quota year on or after the date specified in the Clause 22(1) order.

Finally, Amendment No. 70 amends Clause 53 to insert a new subsection to provide that the statutory instrument containing an order made under Clause 22 shall be subject to the negative resolution procedure unless a draft of the order is approved by each House of Parliament. As I have already indicated, the Government decided that the negative resolution procedure will be used if revocation of the potato marketing scheme proves necessary in the light of an EC regime and affirmative resolution in all other circumstances.

On the basis of that assurance I ask the House to accept the amendment. I beg to move.

Lord Stanley of Alderley moved, as an amendment to Amendment No. 39, Amendment No. 39A:

Line 2, leave out ("necessary or expedient") and insert:

("(a) necessary, or

(b) in the public interest").

The noble Lord said: My Lords, I realise only too well that moving amendments to amendments complicates my life and probably also your Lordships'. I accept also that by so doing it may have resulted in flawed drafting. However, I hope to convince your Lordships of the merits of the intention of my amendment. Indeed, I hope that my noble friend Lord Howe may be able to agree certain parts, if not all, of the amendment.

The intention of Amendment No. 39A is twofold. First, it is to ensure that, should the Government decide to do away with the Potato Marketing Board, they are committed to putting in its place a successor body. I hope that my noble friend will be able to accept that. Secondly, it is to discover and suggest the role that the successor bodies should have and in what circumstances that succession may take place.

I fear that my noble friend may find difficulty in accepting my second intention. As far as can be understood, the present policy of my right honourable friend the Minister of Agriculture is to leave the whole question open and unanswered. That just will not do. Nothing, but nothing, is more demoralising for an industry—particularly the potato industry, which is facing one of its worst seasons for decades—than not to know what is in store. I hope that your Lordships will agree that such an attitude is irresponsible and hardly equates with my noble friend's remarks at Committee stage (at col. 347 of Hansard) when he said that any change would be, in the best interests of the industry". I hope therefore that my noble friend will be able to correct what I hope is my and the potato industry's misinterpretation of my right honourable friend's attitude to the Potato Marketing Board and any successor body.

Amendment No. 39A would therefore have the following effect. If there is a European potato regime introduced that does not allow subsidiarity by the United Kingdom Government—that is, we are forbidden by the European Community from running a national scheme of our own—there would be no point whatever in the Government consulting our industry and it would therefore proceed by negative resolution. However, where the European Community introduces a potato regime that would allow the United Kingdom to have its own scheme—that is, it would accept subsidiarity—under Amendment No. 39A the Government would have to proceed by what I call the "in the public interest" rule, which would result in their consulting, with such persons as appear to them to be representative of the interests of producers, purchasers, retailers and consumers of potatoes and shall have regard to the views expressed by those persons". When that process has been completed and a new scheme drawn up, the Government would then put it before Parliament in the form of an affirmative order.

From what has appeared in the farming press since Committee stage it seems that the European Commission has no objection whatever to the United Kingdom continuing to have its own potato marketing scheme. According to those reports, it is my right honourable friend the Minister who is objecting to our being allowed to have our own United Kingdom scheme. I hope that my noble friend can throw some light on the matter. Indeed, I go further and ask him whether the Government are pressing for a subsidiarity clause in any European potato regime that would allow us either to keep the Potato Marketing Board or to set up our own successor body. If they are not pressing for one, why not? It must surely be in our interests to run our own affairs when we are allowed to rather than to let Brussels dictate. Even though my right honourable friend may prefer to encourage a Brussels directive, it must surely be better to have as many doors as possible kept open than to be saddled with a scheme that could well be Mediterranean oriented.

Finally, before my noble friend finds fault with the drafting of my amendment, and despite his remarks, I still do not understand his amendment. As Amendment No. 39 is tabled—not what he said or promised—I believe that it would be up to Ministers to decide whether to have an affirmative or a negative resolution. I hope therefore that my noble friend will be able to take the mote out of his amendment before he takes the beam out of mine. I beg to move.

Lord Carter

My Lords, my noble friend Lord Gallacher and I were pleased to add our names to Amendment No. 39A. Although the noble Lord, Lord Stanley, did not mention Amendment No. 39B, I think we are now discussing the whole group of amendments.

The group deals with the crucial matter of the route of parliamentary approval for the winding up of the potato marketing scheme and the relationship of European legislation, if any, to that winding up. The purpose of Amendment No. 39A is quite clear. It provides that if a European regulation on the potato regime allows the retention of the potato marketing scheme then the scheme should be retained. The Minister was careful to say that we have not yet seen the final form of the regulation from Europe and that therefore all kinds of things could happen. It could allow subsidiarity. It could allow for our scheme to continue. That is the important point. The impression has already been given by Ministers and others that the regime does not allow the continuation of the potato marketing scheme. However, we do not know that because, as the Minister said, it is not yet in its final form. It is subject to debate in the European Parliament and, of course, to further discussion in the Council of Ministers.

Perhaps I may add to the questions put by the noble Lord, Lord Stanley. There is considerable bewilderment in the industry—perhaps the Minister can clarify this—about reports in the farming press that a Commission source has said that there is nothing to stop us having our own scheme under the proposed regime even as drafted now. It seems that Ministers have a brief to the contrary. I should like to repeat a quotation which I gave in Committee. It comes from a document sent by the PMB to all growers entitled The Potato Marketing Scheme and the Proposed EC Regime. It refers to the principle of subsidiarity and states: Informal discussions with Commission officials suggest that they do not see abolition of the British system as central to their objectives, provided it does not conflict with the principles of the Single European Act".—[Official Report, 10 12, 92; col. 336.] Is that statement wrong?

This whole argument of subsidiarity is crucial to the debate. Are the Government prepared to argue subsidiarity within the Council of Ministers? Are we correct in thinking that the draft regulation has to receive the support of the European Parliament and also requires unanimity in the Council of Ministers? The various member states did not show their hands completely in the very hasty discussions that took place in December. The whole thing was rushed. The draft regulation was published in the middle of November and the Council met in December. I am therefore not in the least surprised that member states are keeping their negotiating cards close to their chest at this time. The House and the industry are entitled to make this point. If the Government want to get rid of the potato marketing scheme—the Government are entitled to that ideological view—and leave producers at the mercy of an uncoordinated market in potatoes, they should say so and not attempt to hide behind the European legislation. If that is their position—in my view it is a position based on free market dogma—they should spell out their arguments as to what they believe will be the benefit to producers.

Amendment No. 39B deals with the consultation process. This was accepted when we were discussing milk. I am sure the Minister would agree that, even though the drafting may not be perfect, there should be full consultation all the way through on anything that happens. Perhaps I may repeat a point which I made in Committee. Under the Bill as drafted the potato scheme can be wound up if in the view of Ministers that is "necessary or expedient". I ask these questions again: necessary for what or expedient for whom? The criterion of public interest which is mentioned in Amendment No. 39A is much clearer and much better than the words "necessary or expedient" which are in the Bill.

We should be clear what the Minister means by Amendment No. 39. He is saying that if the Government decide to wind up the scheme off their own bat, as it were, without reference to European legislation, they will come through the affirmative route; but that if it is a requirement of a European regulation they will come through the negative resolution route. In that connection the Minister made a point which I did not entirely understand. Perhaps he can help. He referred to the annulment of a negative resolution. If that took place as the result of a European regulation which meant that we had to wind up the board and Parliament decided to annul the resolution, what would happen? What is the legislative position if this Parliament decides to annul a resolution which has to be put because it is the result of European legislation? I ask that question not to be awkward but because I am interested to know what the legislative position would be.

As the noble Lord, Lord Stanley, said, if we are to go down the regulation-making route of the affirmative resolution, if the Government are doing it off their own bat, or the negative resolution, if it is the result of a European regulation, Amendment No. 40 in the name of the noble Baroness, Lady Carnegy, although it may not be perfect in its drafting, is much easier to understand than the amendment put forward by the Government. Indeed I added my name to a similar amendment in Committee and I would certainly support Amendment No. 40 now. This is a complicated area. Will the Minister consider taking away his amendment and reconsider the whole area of the drafting of these amendments to deal with regulation-making powers? He could then come back at Third Reading after further discussion. We support the principle of the affirmative route and the negative route as outlined by the Minister but we believe that the drafting could be a little clearer. However, I understand from the discussions we have had between the Committee and Report stages that there are some legal problems in the drafting.

I should also make it clear that Amendments Nos. 39 and 40 deal only with the route by which the resolutions will come. They do not inhibit us returning to the matter at Third Reading and clarifying in some detail the future of the Potato Marketing Board and any successor body. Amendments Nos. 39 and 40 deal with the route of the regulations. They do not state what will be in those regulations. That is an important matter for Third Reading.

Lord Simon of Glaisdale

My Lords, perhaps I may—

Baroness Carnegy of Lour

My Lords, if the noble and learned Lord will forgive me, before other noble Lords develop the discussion, I think I should speak to my amendment, Amendment No. 40, which has already been referred to and is in this group. I hope that that is agreeable to your Lordships.

I have tabled Amendment No.40 after considering carefully the debate in Committee and after further consultation with the Potato Marketing Board and others. I should say now that it is not my intention to press my amendment today. The replacement Clause 22 which I propose, the first two paragraphs of which are identical to the amendment that I moved in Committee, differs from the Government's proposal for the clause in several respects. In one respect it seems to me that the Government's clause is preferable to mine. In other respects I am going to suggest that my clause is to be preferred. I hope I may persuade the Government to think again on those points either at Third Reading or as the Bill proceeds through the House of Commons.

The alternative Clause 22 which I am proposing, like Amendment No. 39A in the name of my noble friend Lord Stanley of Alderley, stipulates that Ministers can move to wind up the Potato Marketing Board only if it is necessary or in the public interest whereas the Government continue to insist that winding up should be allowed if it is necessary or expedient. I do not like the idea of a government abolishing the Potato Marketing Board on grounds of expediency. According to my dictionary, one meaning of expediency is an inclination towards an advantageous procedure rather than one which is fair or just. Should that be a ground for the Government taking action on the Potato Marketing Board? It is also fairly obvious that the concept of expediency is wider than that of being in the public interest. The Government's amendment would therefore allow for the ending of the Potato Marketing Board in circumstances which could not be justified on the basis of public interest.

I very much hope that, in due course if not today, the Government will concede that point, even if public interest is not the correct phrase with which to replace the word expediency. I shall listen very carefully indeed to my noble friend's reply on this matter before deciding whether to support the amendment of my noble friend Lord Stanley in the Lobby should he divide the House on it.

The respect in which the Government's proposed amendment seems to be preferable to my own is this: my noble friend is seeking to allow for the extension of the period of run up to the abolition of the board and the transfer to any successor body. My amendment would not do that, and probably should do so. As regards whether the proposal to abolish the scheme should be subject to the negative or affirmative resolution procedure in Parliament and under precisely what circumstances, having studied the debate at Committee stage and having listened to the wise words of the noble and learned Lord, Lord Simon of Glaisdale, and of the noble Lord, Lord Renton, and also having listened to the assurance that my noble friend gave earlier today, I still believe that my amendment is preferable to what the Government are now proposing.

As has been explained, the amendment of my noble friend Lord Stanley goes further. As I understood him, unless the European arrangements rule out the potato marketing scheme, the Government could not take action until they have consulted and got agreement with all concerned that that should happen. Under legislation which exists already, the Government could take action to bring the Potato Marketing Board to an end if it misbehaved or under certain other grounds. But if, for example, developing markets in Europe and elsewhere, or other important aspects of the public interest, made the winding up of the board seem desirable to the Government, to make it necessary to get the agreement of people who did not feel that the winding up would be in their particular interest, although it might be in the wider public interest, is not a good way to proceed. That amendment is perhaps going too far and for that reason I am not inclined to support Amendment No. 39B.

At the same time the decision to abolish the board, if it is not forced by European arrangements, would be a very important decision indeed not only to farmers but to all who buy potatoes or who care about the countryside and local economies. The seed potato trade in Scotland would be a very different trade without the potato marketing scheme. The potato growing areas would also look very different and the economic life of the areas where potatoes, particularly seed potatoes, are grown would be very different.

Whereas it seems to me that the negative resolution procedure is a reasonable one if the potato marketing scheme has become inconsistent with European arrangements, in all other circumstances there is so much at stake for so many people that both Houses of Parliament must be allowed to discuss the matter more fully. I appreciate that my noble friend has given us an assurance that if it is not required by Community arrangements that the board be abolished, the affirmative resolution procedure will be used. He must somehow get that into the Bill: an assurance is not enough, as too much is at stake.

I believe that we all appreciate very much that my noble friend has come a long way since Committee stage. He has worked very hard at this matter, which is not an easy problem to resolve. He has explained to us that sometimes it will be difficult to know whether European arrangements do preclude the scheme or not. In that case the matter should go to the affirmative resolution procedure. I do not think that that should preclude my suggestion.

We appreciate what the noble Earl has done. As I said, I am not going to press the amendment. However, between this stage and the next 1 ask my noble friend to look at what has been said (there is more to be said in the debate today) and see whether he can make it absolutely plain under which circumstances which form of resolution would be used in the context of the Bill; whether it is worded in the way which I have put forward or whether he simply amends the amendment which he is now moving.

6 p.m.

Lord Simon of Glaisdale

My Lords, when your Lordships debated this clause at Committee on the amendment of the noble Baroness, Lady Carnegy, there was an extraordinary consensus. Nobody gainsaid the view that the potato marketing scheme had to be wound up; it could be done by subordinate legislation. But there was unanimity that if that were so there should be the maximum effective parliamentary control. That emanated from two directions.

Your Lordships are now, as frequently in the past, singularly fortunate in having so many experts on agriculture and indeed on this particular scheme. From their vast experience and sagacity, they were at one in saying that the decision is an important one and therefore demands the affirmative resolution procedure. The other approach was from those that said that the criteria had been perfectly clearly laid down by a joint Select Committee whose recommendations have been accepted by both Houses. There should be an affirmative resolution procedure unless the decision can be described as trivial tidying up or consequential. There was no pretence that this particular decision fell under any of those heads.

The noble Lord, Lord Renton, with a versatility which would have done credit to a hermaphrodite, managed to combine both approaches in a short, cogent and conclusive speech. So we left the Committee stage with a House that was unanimous that there should be the affirmative resolution procedure. At the very last moment—indeed in the middle of last week —the noble Earl was good enough to send by immediate delivery a letter saying that he was prepared, as he had been before, to concede the negative resolution procedure. We must not forget that as this Bill was introduced there was no parliamentary control over that decision. He was prepared to concede the negative resolution procedure and was looking to see whether he could go further.

I ventured then in a telephone message—as time was so short—to point out that there was a perfectly easy way of employing the affirmative resolution procedure. The noble Earl said that he was afraid—he has emphasised this today —that there might be a Community decision on this matter which would require immediate implementation, and that the affirmative resolution procedure did not allow that. If I may say so, that is fairly far-fetched because it presupposes, first, that there would be a Community decision; secondly, that it would require immediate implementation and, thirdly, that the voice of our own Minister for Agriculture, Fisheries and Food would not be heard on those matters.

As I ventured to point out, a perfectly well known and attested form of the affirmative resolution procedure does allow for immediate effect. The resolution comes into immediate effect, but unless it is verified and assented to by one or both Houses of Parliament within, say, 12, 28 or 40 days, it lapses. The answer to that was that that was not good enough because the EC resolution might require implementation while Parliament was not sitting. In other words, there we have a fourth unlikelihood: that despite our own Minister being on the Council, despite there being a Council decision, and despite its requiring the winding-up of our own scheme, that would fortuitously happen while the Houses were in recess. But even that was not good enough because this particular type of affirmative resolution procedure is set out on page 545 of the latest edition of Erskine May, to which I directed the noble Earl's attention. I am told that that particular sort of affirmative resolution procedure can be set down while the Houses are in recess. I do not put great stress on that because my conversation with the Table Office was held on the telephone since it had to be made at the last moment and there are always opportunities for misunderstandings.

One could go further. There is no conceivable reason why Parliament should not stipulate that, notwithstanding any rule of practice, this particular resolution may be set down while Parliament is in recess. There is some sort of precedent for that in the regulation-making powers of the Town and Country Planning (Scotland) Act 1972. So, there we have a position that there is no real reason why your Lordships' wish that there should be an affirmative resolution procedure should not be acceded to.

Your Lordships may remember the definition of metaphysics by the philosopher Bradley, who said that metaphysics is finding bad reasons for what we believe on instinct. I am tempted to say that the reasons advanced by the department —I shall not say the "bad reasons" but they are at least questionable reasons—were put forward with the intention of preventing your Lordships doing what your Lordships wish to do.

The noble Earl finally said, "Look how far I've come. What I propose is that if there is an EC resolution which requires immediate implementation, then the negative resolution procedure shall apply, but otherwise the affirmative resolution procedure shall apply". That is set out with great clarity in the amendment that has been tabled by the noble Baroness, Lady Carnegy. That is precisely what that amendment does. It is clear on the face of the amendment. I venture to agree with the noble Lord, Lord Carter, in saying that I cannot for the life of me see how the noble Earl's amendment does what he says that he wants it to do.

The matter is the more strange when one looks at the final amendment, Amendment No. 70, which seeks to insert a new subsection (4A), which states: A statutory instrument containing an order under section 22 above, if made without a draft having been approved by resolution of each House of Parliament, shall be subject to annulment". I cannot find anywhere in the Bill any provision for a draft resolution, subject to the affirmative resolutions being laid before Parliament. Not only is there no mandate on the Government to do that, but there is not even a permission.

Therefore, I venture to end by agreeing once more with the noble Lord, Lord Carter. This matter is in such confusion and it is so important that the sensible thing to do would be for all the amendments to be withdrawn and for us to take advantage of the interval before the next stage to try to sort the matter out, to ensure that, at the least, the Bill does what the noble Earl says that he intends it to do and, preferably, to investigate whether the affirmative resolution procedure is not fully satisfactory to every apprehension that has been voiced by the department.

If the matter cannot be resolved before tomorrow week when I believe that we next consider the Bill, perhaps the noble Earl could give an undertaking which could be implemented in the other place. At the moment, your Lordships are being invited to buy a pig in a legislative poke. As we are being asked to accept that the Bill does what the noble Earl says that it does and what more than one Member of your Lordships' House has failed to perceive, I beg the noble Earl to withdraw his amendment. He would lose nothing by doing so. If he satisfies everybody, he can bring it forward again at the next stage to general acclamation.

Lord Plumb

My Lords, perhaps I may first support the general comments that were made by my noble friends Lord Stanley of Alderley and Lady Carnegy of Lour. The general thrust of what the noble Lord, Lord Carter, said expressed the concern that is felt by potato growers and the potato industry in this particular year. Frankly, I do not think that there could be a worse time to discuss this. Confidence is low among growers, who are beginning to wonder where on earth the scheme will lead them.

For that reason I was pleased that my noble friend the Minister pointed out that in his amendments he suggests that we might make haste more slowly. That would give adequate time for consultation. I hope that he will take note of what has been said in this House; that it is important that an affirmative resolution is written into every Bill. It is also important that in planning a move away from the statutory powers of a board we make sure that we are moving towards a successor scheme which is acceptable to all concerned.

My noble friend also said that the opinion of Members of the European Parliament would have to be sought before we could reach a conclusion. It so happens that tomorrow and on Wednesday I shall be in Brussels debating the issue in the European Parliament. That will be the first sight of a scheme that has been prepared by a rapporteur who happens to be German. He was greatly influenced by the initiative of members of the Potato Marketing Board and the National Farmers' Union in going to Brussels and informing him of their opinion. The general discussion will begin this week and it will be at least April before the scheme is debated in the European Parliament. I should not like to guarantee the scheme's approval at that stage. By the time the scheme returns to the Council of Ministers it will be autumn before a settlement—

Lord Carter

My Lords, I thank the noble Lord for giving way. Is it correct that in addition to the European Parliament considering the scheme the Economic and Social Committee must give its views?

Lord Plumb

My Lords, that is correct; but the responsible committee will be the Agriculture Committee, which will have an input from other committees. Inevitably that gives the committee the opportunity to make its point at the plenary session. It will of course put forward its own amendments to the scheme during the course of its going through the Parliament.

We must take note that there are those outside this country who believe that the scheme which operates within this country could be a fine example to them. Therefore, they may say, "Perhaps we should adopt a similar scheme". The scheme is the only way by which we can bring stability and sensibility into a difficult area. Indeed, throughout the years we have seen the fluctuations in the total volume of output. I hope that we shall make haste slowly, that we shall take note of the anxieties of others and that there will be an adequate opportunity for consultation. We must not forget the opportunity for subsidiarity in a case such as this. We must make sure that we implement and operate a scheme that is suitable to the whole of the United Kingdom.

6.15 p.m.

Lord Renton

My Lords, your Lordships will be thankful that my noble friend Lord Plumb was able to give that information because it is exceedingly relevant to the whole discussion. As one of those who criticised the Bill in Committee I wish to acknowledge the steps that my noble friend Lord Howe has since taken. They are reflected in his amendments as far as they go. However, I too do not consider that they go far enough. I wish to deal briefly with four issues that have arisen in the discussion and I venture to put forward my own comments.

The first issue is that of policy. In Committee I pressed my noble friend to say whether the Government intended to abolish the potato marketing scheme and, if so, whether there would be a replacement. I received no answer. We still do not have an answer, except that my noble friend has told us that it depends on the decision of the European Parliament. My noble friend Lord Plumb has told the House that that will not bring us closer to a policy decision.

The issue of subsidiarity is relevant to the continuation of the potato marketing scheme because the European Community is now very large and covers a number of different climatic geographical areas. I cannot imagine that a scheme which suits growers around the Mediterranean will necessarily suit growers in this country, or vice versa. For that reason I press the Government to bear in mind several possibilities. The first is the possibility that no scheme will be agreed within the European Community. Will my noble friend Lord Howe give a firm assurance that in that event the potato marketing scheme will continue to operate in this country? That is most important. As regards policy the Government should be pressing not for a universal scheme within the common agricultural policy but a scheme which takes note of differing local conditions.

I turn now to the issue of consultation. We are much closer to getting consultation right because the Government have moved some way. I should like to see the matter further expressed in the Bill as set out in new subsection (1B) of Amendment No. 39B. The need for consultation is there spelt out. It is specified that regard shall be had to the views expressed by those concerned. That requirement is also specified in later amendments tabled by my noble friend Lord Stanley.

Turning to the need for an affirmative resolution, I agree with the noble and learned Lord, Lord Simon of Glaisdale, but I cannot hope to live up to the biological condition which he expressed. The issue is most important. It is full of uncertainty and it is complicated to follow in the Marshalled List. I should be most disappointed—perhaps I may have my noble friend's attention—if my noble friend were unable to give a favourable answer to the most important issues which have been raised in the debate.

Baroness O'Cathain

My Lords, the contributions of the noble Lord, Lord Stanley, and the noble Baroness, Lady Carnegy, are strong evidence of the great support which exists for the Potato Marketing Board in the current scheme. The reasons for this support are the great achievements of the board in the marketing of potatoes in recent years—in marketing in the truest sense of the word, not just managing supply, which in the agricultural section is sometimes regarded as marketing, but in the actual suggestions or projects which it has put forward in putting the customer first.

At Second Reading I relied on knowledge extant when I was closely involved in the agricultural sector, knowledge of four years ago. Since then the picture has changed dramatically. I should like to take this opportunity to put the record straight regarding a statement I made on Second Reading on 23rd November (at col. 830 of Hansard). I there expressed the hope that we should no longer be importing a significant number of potatoes but instead should be producing more in this country. I said then specifically that organisations like McDonald's should not have to import their potatoes from the Netherlands. It was doing this when I was involved in the agricultural sector, but I am delighted to say that now about 90 per cent. of McDonald's requirements are met from supplies produced in this country and it gives me great pleasure to put the record straight.

What the Potato Marketing Board has done in conjunction with McDonald's is to develop a new potato which had not previously been grown in this country. It gave a specific grant to McCain's, who produced it for McDonald's, and as a result it is now supplying 90 per cent. of the potatoes for its own market. This is an amazing turn-round. In the last four years that I was involved in the agricultural sector something like 374,000 tonnes of potatoes were imported into this country. In the last years for which statistics are available, that is 1991–92, the figure has dropped from 374,000 to 88,000 tonnes. I suggest that anything that actually militates against that trend continuing would be bad for British agriculture, and I have the greatest pleasure in supporting continuation of both the Potato Marketing Board and the potato marketing scheme.

Baroness White

My Lords, before the noble Baroness sits down I should be grateful for some enlightenment. How much does McDonald's do in purchasing potatoes from Pembrokeshire in South Wales, which depends very largely in certain areas on that trade for its prosperity, and on early potatoes particularly?

Baroness O'Cathain

My Lords, I do not know the answer to that question, but I am sure the Potato Marketing Board will supply the information. I know that the particular potato variety is called Russet Burbank. I have no idea whether that is grown in Pembrokeshire. I know from previous experience that Pembrokeshire is the place for early potatoes and I suspect that the product is not the one usually used for chipping potatoes for McDonald's purposes.

Earl Howe

My Lords, perhaps I may begin my concluding remarks by addressing the amendments tabled by my noble friend Lord Stanley of Alderley, Nos. 39A and 39B. Amendments Nos. 39A and 39B basically seek further to refine the government amendment in two ways: first, by saying that termination of the scheme will be necessary only if the terms of the Community regulation make it so; and secondly, by changing "expedient" to "in the public interest" and obliging Ministers to consult on whether a decision is in the public interest.

On the first point, I have to say that these amendments suffer from a basic flaw. The Agriculture Marketing Act 1958 already foresees various circumstances in which revocation might become necessary. Section 19 allows Ministers to revoke the scheme where any act or omission of the board is contrary to the interests of consumers and others. Although these powers are facilitative, Ministers would surely not take the final step without being assured that it was necessary to do so. It is also possible that revocation might become necessary by a poll of producers under the scheme. This amendment would preclude any of these eventualities being covered by this Bill, which in turn would mean that the board would have to be wound up without transferring its assets to a successor body. I am sure that we would all wish that possibility to be open, whatever necessitated the winding up.

As to the second point, at Committee stage we discussed the merits of the term "in the public interest". It is a term capable of much interpretation, and it is non the better for that. As I said in Committee, the general public interest is only one of the considerations which Ministers would take into account.

This leads me to the main point, which is that in tying Ministers to consultation on this matter of public interest alone the amendment may be achieving precisely the reverse of what is required. What is required is that Ministers should consult and be aware of the views of all sectors of the industry and of consumers at all times. This is what has in fact happened with regard to the proposed EC regime. It does not need writing in statute. I can assure noble Lords that Ministers would not take such an important decision without the widest consultation. The word "expedient" should not be taken as a convenient means for the Government to do what they like regardless of the industry's views. I hope that for all those reasons my noble friend will withdraw the two amendments.

Turning to the points that my noble friend raised in his speech, he said that the Government should be committed and show themselves to be committed to establishing a successor body. The Government have included a provision in the Bill for a successor body precisely because they recognise that a good case can be made for the continuation of many of the board's functions if it is abolished—functions such as research and development funded by producers, market intelligence and identifying market opportunities, the generic promotion of potatoes, statistics and as a forum for discussion of matters of common interest to producers, retailers, processors, supermarkets and consumers.

I would stress that in the end it is for the industry to decide what it wants. It can do so under the terms of this Bill. The Government cannot give a commitment for that very reason, and not least because Parliament may annul an order made under that part of the Bill. In that event the Government would need to make a Section 2(2) order under the European Communities Act to carry out their obligations. A Section 2(2) order would not provide for a successor body if a negative resolution were annulled.

The noble Lord, Lord Carter, suggested that the Commission is of the view that the United Kingdom can keep its potato marketing scheme. That is not the information that we have. In discussion in the Council working group the Commission said in terms that our scheme is inconsistent with its proposals.

My noble friend Lord Stanley raised the subject of subsidiarity, which we debated in Committee. The noble Lord, Lord Carter, asked whether the Government were ready to argue the principle of subsidiarity in the context of a EC potato regime. I would say again what I said in Committee; subsidiarity is not a concept that is easily recognised in the context of a common organisation of the market. The existence of a common organisation automatically precludes a national regime except in the case where a specific derogation is made allowing a national regime to continue. The EC regulations which permit the milk marketing boards to continue to exist are a good example of that but I do not see that fitting in to the case of potatoes—not at any rate if one is to believe that the EC's current proposals are likely to be implemented.

6.30 p.m.

Lord Carter

My Lords, I wish to raise a point of clarification. In Committee the Minister referred to the problem of relating subsidiarity to the common agricultural policy. I believe the Commission has said it does not want to look at the proposals for the Scottish milk marketing boards and the Northern Ireland Milk Marketing Board on grounds of competition. It gives the reason for not considering them that these are suitable grounds for the use of subsidiarity. Therefore subsidiarity can be fitted in.

Lord Renton

My Lords, before my noble friend answers that question, I hope I can make another point. When he says there is no question of subsidiarity, would he not acknowledge that the problem of growing and of marketing potatoes in, for example, the British Isles is quite different from that of growing and marketing potatoes in countries round the Mediterranean, and that therefore there may be a great advantage in having a degree of subsidiarity?

Earl Howe

My Lords, I would not dissent from the proposal that subsidiarity can in certain circumstances be fitted in to the common agricultural policy. I would say in reply to my noble friend Lord Renton that the UK, and in particular Scotland, has some obvious natural advantages for the growing of potatoes which are not shared by southern member states. I do not wish to rehearse all the arguments I went through in Committee, but it seems to me odd for an industry to seek to restrict the number of acres where it is permitted to grow potatoes when it has those natural advantages and when it could derive competitive advantage from scrapping those rules.

I shall continue to address the various points raised earlier on. The noble Lord, Lord Carter, said that the Government should clearly state if they wish to abolish the potato marketing scheme. We have no current plans to abolish the scheme as a matter of government policy. We are discussing with the industry its views on the matter. We may reach a view in due course but I think it is more likely that an EC regime will intervene in the meantime. The noble Lord also asked me what would happen if Parliament annulled a negative resolution in the face of an EC regime. There would be a legal contradiction, but my understanding is—I stand to be corrected on this and, if so, I shall write to the noble Lord—that EC law would prevail in any case. It would be obligatory for us to implement the EC law. In practice Parliament has little locus in that matter.

My noble friend Lord Plumb said it may be some time before the Council of Ministers decides on an EC potato regime. The point is that rapid action may be necessary when a decision is finally taken and the provisions of the Bill still mean that it would be a further year before the board finally disappears. The noble and learned Lord, Lord Simon of Glaisdale, to whom, as ever, we listen with great attention and respect, took the Government to task for proposing amendments on the grounds that the scenario painted was far-fetched. He said that the likelihood of an EC regime was not strong. My advice is that following the December Agriculture Council meeting we are 95 per cent. of the way towards achieving an EC regime and approval of those proposals is virtually a formality.

The noble and learned Lord also suggested that we would not need to implement the regime immediately. I believe that he may have overlooked one reason for speed. Not only would we need to ensure that the industry had the maximum time to adjust to any new regime—that is only fair on the industry—but we also have to pay due regard to the need to conserve public funds. The potato marketing scheme is concerned with that. If the noble and learned Lord had his way and we had an affirmative resolution procedure throughout this part of the Bill, the delay could be 10 to 12 weeks if the Summer Recess intervened.

Lord Simon of Glaisdale

My Lords, will the noble Earl deal with the point that I ventured to make, that if there is urgency for immediate implementation while Parliament is not sitting, why can that not be dealt with in the legislation in the statute itself; namely, to say that if a regulation which is subject to the affirmative resolution procedure is tabled when Parliament is not sitting, it shall have immediate effect subject to subsequent approval within 40 days in the usual way?

Earl Howe

My Lords, with great respect to the noble and learned Lord, I hope I may remind the House that we are on Report and that certain rules therefore apply. I was going to address—

Lord Simon of Glaisdale

My Lords, the noble Earl was good enough to give way to me. I hope he will be good enough to answer the question that I asked when he was kind enough to give way.

Earl Howe

My Lords, I was about to say that I was coming to the point that the noble and learned Lord raised. I will cover it as best I may in a moment or two.

The noble and learned Lord suggested that one reason why an EC regime might not be put into practice is that the voice of our own agriculture Minister will surely be heard in the Council of Ministers. As I said, UK Ministers are consulting the industry at the moment and we are carefully considering our response to the Commission's proposals. However, in the end it is a qualified majority vote that will determine this issue and even if the UK were to take a negative or hostile stance to the Commission's proposals they could be agreed to nevertheless.

The noble and learned Lord also said it was rather far-fetched to imagine a situation where an EC regime was introduced and Parliament was not sitting. I can assure him that the fact that that might happen has caused acute worry in the Ministry of Agriculture. Immediate action and the ability to lay a statutory instrument immediately are matters to which Ministers attach great importance. I am advised that an affirmative resolution cannot be laid in a recess. A negative resolution, however, can be laid in a recess and that is one very good reason why I believe the noble and learned Lord's proposals should be rejected.

I now turn to Amendment No. 40 tabled by my noble friend Lady Carnegy.

Lord Carter

My Lords, before the Minister continues perhaps I may raise a point of clarification, which is allowed at Report stage. The noble Earl has just said that this requires a qualified majority. When we discussed the matter in Committee on 10th December (col. 343 of Hansard refers) the Minister said: There is no question of our pushing anything through. Unanimity is required … for a measure of this kind to be adopted". I am at a loss if unanimity was required at Committee stage and a qualified majority at Report stage.

Earl Howe

My Lords, I must apologise to the House for giving the House incorrect information at Committee stage. I have the book of words in front of me: it appears to confirm what I have just told the House about qualified majority voting.

Turning to Amendment No. 40 tabled by my noble friend Lady Carnegy, I am aware that she moved a similar amendment in Committee, although that amendment did not provide for the negative resolution procedure. I am grateful that she has reflected on the points that I made then to the effect that we might have to revoke the potato marketing scheme if there were an EC potato régime and that she has obviously taken them on board when drafting the present amendment.

As I have indicated, both my noble friend and I have come to precisely the same conclusion: that if revocation is required because of an EC régime then the negative resolution procedure would be appropriate. In all other circumstances revocation would be subject to the affirmative resolution procedure. I hope, therefore, that my noble friend will be able to accept the government amendment, Amendment No. 39, which also, incidentally, avoids a small technical difficulty over the negative resolution procedure in her amendment.

As I said earlier, Clause 22(2) of the government amendment removes any ambiguity about the validity of actions which may have been taken under an order before it is annulled if such an annulment should occur under the negative resolution procedure. It does so by returning the situation to the status quo ante the making of the order. My advice is that without such a provision some ambiguity could exist.

I hope that my noble friend can accept the assurances I have given and, with the satisfaction of knowing that the House has done a good job in the way that the House knows best, will feel content to withdraw her amendment in favour of that tabled by the Government, reinforced by the clear assurances that I have given this afternoon.

I have to say to the House that the matter has been given the most thorough consideration by Ministers in the light of legal advice. While I am more than happy to reflect on everything that has been said in this debate this afternoon and, if necessary, introduce further amendments at a later stage, on the basis of the advice that I am currently given I fear that there is no prospect of our bettering the wording in the government amendments which I have tabled, much as I understand the instinctive wish on the part of noble Lords for us to do so. I am advised that in particular there is no means of including my assurances on the face of the Bill without risk of serious legal difficulty.

I wish to point out to the House that the Government have moved a considerable distance since Committee stage and have met the wishes of this House in almost every respect. Against that background I ask the House to accept the government amendments today and my assurances in support of them, to which, I need hardly add, the Government will attach the highest importance.

Lord Simon of Glaisdale

My Lords, before the noble Earl sits down, is he not going to explain, in the face of the doubts that have been expressed, how his amendment does what he says it is intended to do?

Earl Howe

My Lords, I thought that I had done so. I apologise if I did not do so sufficiently clearly. The point I was seeking to make was this. The Bill provides either for the negative resolution procedure or the affirmative resolution procedure. I have said to the House, and I repeat, that the affirmative resolution procedure will apply unless we have an EC régime which is inconsistent with our own potato marketing scheme. That is an assurance which I give at this Dispatch Box. As I said, it is not something that can be incorporated into the Bill on the face of the legislation. I ask the House to accept both the government amendments and those assurances as a package and to accept that those assurances should be seen for what they are, assurances given in good faith.

6.45 p.m.

Lord Stanley of Alderley

My Lords, I believe that it is correct for me to sum up in relation to the amendment to the amendment. I find that rather difficult. I am sure that every Member of your Lordships' House would like to congratulate my noble friend on his patience and good temper when every single Member in the Chamber has been against him, and in my case perhaps somewhat viciously.

There are one or two questions which I must put before my noble friend. The first concerns subsidiarity. Surely subsidiarity can be argued before a common policy is agreed. That is the situation in which we find ourselves at present.

Secondly, my noble friend promised us consultation. I hope that that will be more than the three weeks we were offered when the proposals were first drafted.

When moving his original amendment the Minister mentioned the quota system. No member state objected to a quota system, but my amendment does not demand that the United Kingdom keep its quota system. That would be dealt with by consultation. I suggest that the Government seem to have become hooked on the problem of the quota. There are much more important issues for the board than the quota, as was pointed out very ably by the noble Baroness.

I am still not clear about what the Government have in mind as to the role which any successor body to the Potato Marketing Board should play. I am still not clear what circumstances would invoke the dissolution of the Potato Marketing Board by the Government. I do not believe that I have received a satisfactory answer to my second intention, certainly from the point of view of the industry.

It goes without saying that I was very pleased to hear what my noble friend Lord Plumb had to say about what was happening in the European Parliament. His view appeared to be somewhat different from the interpretation of my noble friend Lord Howe. I was pleased to hear that the European Parliament listens very carefully to what our Government say. I am sorry if our case has not been put sufficiently well, as was emphasised by my noble friend Lord Renton.

I understand the reservations of my noble friend Lady Carnegy in respect of my amendment, Amendment No. 39B. I am not sure that I agree with her criticism but I accept that it may well be incorrectly drafted. I accept my noble friend's plea that I and my noble friend should look again at the problem.

I am also delighted that the noble and learned Lord, Lord Simon, agrees that any change to the potato marketing scheme is a serious matter and should be considered very carefully by Parliament. I am comforted that he also found the words in the amendment of my noble friend Lord Howe somewhat confusing.

Bearing all that in mind, I am more than happy to take the advice of the noble and learned Lord, Lord Simon, my noble friend Lady Carnegy and the noble Lord, Lord Carter, and withdraw my amendment to the government amendment while I consider what your Lordships have said tonight and try to return with an amendment which the Government may accept. On that basis I beg leave to withdraw the amendment.

Amendment to the amendment, by leave, withdrawn.

[Amendment No. 39B not moved.]

On Question, Amendment No. 39 agreed to.

[Amendment No. 40 not moved.]

Clause 23 [Revocation of Scheme]:

Earl Howe moved Amendment No. 41:

Page 13, line 5, leave out ("on which the order under section 22 above is made") and insert ("specified by order under section 22 above").

On Question, amendment agreed to.

Clause 24 [Application for approval]:

Earl Howe moved Amendment No. 42:

Page 13, line 16, leave out ("on which the order under section 22 above is made") and insert ("specified by order under section 22 above").

On Question, amendment agreed to.

Clause 25 [Determination of application]:

Earl Howe moved Amendment No. 43:

Page 13, line 35, after second ("of") insert ("persons who are").

The noble Earl said: My Lords, in moving this amendment I shall speak also to Amendments Nos. 44 to 46, 48, 55, 58, 59 and 61.

The House has already considered a series of linked amendments to Part I of the Bill concerning the use of the term "registered producers". These were designed to specify, where the term is used, whether it applies to current and former milk producers registered with a particular milk marketing board or simply to current registered milk producers. The amendments arose primarily out of the need to ensure that Clause 3(5), which concerns the reasonableness of the provision made in a reorganisation scheme for the distribution of assets of a milk marketing board to registered producers, applies to both current and former milk producers.

Part II of the Bill contains similar, although not identical, provisions to Part I in respect of the distribution of assets of the Potato Marketing Board to registered potato producers. Clause 25(3) (c) requires Ministers, when deciding whether to grant an application for approval of a transfer scheme, to be satisfied that any provision made in it for the distribution of assets to registered producers is reasonable. Clause 25(4) provides that a transfer scheme should not be treated as failing to meet this criterion by virtue only of the fact that it provides for the distribution of assets to registered producers to be in proportion to their respective basic areas for the last year to have been prescribed a quota year under the potato marketing scheme. The term "registered producers" is defined in Clause 43 as persons who are registered as producers under the potato marketing scheme.

A tidying up amendment, Amendment No. 46, is made to Schedule 3, paragraph 7(b). This would enable the Potato Marketing Board to propose a transfer of assets to former registered producers if it so wished.

Amendment No. 44 parallels Amendment No. 7. It would amend Clause 25(3) (c) so as to require Ministers to be satisfied that any provision made by the board's transfer scheme for the distribution of assets both to current and former registered producers was reasonable. It is necessary, as I have explained, to amend Clause 25(4) to ensure that the reference in it to registered producers is to both current and former producers. Amendment No. 45 achieves that.

Amendments Nos. 43, 48, 58 and 59 are parallel to Amendments Nos. 5, 20, 36 and 37 respectively. They are consequential upon the change to the definition of the term "registered producer". They ensure that the Bill continues to provide that a board should only have to take reasonable steps to bring the principles of a transfer scheme or of the principle of a proposed variation to the attention of current registered producers and that Clause 38 continues to apply only to current registered producers.

One further amendment is required. Clause 36 provides that the Potato Marketing Board may carry out a poll of registered producers for the purpose of ascertaining the level of support among them for the making of an application for approval of a transfer scheme or for the making of an application in relation to a particular scheme. As the definition of the term "registered producers" in Clause 43 stands at present, this clause would empower a board to carry out a poll of current, but not former, registered producers. As a consequence of the proposed amendment to Clause 43, an amendment to Clause 36 is necessary to retain the present meaning of this clause. Amendment No. 55 achieves that. I beg to move.

Lord Renton

My Lords, the amendments are of a technical kind which no doubt improve the drafting of the Bill. However, I cannot detect in them any change of policy. Will my noble friend confirm that that is the position?

Earl Howe

My Lords, yes. There is no change of policy. In the light of our discussions with the Potato Marketing Board we have reflected on the scope that it may hypothetically need to include former producers in certain provisions of a transfer scheme. In the light of those discussions, we believe that the Bill was insufficiently flexible. To that extent it is a policy change. However, I hope that my noble friend will agree that it is more in the nature of a technical amendment.

On Question, amendment agreed to.

Earl Howe moved Amendments Nos. 44 and 45:

Page 14, line 7, after ("to") insert ("persons by reference to their being or having been").

Page 14, line 12, after first ("to") insert ("persons by reference to their being or having been").

On Question, amendments agreed to.

Schedule 3 [Qualifying transfer scheme]:

Earl Howe moved Amendment No. 46:

Page 39, line 29, after second ("to") insert ("persons by reference to their being or having been").

On Question, amendment agreed to.

Earl Howe moved Amendment No. 47:

Page 39, line 33, leave out from ("1947,") to end of line 35 and insert:

1. ("(b) a society registered under the Industrial and Provident Societies Act 1965 which has not previously carried on business; and
2. (c) a company registered under the Companies Act 1985 which has not previously carried on business.").

The noble Earl said: My Lords, in Committee my noble friend Lady Carnegy of Lour, supported by the noble Lord, Lord Carter, tabled an amendment which would have widened the range of bodies which might qualify as a successor body to the potato marketing scheme. That amendment was prompted by the anxiety of the Potato Marketing Board that all the operations carried out at Sutton Bridge in connection with the research station there might not be functions which could be undertaken by a development council.

I have reflected on what was said in that debate. The Government continue to believe that the PMB's activities at Sutton Bridge can be undertaken by a development council because under the Industrial Organisation and Development Act 1947, among the functions which might be assigned to a development council are, the conduct of experimental establishments and of tests of a commercial scale and promoting or undertaking research for improving arrangements for marketing or distributing products".

However, in the light of the anxieties of the Potato Marketing Board and of discussions with it, we have tabled government Amendment No. 47 to provide additional flexibility for the continuation of the activities of Sutton Bridge. I am sure that my noble friend will be gratified to see that our amendment has the same intention as her earlier amendment in that a qualifying successor body could be a new society registered under the Industrial and Provident Societies Act 1965 or a new company registered under the Companies Act 1985 in addition to a development council. We have not taken up her third suggestion of a subsidiary. The Government can see no good reason for the creation of a subsidiary of the PMB to take over its assets. Furthermore, the creation of such a company seems likely to create taxation difficulties and the net effect could be the loss of valuable R & D revenue, an outcome which other parts of the Bill seek to avoid.

With that explanation, I hope that the House will be content to accept the amendment. I beg to move.

Baroness Carnegy of Lour

My Lords, I thank my noble friend for the amendment. All those concerned with this matter will be very pleased. It is plain that young though my noble friend may look he has considerable clout in his department. We have realised that throughout the discussion on the Bill. This has not been the only success that he has achieved while the Bill has been going through this House. I thank him very much indeed.

On Question, amendment agreed to.

Clause 27 [Variation of approved scheme]:

Earl Howe moved Amendment No. 48:

Page 15, line 29, at end insert ("persons who are").

The noble Earl said: My Lords, the amendment has already been spoken to. I beg to move.

On Question, amendment agreed to.

Earl Howe moved Amendment No. 49:

Page 15, leave out lines 33 to 38 and insert ("and (b) they are satisfied that their decisions under section 25(1) (b) and (2) (a) would not have been different had the scheme included the proposed variation.").

The noble Earl said: My Lords, this amendment is very similar to Amendments Nos. 21 and 22 concerning Clause 5. It is needed in order to ensure that Ministers are not prevented from approving a variation of an approved transfer scheme of the PMB which, it had subsequently emerged, contained minor errors or omissions when set against the requirements of Schedule 3 regarding the content of a qualifying scheme.

Clause 27 parallels Clause 5. It would, as worded at present, require Ministers, before approving a variation of an approved scheme, to be satisfied that the scheme continued to be a qualifying scheme under Schedule 3. As the House will conclude from our discussions on Amendments No. 21 and 22 this provision would not enable Ministers to approve a variation of an approved transfer scheme in the circumstances which I have just described. The amendment would introduce wording which would allow a variation to be approved, one purpose of which could be to correct the earlier omission or error.

I beg to move.

On Question, amendment agreed to.

Clause 28 [Information]:

Earl Howe moved Amendment No. 50:

Page 16, line 20, leave out from ("care,") to end of line 21 and insert ("subsection (3) above shall be treated as never having had any application in relation to it.").

The noble Earl said: My Lords, Amendment No. 23 to Clause 5 was concerned with removing an element of doubt as to whether that clause would ensure that an application from a milk marketing board in relation to a reorganisation scheme should not be treated as having been withdrawn following accidental failure on the part of the board concerned to comply in full with a notice from Ministers requiring information.

Clause 28 is the equivalent provision in Part II of the Bill. Its purpose and effect in relation to a transfer scheme of the Potato Marketing Board is therefore the same as that of Clause 7 in relation to a milk marketing board's reorganisation scheme. The drafting of Clause 28(5) is in material respect the same as that in Clause 7(5). This amendment to Clause 28(5) is therefore equivalent to Amendment No. 23 in respect of Clause 7(5) and is equally necessary to ensure that there is no doubt about what is intended.

I beg to move.

On Question, amendment agreed to.

7 p.m.

Schedule 4 [Provisions relating to carrying out of approved transfer scheme]:

Earl Howe moved Amendment No. 51:

Page 41, line 7, at end insert:

("Statutory accounts.

.—(1) The following provisions of this paragraph have effect for the purposes of any statutory accounts of a successor body, that is to say, a body to which property, rights or liabilities of the Board are transferred under section 31 above in accordance with provision included in a transfer scheme in pursuance of paragraph 7 of Schedule 3 to this Act.

(2) The transfer to the successor body under section 31 above shall be taken to have been effected immediately after the end of the last complete accounting period of the Board to end before the date of the transfer under that section and—

1. (a) in a case where all the property, rights and liabilities of the Board are transferred to the successor body under that section, to have been a transfer of all the property, rights and liabilities to which the Board was entitled or subject immediately before the end of that period;
2. (b) in any other case, to have been a transfer of such of the property, rights and liabilities to which the Board was so entitled or subject as arc determined by or under the transfer scheme.

(3) The value of any asset and the amount of any liability which is taken by virtue of sub-paragraph (2) above to have been transferred to the successor body shall be taken to have been—

1. (a) in a case where all the property, rights and liabilities of the Board are transferred to the successor body under section 31 above, the value or amount assigned to the asset or liability for the purposes of the statement of accounts prepared by the Board in respect of its last complete accounting period to end before the date of the transfer under that section;
2. (b) in any other case, the value or amount so assigned or, if the asset or liability is part only of an asset or liability to which a value or amount is so assigned, so much of that value or amount as may be determined by or under the transfer scheme.

(4) The amount to be included in respect of any item shall be determined—

1. (a) where all the property, rights and liabilities of the Board are transferred to the successor body under section 31 above, as if anything done by the Board (whether by way of acquiring, revaluing or disposing of any asset or incurring, revaluing or discharging any liability, or by carrying any amount to any provision or reserve, or otherwise) had been done by the successor body;
2. (b) in any other case, as if so much of anything done by the Board (as mentioned in paragraph (a) above) as may be determined by or under the transfer scheme had been done by the successor body.

(5) In this paragraph—

• "accounting périod", in relation to the Board, means the period by reference to which it prepares accounts under the Potato Marketing Scheme; and
• "statutory accounts", in relation to a successor body, means any accounts prepared for the purpose of any provision of the legislation under which the body is registered or, as the case may be, established.").

The noble Earl said: My Lords, as your Lordships will know, property transferred between companies is normally entered into the accounts of the recipient company at the value of the consideration given for it. Property transferred to a successor body of the Potato Marketing Board by means of a transfer scheme would, however, be transferred for no consideration. There would therefore be no equivalent value to enter into the initial accounts of the successor or successors.

It would, of course, be possible to value the property, rights and liabilities as they stood on vesting day. However, we have been advised that this would be a lengthy and costly exercise which could cause unwelcome uncertainty in the early stages of a successor's life.

We have addressed this issue in relation to the assets of a milk marketing board in paragraph 23 of Schedule 2. This includes provisions which would determine the value or amount which should he assigned to an asset or liability of a milk marketing board or a subsidiary of one transferred under a reorganisation scheme on vesting day.

The Bill does not yet, however, include parallel provisions in relation to the assets of the Potato Marketing Board. Property transferred by the Potato Marketing Board under a transfer scheme would need to be assigned a value for accounting purposes in the same way as that transferred by a milk marketing board under its reorganisation scheme. This amendment therefore inserts the necessary provisions into Schedule 4.

The provisions in this amendment are equivalent to paragraphs 23(2), 23(3) and 23(4) of Schedule 2. Paragraph 23(2) provides that, for accounting purposes, transfers of property, rights and liabilities which took place on vesting day would be deemed to have taken place immediately after the end of the last complete accounting period of the milk marketing board concerned. The value of any asset or liability so transferred would be deemed, by virtue of paragraph 23(3), to be that assigned to it at that time. Paragraph 23(4) provides that anything done by the transferor in relation to those assets or liabilities between the end of the last complete accounting period and vesting day shall be regarded as having been done by the transferee.

Thus the transferee would, in effect, take over the accounts of its predecessor. Its first accounts would deal partly with what it had done itself and partly with what it was deemed to have done by virtue of paragraph 23(4).

These provisions also cover the possibility that assets and liabilities which had been assigned a single value or amount in previous accounts could be split between successor bodies. In this case, the reorganisation scheme would be required to specify how, for accounting purposes, the property, the value assigned to it in the accounts and anything done in relation to it by the transferor should be split between the successors concerned.

Paragraph 23(5) of Schedule 2 specifies the treatment for accounting purposes of any profits realised and retained by a transferor between the end of the last accounting period and vesting day. However as the PMB is not a trading body these provisions do not need to be repeated in Schedule 4. I beg to move.

On Question, amendment agreed to.

Clause 34 [Position following transfer under section 31]:

Earl Howe moved Amendment No. 52:

Page 17, line 36, leave out ("This section applies") and insert ("Subsections (2) to (5) below apply").

The noble Earl said: My Lords, in moving this amendment I shall speak also to Amendment No. 53.

These amendments would make changes to Part II of the Bill parallel to those contained in Amendments Nos. 33 and 34 relating to Part I. As noble Lords will recall, those amendments are needed to enable Ministers to make regulations before the vesting day, giving effect to so much of an approved reorganisation scheme as applies to a milk marketing board after vesting day laying down its constitution and for the purpose of enabling it to wind up its affairs.

It is clearly sensible that a residuary potato marketing board too should know its new constitution and powers in advance of vesting day and be able to begin operating in its new form on that day. These amendments are needed to enable Ministers to make regulations before vesting day in anticipation of a successful implementation of a transfer scheme. Without the amendment there could be an interim period during which the residuary board might not be able to function properly. I beg to move.

On Question, amendment agreed to.

Earl Howe moved Amendment No. 53:

Page 18, line 17, at end insert:

("(6) Regulations under subsection (2) above may be made in anticipation of the application of that subsection.").

On Question, amendment agreed to.

Clause 36 [Power to poll registered producers]:

Lord Carter moved Amendment No. 54:

Page 18, line 37, leave out ("may") and insert ("shall").

The noble Lord said: My Lords, in moving this amendment I shall speak also to Amendment No. 56. I have brought this back after the discussion in Committee because it deals with what we feel is the rather curious wording of Clause 36, which states that the Potato Marketing Board, may carry out a poll of registered producers". Clause 36(2) states that where there is a poll the result of the poll: shall not constrain [the board] in deciding what to do". So we have a poll and ignore it, as was pointed out in Committee.

I brought the amendment back for two reasons. First, the situation has changed and is changing. One thing on which we can all agree as a result of today's discussions is that there is now great uncertainty about what will happen, with the future of the scheme and under the European regime and so on. For that reason, I believe that there is a strong reason for us now to require a producer poll to ascertain the level of support for any transfer scheme which may follow the board. That is because it is hard to see what such a successor body will or will not do in the light of all the discussions we had earlier today. I feel that the producers must be given a say, it should be provided that the board "shall carry out a poll" rather than "may carry out a poll".

I also explained and shall repeat briefly the reasons for the phrase "have regard to". There are good precedents for the phrase and, as I said in Committee, it means that the board is unable completely to ignore the results of the poll but there is no need slavishly to follow it.

The other reason for bringing the amendment back is to clear up the confusion at Committee stage. Is it now clear that we are talking under Clause 36 only about a producer poll in connection with the transfer scheme under the Bill? There was some mention in Committee of a poll under the Agricultural Marketing Act 1958 which led the Minister to discuss the need for two polls. One would be to vote under the 1958 Act on whether the board should be wound up and the other would be a poll under Clause 36 on the transfer scheme. I believe that we have now agreed outside the House that that was not correct so perhaps it would be helpful if the Minister, when he replies, could clarify that point so that we are entirely clear.

Mention of the 1958 Act leads me to repeat the same question on potatoes which I asked in Committee about milk. If there were a producer poll under the 1958 Act which showed overwhelming support among producers for the potato marketing scheme, and if it then transpired that such a scheme could be operated under the European potato regime, would the Government accept the results of such a poll or would they ignore it? I beg to move.

Baroness Carnegy of Lour

My Lords, I intervene before the Minister replies. I asked the Potato Marketing Board for its view on this matter. It is quite content with Clause 36 as it stands. It said that there was a strong body of opinion that wanted to oblige it to agree to a poll and it would go along with it. But it is quite happy with the Bill.

Lord Stanley of Alderley

My Lords, it goes without saying that I support this amendment; I have my name down to it. Perhaps I could follow the point of my noble friend. I discussed this matter with the Potato Marketing Board. It is perfectly happy with the words "shall have regard to". Let me give noble Lords the example which worried them at the start about what those words would cover. If there were a poll and, ridiculously, only five people with 10 acres replied, that would be a perfect case where "shall have regard to" could be used to "not have regard to".

Earl Howe

My Lords, before addressing the first amendment, I can clear up the slight misunderstanding which arose at Committee between myself and the noble Lord, Lord Carter, which he has just mentioned. I said that Clause 36 allowed for a poll both on whether the board should be wound up and on whether there should be a scheme. Perhaps I was not as clear as I might have been, or indeed should have been. What I intended to convey was that there could be a poll on whether there should be any application under Clause 24; that is, on whether the board should be wound up with or without a successor body. The decision whether to wind up under this legislation is not one for producers. Their rights are enshrined in the Agricultural Marketing Act 1958.

We debated this same amendment at some length in Committee. I am sorry that the noble Lords who have tabled it again have not been convinced by the arguments that I put forward. I shall explain again briefly why I do not think a compulsory poll is appropriate.

The Potato Marketing Board consists essentially of growers. They are in turn democratically elected by other growers. For 60 years they have been successful in representing growers' interests. Surely they can be trusted to continue to do so should they need to perform this last service. It is not as if they had anything to gain from doing anything other than best represent the interests of their constituents since in the end they have to convince Ministers that those interests have been reflected in a scheme.

Although noble Lords opposite may dismiss this point, I have to repeat that this amendment could put the Potato Marketing Board to considerable expense. It would be required to poll producers as to whether they wished the board to consider making an application for a transfer scheme. If they decided to proceed, they would have to poll again on the principles of the proposed scheme. If they then decided to withdraw that scheme, they would be required to poll again before submitting a different transfer scheme. That seems unnecessarily cumber-some and I do not believe producers would thank Parliament for imposing these expensive procedures on them. I fully understand the concern behind the amendment, but I believe that we can leave it to the PMB to decide how and when to consult its producers.

I come back to Clause 25(1), which requires the board to satisfy Ministers that it has taken reasonable steps to bring the principles of a transfer scheme to the attention of registered producers. A poll is certainly one means, but there are less cumbersome and equally effective ways in which the board might advise growers of its intentions; for example, letters, media announcements or producer meetings.

I move finally to Amendment No. 56. We spoke about this in Committee and I must repeat again what I said then, which was an extension of my point about the democratic nature of the board. It seems highly unlikely that this body of growers representing growers would ignore the views of their constituents unless they had very good reason for doing so. One such reason might be that the poll was unrepresentative. I make the point again that this amendment could have undesirable effects in that it might constrain the actions of the board by making it take account of what might be a small and unrepresentative poll. Should a fail-safe be necessary, the need to convince Ministers under Clause 25 should be sufficient to ensure responsible action by the board.

All that this amendment would achieve would be to constrain the board's actions and make it less likely that its admirable work in research and development and market promotion would survive. That cannot be desirable and I hope that the noble Lords will now feel able to withdraw these amendments.

Lord Carter

My Lords, before the Minister sits down, and before I decide what to do with the amendment, would he be good enough to answer the specific question I asked: if there were a poll under the 1958 Act which showed overwhelming or substantial support for the continuation of the potato marketing scheme, and if such a scheme were to be allowed under European legislation, would the Government take into account the results of that poll or would they ignore it and abolish the board anyway?

Earl Howe

My Lords, we would certainly take into account the results of such a poll. But we would also have to bear in mind the needs and interests of the potato industry generally, which incorporates not simply potato producers but consumers and processors as well.

Lord Carter

My Lords, I am extremely grateful to the Minister for what is a very good holding answer. I was interested in the mini-debate. I should like to refer to the noble Lord, Lord Stanley, when he said that if there were a poll there would only be five producers replying. From what he knows of the industry, and what I know, if there were to be such a poll there would be very substantial interest because of all the uncertainty.

I was interested in the Minister's arguments about the problems of a poll. I wonder why the clause to allow a poll is in the Bill at all. The Minister appears to say that the problems in conducting a poll are such that it would be unrepresentative. I heard what the Minister said. I did not expect that he would accept the amendment, but I thought it important to get absolutely clear on the record the views of the Government regarding the producer poll. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Earl Howe moved Amendment No. 55:

Page 18, line 37, after ("of") insert ("persons who are").

The noble Earl said: My Lords, I spoke to this amendment with Amendment No. 43. I beg to move.

On Question, amendment agreed to.

[Amendment No. 56 not moved.]

Clause 37 [Membership of the Board]:

7.15 p.m.

Earl Howe moved Amendment No. 57:

Page 19, line 2, leave out ("on which the order under section 22 above is made") and insert ("specified by order under section 22 above").

The noble Earl said: My Lords, I spoke to this amendment with Amendment No. 39. I beg to move.

On Question, amendment agreed to.

Clause 38 [Overriding nature of functions under Part II]:

Earl Howe moved Amendments Nos. 58 and 59:

Page 19, line 16, leave out ("to registered producers").

Page 19, line 17, at end insert ("to persons who are registered producers.").

The noble Earl said: My Lords, I spoke to these amendments with Amendment No. 43. I beg to move these amendments en bloc.

On Question, amendments agreed to.

Clause 39 [Quota years]:

Earl Howe moved Amendment No. 60:

Page 19, line 18, leave out ("on which the order under section 22 above is made") and insert ("specified by order under section 22 above").

The noble Earl said: My Lords, I spoke to this amendment with Amendment No. 39. I beg to move.

On Question, amendment agreed to.

Clause 43 [Interpretation of Part II]:

Earl Howe moved Amendment No. 61:

Page 20, line 25, leave out ("who are").

The noble Earl said: I spoke to this amendment with Amendment No. 43. I beg to move.

On Question, amendment agreed to.

Clause 48 [Wool guarantee]:

Lord Gallacher moved Amendment No. 62:

Page 23, line 14, at beginning insert ("Subject to subsection (IA) below,").

The noble Lord said: My Lords, when we discussed the future of wool during the Committee stage of the Bill we found the Minister in rather unreceptive mood. In withdrawing the amendments tabled at that time I said that we hoped with the passage of time we might find the Minister more receptive and that also we would await the response of sheep farmers to the announcement made that very day about the reduction in HLCA allowances.

I do not know whether the Minister is in a more receptive mood this evening, but we know from what happened subsequently and what is due to happen tomorrow that there is considerable anxiety, bordering on anger, on the part of the sheep farmers about the reduction of the HLCAs. Therefore, tonight we can reasonably ask the Minister to take a second look at the situation because the proposal to withdraw the guaranteed payments to the Wool Marketing Board is a matter of great significance to them and to the wider British wool textiles industry.

On 8th January the Confederation of British Wool Textiles wrote to the Prime Minister, to the Minister of Agriculture and sundry lesser mortals, including myself, setting out in detail the impact of the withdrawal of the guaranteed price for wool on farmers as well as on the manufacturing side of the industry. It drew attention to the serious situation at world level concerning wool stocks, a matter which would be exacerbated by the proposed timescale for the withdrawal of guaranteed payments.

I am speaking to Amendments Nos. 62, 63, 64 and 66. Amendment No. 64 proposes a phased withdrawal of the guaranteed price over the years 1993 and 1994. That proposal would give the Government some freedom as to the rate at which the withdrawal of the guarantee could take place enabling them to take account of world prices. That compromise should commend itself to the Government.

Do the Government now feel able to give some assistance to a section of industry which is very important in an agricultural sense, although wool is not an agricultural product which would help the manufacturing and marketing aspects of the industry? We move the amendment in the hope that the Minister will look at it sympathetically. Consequentially upon Amendment No. 62 we propose in Amendment No. 66 the deletion of "1995" and the insertion of "1997", which would be a reasonable compromise.

I will not quote from the letter that was sent by the Confederation of British Wool Textiles because of the lateness of the hour and because there is succeeding business; however, it sets out in considerable detail a strong case for amelioration, which is the purpose of the amendment.

Lord Geraint

My Lords, I should like to support the amendment that has been so ably proposed by the noble Lord, Lord Gallacher. I should also declare an interest in that I had the privilege of being vice chairman of the Wool Marketing Board for 11 years, and I am a hill farmer.

Many people do not realise how the income of the hill farmer is derived. Over 60 per cent. of the income comes from subsidies and guaranteed prices. There is only one guaranteed price left; that concerns wool, and it will come to an end this year. Therefore, less than 40 per cent. of the income comes from lambs and sheep that are sold.

It is no wonder that the hill farmers are coming to London tomorrow to lobby us. The select committee in the other place is to discuss the plight of hill farmers in the near future in relation to the HLCAs. I wonder whether that subject will have the blessing of the Minister. Can it be persuaded to extend the remit to cover the future of the guaranteed price of the Wool Marketing Board? If the Minister can give us that assurance, we would be able to convey some good news to keep some hill farmers happy tomorrow.

Lord Palmer

My Lords, I am delighted to be able to put my name to the amendments. The retention of the statutory wool guarantee until 1995, albeit at lower rates over the next two years, would provide more time for the disposal of the existing stockpiles of wool, particularly in the southern hemisphere, that are currently overhanging the international market. It would provide additional support to the industry during a terrible period of uncertainty. Once the stockpiles have been reduced, there is every expectation that the market will improve. In the expectation of an improved market for wool in 1995 the termination of the guarantee for that year would have a less severe impact on producer incomes than it would in 1993.

The current market price for wool is only a little more than 50 per cent. of the guaranteed price. Few of us realise the seriousness of the plight of our sheep farmers, as mentioned by the noble Lord, Lord Geraint; and from a civil servant's desk or from this hallowed place, that is not surprising. Many wool producers now receive less for their wool clip than they did in 1950, over 40 years ago.

A reduction in returns in present market conditions will be felt most severely by producers in the country's less favoured areas. Those producers are heavily dependent upon sheep and wool for their livelihoods. A continuation of a guaranteed price until an improvement in the market would reduce the impact of its termination on producer incomes. I support the amendments.

Lord Stanley of Alderley

I support the amendment. I should like to draw the attention of my noble friend to the remark that was made by the noble Lord, Lord Gallacher, concerning the letter that we all received from the Federation of British Wool Textiles. I hope that the Government will take the matter very seriously. As we know, nearly all wool goes to Bradford but it is not fully employed, and I hope that the Government will realise the effect of unemployment on that town.

Earl Howe

My Lords, the noble Lord, Lord Gallacher, has moved the amendments in the hope of some Government flexibility. However, much as I should like to please him, I fear that I must disappoint him. I explained at Committee stage that whilst the wool guarantee has served the industry well over the past 40 years, it had now outlived its usefulness. The point that is lost sight of is that the guarantee was, and is, intended as a means of price stabilisation, not of continuous market support. It is out of place in the conditions of the 1990s. It has, in particular, become redundant in the face of very generous EC support measures under the common agricultural policy. It is now time for the wool industry to accept financial responsibility for its own financial affairs.

It would not, therefore, be right to accept the amendments, which would postpone the date for termination of the wool guarantee by two years—from 30th April this year to 30th April 1995. I note that the proposal to remove the current restrictions on the proportions by which the guarantee may be reduced from year to year would be intended to allow the guarantee to operate at a lower level for two years after 30th April 1993. However, that proposal misses the central reason for terminating the guarantee: the fact that the element of direct Government involvement in the wool market is no longer appropriate.

I understand the concern that termination of the guarantee will take place at a time when the market for wool is particularly depressed. It is true that the guarantee element currently accounts for approximately 65 per cent. of the producer's return from wool. However, as I emphasised at Committee stage, his total return from wool amounts to only about 5 per cent. of his total return from sheep production. Substantial producer support by means of the sheep annual premium and hill livestock compensatory allowances will continue to be paid. Total payments to sheep farmers from those sources in respect of 1992 will be around £480 million, a considerable increase on the previous year, at a time when many other industries are not in the least insulated against the chill of recession.

We should therefore reject the amendments on those grounds. I know that feelings run deep, but nothing I have heard today alters the Government's conclusions that the guarantee should be ended with effect from 30th April. The industry is now in a position to respond more directly to the needs of the market and it should not be prevented from so doing.

7.30 p.m.

Lord Gallacher

My Lords, the Minister's reply is extremely disappointing. I believe that he underestimates the total significance of the question. For that reason it is doubly disappointing. He points out that the reason for withdrawing the guarantee is to relate the market more closely to current conditions. Our case is that we have an abnormal market and that this is precisely the wrong moment in which to take action of the kind contemplated in the Bill.

Nevertheless, we live in hope that tomorrow will be tomorrow. There will certainly be some noise made in the precincts of this place tomorrow by an extremely influential group of people. In addition, the Bill will go to another place and I have no doubt, particularly bearing in mind what the noble Lord, Lord Geraint, said in regard to the inquiry by the Select Committee into the situation as regards hill farmers, that that will probably strengthen the case for a review of the matter.

I am grateful to all who have spoken in support of the amendments, notably the noble Lords, Lord Geraint, Lord Palmer and Lord Stanley. We live in hope, and particularly the hope that the Minister will reflect on the matter and use the undoubted clout which the noble Baroness, Lady Carnegy, said he has and which we believe he possesses, so that when the Bill goes to another place as it were afresh, a different Minister may not feel so tied as he has been tonight by what he said in Committee. I beg leave to withdraw Amendment No. 62.

Amendment, by leave, withdrawn.

[Amendments Nos. 63 and 64 not moved.]

Earl Howe moved Amendment No. 65:

Page 23, line 19, leave out subsection (3) and insert:

("(3) In making the calculations required to be made under article 5(1) of the British Wool (Guaranteed Prices) Order 1955 (calculation of the Board's outgoings and receipts for each wool year), no account shall be taken of any wool which has not been sold by the Board before 1st May 1995.").

The noble Earl said: My Lords, in addition to providing for the termination of the wool guarantee at the end of April 1993, Clause 48 provides that wool already collected by the British Wool Marketing Board in the 1992 clip year—that is, 1st May 1992 to 30th April 1993—and previous clip years should continue to qualify for the guarantee provided it is sold by the board before 1st May 1995. That will assure for the board a sensible and appropriate timetable for the sale of the wool without disruption to its traditional marketing patterns. It also provides a clear and precise end-date for Exchequer liability under the guarantee.

The existing subsection (3) is intended to facilitate that clear end-date of 1st May 1995 by ensuring that any wool from the 1992 and previous clip years which at that time remains unsold by the board should not be taken into account when calculating the Exchequer liability under the guarantee. The two key elements in calculating the liability are the board's "outgoings", essentially its payments to producers for their wool, together with marketing and other costs, and the board's "receipts", essentially the market return from sales of wool. However, while the existing subsection (3) accurately qualifies the calculation of the board's "receipts" to reflect the 1st May 1995 deadline, it does not, as drafted, qualify the other element in the equation—the calculation of the board's "outgoings".

To remedy that, and to ensure that there is no ambiguity in the provision, the amendment would therefore specify more clearly that, in making the relevant calculations of both the board's receipts and its outgoings, no account shall be taken of wool which has not been sold by the board before 1st May 1993.

The amendment is therefore purely technical in nature, and does not alter the Government's intention of providing the board with a sensible timetable for the sale of wool collected under the 1992 and previous clip years. I beg to move.

Lord Geraint

My Lords, I support the words of the Minister, but from my personal knowledge I do not believe that there will be an ounce of wool from the 1992 clip left in 1995.

Lord Carter

My Lords, perhaps I can ask the Minister whether the amendment means that in the unlikely event that there were, the stocks would not be subject to the wool guarantee? Is that the meaning?

Earl Howe

My Lords, that is so.

On Question, amendment agreed to.

[Amendment No. 66 not moved.]

Lord Carter moved Amendment No. 67:

After Clause 49, insert the following new clause:

("Report on the agricultural industry under 1947 Act

.—(1) As at such date in each year as the Ministers may determine, they shall publish an annual report on the economic conditions in, and prospects for, the United Kingdom agricultural industry, and the role it plays in the environment.

(2) In this section "the Ministers" means the Minister of Agriculture, Fisheries and Food and the Secretaries of State for Northern Ireland, Scotland and Wales acting jointly.").

The noble Lord said: My Lords, Amendment No. 67 was discussed at Committee stage. We have brought it back with an important addition concerning the environmental condition of agriculture. I know that the noble Lord, Lord Norrie, will wish to speak to that specific point as his name is attached to the amendment.

The Minister gave an undertaking in Committee on 10th December at col. 377 when he said, Publication of Agriculture in the United Kingdom will continue after the ending of the requirement to hold an annual review, so there need be no fears that repeal of the requirement will reduce the flow of publicly available information". Of course we were all extremely glad to receive that undertaking.

The amendment does not in the least impugn the Minister's good faith in giving that commitment. But I am sure that the Minister knows that it would satisfy many people in Parliament and throughout agriculture and industry for the Government to accept the commitment given by the Minister actually on the face of the Bill. An environmental point is a crucial one and the role that the agricultural industry plays in the environment is of increasing importance. We are all familiar with the agri- and the monetary measures in the CAP reform and the agri-environmental measures which are all intended to promote good environmental practice in agriculture.

We feel that it would make a good deal of sense for the Government to accept a commitment to report annually on how the environmental as well as the economic condition of the industry is faring. Such a commitment on the face of the Bill would show that the Government are wholly serious regarding their environmental responsibility in the formulation of agricultural policy. I would argue that such an amendment would give the Government no difficulty. Should the Government reject the amendment, I am afraid that industry and others will have the all too real fear that at some time in the future a Minister, perhaps under pressure from the Treasury in the public expenditure round, will decide that money could be saved by abandoning the publication of the annual report.

For those reasons and the crucial importance of the environmental considerations I mentioned, I hope that the Minister can accept the amendment. I beg to move.

Lord Norrie

My Lords, I support the amendment. I believe that it is important to ensure the continued publication of that excellent MAFF document, Agriculture in the United Kingdom. The noble Lord, Lord Carter, argued the merits of the document with regard to agricultural information. I should like to underline its importance from an environmental point of view, bearing in mind that agriculture has played, and will play, a central role in the protection of our rural environment. For example, the Ministry of Agriculture, Fisheries and Food runs a series of environmentally-driven schemes for environmentally sensitive areas and nitrate sensitive areas.

Following the reform last May of the CAP there will be an increasing emphasis on schemes that farmers pay directly to protect the environment. I believe that MAFF is at the present time preparing a scheme that pays farmers to reduce the number of livestock per hectare and take land out of production for 20 years. It is vital that in future years not only is the document published but that it provides up-to-date information on the ever-increasing list of environmental schemes. I therefore urge the House to support the amendment.

Earl Howe

My Lords, I said previously that I do not regard it as necessary to have a statutory provision requiring Ministers to publish Agriculture in the United Kingdom, or something along those lines. I have given a commitment that we shall continue to do so. Nonetheless I should like to introduce a note of consensus to the end of the Report stage of the Bill and I am prepared to accept the amendment in principle.

The noble Lord and my noble friend have in innovative fashion added a contemporary twist to the phrasing of the 1947 Act by referring to the link between agriculture and the environment. While I thoroughly approve of this I have some doubts as to the precise wording of the amendment which might imply a study of a rather more academic nature than one would expect in the context of an annual report of this kind. If, however, the noble Lord will agree to withdraw his amendment I shall see what I can come up with by way of a government amendment in time for Third Reading which meets what I understand to be the principal concern expressed today.

Lord Carter

My Lords, if the Minister could see the looks of incredulity around the House—none more incredulous than mine. I am extremely grateful to him. Of course I shall withdraw the amendment. I am sure that the amendment which he brings forward will be a considerable improvement on this one. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Carter moved Amendment No. 68:

After Clause 51, insert the following new clause:

("Effect of CAP on marketing

.—(1) Where the European Commission or the Ministers make proposals for the operation and development of the Common Agricultural Policy, or for agricultural support, which are deemed by the Ministers to be likely to have significant implications for persons concerned with the marketing of milk, potatoes and wool, were they to be implemented, the Ministers shall consult with such bodies as appear to them to represent the interests of those persons.

(2) In this section "the Ministers" means the Minister of Agriculture, Fisheries and Food and the Secretaries of State for Northern Ireland, Scotland and Wales acting jointly.").

The noble Lord said: My Lords, I cannot believe that I shall have as much luck with this amendment as I had with the last one. But we live in hope.

We feel it is important that the Government have a statutory commitment to consult where the operation of the common agricultural policy, its development and reform, affects the marketing of milk, potatoes and wool, the commodities with which the Bill is concerned. It could be argued—the Minister might say this—that there is provision for consultation already in the Bill to do with both milk and potatoes. However, that is consultation about the changes in the marketing schemes which are brought about by the Bill. It is not the consultation that we are referring to here which concerns proposals for the operation and development of the common agricultural policy, or for agricultural support, which have significant implications for the marketing of milk, potatoes and wool.

I am sure the Government will say that they would always consult—and of course they do—but I remind the Minister of the length of consultation with the industry that took place before the draft proposals on the potato regime were produced. About three weeks were given to the industry to react to those important proposals. What is important is not just that there is consultation but the nature of the consultation.

As we know, the Bill makes some dramatic changes to three marketing schemes which have served the industry and the consumer well. We know that further dramatic changes may result from changes in the common agricultural policy. I feel that the Government should accept a statutory obligation to consult on the effect of such changes. I beg to move.

Earl Howe

My Lords, in speaking on this amendment I shall assume that the purpose is to require Ministers to consult. representatives of producers when a proposal concerning aspects of the CAP or agricultural support is made by the EC Commission or by UK agricultural Ministers and where the proposal in question would have significant implications for milk, potato or wool producers. If that is not the intention I should be pleased to be corrected. I must confess I am otherwise perplexed as to why producer representatives alone should be consulted on matters important to, persons concerned with the marketing of milk, potatoes and wool", which could be a much wider group. I am certainly perplexed in any case as to why the noble Lord considers that consultation is necessary on matters regarding three products and not others. I should also point out, as the noble Lord, Lord Gallacher, did a little while ago, that in EC terms wool is not classed as an agricultural product.

Leaving aside those secondary but not unimportant considerations, I have to say that I regard this amendment as unnecessary and indeed contradictory. It is contradictory because it implies that, although Ministers cannot be trusted to consult important interests within their areas of responsibility on matters affecting them, they can nevertheless be trusted to judge which of those matters are significant and which are not. It seems to me that if we are to prescribe by statute the extent of ministerial responsibility to consult in respect of each and every occasion on which it might be necessary, we are denying that any scope whatsoever exists for the exercise of intelligence and discretion on the part of those in office. That is not an approach which I find acceptable. In fact the word that occurs to me is "meddlesome".

I have, moreover, practical objections to the amendment as well as objections of principle. A blanket requirement to consult, apart from being unnecessarily onerous on occasion, would be unworkable. It is often necessary for the Commission to make new proposals during the course of a Council of Ministers in order to break a deadlock in negotiations and try to reach a compromise acceptable to the majority of member states. At a lower level proposals on market management and other matters are often tabled by the Commission with no prior notice at a variety of management committees which meet regularly in Brussels. Many of the decisions taken by those committees have significant implications too. We must allow our negotiators, whether in the Council or in committee, to negotiate and to participate meaningfully in discussions. A provision of the kind tabled could make this very difficult—I am tempted to say impossible.

The various divisions of the Ministry of Agriculture have devised a variety of ways of keeping in close touch with producer and trade interests according to individual circumstances. A requirement to consult formally in all cases would make it in general less, not more, likely that an outcome acceptable to UK interests could be obtained. I hope I have said enough to persuade the noble Lord to withdraw the amendment.

Lord Carter

My Lords, after the previous amendment, I had a feeling that my luck would not go on. I got the impression that the Minister was opposed to the amendment and that he felt that the drafting was a little less than perfect. I am partly persuaded by his response. I should like to read in Hansard what he said. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 53 [Orders and regulations]:

Earl Howe moved Amendment No. 69:

Page 26, line 29, leave out ("or 42") and insert (", 42 or 44(2) (c)").

The noble Earl said: My Lords, the purpose of this amendment is simple. It is to introduce the negative resolution procedure for an order extending the range of produce, the marketing of which may be grant-aided under Clause 44. The Bill as currently drafted would permit such an order to be made without parliamentary procedure. On reflection, we believe that since Clause 44 involves expenditure of public funds, an order made under it should be subject to parliamentary procedure and that the negative resolution procedure is appropriate. I beg to move.

On Question, amendment agreed to.

Earl Howe moved Amendment No. 70:

Page 26, line 31, at end insert:

("(4A) A statutory instrument containing an order under section 22 above, if made without a draft having been approved by resolution of each House of Parliament, shall be subject to annulment in pursuance of a resolution of either House.").

The noble Earl said: My Lords, this amendment was spoken to with Amendment No. 39. I beg to move.

On Question, amendment agreed to.