Lords Sitting of 26 July 1993

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

Publicly Appointed Bodies: Financial Mismanagement
The Lord Dean of Beswick The Lord Dean of Beswick asked Her Majesty's Government:
Whether they propose to introduce any further safeguards against financial mismanagement by publicly appointed bodies.
The Minister of State, Department of Transport (The Earl of Caithness): My Lords, government departments provide a great deal of guidance which is designed to ensure that financial mismanagement does not take place. New guidance is issued as the need arises.
Lord Dean of Beswick: My Lords, I am grateful to the Minister for that Answer. However, following the events in the Welsh Development Agency, the Wessex Regional Health Authority and the West Midlands Regional Health Authority, is it not clear, when one looks at the scale of the money that has gone astray, that those guidelines and advice are not sufficient to protect the public purse?
Will the Government seriously consider introducing new measures based on the code of conduct which governs people elected to local authorities? Does the Minister understand that I find it strange that we are talking of over £100 million in total, yet no appointed person has been brought to book? Will the Minister give us a copper-bottomed guarantee that no Secretary of State is indemnifying against prosecution people who have been involved in wrongdoing?
The Earl of Caithness: My Lords, I know that the noble Lord will be aware of the difference between a local authority, which is an elected body responsible to the electorate, and an appointed body. However, let me make it absolutely clear that, whether it is a local authority or an appointed body, the Government cannot tolerate any form of financial mismanagement.
Lord Cledwyn of Penrhos: My Lords, while we all recognise the gravity of the reports of the Public Accounts Committee of another place, does the noble Earl agree that the Welsh Development Agency has an excellent record of service to Wales, especially to those areas which have high unemployment? In view of the allegations made in the report, can he say whether the Government propose to take any further action?
The Earl of Caithness: My Lords, that is being considered at the moment.
Lord Ennals: My Lords, has the Minister seen the report on the NHS supplies authority which was
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published recently? It shows that over £100 million of taxpayers' money has been lost, and refers to inefficient management techniques and 'muddled contracts. Is that not an enormous sum at a time when the National Health Service is clearly under grave pressure?
The Earl of Caithness: My Lords, the National Health Service has been better funded by this Government than by any other government. Notwithstanding that point, any financial mismanagement is a serious offence and is taken seriously by all departments.
Baroness Fisher of Rednal: My Lords, is the Minister aware that, according to the press today, at the moment Astra Training Services—a government. agency which has been taken over (if one can use that phrase) by civil servants—has company debts of £10 million? When the Minister replied today he told us that all the appointed people were capable businessmen. I suggest that he would do much better to get people from car boot sales involved.
The Earl of Caithness: My Lords, we look only for the best people. I take into account what the noble Baroness suggested.
Lord Richard: My Lords, can the Minister confirm some figures? Is it right that in 1978–79 quangos spent £14 billion; yet by 1990–91, the figure was no less than £41.7 billion? Is the Minister aware that he paused before he completed his answer to my noble friend Lord Dean? He said that my noble friend would be aware that local authorities are different, that they are accountable to their electorate, but that appointed bodies are not. He then moved sharply on to something else. Does he realise that that is precisely the point? In relation to the quangos, there is a distinct feeling in the country that they are non-accountable, out of control and ought to be made more accountable.
The Earl of Caithness: My Lords, the noble Lord will be delighted to know that the number of executive NDPBs has declined since 1979 from 492 to 369 13 years later. Of course, the figure which he quoted of about £42 billion takes into account expenditure by training and enterprise councils which are non-profit-making, private sector bodies and health bodies which are part of central government. So I do not think that his figure is quite accurate.
Viscount Tonypandy: My Lords, is the Minister aware that, in spite of the fact that in Wales we are deeply grateful for the work that has been done under the Welsh Development Agency, there was great unease over the recently published report? Will the Government be making any further statements on the matter?
The Earl of Caithness: My Lords, as I said to the noble Lord, Lord Cledwyn of Penrhos, this matter is being further considered. If there is more to say, of course the Government will say it.
Lord Grimond: My Lords, the figures for quangos quoted by the noble Lord the Leader of the Opposition are not accurate. Can the Minister give us the accurate figures for quangos?
The Earl of Caithness: My Lords, I do not have the exact figure with me. I seem to recall that it was a very different figure. It was a figure that I gave the noble Lord on the last occasion. He then queried the figure, and said that it was £42 billion. That is why I had a statistical answer for him, because I thought that he would ask the question again.
Lord Dean of Beswick: My Lords, in his Answer to my first supplementary question the Minister referred, as my noble friend Lord Richard said, to the comparisons between local authorities and quangos. Is the Minister aware that some people wear two hats: they are leading councillors or leaders of councils and also chairmen or appointed members of quangos? Is it not strange that, in guarding one sector of the public purse, they are very quickly open to prosecution; whereas in the other case it seems to be within the gift of the Secretary of State, if anything is found to be wrong, whether they are proceeded against or given a knighthood and a golden handshake, and moved on?
The Earl of Caithness: My Lords, the principle is exactly the same. We cannot tolerate any form of financial mismanagement, whether by local authorities or by NDPBs.
Lord Elton: My Lords, does my noble friend think that the experience of Lambeth suggests that applying public control methods to the quangos would have any greater success?
The Earl of Caithness: My Lords, I believe that all of us in this House are fully aware of some of the antics that Lambeth Council got up to. My noble friend is right to draw the matter to your Lordships' attention.
Lord Richard: My Lords, the Minister is aware that, in relation to Lambeth, the district auditor looked at it, as he is bound to under the Act, and came up with his report, which has led to action. Is that likely to happen with a quango?
The Earl of Caithness: My Lords, as I said to the noble Lord, Lord Cledwyn of Penrhos, my right honourable friend the Secretary of State is looking at that specific point with regard to the Welsh Development Agency. Action will be taken where appropriate.
The Countess of Mar: My Lords, can the noble Earl say whether the Government's intolerance will lead to prosecutions in the health service, particularly in Wessex and in the West Midlands?
The Earl of Caithness: My Lords, where there is a case, I am sure that appropriate action will be taken.
Lord Bruce of Donington: My Lords, while the noble Earl seems to concentrate from time to time on Lambeth, will he allow his mind to roam a cog further along the wheel and refer to Westminster?
The Earl of Caithness: My Lords, my mind was drawn to the question of Lambeth as opposed to it being raised at my instigation.

Youth Training: Income Support
2.45 p.m.
Earl Russell Earl Russell asked Her Majesty's Government:
Whether they will consider conferring the automatic right to severe hardship payments of income support to 16 and 17 year-olds who have registered for youth training but have not been found a place.
The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley): My Lords, we have no plans to change our policy. To alter the arrangements in the manner suggested would provide a disincentive to young people seeking work, which would clearly be in no one's best interests.
Earl Russell: My Lords, I am grateful to my noble kinsman for that reply. Can he explain to the House how he reconciles it with the Written Answer given by his honourable friend Miss Widdecombe on 19th July, which showed that in England alone 3,034 people registered for youth training were without a place after eight weeks? Does he accept that the parents of these young people cannot be legally compelled to maintain them? Can he tell me how starvation acts as an incentive to work when one is no longer fit to do it?
Lord Henley: My Lords, I am sure that the noble Lord will welcome the fact that the figure has dropped to 3,000 from the 4,000 that it was a month before. That represents a decline of some 25 per cent. and is the 10th successive month that the figure has so declined. I have to say to my noble kinsman that we simply do not believe that it is in the best interests of 16 and 17 year-olds to have an automatic entitlement to benefit. We believe that it is in their best interests that they are in education, in training or in work. If they are waiting for a YT place and wait longer than eight weeks for that place, there will be entitlement for income support only if there is a risk of severe hardship. Quite frankly I have to say that if they are living at home and if their parents are above benefit levels, I do not see a case for their seeking income support.
Lord Molloy: My Lords, is the Minister prepared to consider that if the non-payment related to the young people who did not bother and were not interested in registering for employment, that would be understandable? But in the case of those who are keen to earn a living and find themselves in desperate circumstances, ought not the Government to be prepared to give them a bit of help financially?
Lord Henley: My Lords, I accept the noble Lord's first point. But as regards the second group of people: namely, those who are registered for work, if there is a risk of severe hardship —I must repeat that it only has to be a risk of severe hardship; something in the order of 85 per cent. of claims for severe hardship do succeed—then they will be entitled to income support.

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But if they are living at home with perfectly well-off parents, I see no case for their seeking entitlement to benefit.
Lady Saltoun of Abernethy: My Lords, does the noble Lord agree that 16 to 17 year-olds usually need more food, clothing and shoes than older people, because very often they are still growing?
Lord Henley: My Lords, that is another question. We have explained on many occasions why we consider that there should be lower rates for the different age bands; namely, lower rates for 16 to 17 year-olds than for the 18 to 24 year-olds. I do not intend to repeat those explanations today. I repeat what I said in earlier Answers. If there is a risk of severe hardship, arid if that child has to live away from home, then there would be entitlement to income support at the higher rates. If they have to live at home and there is the risk of severe hardship, the rate of benefit would be at the lower rate.
Baroness Faithfull: My Lords, is my noble friend aware that many of the children sleeping rough are children without homes who have been in children's homes and have no background? Under those circumstances can special consideration be given to their finding a job, or going on a youth training course? Is he aware that many of those young people told me that they have been unable to get on a course, although they have made an application to do so?
Lord Henley: My Lords, if my noble friend can give me details of any particular cases that she would like to draw to my attention, I should certainly be prepared to look at them. I can assure her that there are special arrangements for children coming out of care in that there will be an automatic entitlement to income support for eight weeks while they are looking for their YT place.
The Countess of Mar: My Lords, is the noble Lord aware that there are some young people for whom placement is difficult? I think particularly of those who have emotional problems and who are disabled but not disabled enough to be on the register. Could he say whether any special consideration is given to those young people?
Lord Henley: My Lords, if they are not in a position to work and are sufficiently disabled, obviously they would be entitled to income support. I cannot comment on any particular case, as the noble Countess seemed to indicate. Certainly officers within the Benefits Agency will try to give whatever help they can as regards benefit. Certainly any application in respect of severe hardship would be looked at sympathetically. Again, it must be a matter for the TECs themselves when it comes to finding the appropriate placement for a particular individual to try to find the appropriate package to suit that person.
Baroness Hollis of Heigham: My Lords, does the noble Lord agree that, if the figure last spring from Youth Aid of 95,000 young people not in education, not in work, not in training and therefore without any income is correct—and that figure comes from the
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Labour Force survey conducted on behalf of the Department of Employment—it reveals a very high degree of hardship among young people? However, instead of that, if the Minister's DSS figure of 3,000 or so is correct, does he further agree that it means that the cost of meeting that hardship is relatively modest?
Lord Henley: My Lords, I am not sure that I can accept the figure that the noble Baroness quoted from Youth Aid. I believe my noble friend Lord Goschen dealt with this matter in debate on an earlier occasion. The noble Baroness went on to say that if our figure is correct of 3,000 waiting longer than eight weeks, it would not cost much to give the concession asked for by the noble Lord. I cannot give any estimate as to the cost of making the changes that the noble Lord and for that matter, I imagine, the noble Baroness, suggest. But I can say that it would very much risk increasing the culture of dependency. There would be very real long-term costs associated with such an increase in the culture of dependency.
Earl Russell: My Lords, if the Minister argues that such people should depend on their parents, will he introduce legislation to compel their parents to maintain them? If he will not do so, will he recognise that being without visible means of support is in itself prima facie evidence of severe hardship?
Lord Henley: My Lords, I have no intention of introducing legislation as suggested. Most people agree that it is the generally accepted duty of parents to look after their children. I do not see a case for further increasing the disincentive to children to work. If there is severe hardship and the parents cannot support their child, there will be an entitlement to income support.

Fisheries Policy: Marine Ecosystem
2.52 p.m.
Baroness Nicol Baroness Nicol asked Her Majesty's Government:
How they will ensure that fisheries policy takes account of the needs of the marine ecosystem as required by EC Fisheries Policy Council Regulation (EEC) No 3760/92 of 20th December 1992.
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe): My Lords, Her Majesty's Government were instrumental during the United Kingdom presidency of the EC last year in securing the obligation to which the Question of the noble Baroness refers. I can assure her that the Government will seek to influence the development of the common fisheries policy in ways which take proper account of that obligation.
Baroness Nicol: My Lords, I thank the noble Earl for his Answer. My concern is with the quality of the information on which the Government base their decisions. Can he say what research is currently done by MAFF and the Scottish Office Agriculture and Fisheries Department which would enable sustainable thresholds to be understood? That is a vital point in the discussion. Does he agree that the sea fisheries

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committees could play an important role in safeguarding marine habitats? Will he say, for example, whether their membership could be improved to include people with expertise who could advise on the ecosystem?
Earl Howe: My Lords, for many years the fisheries departments have undertaken stock assessments of the most important species of fish. The material from that work and from comparable work by other countries contributes to the scientific assessments available to the EC Commission. That information, which includes an estimate of the amount of fish that can be prudently taken, provides the background against which the annual total allowable catches for each member state of the Community are calculated. With regard to sea fisheries committees, as the noble Baroness will know, they were originally established some 105 years ago around the coast in England and Wales. Therefore they have unparalleled knowledge and experience of coastal fisheries and marine environmental issues. Because of their specialist experience, we consider them the most appropriate bodies to be given additional powers to regulate fisheries for wider conservation reasons.
Lord Hunt: My Lords, can the Minister give the House an update on the designation of marine nature reserves? To some of us, certainly to myself, they seem to be extremely slow in coming into being. Will he accept that the most recent information that I have is that some two out of eight proposed by the former Nature Conservancy Council have been designated in the course of 12 years?
Earl Howe: My Lords, as the noble Lord just said, two marine nature reserves have been designated in England and Wales under the Wildlife and Countryside Act 1981. Those are Lundy (in 1986) and Skomer (in 1990). The Countryside Council for Wales is currently undertaking public consultation on a proposed marine nature reserve for the Menai Straits. We consider that marine nature reserves should be established only after full consultation. Before designation every effort should be made to secure the agreement of those with legitimate interests in the area. That process can take longer than we ideally would wish. But we remain of the view that the time spent in gaining local support is time well spent.
Lord Bruce of Donington: My Lords, is the noble Earl aware that, on a reading of the regulation to which the Question refers and which comprises some four preambles and 22 recitals, it is most difficult to obtain from Article 2 anything more than a very general idea of the scope for the eco-marine activity to which my noble friend referred? Will the Minister be a little more precise in indicating how the Government intend to proceed, particularly in the light of Article 5 and the appendix showing the various areas of influence and fishing over which it appears that very few people have any control?
Earl Howe: My Lords, I have already indicated to the noble Baroness the way in which we see the sea
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fisheries committees developing. The Government will continue to seek to protect the marine environment and the fish in it from the effects of pollution and other adverse influences. Our approach will continue to be that of retaining a balance between conservation, management and exploitation of fish as a renewable resource while also addressing environmental aspects which go far wider than fishing methods.
Lord Carter: My Lords, is the Minister aware that the EC regulation mentioned in the Question says that:
"provision should be made for the adoption of emergency measures in the event of serious upheaval"?
What action are the Government taking to deal with potential damage to our fisheries and ecosystem resulting from the activities of the French, Spanish and other boats which are now fishing in our waters, having denuded their own?
Earl Howe: My Lords, one of the ways in which we can respond to threats of that kind is through the Commission. As the noble Lord may know, at the Fisheries Council in June political agreement was reached on a new control regulation which will strengthen the Commission's power to audit the enforcement procedures operated by individual member states. It will also generally tighten and extend existing control procedures to increase the effectiveness of enforcement and ensure that Community rules are implemented to an even standard by all member states. We very much welcome that.
Baroness Nicol: My Lords, can the Minister say whether birds and birds' eggs on cliffs form part of the marine ecosystem as defined in the regulation?
Earl Howe: My Lords, while the common fisheries policy does not extend to sea birds or their eggs, we are aware that sea birds are predators of fish and therefore are dependent for their survival on a healthy marine ecosystem. I shall be delighted if the noble Baroness will allow me to write to her on that detailed point.

Newport Docks
2.59 p.m.
The Earl of Stockton The Earl of Stockton asked Her Majesty's Government:
Whether they can confirm that, in the event of compensation being paid to Newport Docks as a result of the M.4 relief road, any such payments (either directly to Newport Docks, or through the Welsh Development Agency) will be made public and will not include an element intended to fund the reconstruction of the principal entrance lock to Newport Docks.
Viscount St. Davids: My Lords, any compensation so arising would be paid strictly in accordance with the appropriate statutory provisions. However, it is not normal practice to make public the sums of money involved.
The Earl of Stockton: My Lords, I thank my noble friend for that reply. Can he assure the House that the

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terms of the contract for the Usk river crossing will be strictly drawn up and rigorously adhered to? The taxpayer will thus not be asked to fund the highest road bridge—61 metres—facilitating navigation in the UK or be offered a spurious cheaper alternative which will allow the lock reconstruction to be funded at nominal cost.
Viscount St. Davids: My Lords, it would be quite improper for a government department to inflate the level of compensation, whatever the circumstances.
Lord Cocks of Hartcliffe: My Lords, I welcome the opportunity afforded by the noble Earl, Lord Stockton, to ask the Minister to ensure—this is extremely important— that a level playing field is maintained between port activities on both sides of the Severn. Can he assure us that, while the figures may not he published, there will be a strict adherence to what the Minister said?
Viscount St. Davids: My Lords, I can assure the House that there is a level playing field between the two ports which the Question involves. An article in the Western Mail at the end of last week showed a major customer removing business from Newport to Bristol.
Lord Allen of Abbeydale: My Lords, perhaps the Minister could use a self-denying ordinance not to use the phrase "lever playing field". Can I remind the House that Lords and Headingley are by no means level?
Viscount St. Davids: My Lords, I will take due regard of what the noble Lord says.
Lord Prys-Davies: My Lords, can the House be assured that the Welsh Office will have regard to the anxieties of all interested parties? Is he fully aware of the depth of the anxieties of the environmental organisations—including the CPRW and the RSPB —and the villages along the three possible routes regarding the irreparable damage which may be caused to the environment by the relief road?
While there is considerable support for the concept of the relief road, can the Minister confirm whether or not the construction of the relief road will involve an environmental cost? In view of those concerns, is the noble Viscount able to confirm that an environmental impact study is being or will be undertaken in order to measure and assess the damage? If so, who will undertake it? Will there be an opportunity for all interested parties to offer evidence to the study? Finally, when will the study be completed?
Viscount St. Davids: My Lords, the relief road proposals are at a preliminary stage. Two of the three routes currently the subject of public consultation cross Newport Docks. All three could affect navigation capability within the docks and within the River Usk. No decision on a possible route corridor will be undertaken until the outcome of the current public consultation is known. I believe—if I am in error I shall write to the noble Lord—that environmental impact studies will be made in
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accordance with normal practice and that it is normal practice in all such undertakings to prepare such reports.
The Earl of Stockton: My Lords, in view of that reassuring answer, can my noble friend explain why any compensation should be paid to the beneficiaries of such a major infrastructure advantage? People will gain direct motorway access from the dock gate.
Viscount St. Davids: My Lords, compensation is likely to be payable to the Newport Docks Authority, the company owned by Associated British Ports plc, under various statutory provisions. They are primarily the compensation Acts of 1961 and 1973, the Compulsory Purchase Act 1965 and the Planning and Compensation Act 1991. The level of compensation will depend on the route chosen.

Petition: Income Support
3.4 p.m.
Earl Russell: My Lords, I beg to present a Petition from the Nottingham Young People's Benefit Campaign and the Scottish Association for Youth Care and Justice which prays that this House will restore the right to income support to 16 and 17 year-olds who cannot find work or a suitable youth training place, and that it will abolish age-related benefits for under 25 year-olds who are living independently and give them instead the same benefits as those aged 25 or over. This Petition bears 11,000 signatures.
Petition presented.

Allied Irish Banks Bill
Read a third time, and passed.

Statute Law (Repeals) Bill [H.L.]
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, I beg to move that this Bill be now read a third time. In doing so, in relation to this Bill and the other two Bills in my name on the Order Paper, I am sure that the House will wish to record its gratitude to the two Law Commissions for their work, and also to the Joint Committee on. Consolidation and to the parliamentary draftsman.
Moved, That the Bill be now read a third time.—(The Lord Chancellor.)
Lord Mishcon: My Lords, perhaps I can raise a point which may be of interest to the House on the Third Reading of this consolidation Bill. I do so because, if I am wrong, it will be useful that it be recorded that I am wrong in regard to procedures that may take place in the future. If I am right, it may be of some value that I have brought the matter to the attention of the House and to the noble and learned Lord to whom I gave brief notice that I intended to raise this point.
In Clause 2 of the Bill we seek to repeal a repeal. In other words, in regard to a statute passed in the reign of George III, we are saying that, 15 years after its

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repeal, we undo that repeal. It may be of interest to the House that the normal procedure expected when seeking to repeal a repeal by an earlier statute is a re-enactment of the statute and not a cancellation of the repeal. I acknowledge at once that that may not be so when a mistake has been made in the repeal. In that case we record in the repeal enactment that a mistake was made and therefore the repeal of the repeal takes place.
In the Long Title of the Bill there is a recital that the repeal in Clause 2 is to correct a mistake in the Statute Law (Repeals) Act 1978. However, when one comes to the clause there is no statement that there is a mistake and that that is why the repeal takes place. If my point is a valid one, then it ought to be placed on record —no more than that—that in future legislation of this kind, where a repeal is repealed, it can only be done where a mistake has occurred and the clause repealing it so says.
The Lord Chancellor: My Lords, Clause 2 of the Bill deems the Act of George III never to have been repealed. As the noble Lord said, it explains in the Long Title that that repeal was a mistake in the Statute Law (Repeals) Act 1978. The effect of re-enacting, without more, would be to put the old statute hack on the statute book from the date of the re-enactment, whereas the formula used as recommended by the Law Commissions is a formula which seeks to recover the whole ground right back to 1978, subject to provisos in subsection (2) of Clause 2, with which perhaps we need not deal.
Of course, all Bills are intended to be read as a whole and the reader of Clause 2 will have read the Long Title before he or she reaches Clause 2 and so will know that the reason for the form adopted in Clause 2 was that a mistake was made in 1978. The statute in question is a fairly recondite one to which reference is not frequently made. The desire to have it corrected and put back on the statute book came from the trustees of a certain common which was affected by this matter and whose interest apparently had been overlooked in 1978.
I think that the position is reasonably clear, reasonably secure and reasonably appropriate for the state of matters which the Law Commissions encountered. The proposal is in accord with their recommendations and appears to have satisfied the joint committee.
Lord Mishcon: My Lords, before the noble and learned Lord sits down, perhaps I may in one sentence merely ask him to confirm that this procedure as followed in the Bill will not be sufficient to repeal a repeal unless the original repeal was a mistake.
The Lord Chancellor: My Lords, I think it highly unlikely that one would want to go along this road except in the situation in which there was a mistake. It is always difficult to envisage all possible circumstances and therefore I am unwilling to say "never". But I think it highly unlikely that this procedure would be appropriate except in similar circumstances which I must fondly hope may not recur.
Lord Williams of Mostyn: My Lords, I am grateful to my noble friend Lord Mishcon for raising a point which may be recondite, not to say surreal. My major purpose in standing is to reaffirm what the noble and learned Lord the Lord Chancellor said about the quality and the value of the work which is done by the Law Commission on these occasions, for which we are extremely grateful.
On Question, Bill read a third time, and passed, and sent to the Commons.

Pension Schemes Bill [H.L.]
Read a third time, and passed, and sent to the Commons.
Pension Schemes (Northern Ireland) Bill
Read a third time, and passed, and sent to the Commons.
Highland Regional Council (Wester Bridge) Order Confirmation Bill
Read a third time, and passed.

Education Bill
3.13 p.m.
The Minister of State, Department for Education (Baroness Blatch): My Lords, I beg to move that the Commons amendments to Lords amendments and Commons amendments in lieu be now considered.
Moved, That the Commons amendments to Lords amendments and Commons amendments in lieu be now considered.—(Baroness Blatch.)
On Question, Motion agreed to.
MOTIONS AND AMENDMENTS TO BE MOVED ON CONSIDERATION OF COMMONS AMENDMENTS TO CERTAIN OF THE LORDS AMENDMENTS, AND COMMONS AMENDMENTS IN LIEU OF CERTAIN OTHER LORDS AMENDMENTS
[The page and line refer to Bill (72) as first printed by the Lords]
LORDS AMENDMENT
1 Before Clause 145, insert the following new clause:
Economy and efficiency of grant-maintained schools
(". The Secretary of State shall make regulations for the purpose of securing that an examination of economy, efficiency and effectiveness at grant-maintained schools shall be held on a regular basis.")
The Commons disagreed to this amendment but proposed the following amendment in lieu—
1A Before Clause 145, insert the following new clause: Value-for-money studies of grant-maintained schools
'—(1) Each funding authority shall make arrangements for carrying out such value-for-money studies of grant-maintained schools in England or, as the case may be, Wales as in their opinion are required or as the Secretary of State may direct.
(2) The authority shall, in particular—

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(a) in forming an opinion as to whether any value-for-money study is required to he carried out in pursuance of this section, have regard to the desirability of value-for-money studies being carried out at regular intervals, and

(b) in determining the scope of any value-formoney study to be carried out in pursuance of this section otherwise than on the direction of the Secretary of State, have regard to the scope of any value-for-money study which is being or has recently been carried out.

(3) In this section "value-for-money study", in relation to any grant-maintained school, means—

(a) any examination into the economy, efficiency and effectiveness with which the governing body of the school have, in discharging their functions, used grant made by the authority, and

(b) any study designed to improve economy, efficiency and effectiveness in the management or operations of the school.'

Baroness Blatch: My Lords, I beg to move that the House do not insist on their Amendment No. 1 to which the Commons have disagreed, and do agree with the Commons in Amendment No. 1A in lieu thereof.
Although they have not been scheduled together, I should like to speak at the same time to Amendments Nos. 11, 12, 12A, 16 and 16A. That does not preclude, when we reach those amendments, other Members of the House speaking to them.
Amendment No. 1, noble Lords will recall, was introduced by the noble and learned Lord, Lord Brightman, at Third Reading. I am sorry that he is not able to be with us today, but I am pleased to hear that he is recuperating apace. I am sure that we all wish him well.
Noble Lords: Hear, hear!
Baroness Blatch: My Lords, in his absence I should like to put on record my thanks for his perspicacity on this issue of value-for-money studies, and indeed that of my noble friend Lord Peyton, who is also not in his seat, and for the effectiveness with which they have pressed their points.
When we discussed this matter at Third Reading, I promised to draw my right honourable friend's attention to the desirability of including in the Bill an explicit requirement for value-for-money studies of grant-maintained schools to be undertaken on a regular basis. In the meantime I accepted Amendment No. 1, though I made clear that I had been advised that its regulation-making power would cause difficulties.
The effect of Amendment No. 1 A would be to substitute a requirement on the new Funding Agency for Schools, and on its Welsh counterpart, to undertake value-for-money studies of grant-maintained schools, and to do so such that there are regular studies. It was the regular studies which I know was of concern to both my noble friend and the noble and learned Lord, Lord Brightman. The Government put forward this alternative approach for several reasons. First, as I indicated previously, there is a very real difficulty about a requirement to make regulations which could be regarded as biting on the independent role of the Comptroller and Auditor General.
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Secondly, in keeping with other aspects of the Bill, it seems appropriate for the balance of operational responsibility to rest with the Funding Agency for Schools rather than the Secretary of State— though with a backstop power of direction for the latter. Thirdly, there would have been a procedural difficulty in introducing a new duty on the Secretary of State as that would have required a further money resolution in the other place, which was impracticable at this stage of the Bill's progress.
Amendment No. 1A would of course be in addition to the extra clause on the role of the Comptroller and Auditor General which is shown as Amendment No. II on today's Marshalled List. When I introduced that at Third Reading I made clear that I believed it inconceivable that that clause would not lead to a significant and regular programme of value-formoney studies at grant-maintained schools. In combination with the new clause proposed in Amendment No. 1A there can be no doubt that the economy, efficiency and effectiveness of the rapidly growing number of self-governing schools will be scrutinised both thoroughly and regularly.
I am pleased to report that the noble and learned Lord, Lord Brightman, agrees with this view. He has written thanking me for taking his amendment on board, saying that the Government have dealt with it appropriately and apologising that he is riot able to be here today to say so. I trust that other noble Lords will take a similar view.
The other amendments I mentioned—Amendments Nos. 12A and 16A—are minor definitional provisions: they insert the full title of the Audit Commission into Amendments Nos. 11 and 16, and thereby remove the need for Amendment No. 12.
Moved, That the House do not insist on their Amendment No. 1 to which the Cornmons have disagreed, and do agree with the Commons in their Amendment No. 1A in lieu thereof.—(Baroness Blatch.)
Lord Simon of Glaisdale: My Lords, my only demur is as to subsections (2) and (3) of the Commons amendment in lieu. Subsection (3) defines "value-formoney". I should not have thought that anyone would have the smallest difficulty in knowing what value-for-money means or imagine that it would mean anything other than as defined. As to subsection (2), what it does is to particularise something that is in subsection (1) already and therefore does not need particularisation. But the matter goes further because your Lordships will see at the end of subsection (1) that,
"the Secretary of State may direct",
various matters to be considered. So there would be no difficulty in his directing that attention should be given to the matters in subsection (2) without cluttering up the statute book with unnecessary matter.
In 1975 the Renton Committee on the preparation of legislation remarked on the prolixity and unnecessary verbosity and volume of the statute book . At that time it consisted of three volumes annually on public and general Acts and Church measures. Ten years later, in 1985, the statute book consisted of five volumes. Not only did it consist of that number of

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volumes, but those five volumes contained fewer statutes than the three volumes of 1975. In other words, the inflation of verbosity had continued unchecked and undisturbed by what the Renton Committee had said. I do not move formally to leave out the two subsections because a difference of opinion between the Houses at this stage would mean the loss of the Bill.
I believe that your Lordships would wish to mark the increasing volume of the statute book. We are considering a massive statute of itself. It does not stand alone because as the scrutiny committee pointed out, it gives rise to over 100 delegated legislation-making powers. So even this vast statutory mass that one sees is only a small part of the legislation which would ensue.
Earl Russell: My Lords, as always, I listened with great interest to the noble and learned Lord, Lord Simon of Glaisdale. I am in entire agreement with everything he said about prolixity. But subsection (3) of Amendment No. 1A actually introduces a significant change of policy. We are used to value-for-money clauses. For example, we had a long debate on one in the Education Reform Act 1988 which demanded efficiency and economy. I then tabled an amendment to draw attention to the fact that it said nothing about the quality of education. As regards the Water Bill, there was a clause about efficiency and economy. My noble friends tabled an amendment to draw attention to the fact that it said nothing about the quality of water. We have here a third word added. The reference is to, "Economy, efficiency and effectiveness". To me that is a very welcome change and shows an acceptance of the points which have been made many times in this Chamber. I would like to thank the Minister for it.
Baroness Blatch: My Lords, I hope that the House will forgive me for finding it a little difficult to respond to the noble and learned Lord, Lord Simon of Glaisdale, without sounding ungenerous to the House. Our attention has been drawn to the point about which I believe the noble and learned Lord is right—that is to say, the superfluous words on the face of the Bill. They are there to satisfy this House. At Second Reading, Committee, Report stages and at Third Reading, it was clear that this House was not satisfied unless it were made explicit on the face of the Bill that there would not only be value-for-money studies (which were implicit anyway in the Bill originally) but that they should be concerned with economy, effectiveness and efficiency. It was also necessary that those studies should take place regularly.
It is because of that that I kept bringing forward forms of words—as did my colleagues in another place —to have these extra words on the face of the Bill. I take the point which the noble and learned Lord is making, but I believe that it is in response to the will of this House that it should be absolutely beyond doubt that regular audit will be made in the grant-maintained sector and that it will be concerned with effectiveness as well as efficiency and economy.
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On Question, Motion agreed to.
LORDS AMENDMENTS
2 Clause 146, page 88, line 38, at end insert:
("() in relation to the planning of special educational provision as provided in section 151 or")
3 Clause 151, page 91, line 21, after ("shall") insert ("plan and")
3ZA Page 91, line 22 leave out ("by them").
4 Page 91, line 22, at end insert ("and the arrangements made for school premises to be made accessible to children requiring special educational provision within the area of the local education authority.")
Baroness Blatch: My Lords, I beg to move that the House do not insist on their Amendments Nos. 2 to 4, to which the Commons have disagreed. I shall also be speaking to Lords Amendments Nos. 5 to 10 and the Commons amendments in lieu; namely, Amendments Nos. 10A and 10B.
Special education has always been a matter of particular concern to this House. For over a year now it has been a major focus of public and parliamentary debate. The process began last summer with the Private Peer's Bill introduced by my noble friend Lord Campbell of Alloway; the publication of the work of the Audit Commission and HMI; and the production of the government's proposals for change in the consultation paper, Access to the System, and the White Paper, Choice and Diversity. That debate has continued with undiminished vigour since the introduction of the Bill which we are considering today.
Throughout the debate, which has been conducted very constructively on all sides, the Government have been listening carefully to the views of all concerned. We received and analysed over 300 responses to Access to the System. My honourable friend the Parliamentary Under-Secretary and I have held many meetings with voluntary bodies and others. In particular, we have given close consideration to the many issues raised by the Special Educational Consortium. I should take this opportunity to pay tribute to the work of the consortium. It has been most helpful and very constructive throughout the process. Led by its able chairman, Paul Ennals, it has conducted an effective campaign, presenting a reasoned case and practical propositions.
The outcome of that long process of deliberation and debate has been the Bill as it is before us today. It is now clear, and I hope beyond all doubt, that the Government are concerned with all children with special educational needs, both those with statements and those without. The amendments we introduced to ensure that the code of practice applied to schools and to ensure that all schools reported on their special educational needs policies are testimony to that commitment. The Bill also ensures that LEAs will be fully able to monitor the provision specified in statements through regular annual reviews conducted in concert with schools and through access to schools at reasonable times. Moreover, the Bill directly promotes co-operation between all agencies concerned with children with special educational needs

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—that is to say, the district health authorities, social services departments and local education authorities. When these developments are seen alongside the original provisions of the legislation—the creation of the code of practice, the extension of parental rights and the establishment of the SEN tribunal—it is clear that this Bill represents a significant advance for special education. This House has played a major part in securing that result.
We listened too when many Members of this House expressed concern about the planning and coordination of special educational provision. That concern was embodied in a substantial group of amendments carried at Report stage. The Government took the view that many of those amendments went far too far, while others were unnecessary. Those amendments which dealt with planning gave a continuing strategic role to the local education authority. That role was inconsistent with the new regime embodied in the Bill as a whole and inconsistent in particular with the autonomy of schools, especially those which have opted to leave their LEAs and become self-governing. The amendments have been considered, by another place, together with two amendments tabled by the Government. The other place accepted these government amendments in lieu of those passed by your Lordships.
However, in tabling the amendments in lieu, the Government recognised the strength of feeling expressed in this House and in another place. The amendments accepted by the other place, before us as Amendments Nos. 10A and 10B, are designed to address those concerns. The first, Amendment No. 10A, would require the local education authority to consult the funding agency and the governing bodies of any maintained schools—LEA or GM; mainstream or special—for the purpose of co-ordinating special educational provision. That duty would be part of the LEA's duty to keep the arrangements they make under review.
The second, Amendment No. 10B, puts a similar duty on governors of maintained schools. They would be required to consult other governors, the LEA and the funding agency for the purpose of co-ordinating special educational provision for their pupils. The LEA would have a similar duty in respect of nursery schools.
The amendments therefore directly address the question of co-ordination. Local education authorities' reviews of the arrangements they make would be informed by the views of the funding agency and schools in the area. At the same time, all schools would discuss with each other and the appropriate authorities the steps they take to meet pupils' special educational needs. In each case, the explicit aim is to promote full consultation and co-ordination.
These amendments embody the Government's determination to listen to the views of all concerned and to react positively and constructively. Our commitment to consultation will not end with the passage of this Bill. In the autumn we shall begin the process of implementing Part III. We aim to do so in partnership with the special education world. We shall
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issue a draft code of practice and draft regulations for consultation. That consultation will be full and thorough. We aim to talk, in detail, to local education authorities, other agencies, schools and the full range of voluntary bodies. We shall consider very carefully what they have to say. In due course, we shall lay regulations and a draft code before Parliament. Both during the consultation process and through the parliamentary procedure your Lordships will, therefore, have every opportunity to contribute to these important changes. We all, on all sides of this House, attach the utmost importance to the task before us. We must work in partnership to ensure its success. It is worth reminding the House at this stage that the code of practice will come forward under the affirmative procedure not only for its introduction, but also for any amendments that are made to it subsequently, however minor.
These issues have been well debated here and in another place. I therefore ask the House not to insist on Amendments Nos. 2, 3 and 4.
Moved, that the House do not insist on their Amendments Nos. 2 to 4 to which the Commons have disagreed.—(Baroness Blatch.)
3.30 p.m.
Lord Judd: My Lords, before we go too far into our deliberations this afternoon, I hope that it will be in order if I take this opportunity, on behalf of all of us on this side of the House, to wish the Minister well with her considerable responsibilities in temporarily taking over the Department for Education as a whole during the indisposition of the Secretary of State. It has been a long and exacting summer and, if I may dare to say so, even the noble Baroness is human. I hope that she will still be able to have the holiday that she certainly needs. Perhaps I may ask her to convey to the Secretary of State our deep concern about his illness together with our very best good wishes for a speedy recovery. We hope that he, too, will have a well-earned holiday.
We are disappointed that the Government have sought to overturn the amendments that were made to Clause 151 on Report. It is important that local education authorities have the lead role in keeping under review all special educational needs provision within their areas. We remain keen to strengthen the review function of the local education authorities. However, we acknowledge that there has been at least some movement in that direction from the Government. It seems that our amendments on the review provisions of Clause 151 led to the Government making some improvements on their original wording. We still believe that a review of access arrangements should have been put on the face of the Bill. Ministerial comments have not fully addressed the issue.
I am aware that the Minister has received representations on access audits from the National Union of Teachers and the Spastics Society on the basis of the Coopers & Lybrand study, Within Reach—The School Survey. I should like to quote briefly from what Anthony Hewson, the chairman of the Spastics Society, said about that report. He said:

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"Within Reach—The School Survey has highlighted some alarming statistics about the lack of access to mainstream education especially for library, playground and toilet facilities.
According to the survey in primary schools, 22 per cent. of libraries had no access: 65 per cent. had no suitably adapted toilet facilities at all.
The findings for secondary schools have important implications for disabled pupils' access to the National Curriculum:
41 per cent. of libraries were totally inaccessible;
30 per cent of science, art and music rooms were inaccessible;
55 per cent. had no suitable toilet facilities".
The Minister's colleague, Eric Forth, has written separately to a Back-Bench colleague giving a broad welcome to the two Within Reach reports. Indeed, he spoke favourably of the work at a reception held last week to promote the findings of Within Reach. As I understand it, Ministers have feared that a specific requirement for access audits will provide what they have described as,
"a raft of bureaucratic legislation",
and would become a "bureaucratic exercise" for local authorities. Instead, the Government are relying on new measures to encourage grant-maintained schools to apply for capital grants to facilitate access for the disabled. As far as they go, such measures are certainly to be welcomed. However, a full review of access arrangements would lead to an increased awareness of access problems and a clearer idea of the action that might be taken to remedy those problems.
Under the terms of Clause 151, the local education authority is to keep under review special educational provision in consultation with the funding authority and grant-maintained schools. In his letter of 16th July, Eric Forth said:
"the Funding Agency for Schools will, when established, be able increasingly to take a strategic overview of where provision for the disabled is most needed".
In that context, access audits do not themselves force the local education authority or the funding agency to spend money on making schools more accessible. Access audits paint the local and national picture for a value assessment to be made on access to schools. Such a value assessment would enable the LEA, the funding agency and the schools themselves to take the "strategic overview" and allocate the funds to improve access accordingly.
Furthermore, Eric Forth has said that Clause 18 provides sufficient powers for an access audit, allowing the Secretary of State to require information and research specifically on special educational needs. Perhaps I may put a specific question to the Minister: will the Government use those provisions in Clause 18 and review the functions under Clause 151 to undertake a review of access? That would be a logical step for the Government.
Without the full information, it is impossible to know how much it would cost to make our schools physically suitable for disabled pupils. A requirement by the Secretary of State for access audits would provide that information to enable LEAs, the funding agency and schools to improve access with the most efficient use of limited resources.
Lord Addington: My Lords, I rise to speak only briefly. As the Minister may be in charge of the Department for Education for the foreseeable future, I take this opportunity of saying that I feel rather like somebody who is in the back of a taxi which is taking the long route to one's destination: one may not approve, but at least one knows that the driver is competent.
I cannot help feeling that if we had had these government amendments earlier, we might have been able to avoid discussing such provisions late at night because, although they are nowhere near as strong or as direct as we should have liked or as the amendments that we passed, they go at least some way towards addressing some of the problems of the overall view. Therefore, I thank the Government for moving at least some way towards our conclusions. The House can congratulate itself a little on having nudged the Government in that direction.
Baroness Blatch: My Lords, I should like to respond to the only issue which has been raised in relation to this raft of amendments. I refer to the question of access. Before doing so, however, I should like to thank the noble Lords, Lord Judd and Lord Addington, for their kind remarks. I shall convey their generous comments to my right honourable friend the Secretary of State who is recuperating from his illness. Perhaps I should advise the noble Lord, Lord Addington, not to have too much confidence in the driver of that taxi. My navigation skills are not all that they might be.
I should like to stress the Government's policies that are already in place in relation to ensuring access to buildings for disabled pupils.. They are aimed at securing what is, I believe, a completely uncontroversial objective: that for every area, but not necessarily the area of an LEA, there should be a mainstream school which is readily accessible and suitable for the needs of disabled pupils. It is obvious that such facilities not only promote integration, which is important, but also lead to greater parental choice.
We have done a great deal to encourage that general objective. Despite the tight constraints on public expenditure in recent years, capital spending per pupil in maintained schools increased by 19 per cent. in real terms.
We know that local authorities are considering seriously, as part of their bidding for capital projects, access to their buildings for the disabled. We have taken an important step forward within the past week. That was referred to by the noble Lord, Lord Judd. Self-governing schools have just received a letter strongly encouraging them to apply for capital grants to improve access for the disabled. I understand that that move has already been welcomed by the special needs organisations. I am sure that we shall receive an encouraging response from the ever-growing self-governing sector to ensure that, whatever it does, access for the disabled will be improved. Such schools have already demonstrated a strong commitment to special education provision. I am confident that that will continue.
The important point for the purpose of today's debate is whether the Secretary of State has powers,

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contained within primary legislation, to require an audit of access for the disabled to be carried out. The answer is, as my honourable friend Mr. Forth said in another place, that Clause 18 provides that power. I cannot state specifically that my right honourable friend will require it. What I can say is that we shall do a great deal to encourage access for the disabled in all government buildings. The noble Lord, Lord Judd, mentioned some buildings which are not directly the responsibility of education departments. We shall work with local government to ensure that the matter is taken seriously. We have had some constructive discussions about this issue with the teacher unions.
On Question, Motion agreed to.
LORDS AMENDMENT
5 After Clause 151, insert the following new clause:
Strategic plan by local education authority
(".—(1) A local education authority shall submit to the Secretary of State for approval a strategic plan for the purposes of section 151 above and of the progressive development of educational provision including special needs within their areas.
(2) A local education authority, and the governing body of any school with duties under this Part, including a grant-maintained school, shall implement the terms of any plan approved by the Secretary of State under this section and shall bring forward as appropriate relevant proposals for this purpose.
(3) A strategic plan compiled under this section shall have effect for such period of not less than four years as the Secretary of State shall specify.
(4) The Secretary of State may approve any plan submitted to him under this section with such modifications as he considers appropriate having regard to the interests of pupils.
(5) Any proposals contained in any plan submitted under this section shall have regard to the need to promote the interests of children with special educational needs.
(6) A plan compiled under this section shall contain proposals on the following matters—

(a) a broad direction and development of nursery, primary and secondary education respectively within the authority concerned, having regard to the requirements of section 152 below;

(b) the number and size of mixed and single sex schools in the authority concerned;

(c) the number and size of comprehensive or, as the case may be, selective schools in the area, taking account of the requirements of section 152 below;

(d) the number of places available in all maintained and grant-maintained schools, and City Technology Colleges, together with targets for numbers of entry from their catchment areas;

(e) the range of goods and services to be provided by the authority under sections 154 and (where applicable) 265 below; and

(f) any other matter which the authority may consider appropriate or the Secretary of State may specify.

(7) Any local education authority shall consult any neighbouring local education authority, and such representatives of parents, headteachers, teaching and non-teaching staff and other community organisations as appear to it to be concerned before submitting any plan under this section.")
5A After Clause 151, insert the following new clause:
Local education authority guidance
(".—(1) A local education authority, after consultation with—

(a) the relevant funding authority,

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(b) the governing bodies of all maintained schools in its area,

(c) any neighbouring local education authority, and

(d) such representatives of parents, headteachers, teaching and non-teaching staff and other community organisations as appear to it to be concerned,

may submit to the Secretary of State proposed guidance for the purposes of section 151 above and for the progressive development of educational provision including special educational provision within their area.
(2) Guidance compiled under this section may contain proposals on the development of nursery, primary and secondary education within the authority, the types and sizes of schools provided by the authority and any other matter the authority considers to be relevant.
(3) Any proposed guidance compiled under this section shall have regard to the need to promote the interests of children with special educational needs.
(4) The Secretary of State may approve, with or without modifications, any guidance submitted to him under subsection (1) above.
(5) Guidance approved by the Secretary of State under this section shall have effect for such period as the Secretary of State may specify.
(6) The governing body of any maintained school shall have regard to the terms of any guidance approved by the Secretary of State under this section in carrying out its duties under the Education Acts.")
Lord JuddMy Lords, I beg to move that this House do not insist on their Amendment No. 5 to which the Commons have disagreed, but propose Amendment No. 5A in lieu thereof.
I must say that I have in this past week almost reached the point of despair. Even at the 11th hour-plus, the Government seem to have learnt very little. The cavalier, insensitive and arrogant way in which they have, from the time of the publication of their White Paper, dealt with all views or concerns other than their own, has yet again been crudely emphasised in the way that your Lordships' amendments to the Bill have been considered, or, to be more accurate, not considered.
This House, somewhat unhappily, sent a document containing over 580 amendments—no fewer—and mostly government amendments, to the other place. There the debate was limited to just one day, with the guillotine allowing an average of only 53 seconds per amendment. The Government's response to the groups of your Lordships' amendments now before us, as made during our Report stage more than a full four weeks previously on 14th June, was only published for the other place on Friday 16th July, the last working day before consideration took place. They were all unceremoniously rejected by the Government with, by my calculation, barely an hour and a half of debate, which was, even by the Government's lamentable standards, an amazingly dismissive approach to three such fundamental issues as nursery education, special needs, and the proper planning of our children's education—issues which had been repeatedly stressed as being of the greatest importance in all our deliberations from Second Reading though Committee stage to Report stage, and issues which had indeed received support from all quarters in this House.

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But, of course, that has been the whole story of this sorry legislation, well evidenced at the beginning in the way the consultation period on the White Paper last year coincided with the school holidays. As the right reverend Prelate said on Third Reading:
"The Bill will have been put through within 12 months from White Paper to Royal Assent. There was no prior consultation."—[Official Report; 6/7/93; col. 1377.]
What a deplorable contrast to all the statesmanship of 1944, despite the immense pressures of the Second World War. Where is there any evidence whatever of any concession to the principle of consensus which the noble Viscount, Lord Eccles, so firmly reminded us is essential to sound, sustainable education policy? Making education legislation on the hoof is a shameful way to treat our children.
The Bill has been drafted so hastily that there can be no shadow of doubt that the Government will be compelled to return to the House again in the near future with yet another piece of legislation intended to deal with the mess generated by this one. Even at their sixteenth attempt the Government have still failed to get right their legislation on education.
That said, we have to face the realities of the situation in which we now find ourselves. The amendments we now put forward concentrate on two key issues which have received most consistent attention in the deliberations of this House. It is our fervent hope that even now the Government may feel able to accept them in their modified form. To do so would provide some basis for beginning to rebuild essential good will, confidence and consensus.
In Amendment No. 5A we find one of the issues which has most seriously concerned your Lordships' House: the danger of damaging muddle and confusion in the planning of local educational provision. Amendment No. 207B put that right by envisaging a clear lead planning role for LEAs across the public education system, including grant-maintained schools and city technology colleges. That amendment was agreed on the second day of Lords' Report stage, without the Government's endorsement, but not resisted by them. It would have provided the framework that the original Bill lacked and given a clear future role for LEAs.
According to the Parliamentary Under-Secretary of State for Education, Mr. Eric Forth, it was subsequently rejected by the Government because its effect would have been:
"to impose a duty on LEAs to plan all arrangements for special educational needs. That would severely erode the right of schools that have opted to leave their LEAs to run their own affairs. The Government cannot accept that; it cuts across the whole philosophy of GM schools".—[Official Report, Commons, 19/7/93; col. 95.]
The amendment was nevertheless supported by a Conservative Member, Mr. Tim Rathbone, who said that he believed that giving the responsibility for strategic planning of education to local elected education authorities would
"help to plot the future for LEAs as enablers rather than providers".—[Official Report, Commons, 19/7/93; col. 101.]
The purpose of our new amendment would be to give the LEA an overall responsibility for overseeing education in its area, but rather than doing that
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through a plan, which if approved by the Secretary of State would need to be enforced, the LEA would prepare guidance for the progressive development of educational provision, including special educational provision, within its area. That guidance would be submitted to the Secretary of State for approval, if necessary with modification. If the guidance were approved by the Secretary of State, then maintained schools, including grant-maintained schools, would have to have regard to that guidance. Clearly that arrangement is less prescriptive than the plan of Amendment No. 207B, but the approval of the Secretary of State would give the guidance of LEAs an important status. In fact, much of education legislation is put into practice through circulars of guidance; and, for example, the Education (Schools) Act 1992 included giving guidance to registered inspectors among the duties of the Chief Inspector for England.
The amendment would create the enabling authority of the future, recognising that local education authorities will continue to have a critical role in the schools system into the 21st century, with LEAs supporting all schools which do not opt out. It thus produces a workable framework within which the "mixed economy", run by the LEAs and the Funding Agency for Schools respectively, can operate. By giving LEAs the oversight of strategic planning for their areas, information can be gathered at one time and in one place which would have the useful by-product of enabling the FAS to start its work with a full information base. There would be orderly development of the system, and I suggest that it is one of the strengths of the amendment that the interest of the Secretary of State in securing such development across the system as a whole is recognised. There really is a need to ensure effective, well-informed overall local planning in the interests of our children. The amendment would help to secure it. I beg to move.
Moved, That this House do not insist on their Amendment No. 5 to which the Commons have disagreed, but propose Amendment No. 5A in lieu thereof.—(Lord Judd.)
Earl Russell: My Lords, we on these Benches are grateful to the noble Lord, Lord Judd, for tabling this amendment, which we support. I sympathise with the noble Lord in his comments about the Commons rejecting all our amendments. When that happens the words which come into my mind are those of Macduff on realising that Macbeth had killed all his children. But since not even Shakespeare would make those words in order, I shall not repeat them.
The noble Baroness, Lady David, in introducing this group of amendments on Report, said that they were designed to cobble together a provision against the intestacies of individual school policies. Those are crucial words because we are concerned with the danger of the fragmentation of a public service. That has been one of our crucial concerns throughout the debates on the Bill and it has been one of the hardest issues on which to achieve any meeting of minds.
While I sympathises what was said by the noble Lord, Lord Judd, about the time allotted to consideration of these amendments, in another place

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this group was the only one which received an interesting debate. I am glad that I stayed up late last night to read it because a number of important points were made. In referring to them I shall be paraphrasing. Attention was drawn by Mr. Spearing to the danger of schools in a competitive environment letting their special needs provisions sink. That was one of the issues which made him believe that there was a need for some co-ordination. Having read those words, I was immediately reminded of what happens to local authority housing when only the most disadvantaged are unable to buy; that what remains in local authority ownership becomes a kind of sink. I do not believe that it is any part of the Government's purpose to let that happen to the schools which are run by local authorities. If the Bill inadvertently creates that danger. I hope that the Government will think about it.
From the Conservative Benches Sir John Hannam drew attention to the danger of a school which wants to improve its examination results perhaps running down its special needs provisions. An important brief from the Cheshire Dyslexia Association was discussed. It made a point which is of general implication. In Cheshire the local authority runs a general service across the county to teach the county's teachers how to handle dyslexia. As one with dyslexic pupils I should have been most grateful for that kind of service. But if the LEA's role as a co-ordinator is destroyed, who will perform such a service? If such a service is not performed, is it not likely that the overall standard of education will fall?
Last night I was thinking of why we do not get across to each other on the theme of fragmentation. I believe that we—and I mean the whole crescent of the House which stretches from the Benches on which the noble Earl, Lord Baldwin of Bewdley, sits to these Benches—think of a public service as something like a train. There must be a coupling between the carriages and they must move in a roughly co-ordinated way. The Government think much more in terms of a series of cars which may move in different directions, at different speeds and in different places. In that we have a major difference in philosophy and since for the time being the Government are still in power, one may see that they might insist on their view prevailing.
But there is a middle ground which was suggested in the interesting speech of Mr. Rathbone from the Conservative Benches on the role of the LEA as an enabling authority. If we accept the Government's view that they are all like cars, we do not necessarily have to say that they are all like dodgems. If we think that the authorities are like cars, we can have a system of rule of the road, of roundabouts, of traffic lights and of the Highway Code. Mr. Rathbone's arguments in favour of the enabling power of the LEA seemed to be very much in that line.
Whenever we ask another place to think for a second time, the question of legitimacy is always raised. I believe that the answer to that question is very simple. In the two Parliament Acts certain powers were taken away from us by another place and it left us with certain others which are explicitly spelt out. We enjoy those powers by grant of another place and,
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therefore, have every right to exercise the powers that we have been given as long as it pleases another place not to take them away. The question is of the expediency of exercising those powers. It does not seem to me to be expedient to send to another place a signal that we shall always accept what it sends back to us. That would be an invitation to ignore whatever we say knowing that it could do so without further political penalty. We do not exercise the power very often but it is important that we should not allow it to atrophy.
There are certain conditions, at least one of which must be satisfied before we exercise the power. One is that the Bill be not workable if it is not changed. I fear that in relation to this Bill that may be the case. I am afraid of fragmentation and lack of co-ordination leading to a collapse of the whole service. A significant issue of principle should be another ground. I understand that one does not have to satisfy all the grounds but I think that that also exists in this case. Furthermore, it would be a sufficient ground to ask another place to think for a second time if what is being asked for is not simply a partisan matter. The most interesting speech of Mr. Rathbone encourages me to think that that is the case. For those reasons we on these Benches are happy to support the amendment.
Lord Elton: My Lords, perhaps I may make a small point because my noble friend the Minister will feel constrained to do so and it may interfere with the flow of her argument. I would have made it earlier as an interruption to the noble Lord, Lord Judd, had I found the relevant paragraph in the Companion to the Standing Orders. Page 42 states:
"The content of a speech made in the House of Commons or a committee of that House in the current session may be summarised, but it is out of order to quote from such a speech unless it be the speech of a Minister in relation to Government policy".
The noble Lord did not commit a heinous offence but if it went unnoted it might become a precedent. The noble Earl, Lord Russell, was plainly aware of that because he prefaced his remarks by stating that he would be paraphrasing.
Lord Campbell of Alloway: My Lords, Amendment No. 5A, in common with Amendments Nos. 6A and 14B, as the noble Lord, Lord Judd, said, raises a problem which could transcend the intrinsic merits of any of these amendments In one way or another they are all concerned with children with special educational needs. That is because none of the amendments can receive the consideration of another place until the spillover period.
The noble Lord, Lord Judd, dealt with the timetable as between 15th June and 22nd July, and that requires no repetition. On 22nd July I was informed that there would be a delay before consideration could be given by another place to an amendment of which I had given notice as long ago as 7th July that I would move if no accommodation could be made. I make no personal complaint at all. I have no personal grouse or grievance. But what has happened is that the pressure of business has pre-empted a constitutional entitlement of this House.

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The train which carries our procedures to and fro between the two Houses has simply run into the buffers and cannot raise steam until October.
If any of the amendments are acceptable on their merits, the question arises whether a delayed Royal Assent would be so prejudicial as to induce your Lordships to refrain from the exercise of a constitutional entitlement. The way in which the noble Earl, Lord Russell, has put the matter may well commend itself to your Lordships.
As to the merits of the amendment, with the greatest respect to the noble Lord, Lord Judd, it could appear that such further guidance to the LEAs as is proposed by Amendment No. 5A really should not appear on the face of the Bill. It tends to overload the Bill in a manner to which the noble and learned Lord, Lord Simon of Glaisdale, takes traditional and right exception, relying on the Renton Report.
It overloads it with a somewhat complex statutory duty as regards matters of guidance which, if your Lordships look at subsection (4), lie within the absolute discretion of the Secretary of State. Therefore, that is a curious substance to seek to incorporate in primary legislation. With respect to the noble Lord, Lord Judd, Amendment No. 10A does not go so far as some of us would wish but it seems to take on board in another form the concept of strategic planning. As at present advised, on its merits, I am not able to support Amendment No. 5A.
4 p.m.
Baroness David: My Lords, I am sorry that the noble Lord, Lord Campbell, has taken the line that he has. It seems to me that we have a right to ask the other House to think again when that is possible and it has the time to listen. As the noble Lord says, we have been rushed into this because the other House did not look at our amendments as soon as they could have done. There was a delay between 6th July and 19th July, which is nearly a fortnight, and again, we have waited for a week to look at what the other place thinks on these amendments which were hastily and inadequately considered. Therefore, it seems to me that there is the spillover in which the other place can think again about anything that we send back and in those circumstances we are totally within our rights to ask it to look again at the amendment.
The noble Earl, Lord Russell, has said everything that I would wish to say on the merits of the amendments and I shall not bore the House by repeating that. I believe that it is not out of order for me to quote the Minister, Mr. Eric Forth, when he said of the original amendment:
"That would severely erode the right of schools that have opted to leave their LEAs to run their own affairs".—[Official Report, Commons, 19/7/93; col. 95.]
I do not believe that the amendment would have done that. Those schools could perfectly well run their own affairs. The point that we were trying to make—and this applies also to Amendments Nos. 3 and 3ZA—was that the planning ability should be given to the LEA. It seems to me that one authority should have an overall strategic view. Amendment No. 5A does not go so far as it did originally but it gives LEAs that
976
right, with the Secretary of State having the overall power. Therefore, I hope that this House will support Amendment No. 5A.
Lord Campbell of Alloway: My Lords, before the noble Baroness sits down, I believe that she has misunderstood me and it is important that I should correct her. I did not say that we should not ask another place to think again—I accepted much of what was said by the noble Earl, Lord Russell, and the noble Lord, Lord Judd—but I said that I could not accept the amendment on its merits. That is all.
Baroness David: My Lords, I apologise to the noble Lord if I misunderstood him.
Baroness Young: My Lords, perhaps I may intervene to make two points. Of course the House is entitled to ask another place to think again. There is no point in having a long argument about that. The question at issue is not whether or not we should ask it to do so but whether, on the merits of the case, we should do so.
I believe that the Government have listened to a great deal of what has been said in this House and in another place and have attempted to meet our anxieties. The Minister has moved a long way in attempting to satisfy the House on this issue which is concerned with co-ordination and full consultation. It seems to me that Amendment No. 10A achieves that and for that reason I shall support it.
Baroness Blatch: My Lords, this is an important debate. I remind the House that we have had extensive debates on the sensible planning for children with special educational needs and I welcome this opportunity to continue the debate on that important issue. I do not say as regards any of the amendments to be discussed today that there should be no delay, because this is an opportunity for the House to give proper consideration to what the other place has said to us and to take a view about that. I accept that that view should be either registered in another place or for that to be the end of the matter. I wish to discuss the amendments on their merits.
I welcome, and indeed endorse, such an approach as that which lies behind Amendment No. 5A. It recognises the new organisational arrangements for schools under the Bill. It further recognises both the autonomy of schools within the system as a whole and the need for making arrangements for proper consultation and co-operation between the parties in order to ensure sensible co-ordination when making provision for children with special educational needs in an area.
It is just that kind of approach that the Government have envisaged and which we have reflected in our own proposals in the Bill: both those that have been there from the outset and the amendments which were passed by those in another place in lieu of the relevant amendments agreed to by your Lordships at Report stage.
I have in previous debates explained in some detail the system which the Bill would establish. That system

977
starts with the school. It is at the school where children with special needs and their parents have the first and the most direct contact with those who can help them.
Perhaps I may address the point made by the noble Earl, Lord Russell, about dyslexia. We have discussed that before. I was asked who would perform that service. The Bill is quite clear on the way in which the system will work, whether it is at the early stage of identifying the problem or at the stage of recognising problems of co-ordination and reading and writing. There are five stages in the process, but three stages are all within the school. If the problems become so acute and in need of other agency involvement, the school moves to stages four and five which involve the local education authority; and the statementing in process is triggered.
Earl Russell: My Lords, I am grateful to the noble Baroness for allowing me to intervene. However, the question was about who trains the teachers to deal with the dyslexia.
Baroness Blatch: My Lords, that has absolutely nothing to do with the amendments. Training for teachers dealing with children with special educational needs is very much on the agenda. The reason that we provide grants for educational support and training is to allow teachers to be trained in different specialisms which include working with children with special educational needs. However, that is not part of the amendments today.
I have explained in some detail the system which the Bill establishes. It starts with the school; and I have explained the five-stage process. I believe that that is a very systematic way of early identification and ensuring that young people's needs are addressed as early as possible and, we hope, more effectively than they have been hitherto. That is why we have made the code of practice applicable to all schools and will stress the school's role in early identification and assessment of pupils who have special educational needs but who do not need statements.
That is why we have amended the Bill so that regulations governing annual reviews of statements may encompass the school's role. That is why we have proposed to put a requirement on schools to produce policies for educating all their pupils with special educational needs. Indeed, those policies would involve the expertise, or lack of expertise, of teachers who have to deal with children with special educational needs.
That is also why we have ensured that LEAs can continue to offer special educational needs support services to governors of all maintained schools within and outside their areas to enable them better to carry out those policies. That is why I have given commitments on the guidance to be issued by my right honourable friend the Secretary of State over proposals for the establishment or change of character of grant-maintained schools; namely, that consultation must take place with the local authority over special educational provision locally before those proposals are put forward.
That is why a government amendment was tabled in another place in lieu of the amendments passed by
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your Lordships to require governors to consult the local education authority, the funding agency and other governing bodies where necessary for coordinating provision for children with special educational needs, and for governors to be similarly consulted by the LEA when it reviews its own arrangements.
The noble Lord, Lord Judd referred yet again to the 580 amendments which went from this House to another place. I remind the House that more than half of those amendments were technical. Many of the remainder were introduced in response to points raised from all parts of this House. I do not pretend that there was wholehearted agreement on every occasion. However, there was full discussion on most of those amendments and the House determined in favour of the amendments. On a smaller number of amendments, the House took a contrary view. Members in another place considered those amendments, and while not agreeing with all of them, nevertheless displayed an understanding for the underlying anxiety by producing amendments in lieu of those amendments.
I have referred to that formidable array of measures to ensure that schools can and will make proper provision for pupils with special educational needs. I have referred to the support services which they can draw on in order to do so. Schools will, of course, be reassured by the code of practice which will give guidance as to when the LEA should intervene in the case of an individual child.
For all of the reasons that I have given, I cannot agree to the amendment in the name of the noble Lord, Lord Judd, and I must ask the House to reject. Amendment No. 5A. In doing so, I assure your Lordships that I believe that the arrangement which we have proposed in the Bill, including the amendments passed in another place, provide for measures which directly address the proper and sensible planning of SEN provision in an area in keeping with the general thrust of co-operation and guidance underlying the amendment tabled by the noble Lord, Lord Judd.
Perhaps I may say this to the noble Earl, Lord Russell. Those train carriages are properly coupled. We may agree to differ about the effectiveness of the coupling. But I believe that co-operation, consultation and effective working together is ensured within the Bill. I ask the House to reject the amendment.
4.15 p.m.
Lord Judd: My Lords, I am naturally grateful to the Minister for her reply. Perhaps I may comment briefly on the remarks of the noble Lord, Lord Campbell of Alloway. I believe that he was right to emphasise the seriousness of the situation brought about by the shortage of time for proper consideration. There are many differing views. The role of this House within the total political life of the country is a big constitutional issue. However, we have a responsibility to consider legislation and to put the results of our consideration before another place so that it can take them fully into account. It is not satisfactory that only on the last working day before the other place convenes to

979
consider what we have said the Government should make available their observations. How can Members of the other place consult properly and fully in the country as a whole on their response to the Government's comments or observations?
We all know that it is not a satisfactory situation. We know that it has been all too characteristic of the work of this Government in many spheres but—I do not like having to say it—most especially of the Department for Education.
Perhaps I may turn briefly to the substance of the observations of the noble Lord, Lord Campbell of Alloway. He suggested that the point could perhaps be met without actually putting it on the face of the Bill. That suggestion has to be taken seriously. I should be a good deal happier if in our prolonged deliberations together, with all her ability and articulate argument, the Minister had suggested that she sought a dynamic partnership with local authorities. I do not believe that anyone who had even casually attended most of our proceedings could have gone away with that interpretation. The position is quite the reverse. I believe that everyone who has been present, and many outside, have realised that there is a determination —I have said it on past occasions and I do not mind saying it again—by the Minister to ensure that local authorities do not have a key role to play in the planning of educational provision locally. Therefore there really are no grounds for accepting that even if the measure is not on the face of the Bill there will somehow be a commitment by the Government by other means to make it succeed.
That brings me to the last point. Obviously we cannot go over all the arguments again. I believe that we are all profoundly concerned—there was no time to debate it properly in the other place—about the misguided and dangerous over-centralisation of education in this country. The strategy spelt out in 1944 was of a dispersed system of education: a shared responsibility between the centre and local democracy.
We can argue about local democracy. I would be the last to suggest that everything is perfect in the condition of local democracy in this country. That is a different argument. The principal issue with which we are concerned is that the local community should have a key leading part to play in planning the provision of educational facilities for the children who are part of that community. However dedicated and committed public servants and Ministers may be at the centre, how can they possibly understand in detail the nuances and needs up and down the country, from the North West to the South West, or from the North East to the South East?
Baroness Blatch: My Lords, I am most grateful to the noble Lord for allowing me to intervene. Perhaps the noble Lord will respond to this point. The greatest act of devolution of power to schools has been the grant-maintained movement. We have before us amendments in the House today which give operational autonomy to the unit of management, which is the school itself. The amendments were about
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centralising that power and taking it back into the centre of local authorities. The noble Lord almost puts the argument on its head.
Lord Judd: My Lords, it is a very late hour to say this in our deliberations, but I enjoy debating with the Minister because I realise that I am debating with someone who holds genuine convictions. I have said before that I admire her strength of character and her conviction. However, I am terrified that she gets the situation so wrong. That is the issue at stake. I profoundly disagree with her. I put this point to her. Where will all those little schools with their overworked management committees find themselves in five or 10 years' time when seeking to grapple with the central administration? Indeed where were we on the preparation of budgets this year for all those individual schools?
We know that we are piling up trouble for the future with this degree of over-centralisation and that is why I am convinced that the Government will be back here in no time at all with still further legislation to try to sort it all out. This country needs a partnership. If there is to be successful education, we need education to be central to the community. Because that is so important and because there was by no stretch of the imagination any opportunity for Members of the other place to consider fully what we had said and its implications, I have no option but to ask the House to agree with us in our Amendment No. 5A.
4.20 p.m.
On Question, That this House do not insist on their Amendment No. 5 to which the Commons have disagreed, but propose Amendment No. 5A in lieu thereof?
Their Lordships divided: Contents, 100; Not-Contents, 146.

Division No. 1

CONTENTS

Addington, L. [Teller.]

Dormand of Easington, L.

Allen of Abbeydale, L.

Ennals, L.

Archer of Sandwell, L.

Falkland, V.

Ardwick, L.

Fisher of Rednal, B.

Banks, L.

Fitt, L.

Barnett, L.

Galpern, L.

Beaumont of Whitley, L.

Gladwyn, L.

Blackstone, B.

Graham of Edmonton, L. [Teller.]

Blease, L.

Bonham-Carter, L.

Greene of Harrow Weald, L.

Boston of Faversham, L.

Gregson, L.

Bottomley, L.

Harris of Greenwich, L.

Brain, L.

Hayter, L.

Brimelow, L.

Henderson of Brompton, L.

Broadbridge, L.

Hilton of Eggardon, B.

Brooks of Tremorfa, L.

Hollis of Heigham, B.

Bruce of Donington, L.

Holme of Cheltenham, L.

Carmichael of Kelvingrove, L.

Houghton of Sowerby, L.

Carter, L.

Howell, L.

Castle of Blackburn, B.

Hughes, L.

Cledwyn of Penrhos, L.

Hunt, L.

Clinton-Davis, L.

Jay, L.

Cocks of Hartcliffe, L.

Jay of Paddington, B.

Darcy (de Knayth), B.

Jeger, B.

David, B.

Jenkins of Putney, L.

Dean of Beswick, L.

John-Mackie, L.

Desai, L.

Judd, L.

Diamond, L.

Kirkhill, L.

Donoughue, L.

Listowel, E.

981

Llewelyn-Davies of Hastoe, B.

Richard, L.

Lockwood, B.

Rix, L.

Longford, E.

Rochester, L.

Macaulay of Bragar, L.

Russell, E.

McIntosh of Haringey, L.

Sainsbury, L.

Mackie of Benshie, L.

Sefton of Garston, L.

McNair, L.

Serota, B.

Mason of Barnsley, L.

Shannon, E.

Mayhew, L.

Shepherd, L.

Merlyn-Rees, L.

Stallard, L.

Mishcon, L.

Stedman, B.

Molloy, L.

Stoddart of Swindon, L.

Monson, L.

Strabolgi, L.

Morris of Castle Morris, L.

Taylor of Blackburn, L.

Mulley, L.

Thurlow, L.

Nathan, L.

Tordoff, L.

Nicol, B.

Turner of Camden, B.

Ogmore, L.

Warnock, B.

Peston, L.

Wigoder, L.

Plant of Highfield, L.

Williams of Elvel, L.

Ponsonby of Shulbrede, L.

Williams of Mostyn, L.

Prys-Davies, L.

NOT-CONTENTS

Aberdare, L.

Glenarthur, L.

Allenby of Megiddo, V.

Goold, L.

Arran, E.

Goschen, V.

Astor, V.

Gray of Contin, L.

Auckland, L.

Gridley, L.

Beloff, L.

Hailsham of Saint Marylebone, L.

Bessborough, E.

Blatch, B.

Harding of Petherton, L.

Blyth, L.

Harmar-Nicholls, L.

Borthwick, L.

Harmsworth, L.

Boyd-Carpenter, L.

Hayhoe, L.

Brabazon of Tara, L.

Henley, L.

Brentford, V.

Hesketh, L. [Teller.]

Brigstocke, B.

Holderness, L.

Brougham and Vaux, L.

HolmPatrick, L.

Bruntisfield, L.

Hood, V.

Butterworth, L.

Howe, E.

Cadman, L.

Hylton-Foster, B.

Caithness, E.

Ilchester, E.

Campbell of Alloway, L.

Jellicoe, E.

Campbell of Croy, L.

Jenkin of Roding, L.

Carnegy of Lour, B.

Johnston of Rockport, L.

Carnock, L.

Killearn, L.

Chalker of Wallasey, B.

Kimball, L.

Chelmsford, V.

Lauderdale, E.

Chiver, L.

Leigh, L.

Clark of Kempston, L

Long, V.

Coleraine, L.

Lucas of Chilworth, L.

Colnbrook, L.

Mackay of Ardbrecknish, L.

Constantine of Stanmore, L.

Mackay of Clashfern, L. [Lord Chancellor.]

Cox, B.

Cranborne, V.

Macleod of Borve, B.

Cross, V.

Mancroft, L.

Cullen of Ash bourne, L.

Marlesford, L.

Cumberlege, B.

Merrivale, L.

Dacre of Glanton, L.

Milverton, L.

Davidson, V.

Morris, L.

Denham, L.

Mountevans, L.

Denton of Wakefield, B.

Mowbray and Stourton, L.

Downshire, M.

Munster, E.

Eden of Winton, L.

Murton of Lindisfarne, L.

Elibank, L.

Nelson, E.

Eller, B.

Norrie, L.

Elliot of Harwood, B.

O'Cathain, B.

Elliott of Morpeth, L.

Orr-Ewing, L.

Elphinstone, L.

Oxfuird, V.

Elton, L.

Park of Monmouth, B.

Ferrers, E.

Pearson of Rannoch, L.

Finsberg, L.

Pender, L.

Flather, B.

Perry of Southwark, B.

Fraser of Carmyllie, L.

Peyton of Yeovil, L.

Fraser of Kilmorack, L.

Pike, B.

Gainford, L.

Polwarth, L.

Geddes, L.

Porritt, L.

Gilmour of Craigmillar, L.

Quinton, L.

Gisborough, L.

Rankeillour, L.

982

Reay, L.

Sudeley, L.

Rennell, L.

Swinfen, L.

Renton, L.

Terrington, L.

Renwick, L.

Teviot, L.

Romney, E.

Thomas of Gwydir, L.

St. Davids, V.

Trumpington. B.

St. John of Fawsley, L.

Ullswater, V.

Saltoun of Abernethy, Ly.

Vivian, L.

Sanderson of Bowden, L.

Wakeham, L. [Lord Privy Seal.]

Seccombe, B.

Simon of Glaisdale, L.

Waverley, V.

Skelmersdale, L.

Westbury, L.

Soulsby of Swaffham Prior, L.

Wharton, B.

Stanley of Alderley, L.

Whitelaw, V.

Sterling of Plaistow, L.

Windlesham, L.

Strange, B.

Wise, L.

Strathclyde, L.

Wolfson, L.

Strathmore and Kinghorne, E. [Teller.]

Wynford, L.

Young, B.

Resolved in the negative, and Motion disagreed to accordingly.
Baroness Blatch: My Lords, I beg to move that this House do not insist on their Amendment No. 5 to which the Commons have disagreed.
Moved, That the House do not insist on their Amendment No. 5 to which the Commons have disagreed.—(Baroness Blatch.)
On Question, Motion agreed to.
4.29 p.m.
LORDS AMENDMENT
6 After Clause 151, insert the following new clause:
Planning of nursery provision for pupils with special needs
(".—(1) Without prejudice to the provisions of section 165 below, a local education authority shall plan and keep under review, and secure the provision of, nursery education in respect of any child to whom subsection (2) below applies.
(2) A child to whom this section applies is a child who is aged not less than three nor more than five years and who has a learning difficulty which calls for special educational provision to be made for him.
(3) The Secretary of State shall within three years of the date of Royal Assent to this Act review and publish his conclusions on the quality, effectiveness and efficiency of provision under this section (including its impact on the education of pupils with special educational needs in schools which are not special schools) and the desirability or otherwise of the extension of the duty referred to in subsection (1) above to include the planning and review of, and the securing of the provision of, nursery education in respect of all pupils aged not less than three nor more than five years whose parents wish it.")
Lord Judd Lord Judd to move, That this House do not insist on their Amendment No. 6 to which the Commons have disagreed, but propose the following amendment in lieu thereof.
6A After Clause 151, insert the following new clause:
Nursery education
(".—(1) Within three years of the date of Royal Assent to this Act, a local education authority shall, secure the provision of nursery education in respect of any child to whom subsection (2) below applies.
(2) A child to whom this subsection applies is a child who is aged not less than three nor more than five years, who has a learning difficulty which calls for special educational provision to be made for him, and whose parents wish that provision to be made through nursery education.
(3) The Secretary of State shall within five years of the date of Royal Assent to this Act review and publish his conclusions on the quality, effectiveness and efficiency of provision under this section (including its impact on the education of pupils with special needs in schools which are not special schools) and the desirability or otherwise of the extension of the duty referred to in subsection (1) above to include the planning and review of, and the securing of the provision of nursery education in respect, of all pupils aged not less than three nor more than five years whose parents wish it.")
Lord JuddMy Lords, I beg to move that the House do not insist on their Amendment No. 6, to which the Commons have disagreed, but do propose Amendment No. 6A in lieu thereof.
In the other place the Government rejected Amendment No. 207C which would have given LEAs the duty to ensure that nursery education was available for all children with special educational needs, not just those with statements, and would have required that within three years the Secretary of State should consider whether nursery education ought to be extended to all children whose parents wished it.
In rejecting the amendment the Parliamentary Under-Secretary for Education, Mr. Forth, made no reference to nursery education. However, the amendment was supported from the Conservative Benches, with the entreaty that the Government should adopt a more generous attitude towards the provision of nursery schooling and with the strongly expressed conviction that there are few measures which the Government could adopt which would have a greater effect on a child's attitude to schooling and which would influence better the effect of that schooling on the rest of each child's life than the funding of nursery schooling.
One of the main arguments used by the Government in this House against the amendment was that it would be too expensive. As I read it, the Conservative Members in the other place who disagreed took the view that most LEAs prioritise nursery places to children with special educational needs. Therefore, for most LEAs the new duty would involve no increase in provision. It would make explicit what most LEAs already provide, and the few LEAs which do not follow that course would be directed to make such provision. Those observations came from the Conservative Benches in the other place.
While the Association of Metropolitan Authorities has calculated that universal provision of nursery education for those children whose parents wish it would cost some £470 million, the provision of nursery education for children with special educational needs whose parents wish it would increase the spending on nursery education by a relatively small amount since, as was pointed out from the Conservative Benches in the other place, many of those children are already receiving nursery education in any case.
The revised amendment takes into account the Government's anxiety about increased cost by allowing a period of three years for the introduction of nursery education for this group. It would then be for the Secretary of State to decide whether nursery
984
education should be extended to cover all children and, rather than a period of three years from the date of Royal Assent for consideration of such an extension, the new amendment would allow the Secretary of State up to five years in which to consider it.
The new amendment makes it absolutely clear that the initial requirement would be that, of the children covered, only those whose parents wish it would be given nursery education. That would help to resolve the issue which has been raised of identifying children with special educational needs. It would in effect be up to parents to propose to their LEA that their child has special educational needs. The LEA would then have the responsibility of assessing whether that were true.
There is widespread agreement that nursery education is highly beneficial. Even the Government, in opposing the amendment in the House of Lords, did not suggest that nursery education was not valuable, only that it was expensive. The amendment gives the Government an opportunity to introduce nursery education gradually and at relatively low cost.
However, in moving the amendment I must underline, as we underlined in our previous deliberations, that in our judgment, which was widely shared by noble Lords in many parts of this House, all the available evidence demonstrates that universal nursery education for all children whose parents want it would be both an excellent investment in enabling children to make the best use of subsequent educational opportunities and also at the same time a sound economic investment in that the benefits and consequences would pay for the costs in a very short period of time. There would be a more successful economy, more social and family stability and far less social delinquency. In our view, universal provision must therefore remain the ultimate objective. We suggest that to resist it is painfully to penalise the nation, both economically and socially.
Moved, That the House do not insist on their Amendment No. 6 to which the Commons have disagreed, but do propose Amendment No. 6A in lieu thereof.—(Lord Judd.)
Earl Russell: My Lords, we on these Benches warmly support the noble Lord's amendment. Two points arise here. One is the demand for nursery education. Any of us who have looked at our postbags during the course of the Bill will know that that demand is widespread, strong and deeply felt. We hear a great deal from this Government about parental choice. There is widespread parental choice in favour of nursery education. We are asking the Government whether they will do a little more—and only a little more—to make it easier for that choice to be met.
Of course, the Government will make the point about expense, which must be considered. We have heard a great deal from the Government in recent times about the cost of single parents to the Department of Social Security. The vast majority of single parents would like to work. Because of the difficulties of childcare they find it extremely difficult to do so. Were more nursery education provided many of them would find it much easier to do so, at least part time. That would not only ease the budget of the

985
Department of Social Security but also bring some of them into the income tax bracket and reduce the public sector borrowing requirement by increasing revenue. Those, set together with parental choice, are not negligible points. I hope that they will carry weight.
The other point, which we have already touched on, is the planning role of the LEAs. The amendment addresses nursery provision for those with special educational needs, for whom it may often be particularly important, both for social integration and for overcoming learning difficulties. To foresee demand for nursery education for those with special educational needs one has to know the local community. It is no good being a funding authority in York. One does not know that five years ago in a particular village in Cornwall there was an outbreak of one particular birth defect. Such things happen in small waves in particular communities. Cases have been publicised recently in the newspapers. To deal with them one needs specialist medical knowledge. That is the sort of information which is likely to be accessible to a local education authority representing its community. I do not see how it would be accessible to the funding authority.
The noble Baroness said that she did not understand our arguments about centralisation. She said that this Bill was the greatest measure of devolution.
Baroness Blatch: My Lords, I am sorry to interrupt, but I meant the 1988 Bill. I meant that the establishment of grant-maintained schools provided autonomy at a level which was as close as possible to parents, teachers and children.
Earl Russell: My Lords, I thank the noble Baroness for that correction. I apologise for misleading the House. However, it is still the same policy of the move towards grant-maintained schools, which she hails as a measure of devolution.
When devolution is imposed by the centre there is a paradox. It is the same paradox as was invoked by Rousseau who spoke of forcing people to be free. One might even mention what he said about freedom in England. He said that the country is free only on election day, and the use it then makes of it well justifies that it should be deprived of it.
There are certain paradoxes in the implication of freedom here. The enforcement of freedom in a form in which people do not want it may be taken as the imposition of excessive central authority. It is also the essence of our case that a great many of those functions simply cannot be devolved on to every individual school. No doubt the noble Baroness remembers the arguments about the adult education service of ILEA. We believe that some of those functions cannot be devolved all the way down and, therefore, if the local education authority does not do them, the centre must. That, we think, is excessive centralisation.
Lord Campbell of Alloway: My Lords, I take on board everything that was said by the noble Lord, Lord Judd, about the importance of nursery
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education, as I am sure do all noble Lords. However, I find it difficult to accept the imposition of what appears to me to be a novel type of mandatory duty which involves substantial expenditure, so to speak, in escrow, even as regards children with learning difficulties who call for special educational provisions. I believe that it is a novel type of provision, but I may be wrong and am open to correction.
However, in view of what has been said in 'your Lordships' House in the course of the debate, there is no doubt that insufficient attention has been given to the importance of nursery schools. It is now equally apparent that in subsection (b) of Amendment No, 10B, the Government have gone some way towards making reasonable provision. For my part, I should prefer to see how that develops and, if necessary, introduce legislation if the situation is not satisfactory in three years' time. There is something about the delayed action provision, as drafted, which I find unacceptable. For that reason, I shall not support the amendment.
Baroness Faithfull: My Lords, I am in a great dilemma over the amendment. I profoundly believe in nursery education, particularly for children with special educational needs. I also believe in the, pre-school playgroup movement but parents should have the choice between the pre-school playgroup and nursery school.
I believe in nursery school education for all the reasons given at other times during the passage of the Bill. What worries me is the practicality of the situation. The noble Baroness, Lady Warnock, and my noble friend have talked about the cost. I was a local government officer and chief officer and I am fearful that if we insist on nursery schools being introduced within the next three years there will be difficulty over the training of nursery school teachers. I am sure that other noble Lords must have received as many letters as I have from teachers all over the country complaining that there is a movement for people who are not fully trained to work in nursery schools. I believe that if teachers are to do good work in nursery schools which meets the needs of the children and the parents, they must be trained.
I know that one must look at the priorities, but, as the noble Baroness, Lady Warnock, asked, must money really come into the matter? Of course, one would like to say no, but I cannot see that local authorities will be able to obtain good trained staff and run nursery schools within three years. I should have preferred a permissive power to be given to local authorities to run nursery schools with trained teachers and for the situation to be reviewed in three years' time, with a view then to making it obligatory.
I am in difficulty because I do not wish a law to be passed which cannot be implemented for lack of money and good, trained staff. My strongest point is the trained staff. If we implement the recommendation, staff who are not trained will be taken on and, once taken on, they will be there for good. That will be worrying, so I am in the great difficulty of wanting to support the amendment but, from a practical point

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of view on trained staff, I prefer there to be a permissive power with a review taking place in three years' time.
4.45 p.m.
Lord Rix: My Lords, the noble Lord, Lord Judd, has done us all a favour by returning to the fray on nursery education with a more modest bid for support for this particularly important early intervention in the interests of children with special educational needs. A partnership between parents and professionals is important during the early years, for discovering and addressing the problems of disability. I am sad that we have to debate again what I had hoped would be obvious.
I should mention that I have been in correspondence with the Minister and I am grateful to her and her colleagues for the distance which we have been able to move together. I am disappointed, however, that the Government have not been able to go the whole way to complete the journey.
The noble Lord's amendment targets specifically children identified as having a particular category of special needs and, within that group, those children whose parents want their special needs tackled through nursery education rather than through other approaches, which may be equally valid. Education in the early years offers much, not least to those with profound and multiple disabilities and complex needs. I am happy to speak up for them, even within a nursery education system which might initially be heavily geared to those with special needs and not others. It is difficult to make up in later years for the opportunities lost in early years, as thousands of parents—members of MENCAP—can vouchsafe. I very much hope that today the Minister will not slam the door shut which the noble Lord, Lord Judd, seeks to reopen wide enough to let in special children, in the interests of the future of the children, the parents and us.
Lord Finsberg: My Lords, I found the argument of the noble Lord, Lord Judd, flawed in two respects. First, he quoted a figure for nursery education given to him by, I think, the AMA of over £400 million. He then said that if one confined it to a particular group of parents it was much less. It was significant that he did not give the figure and it is important that we should know what is the difference.
Secondly, in the present climate which has existed since the late Anthony Crosland was Secretary of State for Local Government, it is now necessary for this House and Parliament as a whole to think carefully before they commit extra public finance which will fall upon a local authority. It behoves the noble Lord, Lord Judd, and this Chamber, if it is to consider the matter, to say what would be cut in order to implement the proposal. It is clear that no extra finance can be available, so what would the noble Lord, Lord Judd, sacrifice in order to fit that in?
Baroness Blackstone: My Lords, perhaps I may make one or two comments on what was said about my noble friend's amendment. I begin with
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expenditure. Of course, I accept, as the noble Lord, Lord Finsberg, said, that in making proposals for change we must be careful to consider the expenditure involved. Perhaps I may say to both him and the noble Lord, Lord Campbell, that we are talking merely about a relatively small number of additional nursery places. As the noble Baroness, Lady Faithfull, and the noble Lord, Lord Campbell, said, there are already many children with special needs in nursery education.
This amendment is about ensuring that all such children aged three and four, if their parents so wish (and not all parents will) should have access to the special care and education that a good nursery class or nursery school can provide. The additional expenditure that is involved is small. We are not talking about huge numbers of children; nor, I would have thought, a large amount of capital. It will be possible to accommodate many of those children within existing schools and classes.
There may have to be some capital expenditure, but the important point is that by making this provision available, we may well save on later spending in order to help those children catch up. We may make it less necessary to spend a great deal on one-to-one teaching, remedial classes, remedial groups, and so on. Some of their needs will have been identified early; they will have been given support early; and some of the problems that they have, while they may not necessarily be removed, will at least be limited by the very good provision that could be made available if this amendment were accepted.
I should also like to say to the noble Baroness, Lady Faithfull, that I too am a former local education authority chief officer. I share some of her concerns. But she was a little inconsistent in what she said. On the one hand, she suggested that the pre-school play group movement is important in this area; on the other, she suggested that it is extremely important that the teachers of those young children should be trained. Many of the people who work in the pre-school play group movement are not trained. They can do an excellent job in many respects, but are not necessarily the right people to deal with children with special needs. I accept what the noble Baroness says about the need for training.
I was also very interested that the noble Baroness obviously disagrees with the Government's latest proposals for training teachers of young children in only one year. She is absolutely right to disagree with that. These proposals are scandalous. They are based on an assumption that young children need less highly trained people. The Minister shakes her head, and she may want to respond to the point afterwards. Like the noble Baroness, Lady Faithfull, I have received many letters from head teachers and from many others in the education world arguing that this will be a very retrograde step. I accept that it will be.
I come back to the point that the noble Baroness made about how it would be better to leave the local authorities with permissive powers. Here I part company with her in that I believe that unless we put this on the statute book, local authorities, because they are so constrained in terms of the demands that

989
are made upon them in a variety of ways, will (at least, some of them) find it difficult to provide these additional places.
If we were to accept the amendment it would be necessary for the Government to provide a little additional funding. That follows from the legislation. But that is what we ought to be doing. We have all said that this is a highly desirable priority. I do not want at this particular moment to respond to the point made by the noble Lord. Lord Finsberg, about the savings that could be made in other areas, but I would be happy to provide the noble Lord with a list. There are plenty of areas where, for the relatively small sums that we are talking about, we could find some savings. I very much hope that the House will not reject this amendment on the grounds that we are talking about huge additional sums of money. We are not. We are talking about only a fairly small number of children who have very great needs and whom we ought to be helping. We certainly ought to be supporting their parents, as has already been said.
Baroness Faithfull: My Lords, before the noble Baroness sits down, with the leave of the House, I should like to make two points. One is that in the pre-school play group movement the mothers themselves look after the children and they choose to do so. But in regard to the nursery schools, I profoundly believe that nursery school teachers should be trained. It takes at least three years to get courses up and going so that one has the trained staff to take over. I believe so strongly in trained staff looking after nursery school children that I feel that, were we to defer that with a permissive power, with a view to coming back to Parliament in three years' time, we would be able to train the necessary teachers.
Baroness Blackstone: My Lords, with the leave of the House, I accept that the teachers have to be trained. But again, we are not talking about huge numbers of additional teachers. It ought to be possible, over a period of three years, to start a process of recruiting a small number of additional students of nursery and infant education who can and will be trained and who will start coming on stream as soon as that period is over.
Baroness Faithfull: My Lords, not for three years.
Baroness Blatch: My Lords, the noble Baroness, Lady Blackstone, has not read the amendment; or if she has read it, she has not understood it. The provision within the amendment is for a place in nursery education to be provided on demand for all children from three to five. It is divided into two phases. It starts after three years with children with special educational needs, and after five years, all children. There is no definition of a child with special educational needs. In order to know whether a three year-old has special learning difficulties, which lies behind this provision, there would have to be nationwide screening of all three year-olds to determine whether or not they had learning difficulties. It is not every parent who knows at that stage whether the child has learning difficulties. There is no definition of learning difficulties.
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We are talking about children with special learning difficulties; namely, children whose parents believe that there is a problem and where social services and the local education authority believe that there is a problem. They come under the umbrella of the provisions of the Bill, and indeed of the 1981 Act, in that they are children who are able to be statemented from the age of two. If they are statemented there is an obligation to provide for their educational needs. So first, the children who are candidates for statements are cared for, catered for and provided for. For all other children with special educational needs, unless there is a screening process, it is not possible. This amendment goes on, two years later, to provide for all children, irrespective of special educational needs. That is not what the noble Baroness was talking about.
To reinforce the point made by my noble friend Lady Faithfull about the Pre-school Playgroups Association, the noble Baroness, Lady Blackstone, is wrong about that too. I had quite close associations within my authority with the Pre-school Playgroups Association both nationally and locally, and indeed at a very parochial level when I was chairman of my own local play group. Working in conjunction with social services, they frequently provide a very good educational service for children with special educational needs. Sometimes a. special educational need results because of a child's problem of socialising with other children. Special educational needs can sometimes be met in conjunction with pre-school play groups. My own department, together with the health department, is very concerned that the pre-school play groups (as indeed they already do) take training seriously, together with involving parents. It is my view that they do a very good job.
The noble Lord, Lord Rix, and the noble Baroness, Lady Blackstone, suggested that this amendment could affect only a few children, which is simply not true. The point was made that it would involve just modest expenditure because we are talking about only a few children. That also is not true. I shall return to the costs in a moment.
I acknowledge, as I did when we recently spent some time debating these same issues, this House's real concern about provision for young children. The Government certainly agree that children under five can derive real benefits from the kind of experiences that such provision can give.
Over 90 per cent. of three and four year-olds now attend some form of group education or day care. Neither now nor in the foreseeable future would it make sense to discount nearly half of this provision —to suggest that just because it does not conform to a narrow definition of nursery education it should be scrapped and replaced with something that does. Surely the sensible course is to do what the Government have done: to see this high level of participation as an opportunity, not an obstacle, and to make the most of what exists by helping all those who work with the under-fives to provide as stimulating and enriching an environment as possible for them all.

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At this point let me turn to the issue of under-fives with special educational needs. The Bill re-enacts the duty which local authorities have to identify and assess children with special needs from the age of two, and the power, given parental consent, to provide for children with recognised disabilities from birth.
We have always supported and encouraged early intervention by authorities. Prompt and early identification of special needs can be crucial for the child with disabilities or delayed development. But we have not gone so far as to prescribe the form of provision, and nursery provision may not always be absolutely essential. For example, Portage—the early intervention scheme whereby a specially trained worker makes weekly home visits to the child—may be a particularly useful alternative in co-ordinating the work of local education authorities, social services and health authorities in identifying the needs of the child. I have seen that scheme work at first hand. It is a very effective scheme too.
Furthermore, the code of practice will give criteria and guidance specifically on the form of assessment of children under five. It will recognise that special arrangements will need to be in place, bearing in mind that the home environment is of particular importance to young children, and the involvement of parents is especially vital. The code will cover the role of teachers, nursery schools, play groups or voluntary agencies that may be involved with the child. It will also give guidance for the child health services, including child development centres or teams which can provide a multi-professional view at a very early stage.
The code will stress that early intervention is particularly important in young children. It will address the difficulties that may occur in assessing children under five, where age and ability may limit the amount of educational information that can easily be provided, saying that evidence from other sources, such as the Portage checklist, should also be used in the assessment processes. The code will also address the content of statements for under-fives, and specific issues relating to children under two.
One of the great strengths of our provision for the under-fives is its diversity. The discretion given to local authorities in this field has enabled them to make provision in nursery schools and nursery classes for those children who stand to gain the greatest benefit while exploring the most efficient ways to allow all children access to a worthwhile group experience before they embark on their compulsory schooling. To substitute at immense cost to the public purse—not a minor cost, as suggested by the noble Baroness, Lady Blackstone—a uniform, state-provided structure would bring about the loss of a great deal of sound and effective play group provision, which has the added merit of helping to bring about the involvement of parents in their children's educational progress.
It is not good enough for the House to pretend that the expenditure issue is irrelevant. It is relevant now and will be just as relevant five years from now. Providing free education for all three and four year-olds would need an increase in annual spending
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of more than half a billion pounds; and there would also be very substantial capital costs. Those hard facts have been all too readily ignored in today's debate. If the cake is not to be made larger, that half a billion pounds and the additional capital costs would have to come from existing expenditure.
I believe that we have spent far too much time criticising what we have got and far too little time celebrating it. In this country we have the lowest starting age for compulsory education in Europe. Fifty-three per cent. of our three and four year-olds are in school, which is a 33 per cent. increase on the figure for 1979. We have a flourishing play group movement which provides 680,000 places for the under-fives—again, I agree with my noble friend about that. My department is working with the Pre-School Playgroups Association to improve the training of play group leaders so as to make the most of the immense opportunities offered by the groups. Ninety per cent. of our three and four year-olds, as I said, attend some form of provision. Let us by all means build on these achievements. I would not wish to claim that there is no scope for further improvement in both quantity and quality. But let us not undervalue what we have and let us not ignore its worth.
Invidious comparisons are frequently made between the provision in this country and the provision of other countries in Europe. I have already said that we have the lowest statutory entry age into school in Europe. But also, the greater provision in France and Germany (with which we are constantly being compared) is by and large funded by a mix of private and state provision. We are asked today to consider, as a burden on the state and on the taxpayer, provision for all three and four year-olds within five years.
We continue to believe that the best way to ensure that as many young children as possible receive the benefits that early years' experience can provide within what the country can afford is to encourage continuing steady improvement, in both quantity and quality, within all types of provision for the under-fives. That is what we intend to do.
Lord Judd: My Lords, I am grateful to the Minister for the fullness of her reply at this stage. But there are several points which have to be probed. Perhaps she will forgive my saying that she leaves me somewhat confused. The thrust of her argument is that the necessary provision is being made largely for those who in fact should have it. We suggest that there is a marginal addition which should be provided and that the cost of doing so would be a marginal additional cost.
I believe that the answer to the point raised by the noble Lord, Lord Finsberg, is that the Government already have to give the details of what it costs to provide all that they claim to be providing. We can settle down and give a marginal figure for how much more it will cost—we genuinely believe that it will be marginal—to meet the comprehensive coverage for those parents who wish such education to be provided.
But another issue has been raised which we have to consider. Again, I hope that the Minister will forgive

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me if my strictures are a little firm. I suggest that the difficulty is that sometimes in the strength of her convictions she does not hear what is said by others. What is important about our amendment is that we do not say that after five years there will have to be universal provision. We do not say that at all. We say that at the end of five years the Secretary of State must have addressed himself (or indeed herself) to the issue with sufficient seriousness to be able to give a comprehensive, convincing and authoritative commentary on the nature of the provision and how best that can in future be met. That is what the amendment proposes. It has gone a long way to meeting the anxieties expressed on the other side, not least by the Minister. We have done that despite our own conviction that we should move to universal nursery education straightaway. That brings me again to the point raised by the noble Lord, Lord Finsberg. He is absolutely right to say that if we will the ends, we must will the means and ask where the means are to come from.
I ask the noble Baroness to consider this point: at the moment all the research which has been conducted in this country under the leadership of the Home Office and the research conducted in the United States and elsewhere indicates that with universal or wider, more substantial provision of nursery education the savings become very rapid in other spheres of public expenditure because of a demonstrable fall in delinquency, because children make more of their education and go on to fend for themselves better in society, becoming less dependent upon the state, and because the economy is strengthened as a result of children having made better use of their educational opportunities. Savings automatically follow, and more so, because the research being done in the States —which we quoted at some length in our deliberations —demonstrates that the savings are considerably greater, several times over, than the expenditure invested in the universal or wider provision of nursery education.
Our contention is that, by a failure to move on this matter, as a nation we are cutting off our nose to spite our face. Yet we are accepting that the issue is so important that some movement is necessary. We have therefore gone a long way in our amendments to meet the anxieties as they were expressed, by talking about educational provision for children with special needs where their parents wish it and the responsibility of the Secretary of State to make a strategic contribution to the discussion on the future of nursery education within five years.
As the matter was not dealt with at all by Ministers in the other place when our amendments were being considered and, as we heard this afternoon, the case that we put forward, even in the wording of the amendment, has not been understood by the Minister —or the Minister chose not to understand it—I have no alternative but to press the amendment to a Division and ask the House to join with me on Amendment No. 6A.
5.12 p.m.
On Question, That this House do not insist on their Amendment No. 6 to which the Commons have disagreed, but propose Amendment No. 6A in lieu thereof.
Their Lordships divided: Contents, 102; Not-Contents, 140.

Division No. 2

CONTENTS

Addington, L.

Judd, L.

Airedale, L.

Kennet, L.

Allen of Abbeydale, L.

Kinloss, Ly.

Archer of Sandwell, L.

Kirkhill, L.

Ardwick, L.

Listowel, E.

Beaumont of Whitley, L.

Llewelyn-Davies of Hastoe, B.

Blackstone, B.

Lockwood, B.

Blease, L.

Longford, E.

Bonham-Carter, L.

Lovell-Davis, L.

Boston of Faversham, L.

Macaulay of Bragar, L.

Bottomley, L.

McIntosh of Haringey, L.

Brimelow, L.

Mackie of Benshie, L.

Brooks of Tremorfa, L.

McNair, L.

Bruce of Donington, L.

Mason of Barnsley, L.

Carmichael of Kelvingrove, L.

Mayhew, L.

Carter, L.

Mishcon, L.

Castle of Blackburn, B.

Molloy, L.

Cledwyn of Penrhos, L.

Morris of Castle Morris, L.

Clinton-Davis, L.

Mulley, L.

Cocks of Hartcliffe, L.

Nathan, L.

Darcy (de Knayth), B.

Nicol, B.

David, B.

Ogmore, L.

Desai, L.

Peston, L.

Diamond, L.

Plant of Highfield, L.

Dormand of Easington, L.

Ponsonby of Shulbrede, L.

Ennals, L.

Prys-Davies, L.

Falkender, B.

Richard, L.

Falkland, V.

Rix, L.

Fisher of Rednal, B.

Rochester, L.

Galpern, L.

Russell, E. [Teller.]

Geraint, L.

Sefton of Garston, L.

Gladwyn, L.

Serota, B.

Graham of Edmonton, L. [Teller.]

Shackleton, L.

Shepherd, L.

Greene of Harrow Weald, L.

Stedman, B.

Grey, E.

Stoddart of Swindon, L.

Harris of Greenwich, L.

Strabolgi, L.

Hayter, L.

Taylor of Blackburn, L.

Henderson of Brompton, L.

Thomson of Monifieth, L.

Hilton of Eggardon, B.

Thurlow, L.

Hollis of Heigham, B.

Tordoff, L.

Holme of Cheltenham, L.

Turner of Camden, B.

Houghton of Sowerby, L.

Varley, L.

Howell, L.

Warnock, B.

Hughes, L.

Weatherill, L.

Hunt, L.

White, B.

Irvine of Lairg, L.

Wigoder, L.

Jay, L.

Williams of Elvel, L.

Jay of Paddington, B.

Williams of Mostyn, L.

Jeger, B.

Wilson of Rievaulx, L.

Jenkins of Putney, L.

Winchilsea and Nottingham, E.

John-Mackie, L.

NOT-CONTENTS

Abercorn, D.

Borthwick, L.

Aberdare, L.

Boyd-Carpenter, L.

Ailesbury, M.

Braine of Wheatley, L.

Allenby of Megiddo, V.

Brougham and Vaux, L.

Arran, E.

Butterworth, L.

Ashbourne, L.

Cadman, L.

Astor, V.

Caithness, E.

Astor of Hever, L.

Campbell of Alloway, L.

Auckland, L.

Campbell of Croy, L.

Belhaven and Stenton, L.

Carnegy of Lour, B.

Beloff, L.

Carnock, L.

Bessborough, E.

Chelmsford, V.

Blatch, B.

Chilver, L.

Blyth, L.

Clark of Kempston, L

995

Colwyn, L.

Mersey, V.

Constantine of Stanmore, L.

Milverton, L.

Cranborne, V.

Monson, L.

Cross, V.

Mountevans, L.

Cumberlege, B.

Mowbray and Stourton, L.

Dacre of Glanton, L.

Munster, E.

Davidson, V.

Murton of Lindisfarne, L.

Denham, L.

Nelson, E.

Denton of Wakefield, B.

Norrie, L.

Downshire, M.

O'Cathain, B.

Eden of Winton, L.

Orr-Ewing, L.

Elibank, L.

Oxfuird, V.

Elliot of Harwood, B.

Pearson of Rannoch, L.

Elliott of Morpeth, L.

Pender, L.

Elphinstone, L.

Perry of Southwark, B.

Elton, L.

Peyton of Yeovil, L.

Ferrers, E.

Pike, B.

Finsberg, L.

Polwarth, L.

Flather, B.

Quinton, L.

Fraser of Carmyllie, L.

Rankeillour, L.

Fraser of Kilmorack, L.

Reay, L.

Geddes, L.

Rennell, L.

Gilmour of Craigmillar, L.

Renton, L.

Gisborough, L.

Renwick, L.

Goold, L.

Rippon of Hexham, L.

Goschen, V.

Romney, E.

Grantchester, L.

St. Davids, V.

Gray of Contin, L.

Saltoun of Abernethy, Ly.

Gridley, L.

Sanderson of Bowden, L.

Hailsham of Saint Marylebone, L.

Seccombe, B.

Sharp of Grimsdyke, L.

Harmsworth, L.

Sharples, B.

Harrowby, E.

Sherfield, L.

Hayhoe, L.

Simon of Glaisdale, L.

Henley, L.

Skelmersdale, L.

Hesketh, L. [Teller.]

Soulsby of Swaffham Prior, L.

Hives, L.

Stanley of Alderley, L.

Holderness, L.

Sterling of Plaistow, L.

Hood, V.

Strange, B.

Hooper, B.

Strathclyde, L.

Howe, E.

Strathmore and Kinghorne, E. [Teller.]

Hylton-Foster, B.

Jellicoe, E.

Sudeley, L.

Jenkin of Roding, L.

Swansea, L.

Killearn, L.

Swinfen, L.

Kimball, L.

Teviot, L.

Lane of Horsell, L.

Thomas of Gwydir, L.

Lauderdale, E.

Trumpington, B.

Layton, L.

Ullswater, V.

Leigh, L.

Vivian, L.

Long, V.

Wakeham, L. [Lord Privy Seal.]

McAlpine of West Green, L.

Mackay of Ardbrecknish, L.

Waverley, V.

Mackay of Clashfern, L. [Lord Chancellor.]

Westbury, L.

Whitelaw, V.

Macleod of Borve, B.

Windlesham, L.

Marlesford, L.

Wolfson, L.

Merrivale, L.

Wynford, L.

Resolved in the negative, and Motion disagreed to accordingly.
Baroness Blatch: My Lords, I beg to move that the House do not insist on their Amendment No. 6 to which the Commons have disagreed.
Moved, That the House do not insist on their Amendment No. 6 to which the Commons have disagreed.—(Baroness Blatch.)
On Question, Motion agreed to.
5.20 p.m.
LORDS AMENDMENTS
7 Clause 153, page 91, line 46, after ("him") insert:
("() secure that, where a registered pupil with special educational needs is not the subject of a Statement of Special Educational Needs maintained by an education authority, there shall be a review of the provision made for the child within the period of twelve months beginning with the making of the provision, or as the case may be, with the previous review,")
8 Clause 154, page 92, line 35, at end insert:
("() The local education authority shall ensure the availability of goods and services to assist governing bodies in their duties under section 153(1) (a) of this Act.")
9 After Clause 156, insert the following new clause:.
Relationship of local education authority and grant-maintained special school
(".—(1) The funding authority shall consult any local education authority which has in the previous three years named in a statement a school which is or has become a grant-maintained special school.
(2) A grant-maintained special school shall assist the authority in any inspection and review carried out under section (Duty to direct governing body to make special educational provision) below.
(3) The funding authority and governing body of a grant-maintained special school shall consult any local education authority to which subsection (1) above applies on the range and type of provision at the school and of any proposals for a change of character.")
10 After Clause 162, insert the following new clause:
Duty to direct Governing Body to make special educational provision
(" .—(1) Where it has come to the attention of the local education authority that the governing body of a county, voluntary or grant-maintained school is not fulfilling its duties under section 153 of this Act in respect of a pupil for whom a statement of special educational needs is maintained under section 159 of this Act then the local education authority shall direct that the governing body make the special educational provision specified in the statement.
(2) In order to carry out its duty under this section, the local education authority shall have the power to inspect the special educational provision and require the governing body to supply such reports as the local education authority may require.
(3) After a period of two months after the making of a direction under subsection (1) above, the local education authority shall review the special educational provision made for the pupil for whom the direction was made and, where it appears that the provision has not been made, the Ideal education authority shall review the educational needs of the pupil under section 162 of this Act.
The Commons disagreed to Amendments Nos. 7 to 10 hut proposed the following amendments in lieu—
10A After Clause 162, page 91, line 22, at end insert 'and, in doing so, shall, to the extent that it appears necessary or desirable for the purpose of co-ordinating provision for children with speial educational needs, consult the funding authority and the governing bodies of county, voluntary, maintained special and grant-maintained schools in their area'.
10B After Clause 162, page 92, line 10, at end insert:
'() To the extent that it appears necessary or desirable for the purpose of co-ordinating provision for children with special educational needs—

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(a) the governing bodies of county, voluntary and grant-maintained schools shall, in exercising functions relating to the provision for such children, consult the local education authority, the funding authority and the governing bodies of other such schools, and

(b) in relation to maintained nursery schools, the local education authority shall, in exercising those functions, consult the funding authority and the governing bodies of county, voluntary and grant-maintained schools.'

Baroness Blatch: My Lords, I beg to move that the House do not insist on their Amendments Nos. 7 to 10, to which the Commons have disagreed, but do agree with the Commons in their Amendments Nos. 10A and 10B in lieu thereof.
Moved, That the House do not insist on their Amendments Nos. 7 to 10, to which the Commons have disagreed, arid do agree with the Commons in their Amendments Nos. 10A and 10B in lieu thereof. —(Buroness Blatch.)
On Question, Motion agreed to.
LORDS AMENDMENTS
11 After Clause 146, insert the following new clause:
Inspection of accounts and reports to Parliament
(".—(1) The accounts of the governing body of any grant-maintained school shall be open to the inspection of the Comptroller and Auditor General.
(2) The Comptroller and Auditor General shall, in each session of Parliament, report to the House of Commons—

(a) whether he has carried out under section 6 of the National Audit Act 1983 any examinations in respect of grant-maintained schools, and if he has,

(b) the results of such examinations.

(3) The first report under subsection (2) above shall cover a period beginning with the commencement of this section and each subsequent report shall cover a period beginning at the end of the period covered by the preceding report.
(4) In determining whether to carry out any examination under that section in respect of grant-maintained schools and, if he determines to do so, the nature of the examination, the Comptroller and Auditor General shall have regard to any relevant published report of any study promoted or undertaken by the Audit Commission under section 220 of the Education Reform Act 1988.")
12 Clause 147 page 88, line 43, at end insert:
The Commons disagreed to Amendment No. 12 but proposed the following amendment to Amendment No. 11 in lieu thereof—
12A Clause 147, line 19, after 'Commission' insert 'for Local Authorities and the National Health Service in England and Wales'.
Baroness Blatch: My Lords, I beg to move that this House do not insist on their Amendment No. 12, to which the Commons have disagreed, but do agree with the Commons in their Amendment No. 12A to Lords Amendment No. 11 in lieu thereof.
I spoke about value-for-money studies of grant-maintained schools when moving Amendment No. 1A. Amendment No. 12A is a minor technical provision. It puts the full title of the Audit Commission into Amendment No. 11 and thereby removes the need for Amendment No. 12. I beg to move.
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Moved, That the House do not insist on their Amendment No. 12, to which the Commons have disagreed, and do agree with the Commons in their Amendment No. 12A to Lords Amendment No. 11 in lieu thereof.—(Baroness Blatch.)
On Question, Motion agreed to.
LORDS AMENDMENT
13 Clause 149, Page 90, line 42, leave out from ("of") to end of line 43 and insert:
("() local education authorities, and such governing bodies, exercising functions under this Part of this Act,
() any other person exercising any function for the purpose of the discharge by local education authorities, and such governing bodies, of functions under this Part of this Act, and
() the Special Educational Needs Tribunal")
The Commons agreed to this amendment with the following amendments—
13A Clause 149, line 3, at end add 'and'.
13B Clause 149, line 6, leave out from 'Act' to end of line 7.
Baroness Blatch: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 13A and 13B to Lords Amendment No. 13.
Amendment No. 13 extends the code of practice to governing bodies of schools and to the tribunal. Amendment No. 13A is a technical consequential amendment. Amendment No. 13B is a technical consequential amendment on Amendment No. 14A. They are all technical paving amendments to Commons Amendment No. 14A, which we shall be debating shortly. I beg to move.
Moved, That the House do agree with the Commons in their Amendments Nos. 13A and 13B to Lords Amendment No. 13.—(Baroness Blatch.)
On Question, Motion agreed to.
LORDS AMENDMENT
14 Clause 149, page 90, line 44, at end insert:
("() In any proceedings before the Tribunal in which the due discharge of the functions referred to in subsection (2) above is challenged, departure from the provisions of the code may only be justified if it is established that the result of the actions taken was at least as beneficial as if action had been taken in accordance with the provisions of the code.")
The Commons disagreed to this amendment but proposed the following amendment in lieu—
14A Clause 149, page 90, line 44, at end insert:
"() On any appeal, the Tribunal shall have regard to any provision of the code which appears to the Tribunal to be relevant to any question arising on the appeal'.
Baroness Blatch: My Lords, I beg to move that the House do not insist on their Amendment No. 14, to which the Commons have disagreed, but do agree with the Commons in their Amendment No. 14A in lieu thereof.
I hope noble Lords will be content if I also speak now to Amendment No. 14B in the names of my noble friend Lord Campbell of Alloway, the noble and learned Lord, Lord Simon of Glaisdale, the noble Lord, Lord Henderson of Brompton, and the noble Baroness, Lady Warnock. All these amendments are

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concerned with the code of practice to be issued under the Bill. My noble friend will no doubt present the amendment to the House in due course.
During the passage of the Bill your Lordships have been properly concerned that the code of practice should be a clear, thorough and helpful document. We have discussed that code in some detail. Your Lordships have recognised that the code, taken together with the primary provisions of the Bill itself and the regulations we shall make thereunder, will form the framework for special education in the future.
At Committee stage we amended the Bill to secure that the code would offer practical guidance to schools as well as to local education authorities in respect of their functions under Part III. At the same time we amended the Bill to make it clear that local education authorities, schools, other bodies assisting LEAs and schools in carrying out their functions and the special educational needs tribunal would be under a duty to have regard to the code. This House has therefore ensured that the code can address the identification and assessment of all children with special educational needs and can embody, as we intend it should, the staged assessment model originally envisaged by the noble Baroness, Lady Warnock. In short, the code will promote the continuum of special educational needs, to which the noble Baroness first drew our attention some 15 years ago. I hope and believe that the principles underlying the code and the full draft code we eventually produce will command the support of all sides of your Lordships' House.
Some concern has been expressed, notably by my noble friend Lord Campbell of Alloway and others, as to the legal status of the code. My noble friend and others have been keen to ensure that the code should have the greatest possible practical effect. I wholly share that concern. Nonetheless, at Report stage in this House, my noble friend persuaded your Lordships to carry an amendment—before us now as Amendment No. 14—which sought to give the code a degree of legal efficacy. It did so by creating a test against which the new special educational needs tribunal should judge local education authorities' actions in the light of the code.
The other place did not accept that amendment. Instead, it proposed the amendment in lieu, which is now before us as Amendment No. 14A. That amendment in lieu is designed to recognise your Lordships' concern by highlighting the fact that the tribunal will have regard to the code, where relevant, when considering appeals. It goes no further. In particular, it does not set out the test embodied in Amendment No. 14 and substantially repeated in Amendment No. 14B.
I have discussed these issues very fully with my noble friend Lord Campbell of Alloway and others on more than one occasion. I thank them for their courtesy and for their doggedness in pursuing what I know is a real concern to them. My officials and their legal advisers have also held meetings with my noble friend. I hope he will agree that we have approached those meetings in a constructive spirit. I readily
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recognise that he has adopted the same approach. I pay tribute now to the tenacity and eloquence with which he has presented his case. We have found much common ground. The Government have concluded, however, with the greatest reluctance, that, while the difference between us is narrow, the point at issue is of the greatest importance. I wish to explain, therefore, as clearly as I can, why the Government can go no further.
First, let me emphasise the common ground. The Government wholly understand and share my noble friend's concerns that the code of practice should have a demonstrable impact on the quality of special educational provision across the country. We understand also, as Amendment No. 14A shows, my noble friend's concern that the tribunal should have regard to the code when considering appeals.
It is our intention, and has been our intention all along, that the code should offer practical guidance to schools, local education authorities and others. It has never been our intention, as I believe my noble friend now accepts, that the code should impose duties or obligations. Such duties will be imposed through the primary legislation, which we have now debated fully, and through regulations, on which we shall consult fully. The code will range widely, offering guidance on matters which are the subject of legislation and covering other matters where no legislation applies. To be useful, the code must be crisp, clear and unambiguous, offering precise and thorough guidance to all concerned. The code is being drafted with those objectives in mind.
It is also our intention, and again has always been our intention, that the special educational needs tribunal should be a parent-friendly, informal forum. It will consider appeals on specific grounds set out on the face of the Bill. It has never been our intention that the tribunal should police the code of practice. The objective of the tribunal will always be to establish whether the decision taken by a local education authority on which the appeal rests was appropriate for the child concerned.
For the sake of complete clarity, let me repeat: the code will offer guidance which is clear and thorough. The tribunal will be an open, informal forum. I am deeply concerned that Amendment No. 14 would, wholly unintentionally, subvert those objectives. Instead of helping the tribunal and thus helping parents, it would severely complicate the tribunal's proceedings. Instead of delivering an effective code, it would lead to the production of a document which skirted round the vital issues.
I should enlarge on those concerns. The adoption of this amendment would mean that the attention of the tribunal would be focused on the code. The proceedings would focus on difficult, hypothetical questions. The objective of a parent-friendly forum would be lost. And lost too might be the consideration of the most important question, whether at the end of the day the decision taken by an LEA had been appropriate for the child concerned.
Similarly, the adoption of Amendment No. 14B would, I fear, result in a far less positive and effective code than many in this House hope and expect to see.

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In drafting the code we must consult and take account of the views of all those who will be most directly affected, including local education authorities. If LEAs understand that they will have to justify their actions before the tribunal so far as each and every sentence and each and every clause of the code is concerned, they will insist upon words which allow them escape routes at every turn. The straightforward language we want will become vague; the precise advice we want will become woolly and opaque. Throughout the passage of this Bill in this House and another place great importance has been attached to the code. Many hopes rest on that code. I fear that if today, at the very close of our proceedings, we accept this amendment, those hopes will be severely disappointed.
Part III of the Bill will be implemented through its primary provisions, through regulations and the code. Taken together—it is important to accept that they will be taken together—those elements must be effective. We are wholly at one with my noble friend and his colleagues in that respect. We shall consult fully in the autumn on the draft regulations and on the draft code. We shall lay both before the Houses of Parliament and, as noble Lords know, it will be under the affirmative resolution procedure. We recognise that it will be essential that their impact is evaluated.
I therefore wish to assure the House that your Lordships will have a continuing contribution to make to this work. Noble Lords will be able to contribute to the consultation process and scrutinise the drafts when they are laid before Parliament. Beyond that, my department will monitor the impact of the code. We shall do so through consultations with those most directly affected. At the same time, we shall analyse the impact of the regulations and the work of the tribunal. Where necessary, we shall propose changes to the regulations and the code in the light of that evaluation. Those changes will be, of course, subject to your Lordships' approval.
I hope that what I have said today will demonstrate our commitment to the effective implementation of the Bill. I hope too that what I have said will convince your Lordships that, while the very best of intentions lie behind Amendment No. 14B, that amendment would not assist the implementation of this legislation. It would complicate and thus jeopardise the work of the tribunal and the drafting of the code of practice. I must, very reluctantly, say to my noble friend that I ask your Lordships not to insist on Amendment No. 14 and to agree with Commons Amendment No. 14A. My Lords, I beg to move.
Moved, That the House do not insist on their Amendment No. 14 to which the Commons have disagreed, but do agree with the Commons in their Amendment No. 14A in lieu thereof.—(Baroness Blatch.)
AMENDMENT TO COMMONS AMENDMENT 14A IN LIEU OF LORDS AMENDMENT 14
14B Clause 149, as an amendment to Commons amendment 14A in lieu of Lords amendment 14 at end insert:
("() If in the opinion of the Tribunal substantial compliance with such provisions of the Code as may be adjudged to be relevant was reasonably practical in the circumstances departure from such provisions may be justified only if in the opinion of the Tribunal the action taken was at least as beneficial in the interest of the child as if there had been substantial compliance with such provision.")
5.30 p.m.
Lord Campbell of Alloway: My Lords, I beg to move Amendment No. 14B as an amendment to Amendment No. 14A.
At the outset perhaps I may introduce a personal note and return the expressions of courtesy given by my noble friend the Minister. I should like to say that it was a privilege and a pleasure to attend on her and her department to discuss these matters in amity and that, irrespective of the result of this debate, I shall continue so to do. I accept that up to a very large point those discussions were very constructive. The only point on which we stuck was Amendment No. 14. We saved hours and hours of debate in your Lordships' House by those discussions which we had at the department on an all-party basis. To be fair to the Government, they produced Amendment No. 14A which goes some way to meet one of the concerns of your Lordships.
I now turn to this amendment. On its merits it is supported by so many noble Lords, irrespective of where they sit in this House. It is not a political issue. My noble friend the Minister took over the Private Member's Bill and I continue to acknowledge the sincere debt of gratitude which I owe her. She and I both accept that the difference between us is narrow but of substance. She is not in a position to offer any accommodation. We must agree to differ, but we differ in amity, with respect for each other's integrity and purpose, knowing that this difference may be resolved only by your Lordships' House. Therefore, is it not reasonable to ask noble Lords who have received exhortation to vote one way or the other, if they might listen to both sides of the argument?
This amendment is concerned with the status of the code of practice before this new statutory tribunal is set up, which was suggested by me about two-and-a-half years ago in the Cavendish Papers, long before the Private Member's Bill, now subsumed by Part III of this Bill. That code of practice should serve as an important and essential factor in the implementing machinery of Part III of the Bill—together with the regulations and the primary provisions of the Bill —in enforcement proceedings before the tribunal.
On Report in your Lordships' House, Amendment No. 14 on the Marshalled List was carried in a Division. It is now qualified by Amendment No. 14B. It is offered in the light of Amendment No. 14A which is in lieu of Amendment No. 14.
Perhaps I may come at once and in plain English to the object of this amendment which is quite simple. It seeks to restore the special status of the code of practice, as acknowledged by my noble friend the Minister in Committee, but rejected by the Government on Report.

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It has an essential minimum safeguard for the interests and welfare of these disadvantaged children in proceedings before the tribunal. As your Lordships know, that has to be done in primary legislation. There is no way in which that object may be achieved by the regulations or the code of practice, which in any event will not be available until about Easter.
So much for the object. As to the essence of the argument, the Commons amendment which is offered in lieu—namely, Amendment No. 14A—is welcome as far as it goes as rendering relevant provisions of the code of practice admissible in appellate proceedings before the tribunal. But that amendment fails to implement the stated government intention at Committee stage in two respects. The first is that it fails to accord to the code,
"its own special legal status".
Secondly, it fails to ensure that,
"any departure from the code will, if challenged, require justification".—[Official Report, 29/4/93; col. 487.]
I must immediately refer your Lordships to the verbatim account of what was said about this because those 10 lines are crucial to this debate. Having dealt with the aims of the code at col. 486, which I shall summarise in due course, my noble friend the Minister referred to the status of the code, which is the substance of this amendment, saying:
"That said, the code will have its own special legal status. It will he laid before Parliament and carry parliamentary approval. Moreover and most importantly, those to whom it applies will have a duty to have regard to it. That is no light duty. By law, those who must have regard to the code cannot ignore it. If they do so, they will be in breach of a duty. They do not, however, have to follow the code to the letter and in every particular. But any departure from the code will, if challenged, require justification—to parents in the first instance and then, depending on the circumstances, to the Secretary of State if the matter at issue is the subject matter of a statutory complaint, or to the new special needs tribunal if the matter at issue is the subject of an appeal. In justifying their actions, those to whom the code applies will have to show that the alternative action they took produced results which were at least as beneficial as those which would have resulted from their following the code".—[Official Report, 29/4/93; col. 487.]
As your Lordships will see, it is that which is mirrored in the amendment to which I speak. It is the Government's own concept of the code's "own special legal status".
Before I turn to Report stage, perhaps I should say that the aims, which were dealt with by my noble friend the Minister immediately before the words that I have just quoted, are wholly implemented in this amendment which imposes no duties and no hard and fast rules, and which makes every reasonable allowance for the due exercise of judgment in the action taken for each child. However, the problem is that the Government changed their mind on Report. I refer to col. 1376, which reads:
"Guidance to those involved with the policy and drafting of statutory provisions relating to codes of practice … Ad hoc statutory provision as to the effect of failure is therefore neither necessary nor desirable".—[Official Report, 14/6/93; col. 1376.]
I shall not quote the whole passage because it is there on the record for anyone to see, but the effect of the advice in the department, which had clearly and apparently changed between Committee stage and
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Report, was, to put it in plain terms, that the code of practice was not to have its "own special legal status" as regards departures, as proposed in Committee or at all.
One of the problems about this is that, irrespective of whether the case that I was advocating was right or wrong, your Lordships acted on the Government's words in Committee which suggested that there should be a concept of justification and that the code should have its "own special legal status". Those are the Government's words, not mine. Amendments were either not moved or were withdrawn on that basis under what appears to have been an inevitable miasma of confusion. Other noble Lords may wish to speak to that point.
It is not proposed to lengthen this debate and to rehearse the "shall have regard to" argument, save to mention that the noble and learned Lord, Lord Simon of Glaisdale, who is in his place; the noble and learned Lord, Lord Ackner, who has given his mind to this matter and may be prepared to address your Lordships upon it; the noble Earl, Lord Russell, and other noble Lords have dealt with this each in their own way—and none of us considered that "shall have regard to" afforded any sufficient or valuable safeguard for the interests of these children under general administrative law as regards departures from the code. Other noble Lords, whom I see in their places, particularly the noble and learned Lords, may wish to return to this point.
Your Lordships may well think that Amendment No. 14B which, together with Amendment No. 14A, is offered in lieu, will serve as an incentive for observance at the first level and that it is only right and reasonable that the respondent before the tribunal should have to justify departures from the code as proposed by this amendment to show that, put simply, such a departure did not adversely affect the interests of the child. The drafting of the amendment is the mirror of what my noble friend the Minister said in terms at Committee stage. It is exactly the same concept. I have qualified it to some degree by referring to whether the action,
"was reasonably practical in the circumstances".
Essentially, however, it is the same concept as that which was advocated by my noble friend.
I turn now to some of the criticisms which my noble friend raised when dealing with Amendment No. 14 a moment ago. That amendment assuredly is not technical. It is in no way legalistic. It is in no way inconsistent with the proposed user-friendly atmosphere of proceedings before the tribunal. I wonder whether my noble friend the Minister could concentrate on what I am saying. I was about to suggest that on this aspect my noble friend the Minister knows perfectly well that I fully support the user-friendly atmosphere. We have had consultations about this in the department on which we were in total agreement. The amendment will not in any way affect the user-friendly atmosphere because the concept of justification is of evidential consequence and a matter for the tribunal. The anxiety which is expressed, that this amendment will introduce a legalistic element which could detract from the informal conduct of those proceedings, is wholly misconceived. As your

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Lordships can see, the provisions will affect only the approach of the chairman to the evidence for the purpose of making his formal decision after all the evidence has been given.
There can be no question, as has been suggested, of the chairman focusing upon adherence to the code to the detriment of the child, as Section 1 of the Children Act enjoins that such interests shall have paramount importance. There is no question, as I understand it, that the amendment would render the provisions of the code less effective. I believe that my noble friend the Minister described it as woolly and opaque. It is just not understood.
For the reasons given, the amendment does no more than afford the minimum measure of safeguard, in the interests of each child, if the code is to serve any worthwhile purpose. What it comes to is simply this: those advising my noble friend the Minister as to the status of the code have changed their mind and their advice between Committee stage and Report. As has been said before, our legitimate constitutional expectations have been pre-empted by the pressure of business. It is in those most unfortunate and unusual circumstances, in which your Lordships have acted under a plain misconception, that I beg to move.
Baroness Warnock: My Lords, I support the amendment which appears in my name as well as those of other noble Lords. I am no lawyer, but I know that there is an enormous difference as to where the burden of proof lies in a hearing where someone is appealing against a decision. I understand that the amendment will plainly put the burden on the chairman of the tribunal to try to find out the reasons for any departure from the code and to demand that the departure he justified. That is a simple point. We cannot talk in any detail about the code, because we do not know what will be in it. One of the most important aspects of the code will be to provide a set of criteria by which a child's needs will be assessed. It will not necessarily be the case that a statement of a child's needs will be issued by the local authority, but that his needs will be discovered and assessed, according to the criteria laid down, I hope and believe, clearly, in the code.
The code of practice is therefore a matter of immense importance. It is the only safeguard to ensure that children's needs are assessed to a clear and consistent standard. The purpose of the code is to lay down those standards. That affects children who have statements taken out for them and, in particular, those children who have no statements and who, perhaps, have parents who believe that their child's needs are not being met properly. Some of those parents will want to appeal against the non-issue of a statement, as it is now within their rights to do. They may, on the other hand, wish to appeal against the non-provision of what was promised them when the assessment was made.
The amendment goes to the heart of the matter of meeting special educational needs, in particular, those which are supposed to be met in ordinary schools and not special schools. It is therefore important that when an appeal is made before one of the tribunals, any departure from the criteria and standards which a
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code of practice will have set out is justified. The wording of the amendment is careful. First, it has to be shown that in the case coming before the tribunal the code of practice is relevant. If the code of practice is seen not to be relevant, the whole question of departing from it will not be raised. Secondly, as the noble Lord, Lord Campbell of Alloway, said, a proviso has been included: that adherence to the code is reasonably practical. That means that if adherence to the code will cost vast sums of money each year and that some good provision may be made which would not cost so much, a requirement to adhere: to the code would be ruled out. That is a safeguard.
I cannot understand the reasons for the Government not accepting that in an appeal the parents should have the assurance that the code will be adhered to unless the suggested provision for the child is as good as if the code had been adhered to. I cannot understand the Government's reasons for not accepting that proposal. As for suggesting that the amendment will somehow alter the nature of the code, that is fantastic. The code will not be set out with a view to determining how it will be implemented in any appeal that goes to a tribunal. Presumably the code will be set out in the best interests of children and in the interests of establishing standards and providing regular criteria for judging a child's needs.
I do not believe that the acceptance of the amendment would alter the details of the code or the purpose for which it will be introduced. We rely enormously upon the code of practice. We have to take it on trust because we cannot see it. We have been told, and we believe, that it will set out the standards and the criteria. In that belief, it is essential that we go as far as we can to ensure that the code has the special status that we were promised that it would have. I strongly support the amendment.
Lord Simon of Glaisdale: My Lords, I too, strongly support the amendment to which my name is attached. It is deplorable that the Government should now be seeking to reinstate the provisions which your Lordships, after hearing argument, voted down on Report. The arguments prevailed completely. Your Lordships will not find that difficult to believe after hearing the noble Lord, Lord Campbell of Alloway, and my noble friend Lady Warnock. They, after all, irrespective of this issue, are the principal agents behind Part III of the Bill.
No one denies the importance of Part III in providing for singularly vulnerable persons in the community. No one denies the importance of the code of practice. It is hardly deniable that the code of practice is the trigger which sets off the provisions of Part III. Without the code of practice, there is nothing to activate Part III. In that respect, the words. "have regard to", however appropriate in other codes of practice, are inadequate here. On Report the noble Earl, Lord Russell, gave an example which was not controverted, in which the words "having regard to" were in fact disregarded.
One reaches this curious position. In Committee I was left with the duty of moving the amendment tabled by the noble Lord, Lord Campbell of Alloway. In support I quoted from a letter written by the

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Minister, in which she stated that departure from the code must be justified. Notwithstanding her own words she would not accept the amendment. The matter then progressed to the Report stage. The noble Lord, Lord Campbell, took the words which the Minister had used in Committee as the text for his amendment on Report. That was, however, controverted from the Treasury Bench.
The matter went to a Division. The noble Lord, Lord Campbell, said that obviously the Government were incapable of understanding the argument—that was also my impression —and that he would test the opinion of the House. The opinion of the House was specific; 68 Members voted for his amendment and 42 voted against it. Of those 42 Members, 22 were what is opprobriously called "the payroll vote". Of the Ministers who voted, only the noble Baroness and the Whip on the Treasury Bench had heard the argument. All but one of the Cross-Bench Peers who voted did so in favour of the amendment. Two Conservative Peers voted for it, as did the right reverend Prelate the Bishop of Guildford, the only bishop present. Oscar Wilde described the fury of Caliban at seeing his own face in the glass. The noble Baroness seemed to have a fury being faced with her own words in an amendment. That really will not do.
As regards the parliamentary aspects, I fully endorse what was said by the noble Lord, Lord Judd. It is absolutely deplorable to have a wholesale turning down of the amendments which your Lordships have made. That used to happen on occasions when a socialist government was in power. That was rightly resented and it is equally to be resented now that we have a Conservative government. Secondly, I wish to comment on the Minister's position. She has done valiantly as regards academic freedom. She took her department by the scruff of the neck and we obtained a reasonable solution which protected academic freedom.
The Minister also took on her department when we discussed whether there should be an affirmative resolution to Schedule 3, paragraph 1(4), relating to notices given before grant-aided status. We know what advice the noble Baroness had because she inadvertently read out, "I am not impressed by the arguments in favour of the affirmative resolution". But we had not reached discussions on that clause and no argument had been advanced. However, we must pay a tribute to the Minister because once again she persuaded her department to change its mind. Evidently between the Committee and Report stages the department changed its mind on this issue. We hope that the Minister will get it to change its mind yet again. I put it that way but, in fact, the Minister is in charge of the Bill and at present in charge of the department. I hope that she will accept the amendment of the noble Lord, Lord Campbell of Alloway.
6 p.m.
Baroness Darcy (de Knayth): My Lords, I wish to add my full support for the amendment; indeed, I regret our need to return to it. I shall not repeat what
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was said by the noble Lord, Lord Campbell of Alloway, but there appears to have been a volte-face on the part of the Government in relation to the legal status of the code. I echo what was said by my noble and learned friend Lord Simon of Glaisdale in hoping that the Minister will reinstate that status.
As the Minister said today, many hopes rest on the code. Many amendments were withdrawn following assurance that they would be incorporated in the code. In Committee I spoke to a five-pronged amendment aimed at the code of practice. It was originally intended as five separate amendments to the Bill. On Report I withdrew what were to me very important amendments on assessment, statementing and placements following firm and detailed assurances that they would be covered by the code. I too thank the Minister for making herself and her officials readily available on numerous occasions. We had very useful discussions. It is vital that the code has strength.
On Report the Minister said:
"The code of practice will be instrumental in achieving our aim; namely, that all children with special educational needs should receive the appropriate special educational provision to meet those needs".—[Official Report, 14/6/93; col. 1376.]
We are all agreed on that aim; the difference relates to how we achieve it. The intended code of practice will have many excellent attributes. As the Minister said today, it will be a clear, thorough and helpful document. There will be wide consultations on it beforehand; it will be widely circulated; it will be easily accessible and understandable; and it will be user friendly. But when it comes to a dispute, the code needs to be strong, and I too fail to see how the amendment will alter the nature of the code, as my noble friend Lady Warnock clearly stated.
While I welcome the fact that the other place has given us Amendment No. 14A, having disagreed to Amendment No. 14, Amendment No. 14B stands in the name of two noble Lords and one noble and learned Lord, who are expert in codes of practice and the law, and in the name of my noble friend Lady Warnock, who knows more about special educational needs than any other Member of this House. If, when they have heard more from the Minister, their combined wisdom says that Amendment No. 14B is necessary to ensure that the code of practice achieves our common aim, I shall certainly follow them into the Division Lobby without hesitation.
Baroness Carnegy of Lour: My Lords, I regret that I was not in the House at one o'clock in the morning on 15th June when my noble friend Lord Campbell of Alloway divided the House and the House agreed with him. I should have been here. Apparently many other noble Lords were not present but should have been. I for one apologise to the House.
Since then my noble friend Lady Blatch has met with my noble friend Lord Campbell—and he has acknowledged that—to discuss fully the problems which the amendment poses. Indeed, as with so many other aspects of the Bill, my noble friend Lady Blatch has come a long way to meet the express wish of the House on this matter. The Government have tabled a replacement amendment in another place which has been accepted and which is before us. I am sorry that

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my noble friend has nevertheless virtually retabled his original amendment. My noble friend Lady Young is also very sorry about that. She has had to leave the House due to an unavoidable engagement outside but she has told me her views and they accord with my own.
I read with great care the discussions on my noble friend's amendment on Report. The arguments were fully and clearly deployed. I know that my noble friend Lord Campbell has much legal experience and current knowledge of that particular area of the law. But as a lay person who, some time ago admittedly, had a lot of experience of actual decision-making in that area of activity in local government, I must say that I believe that vulnerable children with special needs will be better served by the Bill as amended in the Commons rather than by the Bill with this amendment.
I expect the noble Lord, Lord Ponsonby, who is to speak from the Opposition Front Bench, to elaborate on that because I believe that the local government decision-making point of view is more important in this case than the lawyer's point of view. The noble Lord is a current councillor and I hope that he will enlarge upon that point. He is much more up to date than I am.
Decisions within local government about such a child's education must be, above all, informed constantly by what is best for the child. The necessity to have regard to a code of practice will be helpful on that. As the Minister said on Report, the code of practice will be a tool. It will be very helpful to have the existence of a tribunal to which parents can appeal as regards the appropriateness of a decision concerning their child. Reference to the code of practice can be made in the course of a tribunal hearing. It is quite normal to refer to a code of practice in that way and we all know that it works.
If officials and councillors have to make their decisions with one eye on legal requirements involving concepts such as "substantial compliance" with provisions of the code, with an eye on what is relevant and practical and what would be equivalent to "substantial compliance", the freedom to make sensitive, human judgments is likely to be, in my view, greatly diminished. The Minister made a related point, but not quite the same point.
The role of the tribunal is to consider whether the local authority has made the best decision for the child, having regard to the code. The noble Baroness, Lady Warnock, said that it was very important to know where the burden of proof lies in a tribunal. I accept that. But in local government to give to a tribunal of appeal the unusual role of enforcing substantial compliance with the code, even with the provisos in the amendment, would greatly limit the ability of officials and councillors to do the right thing for the child, or so it seems to me. Local government people—and this is extremely important—must be and are very cautious and careful about keeping within the law. They almost always allow themselves a considerable margin of safety.
My noble friend Lord Campbell is second to none in his concern for children with special needs. I
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understand his aspiration and his desire to further the method which he used in his Private Member's Bill which was so useful to Parliament as a stepping stone towards the Bill which we are now discussing.
I believe my noble friend when he tells us that the, amendment is not legalistic. I should not have known it on the surface but I believe that. However, I am not sure that the gap between my noble friend Lord Campbell and the House of Commons is narrow. I beg my noble friend to accept that the amendment would in practice have a quite different effect on local. government decisions from that which he suggests. From the point of view of children and their parents —and they are the people for whom the clause exists —it would in my opinion be counter-productive Therefore, despite all the work that my noble friend has done on this, I hope that he will decide to withdraw the amendment. If he does not, I hope that the House will not accept it.
Lord Campbell of Alloway: My Lords, perhaps I may be allowed to correct one matter. The Minister, my noble friend Lady Blatch, wrote to me on 16th July and I quote from memory the letter which said, "The gap between us is narrow but of substance. We must agree to differ". My noble friend is entitled to her own opinion but that is the position as between the Minister and myself.
Baroness Carnegy of Lour: My Lords, with the leave of the House, I am glad that my noble friend says that I am entitled to my opinion because that is my opinion. The Minister is extremely courteous and never expresses anything roughly. I do not doubt what she really thinks about the amendment, but it seems to me that the gap is important.
6.15 p.m.
Lord Hailsham of Saint Marylebone: My Lords, t had not intended to speak on the amendment but if have had rather a curious experience about which should like to tell the House. When I saw the most distinguished list of names in support of the amendment, I started with a perfectly open mind but I expected to be persuaded by their arguments.
The awful effect of the experience that I have had is that having heard my noble friend Lord Campbell of Alloway, my noble and learned friend Lord Simon of Glaisdale and the other speakers who have spoken in support of the amendment, they have convinced me that it is wrong. It is only a provisional opinion but I must give the House the benefit of my experience and the reason which I have had for it.
The expression "to have regard to", which is in the text of the Commons amendment which is being challenged and which was included, I assume, on the advice of the Government and their advisers, is very well known in statute law. It is rather difficult to interpret it because it is couched in ordinary language which is not in terms of art; that is, it is very difficult, indeed almost impossible, for either a lawyer or anybody else to predict exactly what the result of it will be in any given case.
But my noble friend's argument was based ultimately on a challenge which he put to the Minister

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to the effect that she had changed her mind between Committee and Report. My noble friend Lord Campbell quoted—I have no doubt with complete accuracy—the phrases upon which he depended to arrive at that conclusion. I do not believe that he has made out his case. The reason is that while it is extremely difficult to say what is meant in the statutes, of which there are a great number, when it says that in reaching a conclusion an appellate tribunal or a Minister "must have regard to" something, it is in general perfectly accurate to say that there is a burden of justification to be placed on the Minister or the tribunal if they wish to depart from the code of practice or whatever else it is to which they are supposed to have regard. I believe that is what the Minister was saying and I believe that to be right.
I had the greatest difficulty as a Minister in having "to have regard to" considerations which ultimately I departed from but I always regarded that as a matter which would require justification either in an appellate tribunal or, if the matter were raised in another forum, by way of judicial review. However, of one thing I am certain. If one has regard to something, there must be circumstances in which one is not only entitled but bound in conscience to depart from the issues to which one would have regard, always subject to the fact that one has to justify what one is doing.
As it seems to me, what is wrong with the amendment in the name of my noble friend is that it states in terms that departure from the provisions of the code may be justified only if, in the opinion of the tribunal, the action taken was at least as beneficial to the interests of the child, as if there had been substantial compliance with the provisions of the code. That sounds at first sight absolutely reasonable and indeed incontrovertible.
However, let me just put an imaginary case. The situation which is postulated by the amendment implies an appeal by, let us say, the parents of the child with special educational needs against the decision of the tribunal proposing to depart from the code of practice. Let us suppose that it was established beyond a scintilla of doubt that, although the code would not be as beneficial to the interests of the particular child with special educational needs who is the subject of the proposed appeal, a number of other children would be far more adversely affected than the particular child would he advantaged if the code were closely adhered to. In other words, in any appeal there are other people to be considered with regard to the background of a departure from the code. The principle is inclusio unius est exclusio alterius. That is the case in point. There are other factors; and it may be the interests of the other children who would be affected by a departure from the code of practice to which the tribunal must have regard. Although the argument does not alter the burden of proof—that is a term of art and I should not have used it to justify a departure from the code of practice—it effectively indicates that the interest of the specific child is only one of the factors that the tribunal must take into account before justifying a departure from the code of practice.
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It is no good saying that the position is not legalistic; of course it is legalistic. One cannot pass laws which are not legalistic. If one did, they would be bad laws. I am saying that on the sheer merits of the case my noble and learned friend and my noble friend who sits behind me have so far persuaded me that they are wrong.
Lord Ackner: My Lords, it is not my intention to add to the conviction of my noble and learned friend Lord Hailsham, although I expect the result will be that I shall. The noble Lord, Lord Campbell of Alloway, invited my attention to the subject in the Bishop's Bar and, as there was no escape, I learned from him the Hansards that I should consider and the issue. The point that he had in mind was that the Government stated at Committee stage that they were going to give special legal status to the code. That was to be done by the use of the words "have regard to".
One of the first occasions I sought to address the House was when the new legal aid legislation was before the House. The firm obligation, which previously rested upon my noble and learned friend Lord Hailsham, to pay fair remuneration for work actually and reasonably done was to be replaced by the then Lord Chancellor (my noble and learned friend Lord Mackay) merely being obliged to have regard to a series of factors. It was generally accepted that that obligation was nothing like the obligation which rested upon my noble and learned friend Lord Hailsham. That was precisely why it was sought to get rid of that obligation.
The words "have regard to" must be considered in their context. However, there is a context which I believe is helpful. It is in the Housing (Homeless Persons) Act 1977, now the 1985 Act. Section 12 provides that,
"In relation to homeless persons and persons threatened with homelessness a relevant authority shall have regard in the exercise of their functions to such guidance as may from time to time be given by the Secretary of State".
There was alleged to be a failure to have regard to that guidance, and judicial review proceedings took place in the case of De Falco v. Crawley Council. That was in 1980, and reported in the Queen's Bench Reports.
In a judgment concurred with by his brothers, the noble and learned Lord, Lord Denning, said:
"I am quite clear that the code should not be regarded as a binding statute. The council, of course, had to have regard to the code: see section 12 of the statute: but, having done so, they could depart from it if they thought fit".
In giving his judgment, the noble and learned Lord, Lord Justice Bridge, (as he then was) put it perhaps a little more firmly. He stated:
"Although the authority must 'have regard' to the guidance given under section 12, that guidance is of no direct statutory force or effect and the local authority are not bound to follow it in any particular case".
As a result of refreshing my memory on the subject, and as a result of the insistence of my noble friend Lord Campbell, I then considered the second day of the Report stage on 15th June—reported at col. 1376 of Hansard—to see where that special legal status had been achieved. In the penultimate paragraph of the reply of the noble Baroness, Lady Blatch, to the noble Lord, Lord Campbell, there is this phrase. It is not

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drafted with the clarity that I would have expected, but I do not attribute the drafting to the noble Baroness. She stated:
"Guidance available to those involved with the policy and drafting of statutory provisions relating to codes of practice advises"—
that means that guidance advises—
"that if the provisions of a code are intended to be included among the relevant factors to be taken into account in the exercise of specific functions, this can be achieved by requiring the relevant authorities to have regard to the code".
That is exactly the position in the Housing (Homeless Persons) legislation. The noble Baroness continues:
"The consequences of failure to do so are governed by general administrative law. Ad hoc statutory provision as to the effect of failure is therefore neither necessary nor desirable".
Frankly, I do not understand this. If it is meant to indicate that by the use of the words "have regard to" there is placed upon an authority the obligation actually to implement the factors that have to be considered, that just is not the law. One may consider and disregard them. The phrase "have regard to" imposes no kind of statutory obligation and that is why I have had difficulty in understanding how this special statutory status is to be achieved.
There has clearly been a change of heart in regard to this and I do not for myself, from a legal point of view, see that the change of heart has been in any way explained so far on any legal basis. The obligation to "have regard to" does not put the code in a special protected legal status. Those words on their own are clearly not sufficient. It seems to me that to improve the situation the amendment has sought to spell out what is the special status to be provided to those words, and if there is to be a special status for the code, this is so far the only method which has been validly suggested. I support the amendment.
Lord Ponsonby of Shulbrede: My Lords—
6.30 p.m.
Lord Henderson of Brompton: My Lords, before the noble Lord from I he Opposition Front Bench speaks, I hope I may say a few brief words as my name is attached to this amendment. I wish strongly to support the amendment. I agree with the words of the first four speakers who spoke to it. I have considered all these proceedings again and I wish only to bring to the attention of the House some words of the noble and learned Lord, Lord Simon of Glaisdale, and to ask a question of the Minister.
When the noble and learned Lord, Lord Simon of Glaisdale, spoke in Committee on 29th April he said:
"Even the awkward squad is entitled to a clear word of command".—[Official Report, 29/4/93; col. 480.]
That is good common sense which all of us can understand even if we are not learned, as are so many noble Lords who have spoken today and who have blinded us with legal science. That is a good, clear, crisp statement of what this amendment seeks to do. For that reason I strongly support it.
The question I wish to ask the noble Baroness is this: if this measure is not put into the Bill by amendment this evening—and if it prospers in another place—would it be possible for the tribunal to develop its own code of practice, if I may put it like that, which
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could include the words of this amendment? If it were able to do that, there would be less pressing need for this amendment to be included in the Bill in this House and that would influence my decision. If it is not possible for the tribunal to develop its own code of practice in this way, I would most certainly support this amendment in a Division.
Lord Renton: My Lords, perhaps the noble Lord, Lord Henderson of Brompton, might be reassured if he referred to the clause in the Bill—in fact there are several clauses—which establishes the tribunal. The composition, powers and procedure of the tribunal are set out in a considerable amount of detail.
First, I would like to acknowledge the help which for a very long time my noble friend Lord Campbell of Alloway has tried to give in legal matters to MENCAP and to the mentally handicapped. I should like to acknowledge that. As my noble friend Lady Carnegy of Lour said, he introduced a Private Member's Bill which covered a considerable part of Part III of the Bill. However, I must confess that I could not agree with him when he said, in referring to the provisions of the Bill which overlap with his own Bill, that it was the code of practice that was necessary to implement it. The noble and learned. Lord, Lord Simon of Glaisdale, said the same. That, with great respect, is not so. Part III of the Bill contains 33 clauses of detailed legal requirements which your Lordships and another place have said must be in the Bill. Local education authorities will have a lot of decisions to make and it will be for the tribunal to have the last word on appeal. There will, of course, be certain very limited circumstances when a matter can be taken to the High Court following the decisions of the tribunal. If I thought that the amendment of my noble friend Lord Campbell of Alloway would help children with special educational needs, especially those who are mentally handicapped, I would be voting for and supporting his amendment. But, alas, I cannot support it as I shall explain. I cannot do so mainly because I do not think it achieves its purpose, as my noble and learned friend Lord Hailsham of Saint Marylebone pointed out.
But before I get on to that—I will be very brief—I remind your Lordships that in our law we have three kinds of legal process. We have Acts of Parliament. We have statutory instruments and we have case law based on the decisions of the courts.
Broadly speaking—there have been exceptions—codes of practice have not fallen within those three areas. They are for the guidance of various people. I suppose the most familiar type of code of practice—it has been subject to rather more stringent statutory provisions in recent years —is the Highway Code. That is still the case. The Highway Code gives guidance to motorists but no motorist can be charged for an offence against the Highway Code. If there has been a breach of the Highway Code, that is a matter for the court to take into consideration where, for example, there is a charge of dangerous driving. The Highway Code was for guidance and there have been many other codes for guidance. The real question that we have to decide—if you like it is the technical, legal question—with regard to this amendment is whether,

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on the one hand, we wish the code of practice in this case to be for guidance and that the tribunal shall have regard to it or whether, on the other hand, we should have this rather complicated obligation placed upon the tribunal, which in any event will have to consider a great many clauses of the Bill to see whether those have been complied with.
I mention in passing that we do not yet know what will be in the code of practice. It will not necessarily have to be approved by Parliament because Clause 150(2) says that the Secretary of State shall have a code of practice, shall consult people and may lay a draft copy of that code before Parliament, and Parliament can then resolve whether or not to have it. But there is no obligation to turn it into a statutory instrument. I say that it is better to keep this thing in the broad and to do what the Commons Amendment No. 14A does; which means that the tribunal has to consider the whole of the code of practice as well as all the provisions of the Bill that are relevant.
I agree with my noble and learned friend Lord Hailsham that there will be problems if this rather complicated obligation is to be placed upon the tribunal. In summary, its effect will be this. The tribunal will have to make a hypothetical comparison. The words:
"If in the opinion of the Tribunal substantial compliance",
will lead to arguments as to whether or not compliance was substantial. As regards the words:
"such provisions of the Code as may be adjudged to be relevant",
there will be arguments as to relevancy.
The amendment also includes the words "reasonably practical". Those of us with experience in the law know that whenever the word "reasonable" is used there is frequent discussion in the courts or before a tribunal as to whether, in the circumstances, an action was reasonable.
The amendment continues:
"departure from such provision may be justified only if".
Those words "only if" are words of limitation. They limit the obligation of the tribunal. I should have thought that it would be far better if we did not include such words of limitation and we kept the matter in the broad.
I could go on about the wrangles that there will be in court as to whether or not the provision which my noble friend Lord Campbell of Alloway has proposed, supported by distinguished noble Lords, shall prevail. I believe that this is self-defeating and that we would be making a mistake if we ask another place to reconsider the matter.
Lord Ponsonby of Shulbrede: My Lords, I believe that we can all agree that compliance with the code of practice will itself be a sensitive issue. Indeed, one of the criticisms of the 1981 Act is that no such code existed so that local education authorities did not have clear guidance as to how they should operate its provisions. I believe that it is felt that the code can now be used as a vehicle to force local education authorities and schools to implement the Bill and find sufficient resources and give an excellent education to many children with special educational needs.
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We have heard from many noble and learned Lords and noble Lords about the problems with the phrase "have regard to" used in Amendment No. 14A. That is seen as being a let out for the amendment in the name of the noble Lord, Lord Campbell of Alloway. That raises a serious point which has been given considerable attention by many noble Lords.
In favour of the amendment is the ability that it will give the appeal tribunal—much stronger than would be possible under the Commons amendment, Amendment No. 14A—to investigate actions which have not been in accordance with the code of practice. The Minister raised reservations about making the tribunal less accommodating and friendly to people taking part. However, I question whether that point could not be accommodated in regulations covering tribunal procedures.
Perhaps I may comment briefly on the question addressed to me as a local councillor by the noble Baroness, Lady Carnegy. I am perfectly happy for lawyers to play their proper part in tribunals, as they do every day. In my view, as a local councillor, a lawyer's place is in touch and not on top.
As someone who is not a lawyer I listened with interest to the criticisms made by the noble and learned Lord, Lord Hailsham, of Amendment No. 14B, which relates to the interests of the child under consideration. He said that there may be other children whose interests should be considered but, under the amendment, would not be considered. I question whether that is not a common expression and whether it would be in the interests of the child itself that it should not be allowed to disrupt or harm the education of other children.
In conclusion, it is my understanding that a code of practice is never a master; it is only a guide. It is up to Parliament and this House to give the code of practice whatever status it wishes. It is my understanding from the debate so far that it is the need to justify departure from that code which will give the code itself greater force. I would argue that it will lead to a better quality of decision making if the tribunal is asked to justify its departure from that code.
For those reasons we support the amendment.
6.45 p.m.
Lord Rix: My Lords, being only too aware of the slight difference of opinion between the noble Lord, Lord Renton, and the noble Lord, Lord Campbell of Alloway, I had a wretched weekend worrying about whether I should intervene today. However, as chairman of MENCAP I felt that I must do so, especially if I can persuade the noble and learned Lord, Lord Hailsham, to change his mind, which is wishful thinking indeed.
Like many before me, I turned to the Good Book to guide me —an unusual version, the Good News Bible—and found that the Book of Proverbs had a splendid code of practice concerning my position in this short debate. Chapter 18, verse 17, notes that:
"The first man to speak in court always seems right until his opponent begins to question him".
Chapter 26, verse 17, says, ominously:

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"Getting involved in an argument that is none of your business is like going down the street and grabbing a dog by the ears".
As a non-lawyer sandwiched uncomfortably in terms of loyalties between several eminent lawyers, I am painfully conscious of the risk of verbal, though not of course physical, mauling.
Having listened to all the learned arguments with care I am inclined to favour the amendment, for one very simple reason. It seems to me to strengthen and in no way diminish the requirement that we all seek through the Bill, the regulations and the code of practice; namely, that the interests of the child are identified and given absolute priority. If the guidance in the code is, as we must all hope, good and useful guidance, there must be good reasons for any departure from it. The amendment in the names of the noble Lord, Lord Campbell, and others puts additional weight behind the code while recognising that there will be cases in which results as good or better can be secured by other means. However, I note the argument of the noble and learned Lord, Lord Hailsham, that the amendment as tabled could disadvantage children and families by not allowing sufficient flexibility to take account of special circumstances. I know that I must take that suggestion on board.
Therefore, noble and learned Lords who argue that we do not need this extra safeguard have my earnest attention. Noble Lords, whether learned or like myself unlearned, who argue for belt and braces (and I am learned on that subject) have my conditional support. I am hoping that the last words spoken on the amendment will clarify for me whether the amendment is indeed all gain but legally controversial or embodies disadvantages. If the former, that is all gain and I shall support the amendment.
Baroness Faithfull: My Lords, I rise briefly to say that I support the amendment.
Lord Addington: My Lords, I rise briefly to say that I support the amendment. I should also like to point out an aspect which has been missed in the discussion on the amendment. In my opinion, one of the great selling points of the code of practice was that it would have legal clarity and it was supposed to be user friendly. Indeed, I can remember a discussion between the noble Lord, Lord Campbell of Alloway, and the noble Baroness during which the ways in which we could make the code user friendly were debated. The idea behind the code was that people would know exactly what they could expect.
The amendment suggests that if there is any deviation from the code the reasons will be known. One of the problems for those involved in special educational needs—and I speak with personal knowledge of dyslexia and the problems associated with it—is that people are not sure what they need. Once we deal with that we shall have effectively dealt with many of the problems attached to special educational needs. Intransigent local authorities, of all shapes and sizes, all colours and creeds, with which we have been dealing, have not given the correct provision. Indeed, they have often gone out of their way to give the incorrect provision. Giving the code
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legal teeth means we know where we stand and unless one knows where one stands to start with one cannot correct a situation.
Baroness Blatch: My Lords, perhaps I may at the outset reject the charge that the Government, or indeed I as Minister at the Dispatch Box, have been inconsistent in our approach to the code. Since its introduction the Bill has stated in terms that the code will offer practical guidance.
I do not apologise for saying at the Committee stage that:
"the code will have its own special legal status".—[Official Report, 29/4/93; col. 487.]
By the provisions of the Bill, the Secretary of State will be obliged to issue a code of practical guidance. He will be obliged to lay a draft of the code before Parliament. Parliamentary approval of that draft will be subject to the affirmative procedure. All those to whom the code applies will be obliged in law to have regard to its provisions. Nonetheless, the code remains a code of guidance. These factors are, to my eyes, as a layman I admit, sufficient to give the code a distinct legal status. I therefore stand by my words.
Nor do I disown my words at col. 487, which my noble friend has sought to incorporate in his amendment. Those words were a wholly reasonable general explanation of the status of the code. I was not seeking to create, as my noble friend now seeks to create, a justiciable issue but seeking to explain how the tribunal chairman might deal with the evidence before him. It is indeed probable that, if a local education authority departs significantly from the code of practice, its action might, not be beneficial to the child and would, therefore, not be appropriate. I stress again that the tribunal will be considering whether the LEA's actions were appropriate for the child. In doing so, where relevant, as Amendment No. 14A emphasises, the tribunal will have regard to the code. But for the reasons I have given, especially our concern that the proceedings of the tribunal should be as straightforward as possible, it would not be appropriate to translate my words of general explanation to the face of this Bill, as my noble friend Lord Campbell seeks to do.
Let me briefly restate the Government's position. The code of practice will be a code of practical guidance. If Amendment No. 14B were adopted the tribunal would take on the role of policing the code. It would be side-tracked from its paramount task of considering appeals on the specific grounds set out on the face of the Bill and considering whether LEAs' decisions were appropriate for the needs of the child concerned. It would become the site of complex legal dispute. It could not be the open, parent-friendly, informal forum we intend to create.
Perhaps I may say to the noble Lord, Lord Addington, that the code of practice will have clout and will be user-friendly, if the House rejects the amendment. The noble and learned Lord, Lord Simon, was concerned that another place had overturned the amendment. He did not go on to say that it had proposed an amendment in lieu which, I

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believe, understood the anxieties underlying my noble friend's amendment. However, that is all part of the democratic process.
The point is that we considered it in this place, this place made a determination, it went to another place for consideration and in another place they took a different view. Nevertheless, they understood the underlying anxieties of my noble friend and proposed an amendment in lieu which is now before this House for consideration. My noble friend feels sufficiently strongly to return to the fray with his amendment and I believe that, rather than a criticism of the way the Bill has been handled, this is all part of the democratic process. In a moment of two we shall take a view about the amendment in lieu and my noble friend's amendment.
My noble and learned friend Lord Hailsham made a further point, one which I had not made and for which I am grateful to him. It is the exclusive reference to the child in Amendment No. 14B. I must say in defence of local authorities that I am sorry that the noble Lord, Lord Ponsonby, has taken the view that he did. When local authorities make their decision about a placement, having had regard to the code and perhaps having even departed from it, and also having had regard to the effective use of resources, they may in addition pray in aid of their case the impact of a placement on other children. That is wholly ignored in the amendment and I believe that the point was well made by my noble and learned friend. The tribunal is charged with making a judgment as to whether the provision made by a local authority is appropriate. It is my view that nothing should detract from what I believe is the prime activity of the tribunal.
The noble Lord, Lord Henderson of Brompton, asked a straight question: if the amendment is not agreed upon today and is not put into the Bill, could the tribunal develop its own code of practice. First, the tribunal will have its own rules and procedures, but it will not develop a code of practice. The code of practice will come before the House for approval. It will again come before the House if we wish to alter it, but the tribunal will have to have regard, where relevant, to the code issued under this Bill. As it does so, case law may develop which may refer to the role of the code. It is always possible that a decision taken by a local education authority may be inappropriate and not consistent with the needs of the child. It may be that a contributory factor to the authority's coming to a poor decision is that it departed from the code. That would be taken into account by the tribunal and would be judged accordingly.
It is equally possible that the tribunal, charged with the prime duty of considering the needs of the child, might come to the view that the provision made by the local authority was entirely consistent with the needs of the child, but that it had had regard to the code of practice and had departed from it. The adherence to the code of practice should not become a preoccupation of the tribunal in any sense other than helping it to come to a view on whether the provision for the child was correct.
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We have debated the matter at length and I want my noble friend to understand what I put to him in writing. I believe that there is enormous common ground between us on all sides of the House. It is a narrow point that divides us, but a point of substance. What unites the House is that all children with special educational needs shall be properly provided for. That is the mission of the tribunal. I believe that the amendment in lieu supports that, but Amendment No. 14B flies in the face of that. I ask the House to reject the amendment.
Lord Campbell of Alloway: My Lords, I wish to thank all noble Lords who have spoken in the debate, as well as the Minister. First, I wish to deal with the rather mischievous demolition job undertaken by my noble and learned friend Lord Hailsham. With the utmost respect to him, I know he enjoyed it very much, but I did not at the time until I realised that it was a total misconception. If it had not been, the Government would have thought of it long ago.
The reason why it was a total misconception is that the position of other children was taken into account when I drafted the amendment. I act in the courts on these matters and fully appreciate that the position of other children is involved when we are dealing with one child. That is one of the reasons why there is the first qualification:
"If in the opinion of the Tribunal substantial compliance … as may be adjudged to be relevant was reasonably practical in the circumstances".
If read fairly, that wholly subsumes the position of the other children. My noble and learned friend will say, "No, it does not", but he is in a sedentary position and I shall not continue to argue the matter.
The next point I wish to take is what I call the fine print contribution of a distinguished lawyer, my noble friend Lord Renton. He said that "only if" are the words of limitation. Yes, they were intended as such, but subject to the point that I have already made. Then the noble Lord dangles before one the spectre of wrangles in court. Anybody can say that. There are always wrangles in court. Why this matter should cause any more wrangles in court than any other, I do not know. The noble Lord will say that he does not agree. But it is my turn to say that I do not agree.
Next, I have to satisfy the noble Lord, Lord Rix, that there is no disadvantage. I hope I have done that by dealing with the demolition job, which itself collapsed. Then, I have to satisfy the noble Lord, Lord Henderson, that we cannot somehow get this by the back door. Well, we cannot.
Finally, if one spends a bit of time in the Bishops' Bar, it is always well spent. The noble and learned Lord, Lord Ackner, and I used to travel the western circuit together, after the war when we were young. We have remained on tolerable terms of friendship ever since, although he is a judge and I am not. He is a good lawyer, so I asked him whether he would mind looking the matter up, totally impartially. I had cited these cases—I did not give them to him—in the debate that I initiated in January 1986 on codes of practice. I did not give him that information, but he used one of the same authorities as I was using. He said that "shall have regard to" has no statutory force or effect.

1021
One can consider and one can disregard. The amendment that I propose is the only method of producing a satisfactory status with any form of safeguard. There it is. It is a disagreement which will continue as a disagreement. I opened this matter saying that my noble friend the Minister and I both agreed that it could only be resolved by your Lordships. I beg to move the amendment.
7.2 p.m.
On Question, Whether Amendment No. 14B, as an amendment to Commons Amendment No. 14A, shall be agreed to?
Their Lordships divided: Contents, 88; Not-Contents, 118.

Division No. 3

CONTENTS

Ackner, L.

Lockwood, B.

Addington, L.

Longford, E.

Airedale, L.

Mclntosh of Haringey, L.

Archer of Sandwell, L.

Mackie of Benshie, L.

Ardwick, L.

Mason of Barnsley, L.

Beaumont of Whitley, L.

Merlyn-Rees, L.

Blackstonc, B.

Milverton, L.

Bonham-Carter, L.

Molloy, L.

Boston of Faversham, L.

Monk Bretton, L.

Brimelow, L.

Napier and Ettrick, L.

Campbell of Alloway, L. [Teller.]

Nathan, L.

Nicol, B.

Carmichael of Kelvingrove, L.

Ogmore, L.

Carter, L.

Park of Monmouth, B.

Cledwyn of Penrhos, L.

Peston, L.

Clinton-Davis, L.

Plant of Highfield, L.

Dahrendorf, L.

Ponsonby of Shulbrede, L.

Darcy (de Knayth), B.

Prys-Davies, L.

David, B.

Rea, L.

Dean of Beswick, L.

Redesdale, L.

Desai, L.

Renwick, L.

Donoughue, L.

Richard, L.

Dormand of Easington, L.

Rix, L.

Ennals, L.

Rochester, L.

Erroll, E.

Russell, E.

Faithfull, B.

Russell of Liverpool, L.

Falkland, V.

Saltoun of Abernethy, Ly.

Gilmour of Craigmillar, L.

Seear, B.

Graham of Edmonton, L.

Serota, B.

Greene of Harrow Weald, L.

Shackleton, L.

Gregson, L.

Shepherd, L.

Hamwee, B.

Simon of Glaisdale, L.

Harris of Greenwich, L.

Stedman, B.

Harrowby, E.

Stoddart of Swindon, L.

Henderson of Brompton, L.

Taylor of Blackburn, L.

Hilton of Eggardon, B.

Thomson of Monifieth, L.

Hollick, L.

Tordoff, L.

Hollis of Heigham, B.

Turner of Camden, B.

Howell, L.

Varley, L.

Hughes, L.

Warnock, B. [Teller.]

Jay of Paddington, B.

White, B.

Jeger, B.

Wigoder, L.

Judd, L.

Williams of Elvel, L.

Kennet, L.

Winchilsea and Nottingham, E.

Kirkhill, L.

NOT-CONTENTS

Abercorn, D.

Bruntisfield, L.

Allenby of Megiddo, V.

Butterworth, L.

Arran, E.

Caithness, E.

Ashbourne, L.

Carnegy of Lour, B.

Astor, V.

Carnock, L.

Auckland, L.

Chalker of Wallasey, B.

Blatch, B.

Chelmsford, V.

Blyth, L.

Chilver, L.

Borthwick, L.

Clark of Kempston, L.

Boyd-Carpenter, L.

Colwyn, L.

Braine of Wheatley, L.

Cranborne, V.

Brougham and Vaux, L.

Crathorne, L.

1022

Crickhowell, L.

Mersey, V.

Cross, V.

Mountevans. L.

Cumberlege, B.

Mowbray and Stourton, L.

Davidson, V.

Munster, E.

Denham, L.

Murton of Lindisfarne, L.

Denton of Wakefield, B.

Nelson, E.

Downshire, M.

Norrie, L.

Elles, B.

O'Cathain, B.

Elliot of Harwood, B.

Orr-Ewing, L.

Elliott of Morpeth, L.

Oxfuird, V.

Elton, L.

Pearson of Rannoch, L.

Ferrers, E.

Pender, L.

Finsberg, L.

Perry of Southwark, B.

Flather, B.

Pike, B.

Fraser of Carmyllie, L.

Plumb, L.

Gisborough, L.

Prior, L.

Goold, L.

Quinton, L.

Goschen, V.

Rankeillour, L.

Grantchester, L.

Reay, L.

Gray of Contin, L.

Rennell, L.

Greenway, L.

Renton, L.

Haddington, E.

Rodger of Earlsferry, L.

Hailsham of Saint Marylebone, L.

Romney, E.

St. Davids, V.

Hanson, L.

Sanderson of Bowden, L.

Harmar-Nicholls, L.

Seccombe, B.

Harmsworth, L.

Sharples, B.

Hayhoe, L.

Skelmersdale, L.

Henley, L.

Skidelsky, L.

Hesketh, L. [Teller.]

Soulsby of Swaffham Prior, L.

Hives, L.

Stanley of Alderley, L.

Holderness, L.

Stewartby, L

Hooper, B.

Strange, B.

Hothfield, L.

Strathclyde, L.

Howe, E.

Strathmore and Kinghorne, E. [Teller.]

Hylton-Foster, B.

Jenkin of Roding, L.

Sudeley, L.

Kimball, L.

Swansea, L.

Lane of Horsell, L.

Thomas of Gwydir, L.

Lauderdale, E.

Trumpington, B.

Leigh, L.

Ullswater, V.

Long, V.

Vivian, L.

McColl of Dulwich, L.

Wakeham, L. [Lord Privy Seal.]

Mackay of Ardbrecknish, L.

Mackay of Clashfern, L. [Lord Chancellor.]

Whitelaw, V.

Windlesharn, L.

Mackintosh of Halifax, V.

Wise, L.

Macleod of Borve, B.

Wynford, L.

Marlesford, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
7.10 p.m.
The Lord Chancellor: My Lords, the Question is that this House do not insist on their Amendment No.14 to which the Commons have disagreed, but do agree with the Commons in their Amendment No. 14A in lieu thereof.
On Question, Motion agreed to.
LORDS AMENDMENT
15 Clause 247, page 148, line 6, at end insert:
("(8) In this section "direction" means a direction contained in an order made by the Secretary of State.")
The Commons agreed to this amendment with the following amendment—
15A Line 3, after 'State' add 'but section 63(1) of this Act shall not apply to the power of the Secretary of State to make orders under this section.'
Baroness Blatch: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 15A as an amendment to Lords Amendment No. 15.

1023
Amendment No. 15A ensures that directions made by my right honourable friend the Secretary of State in respect of sponsor governors at aided schools are not to be made by statutory instrument. These directions are essentially administrative acts relating to individual schools and in common with other such directions it would not be appropriate for them to take the form of statutory instruments. I beg to move.
Moved, That the House do agree with the Commons in their Amendment No. 15A as an amendment to Lords Amendment No. 15.—(Baroness Blatch.)
On Question, Motion agreed to.
LORDS AMENDMENT
16 Clause 251, page 151, line 37, at end insert:
("() in subsection (6) after "with respect to" there is inserted—
"(aa) the planned financial provision in that year specified in the statement prepared by the authority under subsection (3) above", and
() for subsection (8) there is substituted—
"(8) The authority shall furnish—

(a) the governing body of each school required to be covered by the scheme in any financial year, and

(b) the governing bodies of such grant-maintained schools in the authority's area and grant-maintained special schools mentioned in section 34(4) (c) of this Act as may be prescribed,

with a copy of each statement prepared by the authority under this section in relation to that year or, in such circumstances as may be prescribed, with such part or parts of it as may be prescribed."
() After that section there is inserted—
"Certification of statements by Audit Commission.
42A.—(1) This section applies where in the case of any local education authority the authority's financial provision for county and voluntary schools is subject to regulation by a scheme.
(2) Any such local education authority shall, if directed to do so by the Secretary of State, require the Audit Commission to make arrangements in accordance with section 29(1) (d) of the Local Government Finance Act 1982 for certifying such statement or statements prepared by the authority under section 42 of this Act as may be specified in the directions; and any statement under that section shall be treated for the purposes of section 29(1) (d) of that Act as a return by the authority.
(3) The arrangements made by the Audit Commission in pursuance of subsection (2) above shall include arrangements for sending a copy of any such statement or statements as so certified to the Secretary of State.
(4) Directions given under subsection (2) above may relate to any local education authority or to local education authorities generally or to any class or description of such authorities." ")
The Commons agreed to this amendment with the following amendment—
16A Line 24, after 'Commission' insert 'for Local Authorities and the National Health Service in England and Wales'.
Baroness Blatch: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 16A to Lords Amendment No. 16. This is a further technical amendment which simply inserts the full title of the Audit Commission in Amendment No. 16. I beg to move.
1024
Moved, That the House do agree with the Commons in their Amendment No. 16A to Lords Amendment No. 16.— (Baroness Blatch.)
On Question, Motion agreed to.

Criminal Justice Bill [H.L.]
7.13 p.m.
The Minister of State, Home Office (Earl Ferrers): My Lords, I beg to move that the Commons amendments to the Criminal Justice Bill be now considered.
It might be helpful if I were to say one or two words by way of introduction. The Marshalled List of amendments to the Criminal Justice Bill may strike your Lordships as a pretty formidable tome of amendments. So it strikes me.
Before we come to the consideration of the details of individual amendments, I thought that it would be only courteous to your Lordships if I were to give some slight explanation of the substantial quantity of amendments which are now in front of your Lordships for consideration. The first thing to point out is that the changes which are made to the Bill as it originally left your Lordships' House do not significantly alter its aims or intentions. In fact, they ensure that those aims and intentions are properly fulfilled.
The amendments to Part II, which relates to drugs, and to Part III, which relates to general crime, are in the main technical amendments to clarify and improve the clauses concerned. I hope that your Lordships will welcome that.
The new Part IIIA, which deals with terrorist finances, does not introduce new concepts. What it does is to ensure that the law on the laundering and confiscation of terrorist funds is in line with the law on the laundering and confiscation of the proceeds of drug trafficking and other crimes.
The amendments to the insider dealing provisions, which my noble friend Lord Caithness will address, came about as a result of further extensive consultation with those who are primarily affected. I hope that your Lordships will welcome the changes as helpful improvements.
As your Lordships will know, the opportunity was taken in the Bill while it was in another place to put right difficulties which had arisen over the implementation of certain parts of the Criminal Justice Act 1991. These appear principally in Amendments Nos. 143 and 144, which will appear before Clause 42 of the Bill. There has been a great deal of concern over the 1991 Act and we shall come to the amendments which affect that in due course.
However, the Government thought it correct to take the opportunity of this Bill to amend the fining and sentencing provisions of the Criminal Justice Act 1991.
Moved, That the Commons amendments be now considered.—(Earl Ferrers.)
Lord McIntosh of Haringey: My Lords, I rise to thank the Minister for the introduction that he has given to the consideration of the Commons amendments. As the House will know, it is very

1025
difficult to pin any more general statement on the specific amendments that are before us. The Minister said that the 69 pages of amendments which have come from another place do not affect the scope of the Bill. I find that very difficult to accept in the light of the fact that the Long Title is to be amended by no fewer than seven Commons amendments (Nos. 201 to 207).
The Minister will be well aware that when it became clear that the Government intended to use the consideration of the Bill in Committee in the other place in the way that they have done—in other words, substantially to alter the scope as well as the detail of the Bill—my honourable friends saw it as an opportunity to attempt to extend the scope of the Bill very considerably from that which came before your Lordships at the end of last year. In particular, they were concerned that a criminal justice Bill with the kind of scope that is now envisaged could have covered much more effectively issues of crime prevention, delay in the courts, juvenile crime, consistency in sentencing—particularly I draw attention to the urgent need for a sentencing council and that matter will come up in the consideration of amendments today—help to victims of crime, consideration of the mental state of the defendant and better pre-sentencing reports. There are many other issues which could have been included in the Bill once it had become clear that the Government would not restrict their consideration to the very limited matters which were originally in the Long Title to the Bill.
Quite apart from the consideration of the specific amendments, we have to say that since the Government were flexible in other ways and performed a U-turn about a number of issues in the 1991 Criminal Justice Act, the opportunity could and should have been taken to deal with a number of other matters which are still defective in our criminal justice system and which it would have been entirely appropriate and quicker to have dealt with by accepting the amendments put down by my honourable friends in another place. Therefore it is with a sense of disappointment that I repeat my thanks to the Minister for his introduction to these amendments.
Lord Harris of Greenwich: My Lords, I want to say only a few words about this Bill. There are 69 pages of Commons amendments to a Bill of fewer than 50 clauses. That is the first point.
Secondly, as the noble Earl indicated, slightly bleakly if I may say so, we are invited today to become involved in a major re-writing of the 1991 Criminal Justice Act. The clauses to which I refer have in fact been drastically changed and the decision to change them was taken only seven months after the 1991 Act came into force in respect of those issues: one being the sentencing powers of the court and the other matter relating to fines.
I do not feel that this is a sensible way to legislate. It is quite extraordinary that, with the ink on the statute book still wet, we have been asked to change radically what Parliament originally agreed.
Thirdly, the issues involving insider dealing, with which the Treasury is primarily involved, are worthy of some comment. As noble Lords will know, no
1026
proper consultative arrangements were made before the Bill was published. Therefore the consultations have taken place since the publication of the Bill; hence, many of the amendments.
I should like to draw the attention of the noble Earl to the report of the Hansard Society Commission on the legislative process. His noble friend Lord Rippon was the chairman, the noble and learned Lord, Lord Browne-Wilkinson, was one of the members and a former Permanent Secretary to the Home Office was a third member. In the summary of conclusions, under "Consultation", the report reads:
"The overwhelming impression from the evidence is that many of those most directly affected are deeply dissatisfied with the extent, nature, timing and conduct of consultation on Bills as at present practised … the Government must heed this criticism and seek to meet it".
The next paragraphs in which the noble Earl will be interested are numbered 6 and 7. Paragraph 6 states:
"Although some Bills are inevitably required in a hurry, getting a Bill right should always have priority over passing it quickly, and we recommend that the Government should publicly endorse this policy".
Paragraph 7 states:
"The Government should make every effort to get Bills in a form fit for enactment, without major alteration, before they are presented to Parliament; in the Government's review of the legislative process, this should be a first and overriding objective".
Those principles seem to me highly desirable. I hope in the future that they may be put into practice.
Lord Windlesham: My Lords, I add my thanks to the noble Earl for affording this House the opportunity to make some general comments on the amendments before we discuss them in detail.
The legislative progress on this measure has been unorthodox, to say the least. The Bill left the House in December of last year with 40 clauses. It was before the Commons, apparently a Bill of low priority, for several months until the then Home Secretary…Kenneth Clarke…decided in the most remarkable turnabout (because of criticism from judicial sources and the magistracy, magnified by the tabloid press) to amend and in some cases to repeal provisions of the Criminal Justice Act 1991 which had been under consideration for a period of two or three years and intensively discussed by both Houses of Parliament:. He decided to do that in an immediate way made possible, it turned out, by the view taken by the House authorities in another place differing from the view taken by the authorities in this House, that the Bill, which hitherto had been confined to financial offences and the proceeds of crime—drug trafficking, insider dealing, money laundering and so forth…could be expanded in this dramatic way to alter the powers of the courts and the treatment of offenders.
Tonight the 207 government amendments are before us for a short period of time. if it is necessary to do so the House will return tomorrow for further consideration of those Commons amendments. The high probability is that they will then go on the statute book with the minimum of consideration and effectively no opportunity for this House to exercise its revising role.
I endorse what was said by the noble Lord, Lord Harris, in reading the extract from the Hansard

1027
Society Commission report, which is reflected in every classic text referring to the making of statute law. I shall certainly do nothing to make the Government's task more difficult this evening or tomorrow. But it is appropriate to put on record at the outset of this debate our reservations about the way in which the proposals have been put before the House.
Earl Ferrers: My Lords, I can understand your Lordships' concern that we are being asked to consider a number of amendments to the Bill which did not come into the frame when the Bill was before your Lordships. It does not surprise me that the noble Lord, Lord McIntosh, described it as a "U-turn"; the noble Lord, Lord Harris, said that after seven months we were changing the way that we had proposed to proceed and that did not seem to him to be a sensible way to legislate. My noble friend Lord Windlesham said that it was a remarkable "turnabout".
The Criminal Justice Act was in practice and in operation and was an Act that we felt was correct in the circumstances of the day. For example, unit fines was a way of making sure that there was uniformity in sentencing throughout the country. For better or worse, for reasons which your Lordships will understand, that created a furore both from the public and the magistrates in regard to the sentences. We felt, being a listening, caring government, that we should take countenance of what was being said and take the opportunity of this Bill to alter the situation.
The difficulty is that if one takes no notice of the row that goes on, everyone says that the Government are obdurate and do not take notice. If one takes notice and tries to address the matter one is accused of vacillating, making U-turns and no one knows where they are. I accept that that is a criticism that your Lordships wallow in making. I understand and do not despise that. Were I in a similar position, I should probably take pleasure in doing the same. The fact is that throughout the country there was concern about sentencing and the Government took the opportunity of this Bill to alter the position as soon as possible.
The noble Lord, Lord McIntosh. was concerned that that did not happen within your Lordships' House. Your Lordships may recall that the authorities of this House took a relatively narrow view of the scope of the Bill when it was before us last year. The view taken by the authorities in another place was somewhat different. The Government decided therefore to take the opportunity afforded by that view to respond in a positive way to pressure for amendment to be made to the fining and sentencing provisions of the Criminal Justice Act 1991.
Lord McIntosh of Haringey: My Lords, it does not fall within appropriate comment by a Minister of the Crown to refer to the view taken by the authorities, either of this House or another place. If the Government or any one else had wished to introduce amèndments to extend the Long Title of the Bill in your Lordships' House, as they did in the Commons, I do not believe that the authorities of the House
1028
would have been in a position to deny them that opportunity. It is a political decision, not an administrative one.
Earl Ferrers: My Lords, the noble Lord is not quite right. Different procedures operate within the two Houses. It is not a question of altering the Long Title of the Bill; it is a question of amendments which come within the ambit of the Bill. We did not make the alteration in your Lordships' House for the reasons which I gave. When it was in another place the opportunity was presented to do so and the Government felt that it was appropriate to respond to the anxieties being expressed by incorporating the adjustments into the Bill when it was in another place. That was done and it is now for your Lordships to approve those adjustments.
I do not pretend that it is anything but an unusual procedure. But in the circumstances I hope that your Lordships will agree that it is acceptable and reasonable.
On Question, Motion agreed to.
COMMONS AMENDMENTS
[The page and line refer to [ Bill 104 ] as first printed in the Commons. ]
1 Clause 2, page 2, line 39, leave out from '(1)' to 'For' in line 41.
2 Page 3, line 1, leave out subsection (3) and insert:
'(2) For the purpose of determining whether or not a particular event is a relevant event in relation to a Group A offence, any question as to where it occurred is to be disregarded.
(3) A person may be guilty of a Group A offence if any of the events which are relevant events in relation to the offence occurred in England and Wales.'.
Earl Ferrers: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 1 and 2. These are simply drafting amendments, which are intended to make the effect of Clause 2 more readily apparent. It became clear during the Committee stage in another place that not everyone understood it, although as far as I recall this was not a handicap which your Lordships experienced. These amendments will not add to the Bill or change the meaning of the clause. I beg to move.
Moved, That the House do agree with the Commons in their Amendments Nos. I and 2.—(Earl Ferrers.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
3 Clause 8, page 6, line 44, leave out '("the specified period")'.
4 Page 7, line 4, after 'period' insert 'under subsection (1) above'.
5 Page 7, line 6, leave out 'when taken'.
6 Page 7, line 7, leave out 'has' and insert 'have'.
7 Page 7, line 11, leave out `on which the defendant was convicted' and insert 'of conviction'.
8 Page 7, line 17, after `above' insert 'for such period as it may specify'.
9 Page 7, line 26, after '(6)' insert 'Unless the court is satisfied that there are exceptional circumstances,'.
10 Page 8, line 6, leave out paragraph (b).
11 Page 8, line 12, at end insert:
'(11) In this section "the date of conviction" means—

(a) the date on which the defendant was convicted, or

(b) where he appeared to be sentenced in respect of more than one conviction, and those convictions were not all on the same date, the date of the latest of those convictions.'.

12 Clause 10, page 8, line 36, after 'Act', insert 'or applies to the court under section 4A, 5A, 5B or 5C of this Act'.
13 Page 9, line 29, leave out 'the court may direct' and insert 'may be prescribed by rules of court or as the court may direct'.
14 Page 9, line 35, after 'Act' insert 'or has applied to the court under section 5A, 5B or 5C of this Act'.
15 Page 9, line 38, leave out 'that section' and insert 'section 1'.
16 Page 10, line 14, leave out 'the court may direct' and insert 'may be prescribed by rules of court or as the court may direct'.
17 Clause 11, page 10, line 25, leave out from 'provision' to end of line 31 and insert '—

(a) for the giving of notice of any application under this section; and

(b) for any person appearing to the court to be likely to be affected by any exercise of its powers under this section to be given an opportunity to make representations to the court.'.

18 Clause 12, page 10, line 32, leave out 'section' and insert 'sections'.
19 Page 10, line 34, leave out from beginning to end of line 19 on page 11 and insert:
"'Reconsideration of case where court has not proceeded under section 1.
5A.—(1) This section applies where the defendant has appeared before the Crown Court to be sentenced in respect of one or more drug trafficking offences but the court has not proceeded under section 1 of this Act.
(2) If the prosecutor has evidence—

(a) which was not available to him when the defendant appeared to be sentenced (and accordingly was not considered by the court), but

(b) which the prosecutor believes would have led the court to determine that the defendant had benefited from drug trafficking if—

(i) the prosecutor had asked the court to proceed under section 1 of this Act, and

(ii) the evidence had been considered by the court,

he may apply to the Crown Court for it to consider the evidence.
(3) The court shall proceed under section 1 of this Act if, having considered the evidence, it is satisfied that it is appropriate to do so.
(4) In considering whether it is appropriate to proceed under section 1, the court shall have regard to all the circumstances of the case.
(5) Where, having decided to proceed under section 1, the court proposes to make a confiscation order against the defendant, it shall order the payment of such amount as it thinks just in all the circumstances of the case.
(6) In considering the circumstances of any case the court shall have regard, in particular, to the amount of any fine imposed on the defendant in respect of the offence or offences in question.
(7) Where the court is proceeding under section 1 of this Act, by virtue of this section, subsection (4) of that section shall have effect as if the words "before sentencing or otherwise dealing with him in respect of the offence or, as the case may be, any of the offences concerned" were omitted.
(8) The court may take into account any payment or other reward received by the defendant on or after the date of conviction, but only if the prosecutor shows that it was received by the defendant in connection with drug trafficking carried on by the defendant or another on or before that date.
(9) In considering any evidence under this section which relates to any payment or reward to which subsection (8) above applies, the court shall not make the assumptions which would otherwise be required by section 2 of this Act.
(10) No application shall be entertained by the court under this section if it is made after the end of the period of six years beginning with the date of conviction.
(11) In this section "the date of conviction" means—

(a) the date on which the defendant was convicted, or

(b) where he appeared to be sentenced in respect of more than one conviction, and those convictions were not all on the same date, the date of the latest of those convictions.

Re-assessment of whether defendant has benefited from drug trafficking.
5B.—(I) This section applies where the court has made a determination ("the section 1(2) determination") under section 1(2) of this Act that the defendant has not benefited from drug trafficking.
(2) If the prosecutor has evidence—

(a) which was not considered by the court in making the section 1(2) determination, but

(b) which the prosecutor believes would have led the court to determine that the defendant had benefited from drug trafficking if it had been considered by the court,

he may apply to the Crown Court for it to consider that evidence.
(3) If, having considered the evidence, the court is satisfied that it would have determined that the defendant had benefited from drug trafficking if that evidence had been available to it, the court—

(a) shall—

(i) make a fresh determination under subsection (2) of section 1 of this Act; and

(ii) make a determination under subsection (4) of that section of the amount to be recovered by virtue of that section; and

(b) may make an order under that section.

(4) Where the court is proceeding under section 1 of this Act, by virtue of this section, subsection (4) of that section shall have effect as if the words "before sentencing or otherwise dealing with him in respect of the offence or, as the case may be, any of the offences concerned" were omitted.
(5) The court may take into account any payment or other reward received by the defendant on or after the date of the section 1(2) determination, but only if the prosecutor shows that it was received by the defendant in connection with drug trafficking carried on by the defendant or another on or before that date.
(6) In considering any evidence under this section which relates to any payment or reward to which subsection (5) above applies, the court shall not make the assumptions which would otherwise be required by section 2 of this Act.
(7) Where the High Court—

(a) has been asked to proceed under section 4A of this Act in relation to a defendant who has absconded, but

1031

(b) has decided not to make a confiscation order against him,

this section shall not apply at any time while he remains an absconder.
(8) No application shall be entertained by the court under this section if it is made after the end of the period of six years beginning with—

(a) the date on which the defendant was convicted; or

(b) where he appeared to be sentenced in respect of more than one conviction, and those convictions were not all on the same date, the date of the latest of those convictions.

Revised assessment of proceeds of drug trafficking.
5C.—(1) This section applies where the court has made a determination under section 1(4) of this Act of the amount to be recovered in a particular case by virtue of that section ("the current section 1(4) determination").
(2) Where the prosecutor is of the opinion that the real value of the defendant's proceeds of drug trafficking was greater than their assessed value, the prosecutor may apply to the Crown Court for the evidence on which the prosecutor has formed his opinion to be considered by the court.
(3) In subsection (2) above—
"assessed value" means the value of the defendant's proceeds of drug trafficking as assessed by the court under section 4(1) of this Act; and
"real value" means the value of the defendant's proceeds of drug trafficking which took place—

(a) in the period by reference to which the current section 1(4) determination was made; or

(b) in any earlier period.

(4) If, having considered the evidence, the court is satisfied that the real value of the defendant's proceeds of drug trafficking is greater than their assessed value (whether because the real value was higher at the time of the current section 1(4) determination than was thought or because the value of the proceeds in question has subsequently increased), the court shall make a fresh determination under subsection (4) of section 1 of this Act of the amount to be recovered by virtue of that section.
(5) Where the court is proceeding under section 1 of this Act, by virtue of this section, subsection (4) of that section shall have effect as if the words "before sentencing or otherwise dealing with him in respect of the offence or, as the case may be, any of the offences concerned" were omitted.
(6) Any determination under section 1(4) of this Act by virtue of this section shall be by reference to the amount that might be realised at the time when the determination is made.
(7) For any determination under section 1(4) of this Act by virtue of this section, section 2(5) of this Act shall not apply in relation to any of the defendant's proceeds of drug trafficking taken into account in respect of the current section 1(4) determination.
(8) In relation to any such determination—

(a) sections 3(4) (a), 4(2) and 5(7) of this Act shall have effect as if for "confiscation order" there were substituted "determination";

(b) section 4(3) of this Act shall have effect as if for "confiscation order is made" there were substituted "determination is made"; and

(c) section 5(3) of this Act shall have effect as if for "a confiscation order is made against the defendant" there were substituted "of the determination".

(9) The court may take into account any payment or other reward received by the defendant on or after the date of the current section 1(4) determination, but only if the prosecutor shows that it was received by the defendant in connection with drug trafficking carried on by the defendant or another on or before that date.
(10) In considering any evidence under this section which relates to any payment or reward to which subsection (9) above applies, the court shall not make the assumptions which would otherwise be required by section 2 of this Act.
(11) If, as a result of making the fresh determination required by subsection (4) above, the amount to be recovered exceeds the amount set by the current section 1(4) determination, the court may substitute for the amount to be recovered under the confiscation order which was made by reference to the current section 1(4) determination such greater amount as it thinks just in all the circumstances of the case.
(12) Where the court varies a confiscation order under subsection (11) above it shall substitute for the term of imprisonment or of detention fixed under section 31(2) of the Powers of Criminal Courts Act 1973 in respect of the amount to be recovered under the order a longer term determined in accordance with that section (as it has effect by virtue of section 6 of this Act) in respect of the greater amount substituted under subsection (11) above.
(13) Subsection (12) above shall apply only if the effect of the substitution is to increase the maximum period applicable in relation to the order under section 31(3A) of the Act of 1973.
(14) Where a confiscation order has been made in relation to any defendant by virtue of section 4A of this Act, this section shall not apply at any time while he is an absconder.
(15) No application shall be entertained by the court under this section if it is made after the end of the period of six years beginning with—

(a) the date on which the defendant was convicted; or

(b) where he appeared to be sentenced in respect of more than one conviction, and those convictions were not all on the same date, the date of the latest of those convictions."'.

20 Clause 13, page 11, line 28, leave out subsection (2) and insert:
'(2) Section 7 of the Act of 1986 (cases in which restraint orders and charging orders may be made) shall be amended as set out in subsections (3) to (5).
(3) The following subsection shall be substituted for subsection (1)—
"(1) The powers conferred on the High Court by sections 8(1) and 9(1) of this Act are exercisable where—

(a) proceedings have been instituted in England and Wales against the defendant for a drug trafficking offence or an application has been made by the prosecutor in respect of the defendant under section 16 of the Criminal Justice (International Co-operation) Act 1990 (increase in realisable property) or section 4A, 5A, 5B or 5C of this Act,

(b) the proceedings have not, or the application has not, been concluded, and

(c) the court is satisfied that there is reasonable cause to believe—

(i) in the case of an application under section 5C of this Act or section 16 of the Act of 1990, that the court will be satisfied as mentioned in section 5C(4) of this Act or, as the case may be, section 16(2) of the Act of 1990, or

(ii) in any other case, that the defendant has benefited from drug trafficking.".

(4) The following subsection shall be substituted for subsection (2)—
"(2) Those powers are also exercisable where—

(a) the court is satisfied that, whether by the laying of an information or otherwise, a person is to be charged with a drug trafficking offence or that an application of a kind mentioned in subsection (1) (a) above is to be made in respect of the defendant, and

(b) the court is also satisfied as mentioned in subsection (1) (c) above.".

(5) The following subsections shall be added at the end—
"(5) Where the court has made an order under section 8(1) or 9(1) of this Act in relation to a proposed application by virtue of subsection (2) above, the court shall discharge the order if the application is not made within such time as the court considers reasonable.
(6) The court shall not exercise powers under section 8(1) or 9(1) of this Act, by virtue of subsection (1) above, if it is satisfied that—

(a) there has been undue delay in continuing the proceedings or application in question; or

(b) the prosecutor does not intend to proceed.".

(6) In section 8 of the Act of 1986 (restraint orders), the following subsection shall be substituted for subsection (5)—
"(5) A restraint order—

(a) may be discharged or varied in relation to any property, and

(b) shall be discharged on the conclusion of the proceedings or of the application in question.".

(7) In section 9 of the Act of 1986 (charging orders), the following subsection shall be substituted for subsection (7)—
"(7) In relation to a charging order, the court—

(a) may make an order discharging or varying it, and

(b) shall make an order discharging it—

(i) on the conclusion of the proceedings or of the application in question, or

(ii) on payment into court of the amount payment of which is secured by the charge.".

(8) In section 11 of the Act of 1986 (realisation of property), the following subsection shall be substituted for subsection (1)—
"(1) Where a confiscation order—

(a) has been made under this Act,

(b) is not satisfied, and

(c) is not subject to appeal,

the High Court or a county court may, on an application by the prosecutor, exercise the powers conferred by subsections (2) to (6) below.".
(9) In section 15 of the Act of 1986 (bankruptcy of defendant), the following shall be substituted for paragraphs (a) and (b) of subsection (6)—
"(a) no order shall be made under section 339 or 423 of that Act (avoidance of certain transactions) in respect of the making of the gift at any time when—

(i) proceedings for a drug trafficking offence have been instituted against him and have not been concluded;

(ii) an application has been made in respect of the defendant under section 4A, 5A, 5B or 5C of this Act or section 16 of the Criminal Justice (International Co-operation) Act 1990 and has not been concluded; or

(iii) property of the person to whom the gift was made is subject to a restraint order or charging order; and

(b) any order made under section 339 or 423 after the conclusion of the proceedings or of the application shall take into account any realisation under this Act of property held by the person to whom the gift was made.".
(10) In section 16 of the Act of 1986 (sequestration in Scotland), the following shall be substituted for paragraphs (a) and (b) of subsection (6)—
"(a) no decree shall be granted under section 34 or 36 of that Act (gratuitous alienations and unfair preferences) in respect of the making of the gift at any time when—

(i) proceedings for a drug trafficking offence have been instituted against him and have not been concluded;

(ii) an application has been made in respect of the defendant under section 4A, 5A, 5B or 5C of this Act or section 16 of the Criminal Justice (International Co-operation) Act 1990 and has not been concluded; or

(iii) property of the person to whom the gift was made is subject to a restraint order or charging order; and

(b) any decree made under section 34 or 36 after the conclusion of the proceedings or of the application shall take into account any realisation under this Act of property held by a person to whom the gift was made.".
(11) In section 38 of the Act of 1986 (interpretation), the following subsections shall be substituted for subsection (12)—
"(12) Proceedings for a drug trafficking offence are concluded—

(a) when the defendant is acquitted on all counts;

(b) if he is convicted on one or more counts, but the court decides not to make a confiscation order against him, when it makes that decision; or

(c) if a confiscation order is made against him in those proceedings, when the order is satisfied.

(12A) An application under section 4A, 5A or 5B of this Act is concluded—

(a) if the court decides not to make a confiscation order against the defendant, when it makes that decision; or

(b) if a confiscation order is made against him as a result of that application, when the order is satisfied.

(12B) An application under section 16 of the Criminal Justice (International Co-operation) Act 1990 (increase in realisable property) or section 5C of this Act is concluded—

(a) if the court decides not to vary the confiscation order in question, when it makes that decision; or

(b) if the court varies the confiscation order as a result of the application, when the order is satisfied.

(12C) For the purposes of this Act, a confiscation order is satisfied when no amount is due under it.
(12D) For the purposes of sections 15 and 16 of this Act, a confiscation order is also satisfied when the defendant in respect of whom it was made has served a term of imprisonment or detention in default of payment of the amount due under the order.".'.
21 Clause 14, page 11, line 37, leave out 'section' and insert 'sections'.
22 Page 11, line 38, after 'Act' insert '1986'.
23 Page 12, line 16, leave out 'section 2(2)' and insert 'sections 2(2) and 3(1D), (2) and (3)'.
24 Page 12, leave out lines 21 to 28.
25 Page 12, line 33, at end insert:
'Effect of conviction where High Court has acted under section 4A.
4B.—(1) Where the High Court has made a confiscation order by virtue of section 4A of this Act, the Crown Court shall, in respect of the offence or any of the offences concerned—

(a) take account of the order before—

(i) imposing any fine on him, or

(ii) making any order involving any payment by him, or

(iii) making any order under section 27 of the Misuse of Drugs Act 1971 (forfeiture orders) or section 43 of the Powers of Criminal Courts Act 1973 (deprivation orders), and

(b) subject to paragraph (a) above, leave the order out of account in determining the appropriate sentence or other manner of dealing with the defendant.

(2) Where the High Court has made a confiscation order by virtue of section 4A of this Act and the defendant subsequently appears before the Crown Court to be sentenced in respect of one or more of the offences concerned, section 1(1) of this Act shall not apply so far as his appearance is in respect of that offence or those offences.'.
26 Page 12, line 33, at end insert:
'(2) In section 6 of the Act of 1986 (application of procedure for enforcing fines), in subsection (6), after the words "made by", where they first occur, there shall be inserted "the High Court, by virtue of section 4A of this Act, or by".
(3) The following subsection shall be added at the end of section 6 of the Act of 1986—
"(8) Where the High Court makes a confiscation order by virtue of section 4A of this Act in relation to a defendant who has died, subsection (1) above shall be read as referring only to sections 31(1) and 32(1) of the Act of 1973."'.
27 Clause 15, page 12, line 34, leave out 'section' and insert 'sections'.
28 Page 12, line 37, leave out 'in the exercise of its powers under' and insert 'by virtue of'.
29 Page 13, line 3, at end insert:
'() Rules of court may make provision—

(a) for the giving of notice of any application under this section; and

(b) for any person appearing to the court to be likely to be affected by any exercise of its powers under this section to be given an opportunity to make representations to the court.'.

30 Page 13, line 5, leave out 'Secretary of State' and insert 'Lord Chancellor'.
31 Page 13, line 10, at end insert:
'Power to discharge confiscation order and order compensation where absconder returns.
19B.—(1) This section applies where—

(a) the High Court has made a confiscation order by virtue of section 4A(4) of this Act in relation to an absconder,

(b) the defendant has ceased to be an absconder, and

(c) section 19A of this Act does not apply.

(2) The High Court may, on the application of the defendant, cancel the confiscation order if it is satisfied that—

(a) there has been undue delay in continuing the proceedings in respect of which the power under section 4A(4) of this Act was exercised; or

(b) the prosecutor does not intend to proceed with the prosecution.

(3) Where the High Court cancels a confiscation order under this section it may, on the application of a person who held property which was realisable property, order compensation to be paid to the applicant if it is satisfied that the applicant has suffered loss as a result of the making of the confiscation order.
(4) The amount of compensation to be paid under this section shall be such as the court considers just in all the circumstances of the case.
(5) Rules of court may make provision—

(a) for the giving of notice of any application under this section; and

(b) for any person appearing to the court to be likely to be affected by any exercise of its powers under this section to be given an opportunity to make representations to the court.

(6) Any payment of compensation under this section shall be made by the Lord Chancellor out of money provided by Parliament.
(7) Where the court cancels a confiscation order under this section it may make such consequential or incidental order as it considers appropriate in connection with the cancellation.
Variation of confiscation orders made by virtue of section 4A.
19C.—(1) This section applies where—

(a) the High Court has made a confiscation order by virtue of section 4A(4) of this Act, and

(b) the defendant has ceased to be an absconder.

(2) If the defendant alleges that—

(a) the value of his proceeds of drug trafficking in the period by reference to which the determination in question was made (the "original value"), or

(b) the amount that might have been realised at the time the confiscation order was made,

was less than the amount ordered to be paid under the confiscation order, he may apply to the High Court for it to consider his evidence.
(3) If, having considered that evidence, the court is satisfied that the defendant's allegation is correct it—

(a) shall make a fresh determination under subsection (4) of section 1 of this Act, and

(b) may, if it considers it just in all the circumstances, vary the amount to be recovered under the confiscation order.

(4) For any determination under section 1 of this Act by virtue of this section, section 2(5) of this Act shall not apply in relation to any of the defendant's proceeds of drug trafficking taken into account in determining the original value.
(5) Where the court varies a confiscation order under this section—

(a) it shall substitute for the term of imprisonment or of detention fixed under section 31(2) of the Powers of Criminal Courts Act 1973 in respect of the amount to be recovered under the order a shorter term determined in accordance with that section (as it has effect by virtue of section 6 of this Act) in respect of the lesser amount; and

(b) on the application of a person who held property which was realisable property, it may order compensation to be paid to the applicant if—

(i) it is satisfied that the applicant has suffered loss as a result of the making of the confiscation order; and

(ii) having regard to all the circumstances of the case, the court considers it to be appropriate.

(6) The amount of compensation to be paid under this section shall be such as the court considers just in all the circumstances of the case.
(7) Rules of court may make provision—

1037

(a) for the giving of notice of any application under this section; and

(b) for any person appearing to the court to be likely to be affected by any exercise of its powers under this section to be given an opportunity to make representations to the court.

(8) Any payment of compensation under this section shall be made by the Lord Chancellor out of money provided by Parliament.
(9) No application shall be entertained by the court under this section if it is made after the end of the period of six years beginning with the date on which the confiscation order was made.'.
32 Clause 16, page 13, line 12, after 'following' insert 'section'.
33 Page 13, line 18, leave out 'that property or has possession or the use of it' and insert 'or uses that property or has possession of it'.
34 Page 13, line 21, leave out 'the property' and insert 'or used the property or had possession of it'.
35 Page 13, line 23, leave out from 'above' to end of line 26 and insert'—

(a) a person acquires property for inadequate consideration if the value of the consideration is significantly less than the value of the property; and

(b) a person uses or has possession of property for inadequate consideration if the value of the consideration is significantly less than the value of his use or possession of the property.'.

36 Page 13, line 38, leave out from first 'by' to end of line 40 and insert 'statute or otherwise; and'.
37 Page 14, line 4, leave out 'subsection (5) above' and insert 'this section'.
38 Clause 17, page 14, line 44, leave out 'that property or has possession or the use of it' and insert 'or uses that property or has possession of it'.
39 Page 14, line 47, leave out 'the property' and insert 'or used the property or had possession of it'.
40 Page 15, line 1, leave out from 'above' to end of line 4 and insert—

(a) a person acquires property for inadequate consideration if the value of the consideration is significantly less than the value of the property; and

(b) a person uses or has possession of property for inadequate consideration if the value of the consideration is significantly less than the value of his use or possession of the property.'.

41 Page 15, line 18, leave out from first 'by' to end of line 20 and insert 'statute or otherwise; and'.
42 Page 15, line 31, leave out 'subsection (5) above' and insert 'this section'.
43 Clause 18, page 16, line 32, leave out subsection (2) and insert:
'(2) Subsection (1) above does not make it an offence for a professional legal adviser to fail to disclose any information or other matter which has come to him in privileged circumstances.'.
44 Page 16, line 40, after 'constable' insert'—
(a)'.
45 Page 16, line 42, after 'laundering,' insert 'or
(b) any information or other matter on which that suspicion or belief is based,'.
46 Page 16, line 43, leave out from first 'by' to end of line 45 and insert 'statute or otherwise'.
47 Page 17, line 8, at end insert:
'(5A) A disclosure to which subsection (5) above applies shall not be treated as a breach of any restriction imposed by statute or otherwise.'.
48 Page 17, line 19, leave out from 'Wales' to end of line 23.
49 Page 17, line 26, at end insert:
'() For the purposes of this section, any information or other matter comes to a professional legal adviser in privileged circumstances if it is communicated, or given, to him—

(a) by, or by a representative of, a client of his in connection with the giving by the adviser of legal advice to the client;

(b) by, or by a representative of, a person seeking legal advice from the adviser; or

(c) by any person—

(i) in contemplation of, or in connection with, legal proceedings; and

(ii) for the purpose of those proceedings.

() No information or other matter shall be treated as coming to a professional legal adviser in privileged circumstances if it is communicated or given with a view to furthering any criminal purpose.'.
50 Page 17, line 35, leave out from 'if' to end of line 4 on page 18, and insert—

(a) he knows or suspects that a constable is acting, or is proposing to act, in connection with an investigation which is being, or is about to be, conducted into drug money laundering, and

(b) he discloses to any other person information or any other matter which is likely to prejudice that investigation, or proposed investigation.

(1A) A person is guilty of an offence if—

(a) he knows or suspects that a disclosure ("the disclosure") has been made to a constable under section 23A, 24 or 26B of this Act, and

(b) he discloses to any other person information or any other matter which is likely to prejudice any investigation which might be conducted following the disclosure.

(1B) A person is guilty of an offence if—

(a) he knows or suspects that a disclosure of a kind mentioned in section 23A(8), 24(4A) or 26B(5) of this Act ("the disclosure") has been made, and

(b) he discloses to any person information or any other matter which is likely to prejudice any investigation which might be conducted following the disclosure.

(2) Nothing in subsections (1) to (1B) above makes it an offence for a professional legal adviser to disclose any information or other matter—

(a) to, or to a representative of, a client of his in connection with the giving by the adviser of legal advice to the client; or

(b) to any person—

(i) in contemplation of, or in connection with, legal proceedings; and

(ii) for the purpose of those proceedings.

(2A) Subsection (2) above does not apply in relation to any information or other matter which is disclosed with a view to furthering any criminal purpose.'.
51 Page 18, line 6, leave out 'this section' and insert 'subsection (1), (1A) or (1B) above'.
52 Page 18, line 8, leave out 'subsection (1) above' and insert 'that subsection'.
53 Page 18, line 9, leave out from 'laundering"' to end of line I11 and insert 'has the same meaning as in section 26B of this Act'.
54 Page 18, line 27, leave out from '(a)' to end of line 29 and insert 'for the word "contract" there shall be substituted "statute or otherwise".'.
55 Clause 19, page 19, line 6, leave out from 'not' to end of line 10 and insert 'make it an offence for a professional legal adviser to fail to disclose any information or other matter which has come to him in privileged circumstances.'.
56 Page 19, line 16, after 'commissioned', insert '—(a)'.
57 Page 19, line 17, after 'laundering,' insert 'or
(b) any information or other matter on which that suspicion or belief is based,'.
58 Page 19, line 19, leave out from first 'by' to end of line 20 and insert 'statute or otherwise'.
59 Page 19, line 28, at end insert:
'(5A) A disclosure to which subsection (5) above applies shall not be treated as a breach of any restriction imposed by statute or otherwise.'.
60 Page 19, line 39, at end insert:
'() For the purposes of this section, any information or other matter comes to a professional legal adviser in privileged circumstances if it is communicated, or given, to him—

(a) by, or by a representative of, a client of his in connection with the giving by the adviser of legal advice to the client;

(b) by, or by a representative of, a person seeking legal advice from the adviser; or

(c) by any person—

(i) in contemplation of, or in connection with, legal proceedings; and

(ii) for the purpose of those proceedings.

() No information or other matter shall be treated as coming to a professional legal adviser in privileged circumstances if it is communicated or given with a view to furthering any criminal purpose.'.
61 Page 19, line 48, leave out from 'if to end of line 21 on page 20 and insert '—

(a) he knows or suspects that a constable or a person commissioned by the Commissioners of Customs and Excise is acting, or is proposing to act, in connection with an investigation which is being, or is about to be, conducted into drug money laundering within the meaning of subsections (6) and (7) of section 43A of this Act; and

(b) he discloses to any other person information or any other matter which is likely to prejudice that investigation, or proposed investigation.

(1A) A person is guilty of an offence if—

(a) he knows or suspects that a disclosure has been made to a constable, or a person so commissioned, under section 42A, 43 or 43A of this Act; and

(b) he discloses to any other person information or any other matter which is likely to prejudice any investigation which might be conducted following the disclosure.

(1B) A person is guilty of an offence if—

(a) he knows or suspects that a disclosure of a kind mentioned in section 42A(8), 43(4A) or 43A(5) of this Act has been made; and

(b) he discloses to any person information or any other matter which is likely to prejudice any investigation which might be conducted following the disclosure.

(2) Nothing in subsections (1) to (1B) above makes it an offence for a professional legal adviser to disclose any information or other matter—

(a) to, or to a representative of, a client of his in connection with the giving by the adviser of legal advice to the client; or

(b) to any person—

(i) in contemplation of, or in connection with, legal proceedings; and

(ii) for the purpose of those proceedings.

(2A) Subsection (2) above does not apply in relation to any information or other matter which is disclosed with a view to furthering any criminal purpose.'.
62 Page 20, line 23, leave out 'this section' and insert 'subsection (1), (1A) or (1B) above'.
63 Page 20, line 25, leave out 'subsection (1) above' and insert 'that subsection'.
64 Page 20, line 46, leave out from '(3)' to end of line 48 and insert 'for the word "contract" there shall he substituted "statute or otherwise"'.
65 Clause 20, page 22, line 43, leave out 'an officer' and insert 'a person'.
66 Page 23, line 20, leave out from beginning to 'An' in line 24 and insert:
'(2) In section 24A of the Drug Trafficking Offences Act 1986 (recognition and enforcement of certain orders), the following shall be substituted for subsection (6)—
"(6)'.
67 Page 23, line 24, leave out 'made'.
68 Page 23, line 27, leave out subsection (3) and insert:
'(3) The same subsection as is inserted in section 24A of the Act of 1986 by subsection (2) shall be inserted in—

(a) section 25 of that Act (but in substitution for subsection (4));

(b) section 26 of that Act (but in substitution for subsection (5));

(c) section 29 of the Criminal Justice (Scotland) Act 1987 (but in substitution for subsection (4));

(d) section 30 of the Act of 1987 (but in substitution for subsection (5));

(e) section 94 of the Criminal Justice Act 1988 (but in substitution for subsection (4));

(f) section 95 of the Act of 1988 (but in substitution for subsection (3));

(g) section 96 of the Act of 1988 (but in substitution for subsection (5));

(h) section 9 of the Criminal Justice (International Co-operation) Act 1990 (but in substitution for subsection (5)).'.

69 After Clause 21, insert the following clause:
Enforcement of Northern Ireland orders: drug trafficking
'.—(1) In section 25 of the Drug Trafficking Offences Act 1986 (enforcement of Northern Ireland orders), in subsection (1). for "19" there shall be substituted "18" and the following subsection shall be inserted after subsection (3)—
"(3A) An Order in Council under this section may, in particular, provide for section 18 of the Civil Jurisdiction and Judgments Act 1982 (enforcement of United Kingdom judgments in other parts of the United Kingdom) not to apply in relation to such orders as may be prescribed by the Order.".
(2) In section 29 of the Criminal Justice (Scotland) Act 1987 (enforcement of Northern Ireland orders), the following subsection shall be inserted after subsection (3)—
"(3A) An Order in Council under this section may, in particular, provide for section 18 of the Civil Jurisdiction and Judgments Act 1982 (enforcement of United Kingdom judgments in other parts of the United Kingdom) not to apply in relation to such orders as may be prescribed by the Order.".'.
70 Page 24, line 8, leave out '11'.
71 Page 24, line 8, after '19' insert '(2) (b) (i)'.
72 After Clause 23, insert the following clause:
Appeal against order forfeiting drug trafficking cash
'.—(1) The following sections shall be inserted in the Criminal Justice (International Co-operation) Act 1990, after section 26—
"Appeal against section 26 order.
26A.—(1) This section applies where an order for the forfeiture of cash ("the forfeiture order") is made under section 26 above by a magistrates' court.
(2) Any party to the proceedings in which the forfeiture order is made (other than the applicant for the order) may, before the end of the period of 30 days beginning with the date on which it is made, appeal to the Crown Court or, in Northern Ireland, to a county court.
(3) An appeal under this section shall be by way of a rehearing.
(4) On an application made by the appellant to a magistrates' court at any time, that court may order the release of so much of the cash to which the forfeiture order relates as it considers appropriate to enable him to meet his legal expenses in connection with the appeal.
(5) The court hearing an appeal under this section may make such order as it considers appropriate.
(6) If it upholds the appeal, the court may order the release of the cash, or (as the case may be) the remaining cash, together with any accrued interest.
(7) Section 26(3) applies in relation to a rehearing on an appeal under this section as it applies to proceedings under section 26.
Appeal against section 26 order: Scotland.
26B. Any party to proceedings in which an order for the forfeiture of cash is made by the sheriff under section 26 above may appeal against the order to the Court of Session.".
(2) The Act of 1990 shall be further amended as follows.
(3) In section 26 (forfeiture of drug trafficking cash), after subsection (3) there shall be inserted the following subsection—
"(4) Proceedings on an application under this section to the sheriff shall be civil proceedings.".
(4) In section 28 (procedure), the words "or appeals" shall be inserted after the word "applications" in each place where it occurs in subsection (2).
(5) In section 30 (forfeited cash to be paid into the Consolidated Fund), the following subsection shall be added at the end—
"(3) Subsection (2) above does not apply—

(a) where an appeal is made under section 26A or 26B above, before the appeal is determined or otherwise disposed of; and

(b) in any other case—

(i) where the forfeiture was ordered by a magistrates' court, before the end of the period of 30 days mentioned in section 26A(2); or

(ii) where the forfeiture was ordered by the sheriff, before the end of any period within which, in accordance with rules of court, an appeal under section 26B must be made.".

(6) The amendments made by this section apply only in relation to orders under section 26 of the Act of 1990 made on or after the date on which this section comes into force.'.
73 After Clause 23, insert the following clause:
Disclosure of information etc. received in privileged circumstances
'.—(1) In section 31 of the Drug Trafficking Offences Act 1986 (offence of prejudicing investigation), the following subsections shall be inserted after subsection (2)—
"(2A) Nothing in subsection (1) above makes it an offence for a professional legal adviser to disclose any information or other matter—

(a) to, or to a representative of, a client of his in connection with the giving by the adviser of legal advice to the client; or

(b) to any person—

(i) in contemplation of, or in connection with, legal proceedings; and

(ii) for the purpose of those proceedings.

(2B) Subsection (2A) above does not apply in relation to any information or other matter which is disclosed with a view to furthering any criminal purpose.".'.
(2) The same subsections as are inserted in section 31 of the Act of 1986 by subsection (1) shall be inserted in section 42 of the Criminal Justice (Scotland) Act 1987 (corresponding Scottish provision).'.
Earl Ferrers: My Lords, with the leave of the House, I beg to move that the House do agree with the Commons in their Amendments Nos. 3 to 73.
This is a large set of amendments. I am tempted to say that they are merely technical amendments—and leave it at that. But that might be a little too expeditious for your Lordships' taste, because there are a few alterations of substance, even though the majority of these follow from the principles which were discussed and agreed by your Lordships last year. The amendments make various, mainly technical, changes to Part II of the Bill, which concerns the confiscation of the proceeds of drug trafficking.
When the Bill was first considered by your Lordships, there was, in general, a welcome for Part II, although some concerns were expressed at some aspects of it. These amendments do not alter what we are trying to do in Part II. They really just represent a more fully developed version of the original clauses, so as to ensure that they meet the Government's intentions, and that they are as clear and as technically correct as we can make them. Some of the amendments are minor, and do no more than correct inaccuracies which crept in when the Bill was originally drafted. It might be convenient therefore to your Lordships if I were to limit my explanation of this block of amendments to those which are significant.
We have altered the provision allowing confiscation orders to be revised at a later date. Your Lordships may recall that some disquiet was expressed by certain noble Lords about the powers which are provided by Clause 12. I think, though, that the principle of allowing the prosecutor to seek the confiscation of proceeds of drug trafficking, which were either hidden from the courts, or which came into existence after the time when a confiscation order was originally made, was generally accepted.
The amendments to Clause 12 ensure that we can take account of all the circumstances in which it may be appropriate to seek the confiscation of previously unknown proceeds. The clause now covers three scenarios: first, where the court did not proceed under Section 1 of the Act because there appeared to be no benefit at all; secondly, where it did proceed, following the procedure under the Drug Trafficking Offences Act 1986, but found eventually that there had been no benefit; and thirdly, where it did make an earlier confiscation order. In all three scenarios, where proceeds subsequently come to light, it will be possible either to make a new order or to increase the earlier one.
Clause 13 has also been significantly amended. The alteration looks complicated. So it is but it does not alter the substance of the provision in the Clause 13 that was debated by your Lordships at the end of last year. The amendment makes consequential amendments to the Drug Trafficking Offences Act 1986, which are necessary as a result of the changes which are made to that Act by Clause 12 of the Bill and the original part of Clause 13. The amendment ensures, in particular, that the enforcement powers—such as the

1043
High Court's powers to issue restraint and charging orders—are available when some of the new measures come into force.
The provision allowing confiscation in the case of drug traffickers, who die or who abscond, is also altered. Amendment No. 25 inserts a new Section 4B into the 1986 Act. It ensures that, where the High Court has made a confiscation order under Section 4A against a drug trafficker who has absconded and who subsequently returns and who appears before the Crown Court to be sentenced, the Crown Court will be required to ignore the size of the confiscation order in deciding the appropriate term of imprisonment.
Where a defendant absconds before conviction and where a confiscation order is made against him in his absence in the High Court, the Crown Court will be prevented from making a confiscation order if the defendant is subsequently convicted of the offence and appears before that court to be sentenced. This is because an order will already have been made in absentia. Without Amendment No. 25, there would be nothing to prevent the Crown Court from making a further order against such an offender.
We have also expanded the compensation provisions in Clause 15. New Sections 19B and 19C, which are to be inserted into the 1986 Act, concern the discharge and variation of orders and the payment of compensation in the case of drug traffickers who abscond. They complement the new Section 19A in the 1986 Act, which allows for the payment of compensation when a defendant, who absconds before conviction and against whom an order is made, subsequently returns and is acquitted. I hope, therefore, that these changes will be welcomed.
The clauses concerning money laundering have also been amended. I ought perhaps to draw your Lordships' attention, in particular, to the legal privilege defence in the new "failure to report" offences in Clauses 18 and 19. On reconsideration, we thought that the defence would be better drafted without reference to the Police and Criminal Evidence Act 1984. The effect of that formulation was that only written, and not oral, communications with legal advisers could be the subject of the defence. We are also ensuring that the immunity, which is provided in Clauses 18 and 19 for those who make disclosures of suspicions of money laundering applies to the disclosure of the information, or to the disclosure of the matter on which the suspicion is based, as well as to the disclosure of the suspicion itself.
Amendment No. 72 adds a new clause to the Bill. It inserts two new sections—Section 26A and Section 26B—into the Criminal Justice (International Cooperation) Act 1990, to meet a particular problem which has only recently been identified. Section 26 of the 1990 Act enables a magistrates' court to order the forfeiture of cash which is seized when it is found crossing borders if the court is satisfied that the cash represents the proceeds of drug trafficking. But there are at present only limited rights of appeal in England and Wales against such orders. Such appeals can be
1044
made only on the grounds that the order was wrong in law, or in excess of the jurisdiction, but the merits of the decision cannot be re-evaluated.
The lack of a full right of appeal was raised by two honourable Members in another place—the honourable Members for Beckenham and for Lewisham, West—last year, and we have since decided that it would be right to take the opportunity of this Bill to correct the position. I beg to move.
Moved, That this House do agree with the Commons in their Amendments Nos. 3 to 73.—(Earl Ferrers.)
Lord Harris of Greenwich: My Lords, I propose to raise a matter concerning Karyn Smith and Patricia Cahill, who were given a Royal Pardon by the King of Thailand following the intervention of the Prime Minister—I have given the noble Earl notice that I intended to raise this matter—and also the conduct of Mr. Stephen Jakobi, who is apparently the lawyer of Miss Smith. The Bill deals with the power to give the courts in England and Wales power to try cases of fraud and related offences, and of course fraud is often directly related to drug trafficking and money laundering. What we are discussing now is particularly appropriate—the question of the confiscation of drugs smugglers' assets. Both these two women come into that category and therefore in my view this matter is highly relevant to the issues that we are discussing.
I think there is general agreement in all parts of the House and indeed in another place about the consequences of the growth of drug trafficking in this country, particularly in relation to heroin, cocaine and crack. These drugs kill many thousands of people. They destroy family life. They now involve the activities of a very large industry with a turnover in the United Kingdom of many hundreds of millions of pounds a year. The Bill is aimed rightly at the organisers of this traffic but the Government have also made it clear, and made it clear repeatedly, that they consider it right for the courts to be given adequate powers to imprison for substantial periods those who are involved in carrying drugs from third world countries such as Colombia and from the Golden Triangle states, which include Thailand. All sides of both Houses have endorsed that approach. That being so, I turn now to the cases of Miss Smith and Miss Cahill.
As I understand it, the Government—Mr. Major taking the same view—have accepted the guilt of both of these women. That has been made wholly clear. Mr. Major's approach to the King of Thailand was, as I understand it, based exclusively on what were described as compassionate grounds. The women have now been released. As far as their families are concerned, all of us, I am sure, will understand their delight that their daughters have now returned to this country. But substantial questions do arise from this episode. These women have served three years in prison, but if they had been convicted in a British court on precisely the same charges they would certainly not have been released within a period of three years. Indeed, they could have been in prison —putting aside the length of the sentence —for at least twice as long.

1045
As it is, they have returned to this country and one of them, through her lawyer, Mr. Jakobi, is busy trying to sell her story to newspapers for sums ranging between £80,000 and £100,000. I very much welcome—as I am sure we all do—the statement made by the Press Complaints Commission last week and by my noble friend Lord McGregor of Durris, when he cited Article 9 of the code of practice relating to payments to criminals. Apparently, so far the story has not yet been acquired by a British newspaper and I very much hope that it will not be.
But there are now even suggestions that film rights are being sold by one of these women. I find the conduct of those who have been operating on behalf of one of these women, and that of Mr. Jakobi in particular, highly questionable. All I shall say about him is that I hope that the noble Earl will be good enough to refer this matter, following this debate, to the noble and learned Lord the Lord Chancellor so that he can have discussions, if he thinks it appropriate, with the Law Society about how a code of ethics involving solicitors relates to the behaviour of Mr. Jakobi, which has been widely publicised. I believe that his behaviour is open to very substantial criticism, but I do not believe in misusing parliamentary privilege. I leave it at the point where I say that I believe that the matter should be inquired into. I hope that that will be done.
Following that, we have had a series of attacks by Mr. Jakobi, and those who have associated themselves with him, on the Customs and Excise, who are being severely criticised because they had the temerity to work in collaboration with the Thai police. That is exactly what the Customs and Excise are supposed to do if we have a situation where they have reason to believe that British subjects, or any other nationals, are involved in the heroin trade.
One has to ask: what happens when the next alleged drug carrier, be it a woman or a man, is caught in Thailand? We have a situation where already one British woman, as has been published in the press in the past few days, is now facing serious charges in Bangkok which involve a possible capital offence because of the quantity of drugs alleged to be in her possession. In Thailand and other parts of Asia, there are in fact capital penalties. We have seen a situation where a young British subject was executed in Malaysia notwithstanding the representations made on his behalf by the then Prime Minister, the noble Baroness, Lady Thatcher.
It is critically important for people to realise the gravity of a situation in which young British subjects, who are encouraged to go to Thailand, Malaysia or elsewhere, think that they are going to make very substantial quantities of money. In the particular case to which I have referred this evening, the suggestion is made that, although they have no doubt had a disagreeable experience for the past three years, they can return home, have clutches of television interviews, and may be able to sell their stories to the newspapers but, at worst, they may be able to sell the film rights. That sends an exceedingly bad and dangerous message. The Government must take this matter extremely seriously.
1046
I repeat the question that arises: will representations be made, on what will no doubt be described as compassionate grounds, whenever a woman is convicted in Thailand or elsewhere and sentenced to imprisonment? How can we expect Thailand to take us seriously when we demand, as we do repeatedly, that they step up their campaign against the drug industry and then, whenever British women are caught, a campaign begins at once to free them. This is not the first time that it has happened. There was another case at the beginning of 1979 when, by chance, I was in Thailand myself. There was an extraordinary situation where the British Ambassador was being asked to go in to bat for this particular woman who had been caught with a large quantity of heroin in her possession and was being asked simultaneously to make vigorous representations to the Thai Government because they were not thought to be taking their responsibilities seriously enough in combating drug trafficking.
Finally, I shall be grateful if the noble Earl would explain why it is apparently right to demand compassion on behalf of British women convicted of serious offences when abroad and at the same time to adopt a wholly different approach when drug smugglers are convicted in the United Kingdom. In January 1991—unhappily, I do not have any figures for later than that—I understand that there were 161 women from third world countries in British prisons. Many of them had been convicted of carrying far smaller quantities of narcotics than was the case with the two women in Thailand. Many of them are extremely poor Nigerian women who face the prospect of further punishment when they return home. If it is right to require compassion to be exercised on behalf of Miss Smith and Miss Cahill, is it to be extended to the women in the United Kingdom whom I have referred to as well and if not, why not? This is an issue which deserves the most serious attention from the Government.
The present situation as I have described it is wholly unacceptable. I can understand the generosity of the Prime Minister's motives, but I believe that the noble Earl is required to answer some of these questions this evening. I certainly would not want him to feel that he has to give a full answer now if he cannot do so. But I believe that we would all appreciate a letter—perhaps sent to us following consultation with the Foreign and Commonwealth Office—so that we have a clear statement of the Government's position for the future. My view is that the present situation cannot go on as it is.
7.45 p.m.
Lord Wigoder: My Lords, perhaps I may add one very brief comment. When, as I hope, the noble Earl has a word with the noble and learned Lord the Lord Chancellor about the matters which my noble friend has mentioned, the noble Earl will hardly need to remind him that he is at this moment adjudicating on an application by the Law Society for rights of audience for solicitors in the higher courts.
Both the noble and learned Lord the Lord Chancellor and the Law Society know perfectly well

1047
that in all courts the very highest ethical standards are expected of the lawyers who practise there. It is difficult to be enthusiastic about the Law Society's application when, according to reports, it has already ruled that it has seen nothing improper in the behaviour of one of its members who apparently infiltrated himself into this case in the first place by approaching the defendants' families and offering to serve them without fee and who is now seeking, by various commercial devices, to profit from their release. I hope that the noble Earl will raise this matter with the noble and learned Lord.
Earl Ferrers: My Lords, both the noble Lords, Lord Harris of Greenwich and Lord Wigoder, raise a sensitive subject and they are entirely correct and entitled to do so. The first thing we want to make perfectly clear is that drug trafficking, whether in this country or any other, is totally unacceptable. All our aims in the legislation that we have introduced have been directed towards stopping that and towards making it as difficult as possible for people to smuggle or to traffic in drugs, and to make the penalties for so doing very severe. We also encourage other countries to do so. In this case, as the noble Lord, Lord Harris, knows, Thailand has severe penalties.
The noble Lord finds difficulty in seeing why these people were released. The release was granted by the King of Thailand on humanitarian grounds. It was given because the girls were young. I believe that they were 17 when they were given 25-year sentences. They have spent some three years in prison and it was reckoned that they had learnt a good lesson. I do not want to go into the details of why they got involved or to seek to justify their smuggling in any way whatsoever. However, the fact is that they were considered as individual cases, and the King of Thailand graciously consented to release them. That does not mean in any respect that we approve of or condone what they did. What they did was wrong. Our desire in this Bill and in other legislation is to ensure that such things do not happen in this country.
The noble Lord, Lord Harris, asks, "What about the people who come from Nigeria and get caught and who spend their time in prison here? Should we not therefore release them?" I know that the answer will accord with the views of the noble Lord: it is "no". Such people bring drugs into this country and suffer the penalty for doing so and go to prison. If, as a result, they return to Nigeria and serve another sentence there, that is their fault for having carried out that operation in the first place. As I said, individual consideration was given to the two people concerned.
The noble Lord also referred to the solicitor, Jakobi, and said that it was intolerable that such people should profit from television interviews. My sympathies are entirely with the noble Lord, Lord Harris. It is intolerable that people who have misbehaved and who have broken the laws of one country and another should then profit by being interviewed or by television commercials. I shall certainly ensure that the noble Lord's concerns—and
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those of the noble Lord, Lord Wigoder—are drawn to the attention of my noble and learned friend the Lord Chancellor.
Turning to the proceeds that will be received from rights or book royalties, I can only say that if the girls had been convicted in this country it would be open to the prosecutors to make an application to the Crown Court under Clause 12 of the Bill for a reassessment of the benefits from drug trafficking. However, the convictions occurred in Thailand. Although Clause 12 would not therefore be relevant, it would be possible for us to enforce a Thai confiscation order if the Thais were able to confiscate such proceeds and if we had designated Thailand by Order in Council as a result of the conclusion of a bilateral confiscation agreement. The noble Lord, Lord Harris, will be glad to know that our officials are at present negotiating such an agreement with the Thais. I understand the noble Lord's concerns, and I shall ensure that they are brought to the attention of my noble and learned friend.
Lord Harris of Greenwich: My Lords, may I ask the noble Earl again—I am sure that he will be able to do this—whether he will write me a substantive letter on this issue? My noble friend Lord Wigoder and I would be deeply grateful to him if he could do so.
Earl Ferrers: My Lords, I apologise to the noble Lord. I had forgotten that he had asked that question. I shall certainly write such a letter to both him and the noble Lord, Lord Wigoder.
Baroness Seear: My Lords, I am sorry that I was not in my place when we started our consideration of this Bill. I know that the noble Earl cannot do anything about this, but does he agree that it was singularly inappropriate for that news to be made the first item of news on the radio on the morning when it broke as if it were the most important news to be reported to the nation as a whole? Surely that gives a quite wrong impression of what is important.
Earl Ferrers: My Lords, as the noble Baroness, Lady Seear, knows only too well, the media have a curious priority of importance. I agree with her that to make that kind of news the central feature, as the most important thing happening in this country, can in some people's minds be considered a misdirection of effort.
On Question, Motion agreed to.
COMMONS AMENDMENTS
74 Clause 25, page 26, line 12, leave out '("the specified period")'.
75 Page 26, line 16, after 'period' insert 'under subsection (1) above'.
76 Page 26, line 18, leave out 'when taken'.
77 Page 26, line 19, leave out 'has' and insert 'have'.
78 Page 26, line 23, leave out 'on which the defendant was convicted' and insert 'of conviction'.
79 Page 26, line 28, after 'above' insert 'for such period as it may specify'.
80 Page 26, line 37. after '(6)' insert 'Unless the court is satisfied that there are exceptional circumstances,'.
81 Page 27, line 17, leave out from 'section' to 'references' in line 21.
82 Page 27, line 24, at end insert:
'(11) In this section "the date of conviction" means—

(a) the date on which the defendant was convicted of the offence concerned, or

(b) where he was convicted in the same proceedings, but on different dates, of two or more offences which may be taken together for the purposes of subsection (2) or, as the case may be, (3) of section 71 above, the date of the latest of those convictions.'.

83 Clause 26, page 28, line 12, leave out from first 'by' to 'and' in line 14 and insert 'statute or otherwise'.
84 Page 29, line 14, after '102' insert '(1)'.
85 Page 29, line 14, after 'VI)' insert 'the following definition shall be inserted after the definition of "interest"—
""proceeds of criminal conduct", in relation to any person who has benefited from criminal conduct, means that benefit;".
(3) In section 102(2) of the Act of 1988.'.
86 Page 29, line 15, leave out 'in subsection (2)'.
87 Clause 27, page 29, line 23, leave out 'that property or has possession or the use of it' and insert 'or uses that property or has possession of it'.
88 Page 29, line 26, leave out 'the property' and insert 'or used the property or had possession of it'.
89 Page 29, line 28, leave out from 'above' to end of line 31 and insert—

(a) a person acquires property for inadequate consideration if the value of the consideration is significantly less than the value of the property; and

(b) a person uses or has possession of property for inadequate consideration if the value of the consideration is significantly less than the value of his use or possession of the property.'.

90 Page 29, line 43, leave out from first 'by' to end of line 45 and insert 'statute or otherwise; and'.
91 Page 30, line 7, leave out 'subsection (5) above' and insert 'this section'.
92 Clause 29, page 31, line 27, leave out from 'if' to end of line 44 and insert '—

(a) he knows or suspects that a constable is acting, or is proposing to act, in connection with an investigation which is being, or is about to be, conducted into money laundering; and

(b) he discloses to any other person information or any other matter which is likely to prejudice that investigation, or proposed investigation.

(1A) A person is guilty of an offence if—

(a) he knows or suspects that a disclosure ("the disclosure") has been made to a constable under section 93A or 93B above; and

(b) he discloses to any other person information or any other matter which is likely to prejudice any investigation which might be conducted following the disclosure.

(1B) A person is guilty of an offence if—

(a) he knows or suspects that a disclosure of a kind mentioned in section 93A(5) or 93B(8) above ("the disclosure") has been made; and

(b) he discloses to any person information or any other matter which is likely to prejudice any investigation which might be conducted following the disclosure.

(2) Nothing in subsections (1) to (1B) above makes it an offence for a professional legal adviser to disclose any information or other matter—

(a) to, or to a representative of, a client of his in connection with the giving by the adviser of legal advice to the client; or

(b) to any person—
1050

(i) in contemplation of, or in connection with, legal proceedings; and

(ii) for the purpose of those proceedings.

(2A) Subsection (2) above does not apply in relation to any information or other matter which is disclosed with a view to furthering any criminal purpose.'.
93 Page 31, line 46, leave out 'this section' and insert 'subsection (1), (1A) or (1B) above'.
94 Page 31, line 48, leave out 'subsection (1) above' and insert 'that subsection'.
95 Page 32, line 8, leave out from 'Scotland' to end of line 16.
96 After Clause 30, insert the following clause:
Enforcement of Northern Ireland orders: proceeds of criminal conduct
'.—(1) In section 94 of the Criminal Justice Act 1988 (enforcement of Northern Ireland orders), in subsection (1), for "89" there shall be substituted "88" and the following subsection shall be inserted after subsection (3)—
"(3A) An Order in Council under this section may, in particular, provide for section 18 of the Civil Jurisdiction and Judgments Act 1982 (enforcement of United Kingdom judgments in other parts of the United Kingdom) not to apply in relation to such orders as may be prescribed by the Order.".
(2) In section 95 of the Act of 1988 (enforcement of Northern Ireland orders in Scotland), the following subsection shall be inserted after subsection (2)—
"(2A) An Order in Council under this section may, in particular, provide for section 18 of the Civil Jurisdiction and Judgments Act 1982 (enforcement of United Kingdom judgments in other parts of the United Kingdom) not to apply in relation to such orders as may be prescribed by the Order.".'.
97 After Clause 30, insert the following clause:
Prosecution by order of the Commissioners of Customs and Excise
'() The following section shall be inserted in the Criminal Justice Act 1988 after section 93E—
"Prosecution by order of the Commissioners of Customs and Excise.
93F.—(1) Proceedings for an offence to which this section applies ("a specified offence") may be instituted by order of the Commissioners.
(2) Any proceedings for a specified offence which are so instituted shall he commenced in the name of an officer.
(3) In the case of the death, removal, discharge or absence of the officer in whose name any proceedings for a specified offence were commenced, those proceedings may be continued by another officer.
(4) Where the Commissioners investigate, or propose to investigate, any matter with a view to determining—

(a) whether there are grounds for believing that a specified offence has been committed; or

(b) whether a person should be prosecuted for a specified offence;

that matter shall be treated as an assigned matter within the meaning of the Customs and Excise Management Act 1979.
(5) Nothing in this section shall be taken—

(a) to prevent any person (including any officer) who has power to arrest, detain or prosecute any person for a specified offence from doing so; or

(b) to prevent a court from proceeding to deal with a person brought before it following his arrest by an officer for a specified offence, even though the proceedings have not been instituted by an order made under subsection (1) above.

(6) In this section—
"the Commissioners" means the Commissioners of Customs and Excise;
"officer" means a person commissioned by the Commissioners;
"proceedings", as respects Scotland, means summary proceedings; and
"specified offence" means—

(a) any offence under sections 93A to 93D above;

(b) attempting to commit, conspiracy to commit or incitement to commit any such offence; or

(c) any other offence of a kind prescribed in regulations made by the Secretary of State for the purposes of this section.

(7) The power to make regulations under subsection (6) above shall be exercisable by statutory instrument.
(8) Any such instrument shall be subject to annulment in pursuance of a resolution of either House of Parliament."'.
Earl Ferrers: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 74 to 97 en bloc.
The amendments affect Clauses 25 to 29. Broadly speaking, they do no more than reflect a number of the changes which have been made by the earlier set of amendments to Part II of the Bill. These mainly concern the money laundering provisions. They ensure that the new offences relating to the laundering of the proceeds of criminal conduct are brought into line with those relating to the laundering of the proceeds of drug trafficking.
Moved, That the House do agree with the Commons in their Amendments Nos. 74 to 97.—(Earl Ferrers.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
98 After Clause 30. insert the following clause:
'Part III A
FINANCING ETC. OF TERRORISM
Amendments of the 1991 Act Confiscation orders
.—(1) In section 47(7) of the Northern Ireland (Emergency Provisions) Act 1991 (confiscation orders), for "the amount that might then be so realised" there shall be substituted "—

(a) the amount that might then be so realised, or

(b) a nominal amount, where it appears to the court (on the information available to it at the time) that the amount that might then be so realised is nil".

(2) In section 47 of the Act of 1991, the following subsection shall be added at the end—
"(9) The standard of proof required to determine any question arising under this Part of this Act as to—

(a) whether a person has benefited from terrorist-related activities engaged in by him or another;

(b) the value of his proceeds of those activities;

(c) any matter of which the court must be satisfied under subsection (5) above; or

(d) the amount to be required to be paid under a confiscation order made in his case,

shall be that applicable in civil proceedings.".
(3) Section 48 of that Act (postponed confiscation orders etc.) shall be amended as follows.
(4) In subsection (2), for "a period not exceeding six months after the date of conviction" there shall be substituted "such period as it may specify".
(5) After subsection (2) there shall he inserted—
"(2A) More than one postponement may be made under subsection (2) above in relation to the same case.
(2B) Unless it is satisfied that there are exceptional circumstances, the court shall not specify a period under subsection (2) above which—

(a) by itself, or

(b) where there have been one or more previous postponements under subsection (2) above or (3) below, when taken together with the earlier specified period or periods,

exceeds six months beginning with the date on which the defendant was convicted.".
(6) In subsection (3) the words "during the period of postponement" shall cease to have effect and for the words from "on the application of the prosecution" to the end there shall be substituted—
"on that account—

(a) postpone making the confiscation order for such period as it may specify, or

(b) where it has already exercised its powers under this section to postpone, extend the specified period;

but, without prejudice to Article 11 of the Treatment of Offenders (Northern Ireland) Order 1989, the court may notwithstanding any postponement under this section proceed to sentence or otherwise deal with the defendant in respect of the conviction.".
(7) After subsection (3) there shall be inserted—
"(3A) A postponement or extension under subsection (2) or (3) above may be made—

(a) on application by the defendant or the prosecution, or

(b) by the court of its own motion.

(3B) Unless the court is satisfied that there are exceptional circumstances, any postponement or extension under subsection (3) above shall not exceed the period ending three months after the date of determination of the appeal.".'.
99 After Clause 30, insert the following clause:
Revised assessments
'.The following sections shall be inserted in the Northern Ireland (Emergency Provisions) Act 1991, after section 48—
"Re-assessment of whether defendant has benefited.
48A.—(1) This section applies where—

(a) a court proceeding under section 47(1) above decided not to make a confiscation order ("the decision"); and

(b) the statement made by the court under section 48(8) above was to the effect that the reason, or one of the reasons, for the decision was that the court was not satisfied that the defendant had benefited.

(2) If the prosecution has evidence—

(a) which was not considered by the court, but

(b) which the prosecution believes would have led the court to decide that the defendant had benefited,

the prosecution may apply to the Crown Court for it to consider that evidence.
(3) If, having considered the evidence, the court considers that it would have been satisfied that the defendant had benefited if that evidence had been available to it, section 47 shall apply as if the court were convicting the defendant.
(4) The court may take into account any money or other property obtained by the defendant on or after the date of the decision, but only if the prosecution shows that it was obtained by him as a direct or indirect result of terrorist-related activities carried on by the defendant or another on or before that date.
(5) In considering any evidence under this section which relates to any money or other property to which subsection (4) above applies, the court shall not make the assumptions which would otherwise be required by section 51 below.
(6) No application shall be entertained by the court under this section if it is made after the end of the period of six years beginning with the date on which the defendant was convicted.
(7) Subsections (1) to (7) of section 48 above shall not apply where the court is proceeding under section 47 above by virtue of this section.
(8) Where the court—

(a) has, in dealing with the defendant in respect of the conviction or any of the convictions concerned, made an order for the payment of compensation under Article 3 of the Order of 1980, and

(b) makes a confiscation order by virtue of this section,

it shall, if it is of the opinion that the defendant will not have sufficient means to satisfy both orders in full, direct that so much of the compensation as will not in its opinion be recoverable because of the insufficiency of his means is to be paid out of any sums recovered under the confiscation order.
(9) Where the prosecution makes an application to the court under this section it shall, on making the application, give the court a statement under section 52 below.
(10) Where the High Court—

(a) has been asked to proceed under section 52B below in relation to a defendant who has absconded, but

(b) has decided not to make a confiscation order against him,

this section shall not apply at any time while he remains an absconder.
(11) In this section "benefited" means benefited from terrorist-related activities as mentioned in section 47(1) above.
Revised assessments.
48B.—(1) This section applies where the court has made a confiscation order by reference to an amount assessed under section 47(1) above ("the current assessment").
(2) Where the prosecution is of the opinion that the real value of the defendant's proceeds of terrorist-related activities was greater than their assessed value, the prosecution may apply to the Crown Court for the evidence on which it has formed that opinion to be considered by the court.
(3) In subsection (2) above—
"assessed value" means the value of the defendant's proceeds of terrorist-related activities as assessed by the court under section 47(1) above; and
"real value" means the value of the defendant's proceeds of terrorist-related activities which took place—

(a) in the period by reference to which the current assessment was made; or

(b) in any earlier period.

(4) If, having considered the evidence, the court is satisfied that the real value of the defendant's proceeds of terrorist-related activities is greater than their assessed value (whether because the real value was higher at the time of the current assessment than was thought or because the value of the proceeds in question has subsequently increased), the court shall make a fresh determination of the amount to be required to be paid under section 47 above.
(5) In relation to any determination by virtue of this section, section 47(7) above shall have effect as it has effect in relation to the making of a confiscation order.
(6) For any determination by virtue of this section, section 47(8) above shall not apply in relation to any of the defendant's proceeds of terrorist-related activities taken into account in respect of the current assessment.
(7) Sections 50(4) and 52(4) (a) and (7) below shall have effect in relation to any such determination as if for "confiscation order" there were substituted "determination" and section 50(3) below shall so have effect as if for "a confiscation order is made" there were substituted "of the determination".
(8) The court may take into account any money or other property obtained by the defendant on or after the date of the current assessment, but only if the prosecution shows that it was obtained by him as a direct or indirect result of terrorist-related activities carried on by the defendant or another on or before that date.
(10) If, as a result of making the determination required by subsection (4) above, the amount to be required to be paid exceeds the amount set in accordance with the current assessment, the court may substitute for the amount required to be paid under the confiscation order such greater amount as it thinks just in all the circumstances of the case.
(11) Where the court varies a confiscation order under subsection (10) above it shall substitute for the term of imprisonment or of detention fixed under section 35(1) (c) of the Criminal Justice Act (Northern Ireland) 1945 in respect of the amount required to be paid under the order a longer term determined in accordance with that section (as it has effect by virtue of paragraph 2 of Schedule 4 to this Act) in respect of the greater amount substituted under subsection (10) above.
(12) Subsection (11) above shall apply only if the effect of the substitution is to increase the maximum period applicable in relation to the order under paragraph 2(1) (b) of Schedule 4 to this Act.
(13) Where the prosecution makes an application to the court under this section—

(a) it shall, on making the application, give the court a statement under section 52 below; and

(b) section 52A shall apply.

(14) Where a confiscation order has been made in relation to any defendant by virtue of section 52B below, this section shall not apply at any time while he is an absconder.
(15) No application shall be entertained by the court under this section if it is made after the end of the period of six years beginning with the date on which the defendant was convicted."'.
100 After Clause 30, insert the following clause:
Statements, etc. relevant to making confiscation orders
'.—(1) Section 52 of the Northern Ireland (Emergency Provisions) Act 1991 shall be amended as follows.
(2) The following subsections shall be substituted for subsection (1)—
"(1) In this section, except in subsection (4) below, "a statement" means a statement in the case of a defendant as to any matters relevant—

(a) to determining whether he has benefited from terrorist-related activities,

(b) to assessing the value of his proceeds of those activities, or

(c) to determining whether the requirements of section 47(5) above are satisfied.

(1A) Where section 47(l) above applies—

(a) the court may require the prosecution to give it a statement within such period as it may direct; and

(b) the prosecution may at any time give a statement to the court.

(1B) Where the prosecution has given the court a statement—

1055

(a) it may at any time give the court a further statement; and

(b) the court may at any time require it to give the court a further statement, within such period as the court may direct.

(1C) Where—

(a) a statement has been given to the court under this section, and

(b) the defendant accepts to any extent any allegation in the statement,

the court may treat his acceptance as conclusive of the matters to which it relates.".
(3) In subsection (2)—

(a) for "is tendered under subsection (1) (a) above" there shall be substituted "is given under this section"; and

(b) after first "indicate" there shall be inserted "within such period as the court may direct".

(4) The following subsection shall be inserted after subsection (2)—
"(2A) Where the court has given a direction under this section it may at any time vary it by giving a further direction."
(5) In subsection (4), for "tendered" there shall be substituted "given".
101 After Clause 30, insert the following clause:
Provision of information
'.The following section shall be inserted in the Northern Ireland (Emergency Provisions) Act 1991, after section 52—
"Provision of information by defendant.
52A.—(1) This section applies where the Crown Court is proceeding under section 47(1) above.
(2) For the purpose of obtaining information to assist it in carrying out its functions, the court may at any time order the defendant to give it such information as may be specified in the order.
(3) An order under subsection (2) above may require all, or any specified part, of the required information to be given to the court in such manner, and before such date, as may be specified in the order.
(4) Rules of court may make provision as to the maximum or minimum period that may be allowed under subsection (3) above.
(5) If the defendant fails, without reasonable excuse, to comply with any order under this section, the court may draw such inference from that failure as it considers appropriate.
(6) Where the prosecution accepts to any extent any allegation made by the defendant in giving to the court information required by an order under this section, the court may treat that acceptance as conclusive of the matters to which it relates.
(7) For the purposes of this section, an allegation may be accepted in such manner as may be prescribed by rules of court or as the court may direct."'.
102 After Clause 30, insert the following clause:
Variation of confiscation orders
'.—(1) Paragraph 15 (variation of confiscation orders) of Schedule 4 to the Northern Ireland (Emergency Provisions) Act 1991 shall be amended as follows.
(2) In sub-paragraph (1), after "defendant" there shall be inserted "or a receiver appointed under this Schedule, or in pursuance of a charging order, made".
(3) In sub-paragraph (3), for "defendant" there shall be substituted "person who applied for it".
(4) The following shall be added at the end—
"(5) Rules of court may make provision—

(a) for the giving of notice of any application under this paragraph; and

(b) for any person appearing to the court to be likely to be affected by any exercise of its powers under this paragraph to be given an opportunity to make representations to the court."'.

103 After Clause 30, insert the following clause:
Availability of powers and satisfaction of orders
'.—(1) Schedule 4 to the Northern Ireland (Emergency Provisions) Act 1991 (supplementary provisions about confiscation orders) shall be amended as follows.
(2) In paragraph 2 (application of procedure for enforcing fines), the following shall be added at the end—
"(6) Where the defendant serves a term of imprisonment or detention in default of paying any amount due under a confiscation order, his serving that term does not prevent the confiscation order from continuing to have effect, so far as any other method of enforcement is concerned.".
(3) In paragraph 4 (cases in which restraint orders and charging orders may be made), the following sub-paragraphs shall be substituted for sub-paragraphs (1) and (2)—
"(1) The powers conferred on the High Court by paragraphs 5(1) and 6(1) below are exercisable where—

(a) proceedings have been instituted in Northern Ireland against the defendant for a relevant offence or an application has been made by the prosecution in respect of the defendant under section 48A, 48B or 52B of this Act or paragraph 11 below,

(b) the proceedings have not, or the application has not, been concluded, and

(c) the court is satisfied that there is reasonable cause to believe—

(i) in the case of an application under section 48B of this Act or paragraph 11 below, that the court will be satisfied as mentioned in section 48B(4) of this Act or, as the case may be, paragraph 11(1) (b) below, or

(ii) in any other case, that the defendant has benefited from terrorist-related activities.

(2) Those powers are also exercisable where—

(a) the High Court is satisfied that, whether by the making of a complaint or otherwise, a person is to be charged with a relevant offence or that an application of a kind mentioned in sub-paragraph (1) (a) above is to be made in respect of the defendant, and

(b) it appears to the court that there is reasonable cause to believe—

(i) in the case of a proposed application under section 48B of this Act or paragraph 11 below, that the court will be satisfied as mentioned in section 48B(4) of this Act or, as the case may be, paragraph 11(1) (b) below, or

(ii) in any other case, that the defendant has benefited from terrorist-related activities.".

(4) The following sub-paragraphs shall be added at the end of paragraph 4—
"(5) Where the court has made an order under paragraph 5(1) or 6(1) below in relation to a proposed application, by virtue of sub-paragraph (2) above, the court shall discharge the order if the application is not made within such time as the court considers reasonable.
(6) The court shall not exercise powers under paragraph 5(1) or 6(1) below, by virtue of sub-paragraph (1) above, if it is satisfied that—

(a) there has been undue delay in continuing the proceedings or application in question; or

(b) the prosecution does not intend to proceed.".

(5) In paragraph 5 (restraint orders), the following sub-paragraph shall be substituted for sub-paragraph (6)—
"(6) A restraint order—

(a) may be discharged or varied in relation to any property, and

(b) shall be discharged on the conclusion of the proceedings or of the application in question.".

(6) In paragraph 6 (charging orders), the following sub-paragraph shall be substituted for sub-paragraph (6)—
"(6) In relation to a charging order the court—

(a) may make an order discharging or varying it, and

(b) shall make an order discharging it—

(i) on the conclusion of the proceedings or of the application in question, or

(ii) on payment into court of the amount payment of which is secured by the charge.".

(7) In paragraph 10 (realisation of property), the following sub-paragraph shall be substituted for sub-paragraph (1)—
"(1) Where a confiscation order—

(a) has been made under this Act,

(b) is not satisfied, and

(c) is not subject to appeal,

the High Court may, on an application by the prosecution, exercise the powers conferred by sub-paragraphs (2) to (6) below.".
(8) In paragraph 16 (bankruptcy of defendant), the following shall he substituted for paragraphs (a) and (b) of sub-paragraph (6)—
"(a) no order shall be made under Article 312 or 367 of the said Order of 1989 (avoidance of certain transactions) in respect of the making of the gift at any time when—

(i) proceedings for a relevant offence have been instituted against him and have not been concluded;

(ii) an application has been made in respect of the defendant under section 48A, 48B or 52B of this Act or paragraph 11 below and has not been concluded; or

(iii) property of the person to whom the gift was made is subject to a restraint order or charging order; and

(b) any order made under either of those Articles after the conclusion of the proceedings or of the application shall take into account any realisation under this Schedule of property held by the person to whom the gift was made.".
(9) In paragraph 1 (interpretation), the following sub-paragraphs shall be substituted for sub-paragraph (3)—
"(3) Proceedings for a relevant offence are concluded—

(a) when the defendant is acquitted;

(b) if he is convicted, but the court decides not to make a confiscation order against him, when it makes that decision; or

(c) if a confiscation order is made against him in those proceedings, when the order is satisfied.

(3A) An application under section 48A or 52B of this Act is concluded—

(a) if the court decides not to make a confiscation order against the defendant, when it makes that decision; or

(b) if a confiscation order is made against him as a result of that application, when the order is satisfied.

(3B) An application under section 48B of this Act or paragraph 11 below is concluded—

(a) if the court decides not to vary the confiscation order in question, when it makes that decision; or

(b) if the court varies the confiscation order as a result of the application, when the order is satisfied.

(3C) For the purposes of this Schedule, a confiscation order is satisfied when no amount is due under it.
(3D) For the purposes of paragraph 16 below, a confiscation order is also satisfied when the defendant in respect of whom it was made has served a term of imprisonment or detention in default of payment of the amount due under the order.".'.
104 After Clause 30, insert the following clause:
Defendant who has died or absconded
'.The following section shall be inserted in the Northern Ireland (Emergency Provisions) Act 1991 after section 52A—
"Powers of High Court where defendant has died or absconded.
52B.—(1) Subsection (2) below applies where a person has been convicted of a relevant offence.
(2) If the prosecution asks it to proceed under this section, the High Court may exercise the powers of the Crown Court under this Act to make a confiscation order against the defendant if satisfied that the defendant has died or absconded.
(3) Subsection (4) below applies where proceedings have been instituted against the defendant for one or more relevant offences but have not been concluded.
(4) If the prosecution asks it to proceed under this section, the High Court, if satisfied that the defendant has absconded, may exercise the powers of the Crown Court under this Act to make a confiscation order against the defendant as if the defendant had been convicted of the relevant offence or each of the relevant offences for which the proceedings had been instituted.
(5) The power conferred by subsection (4) above may not be exercised at any time before the end of the period of two years beginning with the date which is, in the opinion of the court, the date on which the defendant absconded.
(6) Where the prosecution makes an application to the court under this section it shall, on making the application, give the court a statement under section 52 above.
(7) In any proceedings on an application under this section—

(a) sections 51, 52(1C), (2) and (3) and 52A above shall not apply,

(b) the court shall not make a confiscation order against a person who has absconded unless it is satisfied that the prosecution has taken reasonable steps to contact him, and

(c) any person appearing to the court to be likely to be affected by the making of a confiscation order by the court shall be entitled to appear before the court and make representations.

(8) Where the High Court has made a confiscation order by virtue of this section, in a case where the defendant has been or is subsequently convicted of one or more of the offences concerned, sections 47 and 48(1) to (5) and (7) above shall not apply in respect of his conviction of that offence or those offences; but any court dealing with him in respect of that conviction or any of those convictions—

(a) shall take account of the order before—

(i) imposing any fine on him; or

(ii) making any order involving any payment by him, other than an order under Article 3 of the Criminal Justice (Northern Ireland) Order 1980 (compensation orders); or

(iii) making any order under Article 7 of that Order (deprivation orders),

but subject to that shall leave the order out of account in determining the appropriate sentence or other manner of dealing with him; and

1059

(b) if it makes an order for the payment of compensation under Article 3 of the Order of 1980, and is of the opinion that the defendant will not have sufficient means to satisfy both that order and the confiscation order in full, shall direct that so much of the compensation as will not in its opinion be recoverable because of the insufficiency of his means is to be paid out of any sums recovered under the confiscation order."'.

105 After Clause 30, insert the following clause:
Compensation
'. In Schedule 4 to the Northern Ireland (Emergency Provisions) Act 1991, the following paragraphs shall be inserted after paragraph 20—
"Compensation etc. where absconder is acquitted
20A.—(1) This paragraph applies where—

(a) the High Court has made a confiscation order by virtue of section 52B(4) of this Act, and

(b) the defendant is subsequently tried for the offence or offences concerned and acquitted on all counts.

(2) The court by which the defendant is acquitted shall cancel the confiscation order.
(3) The High Court may, on the application of a person who held property which was realisable property, order compensation to be paid to the applicant if it is satisfied that the applicant has suffered loss as a result of the making of the confiscation order.
(4) The amount of compensation to be paid under this paragraph shall he such as the court considers just in all the circumstances of the case.
(5) Rules of court may make provision—

(a) for the giving of notice of any application under this paragraph; and

(b) for any person appearing to the court to be likely to be affected by any exercise of its powers under this paragraph to be given an opportunity to make representations to the court.

(6) Any payment of compensation under this paragraph shall be made by the Lord Chancellor out of money provided by Parliament.
(7) Where the court cancels a confiscation order under this paragraph it may make such consequential or incidental order as it considers appropriate in connection with the cancellation.
Power to discharge confiscation order and order compensation where absconder returns
20B.—(1) This paragraph applies where—

(a) the High Court has made a confiscation order by virtue of section 52B(4) of this Act in relation to an absconder,

(b) the defendant has ceased to be an absconder, and

(c) paragraph 20A above does not apply.

(2) The High Court may, on the application of the defendant, cancel the confiscation order if it is satisfied that—

(a) there has been undue delay in continuing the proceedings in respect of which the power under section 52B(4) above was exercised; or

(b) the prosecution do not intend to proceed.

(3) Where the High Court cancels a confiscation order under this paragraph it may, on the application of a person who held property which was realisable property, order compensation to be paid to the applicant if it is satisfied that the applicant has suffered loss as a result of the making of the confiscation order.
(4) The amount of compensation to be paid under this paragraph shall be such as the court considers just in all the circumstances of the case.
(5) Rules of court may make provision—

(a) for the giving of notice of any application under this paragraph; and

1060

(b) for any person appearing to the court to be likely to be affected by any exercise of its powers under this paragraph to be given an opportunity to make representations to the court.

(6) Any payment of compensation under this paragraph shall be made by the Lord Chancellor out of money provided by Parliament.
(7) Where the court cancels a confiscation order under this paragraph it may make such consequential or incidental order as it considers appropriate in connection with the cancellation.
Variation of confiscation orders made by virtue of section 52B
20C.—(l) This paragraph applies where—

(a) the High Court has made a confiscation order by virtue of section 52B(4) of this Act, and

(b) the defendant has ceased to be an absconder.

(2) If the defendant alleges that—

(a) the value of his proceeds of terrorist-related activities in the period by reference to which the assessment in question was made (the "original value"), or

(b) the amount that might have been realised at the time the confiscation order was made,

was less than the amount required to be paid under the confiscation order, he may apply to the High Court for it to consider his evidence.
(3) If, having considered that evidence, the court is satisfied that the defendant's allegation is correct it—

(a) shall proceed under section 47(1) of this Act to make a fresh assessment of the value of his proceeds of terrorist-related activities, and

(b) may, if it considers it just in all the circumstances, vary the amount required to be paid under the confiscation order.

(4) For any assessment under section 47 of this Act by virtue of this paragraph, section 47(8) shall not apply in relation to any of the defendant's proceeds of terrorist-related activities taken into account in assessing the original value.
(5) Where the court varies a confiscation order under this paragraph—

(a) it shall substitute for the term of imprisonment or detention fixed in respect of the order under subsection (1) (c) of section 35 of the Criminal Justice Act (Northern Ireland) 1945 (imprisonment in default of payment) a shorter term if the effect of the substitution under sub-paragraph (3) above is to reduce the maximum period applicable in relation to the order under subsection (2) of that section as it has effect by virtue of paragraph 2(1) (b) above; and

(b) on the application of a person who held property which was realisable property, it may order compensation to be paid to the applicant if—

(i) it is satisfied that the applicant has suffered loss as a result of the making of the confiscation order; and

(ii) having regard to all the circumstances of the case, the court considers it to be appropriate.

(7) Rules of court may make provision—

(a) for the giving of notice of any application under this paragraph; and

(b) for any person appearing to the court to be likely to be affected by any exercise of its powers under this paragraph to be given an opportunity to make representations to the court.

(8) Any payment of compensation under this paragraph shall be made by the Lord Chancellor out of money provided by Parliament.
(9) No application shall be entertained by the court under this paragraph if it is made after the end of the period of six years beginning with the date on which the confiscation order was made."'.
106 After Clause 30, insert the following clause:
Realisable property
'. In Section 50 of the Northern Ireland (Emergency Provisions) Act 1991 (realisable property, value and gifts), in subsection (2), the following paragraphs shall be inserted after paragraph (c)—
"(d) section 43 of the Powers of Criminal Courts Act 1973; or
(e) section 223 or 436 of the Criminal Procedure (Scotland) Act 1975,".'.
107 After Clause 30, insert the following clause:
Enforcement
'.—(1) Section 67 of the Northern Ireland (Emergency Provisions) Act 1991 (orders and regulations), shall be amended as follows.
(2) In subsection (5), after the words "paragraph 7(3)" there shall be inserted "or 19(1) (a)".
(3) Subsection (6) shall cease to have effect.'.
108 After Clause 30, insert the following clause:
Enforcement of orders outside Northern Ireland
In paragraph 19 of Schedule 4 to the Northern Ireland (Emergency Provisions) Act 1991 (enforcement of orders outside Northern Ireland), the following sub-paragraphs shall be added at the end—
"(3) An Order under this paragraph may contain such incidental, consequential and transitional provisions as Her Majesty considers expedient.
(4) An Order under sub-paragraph (1) (a) above may, in particular, provide for section 18 of the Civil Jurisdiction and Judgments Act 1982 (enforcement of United Kingdom judgments in other parts of the United Kingdom) not to apply.".'.
109 After Clause 30, insert the following clause:
Offences relating to proceeds of terrorist-related activities
'.—(1) In section 53 of the Northern Ireland (Emergency Provisions) Act 1991 (assisting another to retain proceeds of terrorist-related activities) the following subsection shall be inserted after subsection (3)—
"(3A) Where a person discloses to a constable a suspicion or belief that any funds or investments are derived from or used in connection with terrorist-related activities or any matter on which such a suspicion or belief is based, the disclosure shall not be treated as a breach of any restriction upon the disclosure of information imposed by statute or otherwise.".
(2) In section 53 of that Act the following subsection shall be inserted after subsection (4)—
"(4A) In the case of a person who was in employment at the relevant time, subsections (3), (3A) and (4) (c) above shall have effect in relation to disclosures, and intended disclosures, to the appropriate person in accordance with the procedure established by his employer for the making of such disclosures as they have effect in relation to disclosures, and intended disclosures, to a constable.".
(3) In subsection (3) of section 54 of that Act (concealing or transferring proceeds of terrorist-related activities), for the words from "that property" to the end of that subsection, there shall be substituted "or uses that property or has possession of it".
(4) In section 54 of that Act, the following subsection shall be inserted after subsection (3)—
"(3A) It is a defence to a charge of committing an offence under this section that the person charged acquired or used the property or had possession of it for adequate consideration.".
(5) For section 54(5) of that Act there shall be substituted—
"(5) For the purposes of subsection (3A) above—

(a) a person acquires property for inadequate consideration if the value of the consideration is significantly less than the value of the property;

(b) a person uses or has possession of any property for inadequate consideration if the value of the consideration is significantly less than the value of his possession or use of the property; and

(c) the provision for any person of services or goods which are of assistance to him in terrorist-related activities shall not be treated as consideration.

(5A) Where a person discloses to a constable a suspicion or belief that any property is, or in whole or in part directly or indirectly represents, another person's proceeds of terrorist-related activities or any matter on which such a suspicion or belief is based—

(a) the disclosure shall not be treated as a breach of any restriction upon the disclosure of information imposed by statute or otherwise; and

(b) if he does any act in contravention of subsection (3) above, he does not commit an offence under that subsection if—

(i) the disclosure is made before he does the act concerned and that act is done with the consent of the constable; or

(ii) the disclosure is made after he does the act but on his initiative and as soon as it is reasonable for him to make it.

(5B) For the purposes of this section, having possession of any property shall be taken to be doing an act in relation to it.
(5C) In proceedings against a person for an offence under subsection (3) above, it is a defence to prove that—
(a) he intended to disclose to a constable such a suspicion, belief or matter as is mentioned in subsection (5A) above; but
(5D) In the case of a person who was in employment at the relevant time, subsections (5A) and (5C) above shall have effect in relation to disclosures, and intended disclosures, to the appropriate person in accordance with the procedure established by his employer for the making of such disclosures as they have effect in relation to disclosures, and intended disclosures, to a constable.
(5E) No constable or other person shall be guilty of an offence under subsection (3) above in respect of anything done by him in the course of acting in connection with the enforcement, or intended enforcement, of any provision of this Act or of any other enactment relating to terrorism or the proceeds or resources of such terrorism."'.
110 After Clause 30, insert the following clause:
Failure to disclose knowledge or suspicion relating to proceeds of terrorist-related activities
'. The following section shall be inserted in the Northern Ireland (Emergency Provisions) Act 1991, after section 54—
"Failure to disclose knowledge or suspicion of offences under sections 53 and 54.
54A.—(1) A person is guilty of an offence if—

(a) he knows, or suspects, that another person is acting in the proscribed manner,

(b) the information, or other matter, on which that knowledge or suspicion is based came to his attention in the course of his trade, profession, business or employment, and

(c) he does not disclose the information or other matter to a constable as soon as is reasonably practicable after it comes to his attention.

(2) Subsection (1) above does not make it an offence for a professional legal adviser to fail to disclose any information or other matter which has come to him in privileged circumstances.
(3) It is a defence to a charge of committing an offence under this section that the person charged had a reasonable excuse for not disclosing the information or other matter in question.
(4) Where a person discloses to a constable—

(a) his suspicion or belief that another person is acting in the proscribed manner, or

(b) any information or other matter on which that suspicion or belief is based,

the disclosure shall not be treated as a breach of any restriction imposed by statute or otherwise.
(5) Without prejudice to subsection (3) or (4) above, in the case of a person who was in employment at the relevant time, it is a defence to a charge of committing an offence under this section that he disclosed the information or other matter in question to the appropriate person in accordance with the procedure established by his employer for the making of such disclosures.
(6) A disclosure to which subsection (5) above applies shall not be treated as a breach of any restriction imposed by statute or otherwise.
(7) In this section "acting in the proscribed manner" means doing any act which constitutes an offence under section 53 or 54 above or, in the case of an act done otherwise than in the United Kingdom, which would constitute such an offence if done in the United Kingdom.
(8) For the purposes of subsection (7) above, having possession of any property shall be taken to be doing an act in relation to it.
(9) For the purposes of this section, any information or other matter comes to a professional legal adviser in privileged circumstances if it is communicated, or given, to him—

(a) by, or by a representative of, a client of his in connection with the giving by the adviser of legal advice to the client;

(b) by, or by a representative of, a person seeking legal advice from the adviser; or

(c) by any person—

(i) in contemplation of, or in connection with, legal proceedings; and

(ii) for the purpose of those proceedings.

(10) No information or other matter shall be treated as coming to a professional legal adviser in privileged circumstances if it is communicated or given with a view to furthering any criminal purpose.
(11) A person guilty of an offence under this section shall be liable—

(a) on summary conviction, to imprisonment for a term not exceeding six months or a fine not exceeding the statutory maximum or to both, or

(b) on conviction on indictment, to imprisonment for a term not exceeding five years or a fine or to both." '.

111 After Clause 30, insert the following clause:
'Amendments of the 1989 Act Financial assistance for terrorism
.—(1) In section 9 of the Prevention of Terrorism (Temporary Provisions) Act 1989 (contributions towards acts of terrorism), the following shall be inserted at the end of subsection (1) (b)—
"or
(c) uses or has possession of, whether for consideration or not, any money or other property,".
(2) In section 10 of that Act (contributions to the resources of proscribed organisations), in subsection (1) (b), after the words "or accepts" there shall be inserted "or uses or has possession of".
(3) In section 12 of that Act (disclosure of information about terrorist funds) for the word "contract", in subsection (1), there shall be substituted "statute or otherwise".
(4) In section 12 of that Act, the following subsection shall be inserted after subsection (2)—
"(2A) For the purposes of subsection (2) above a person who uses or has possession of money or other property shall be taken to be concerned in a transaction or arrangement.".
(5) In section 12(3) of that Act, after "section 9(1) (b)" there shall be inserted "or (c)".
(6) The following subsections shall be added at the end of section 12 of that Act—
(5) No constable or other person shall be guilty of an offence under section 9(1) (b) or (c) or (2) or 10(1) (b) or (c) above in respect of anything done by him in the course of acting in connection with the enforcement, or intended enforcement, of any provision of this Act or of any other enactment relating to terrorism or the proceeds or resources of terrorism.
(6) For the purposes of subsection (5) above, having possession of any property shall be taken to be doing an act in relation to it.".'.
112 After Clause 30, insert the following clause:
Investigation of terrorist activities
' .—(1) Section 17 (investigation of terrorist activities) of the Prevention of Terrorism (Temporary Provisions) Act 1989 shall be amended as follows.
(2) In subsection (1) (a) (ii)—

(a) for "or 11 above" there shall be substituted "11, 18 or 18A of this Act"; and

(b) for "or 28" there shall be substituted "28, 53, 54 or 54A".

(3) For subsection (2) there shall be substituted—
"(2) A person is guilty of an offence if, knowing or having reasonable cause to suspect that a constable is acting, or is, proposing to act, in connection with a terrorist investigation which is being, or is about to be, conducted, he—

(a) discloses to any other person information or any other matter which is likely to prejudice the investigation or proposed investigation, or

(b) falsifies, conceals or destroys or otherwise disposes of, or causes or permits the falsification, concealment, destruction or disposal of, material which is or is likely to be relevant to the investigation, or proposed investigation.

(2A) A person is guilty of an offence if, knowing or having reasonable cause to suspect that a disclosure ("the disclosure") has been made to a constable under section 12, 18 or 18A of this Act or section 53, 54 or 54A of the Northern Ireland (Emergency Provisions) Act 1991, he—

(a) discloses to any other person information or any other matter which is likely to prejudice any investigation which might be conducted following the disclosure; or

(b) falsifies, conceals or destroys or otherwise disposes of, or causes or permits the falsification, concealment, destruction or disposal of, material which is or is likely to be relevant to any such investigation.

(2B) A person is guilty of an offence if, knowing or having reasonable cause to suspect that a disclosure ("the disclosure") of a kind mentioned in section 12(4) or 18A(5) of this Act or section 53(4A), 54(5D) or 54A(5) of the Act of 1991 has been made, he—

(a) discloses to any person information or any other matter which is likely to prejudice any investigation which might be conducted following the disclosure; or

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(b) falsifies, conceals or destroys or otherwise disposes of, or causes or permits the falsification, concealment, destruction or disposal of, material which is or is likely to be relevant to any such investigation.

(2C) Nothing in subsections (2) to (2B) above makes it an offence for a professional legal adviser to disclose any information or other matter—

(a) to, or to a representative of, a client of his in connection with the giving by the adviser of legal advice to the client; or

(b) to any person—

(i) in contemplation of, or in connection with, legal proceedings; and

(ii) for the purpose of those proceedings.

(2D) Subsection (2C) above does not apply in relation to any information or other matter which is disclosed with a view to furthering any criminal purpose.
(2E) No constable or other person shall be guilty of an offence under this section in respect of anything done by him in the course of acting in connection with the enforcement, or intended enforcement, of any provision of this Act or of any other enactment relating to terrorism or the proceeds or resources of terrorism.".
(4) In subsection (3) (defence in respect of disclosure), after "investigation" there shall be inserted "or proposed investigation".
(5) The following shall be inserted after subsection (3)—
"(3A) In proceedings against a person for an offence under subsection (2A) (a) or (2B) (a) above it is a defence to prove—

(a) that he did not know and had no reasonable cause to suspect that his disclosure was likely to prejudice the investigation in question; or

(b) that he had lawful authority or reasonable excuse for making his disclosure.".

(6) In subsection (4) (defence in respect of falsifying material etc.), for the words from "the persons" to the end there shall be substituted "any person conducting, or likely to be conducting, the investigation or proposed investigation".
(7) The following shall be inserted after subsection (4)—
"(4A) In proceedings against a person for an offence under subsection (2A) (b) or (2B) (b) above, it is a defence to prove that he had no intention of concealing any information contained in the material in question from any person who might carry out the investigation in question.".
(8) In subsection (5) (penalties) after "(2)" there shall he inserted "(2A) or (2B)".
(9) The following subsection shall be added at the end—
"(6) For the purposes of subsection (1) above, as it applies in relation to any offence under section 18 or 18A below or section 54A of the Act of 1991, "act" includes omission.".'.
113 After Clause 30, insert the following clause:
Failure to disclose knowledge or suspicion of financial assistance for terrorism
'. The following section shall be inserted in the Prevention of Terrorism (Temporary Provisions) Act 1989 after section 18—
"Failure to disclose knowledge or suspicion of offences under sections 9 to 11.
18A.—(1) A person is guilty of an offence if—

(a) he knows, or suspects, that another person is providing financial assistance for terrorism;

(b) the information, or other matter, on which that knowledge or suspicion is based came to his attention in the course of his trade, profession, business or employment; and

(c) he does not disclose the information or other matter to a constable as soon as is reasonably practicable after it comes to his attention.

(2) Subsection (1) above does not make it an offence for a professional legal adviser to fail to disclose any information or other matter which has come to him in privileged circumstances.
(3) It is a defence to a charge of committing an offence under this section that the person charged had a reasonable excuse for not disclosing the information or other matter in question.
(4) Where a person discloses to a constable—

(a) his suspicion or belief that another person is providing financial assistance for terrorism; or

(b) any information or other matter on which that suspicion or belief is based;

the disclosure shall not be treated as a breach of any restriction imposed by statute or otherwise.
(5) Without prejudice to subsection (3) or (4) above, in the case of a person who was in employment at the relevant time, it is a defence to a charge of committing an offence under this section that he disclosed the information or other matter in question to the appropriate person in accordance with the procedure established by his employer for the making of such disclosures.
(6) A disclosure to which subsection (5) above applies shall not be treated as a breach of any restriction imposed by statute or otherwise.
(7) In this section "providing financial assistance for terrorism" means doing any act which constitutes an offence under section 9, 10 or 11 above or, in the case of an act done otherwise than in the United Kingdom, which would constitute such an offence if done in the United Kingdom.
(8) For the purposes of subsection (7) above, having possession of any property shall be taken to be doing an act in relation to it.
(9) For the purposes of this section, any information or other matter comes to a professional legal adviser in privileged circumstances if it is communicated, or given, to him—

(a) by, or by a representative of, a client of his in connection with the giving by the adviser of legal advice to the client;

(b) by, or by a representative of, a person seeking legal advice from the adviser; or

(c) by any person —

(i) in contemplation of, or in connection with, legal proceedings; and

(ii) for the purpose of those proceedings.

(10) No information or other matter shall be treated as coming to a professional legal adviser in privileged circumstances if it is communicated or given with a view to furthering any criminal purpose.
(11) A person guilty of an offence under this section shall be liable—

(a) on summary conviction, to imprisonment for a term not exceeding six months or a fine not exceeding the statutory maximum or to both; or

(b) on conviction on indictment, to imprisonment for a term not exceeding five years or a fine or to both." '.

Earl Ferrers: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 98 to 113 en bloc.
In moving the Bill at Second Reading in another place, my right honourable friend's predecessor as Home Secretary recognised that, given the particularly serious nature of both forms of crime, it was only right that the measures taken against terrorist finances should, as far as is appropriate, match those taken in relation to drug trafficking. He therefore announced that it was the Government's intention to introduce amendments to the Bill in order to reproduce, in the terrorism legislation, many of the changes being made

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in Part II of the Bill to the money laundering and confiscation provisions contained in the Drug Trafficking Offences Act 1986.
Amendments Nos. 98 to 113 achieve that intention by introducing equivalent new provisions on terrorist finances in the Prevention of Terrorism (Temporary Provisions) Act 1989 and the Northern Ireland (Emergency Provisions) Act 1991. They represent a strengthening of the United Kingdom's legislation on terrorist finances.
Specifically, the amendments create new terrorist finance offences in three areas, all of which will apply throughout the United Kingdom. First, Amendments Nos. 109 and 111 will make it an offence to possess or use terrorist proceeds or resources. This will carry a maximum penalty of 14 years' imprisonment. Secondly, Amendments Nos. 110 and 113 will make it an offence to fail to disclose knowledge or suspicion of terrorist money laundering or of other financial assistance for terrorism. The maximum penalty will be five years' imprisonment. Thirdly, Amendment No. 112 will make it an offence to tip someone off that a terrorist finance or other investigation is planned or in progress or to conceal or destroy material relevant to such an investigation. This will also carry a maximum penalty of five years' imprisonment.
These new offences are in similar terms to those introduced in the drug trafficking legislation by Clauses 16 and 18 of the Bill and, like those offences, they contain the defences and safeguards necessary to ensure that they will not harm legitimate business nor threaten those who are carrying out their lawful duties. They will, however, enhance the investigation and prosecution of terrorist funding in all parts of the United Kingdom.
Amendments Nos. 98 to 108 also strengthen the scheme which applies in Northern Ireland for the confiscation of the proceeds of terrorist-related activities by reading across to the Northern Ireland (Emergency Provisions) Act 1991 many of the changes which Clauses 7 to 15 of the Bill make to the confiscation scheme which is contained in the Drug Trafficking Offences Act 1986. The Northern ireland (Emergency Provisions) Act 1991 scheme is already modelled on the provisions which are currently contained in Sections 1 to 19 of the Drug Trafficking Offences Act 1986, and these amendments will ensure that, as far as is appropriate, the two confiscation schemes will remain in step. Amendment No. 99, for example, will allow the court to make or revise a confiscation order at a later stage if further terrorist proceeds are discovered, while Amendment No. 104 will, in certain circumstances, allow terrorist proceeds to be confiscated where the defendant has died or absconded.
Moved, That the House do agree with the Commons in their Amendments Nos. 98 to 113 en bloc.—(Earl Ferrers.)
8 p.m.
Lord Harris of Greenwich: My Lords, we believe these powers are highly desirable. We welcome them, and we have no difficulty with them in any way.
COMMONS AMENDMENTS
114 Clause 31, page 33, line 9, leave out Clause 31.
115 After Clause 31, insert the following clause:
The offence
'.—(1) An individual who has information as an insider is guilty of insider dealing if, in the circumstances mentioned in subsection (3), he deals in securities that are price-affected securities in relation to the information.
(2) An individual who has information as an insider is also guilty of insider dealing if—

(a) he encourages another person to deal in securities that are (whether or not that other knows it) price-affected securities in relation to the information, knowing or having reasonable cause to believe that the dealing would take place in the circumstances mentioned in subsection (3); or

(b) he discloses the information, otherwise than in the proper performance of the functions of his employment, office or profession, to another person.

(3) The circumstances referred to above are that the acquisition or disposal in question occurs on a regulated market, or that the person dealing relies on a professional intermediary or is himself acting as a professional intermediary.
(4) This section has effect subject to section (Defences).'
116 After Clause 31, insert the following clause:
Defences
'.—(1) An individual is not guilty of insider dealing by virtue of dealing in securities if he shows—

(a) that he did not at the time expect the dealing to result in a profit attributable to the fact that the information in question was price-sensitive information in relation to the securities, or

(b) that at the time he believed on reasonable grounds that the information had been disclosed widely enough to ensure that none of those taking part in the dealing would be prejudiced by not having the information, or

(c) that he would have done what he did even if he had not had the information.

(2) An individual is not guilty of insider dealing by virtue of encouraging another person to deal in securities if he shows—

(a) that he did not at the time expect the dealing to result in a profit attributable to the fact that the information in question was price-sensitive information in relation to the securities, or

(b) that at the time he believed on reasonable grounds that the information had been or would be disclosed widely enough to ensure that none of those taking part in the dealing would be prejudiced by not having the information, or

(c) that he would have done what he did even if he had not had the information.

(3) An individual is not guilty of insider dealing by virtue of a disclosure of information if he shows—

(a) that he did not at the time expect any person, because of the disclosure, to deal in securities in the circumstances mentioned in subsection (3) of section (The offence); or

(b) that, although he had such an expectation at the time, he did not expect the dealing to result in a profit attributable to the fact that the information was price-sensitive information in relation to the securities.

(4) Schedule (Special defences) (special defences) shall have effect.
(5) The Treasury may by order amend Schedule (Special defences).
(6) In this section references to a profit include references to the avoidance of a loss.'
117 After Clause 31, insert the following clause:
Securities to which Part IV applies
'.—(1) This Part applies to any security which—

(a) falls within any paragraph of Schedule 1; and

(b) satisfies any conditions applying to it under an order made by the Treasury for the purposes of this subsection;

and in the provisions of this Part (other than that Schedule) any reference to a security is a reference to a security to which this Part applies.
(2) The Treasury may by order amend Schedule 1.'
118 Clause 32, page 34, line 8, leave out 'discharging' and insert 'bringing to an end'.
119 Page 34, line 9, leave out 'this Part' and insert 'subsection (1)'.
120 Clause 33, page 34, line 19, leave out 'Part' and insert 'section and section 34'.
121 Page 34, line 27, leave out from first 'securities' to "'price"' in line 34 and insert:
'(1A) For the purposes of this Part, securities are "price-affected securities" in relation to inside information, and inside information is "price-sensitive information" in relation to securities, if and only if the information would, if made public, be likely to have a significant effect on the price of the securities.
(1B) For the purposes of this section'.
122 Clause 34, page 34, line 35, leave out from 'person' to 'he' in line 40 and insert 'has information as an insider if and only if—

(a) it is, and he knows that it is, inside information, and

(b) he has it, and knows that he has it, from an inside source.

(2) For the purposes of subsection (1), a person has information from an inside source if and only if—
(a)'.
123 Page 34, line 41, leave out '(a)' and insert '(i)'.
124 Page 34, line 43, leave out `(b)' and insert '(ii)'.
125 Page 34, leave out line 44 and insert 'office or profession; or
(b) the direct or indirect source of his information is a person within paragraph (a).'
126 Clause 35, page 35, line 2, leave out Clause 35.
127 After Clause 35, insert the following clause:
Information "made public"
'.—(1) For the purposes of section 33, "made public", in relation to information, shall be construed in accordance with the following provisions of this section; but those provisions are not exhaustive as to the meaning of that expression.
(2) Information is made public if—

(a) it is published in accordance with the rules of a regulated market for the purpose of informing investors and their professional advisers;

(b) it is contained in records which by virtue of any enactment are open to inspection by the public;

(c) it can be readily acquired by those likely to deal in any securities—

(i) to which the information relates, or

(ii) of an issuer to which the information relates; or

(d) it is derived from information which has been made public.

(3) Information may be treated as made public even though—

(a) it can be acquired only by persons exercising diligence or expertise;

(b) it is communicated to a section of the public and not to the public at large;

(c) it can be acquired only by observation;

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(d) it is communicated only on payment of a fee; or

(e) it is published only outside the United Kingdom.'

128 After Clause 35, insert the following clause:
"Professional intermediary"
'.—(1) For the purposes of this Part, a "professional intermediary" is a person—

(a) who carries on a business consisting of an activity mentioned in subsection (2) and who holds himself out to the public or any section of the public (including a section of the public constituted by persons such as himself) as willing to engage in any such business; or

(b) who is employed by a person falling within paragraph (a) to carry out any such activity.

(2) The activities referred to in subsection (1) are—

(a) acquiring or disposing of securities (whether as principal or agent); or

(b) acting as an intermediary between persons taking part in any dealing in securities.

(3) A person is not to be treated as carrying on a business consisting of an activity mentioned in subsection (2)—

(a) if the activity in question is merely incidental to some other activity not falling within subsection (2); or

(b) merely because he occasionally conducts one of those activities.

(4) For the purposes of section (The offence) a person dealing in securities relies on a professional intermediary if and only if a person who is acting as a professional intermediary carries out an activity mentioned in subsection (2) in relation to that dealing.'
129 After Clause 35, insert the following clause:
Other interpretation provisions
'.—(1) For the purposes of this Part, "regulated market" means any market, however operated, which, by an order made by the Treasury, is identified (whether by name or by reference to criteria prescribed by the order) as a regulated market for the purposes of this Part.
(2) For the purposes of this Part an "issuer", in relation to any securities, means any company, public sector body or individual by which or by whom the securities have been or are to be issued.
(3) For the purposes of this Part—

(a) "company" means any body (whether or not incorporated and wherever incorporated or constituted) which is not a public sector body; and

(b) "public sector body" means—

(i) the government of the United Kingdom, of Northern Ireland or of any country or territory outside the United Kingdom;

(ii) a local authority in the United Kingdom or elsewhere;

(iii) any international organisation the members of which include the United Kingdom or another member state;

(iv) the Bank of England; or

(v) the central bank of any sovereign State.

(4) For the purposes of this Part, information shall be treated as relating to an issuer of securities which is a company not only where it is about the company but also where it may affect the company's business prospects.'
130 Clause 36, page 35, line 24, leave out Clause 36.
131 Clause 37, page 35, line 35, leave out Clause 37.
132 Clause 38, page 36, line 19, leave out 'A person' and insert 'An individual'.
133 Clause 39, page 36, line 34, leave out 'A person' and insert 'An individual'.
134 Page 36, line 34, leave out 'section 35' insert 'subsection (1) of section (The offence)'.
135 Page 36, line 40, leave out from 'which' to 'regulated' in line 42 and insert 'by an order made by the Treasury, is identified (whether by name or by reference to criteria prescribed by the order) as being, for the purposes of this Part,'.
136 Page 37. line 1, leave out 'A person' and insert 'An individual'.
137 Page 37, line 1, leave out 'section 36' and insert 'subsection (2) of section (The offence)'
138 Clause 40, page 37, line 8, leave out 'Sections 35 and 36 do' and insert 'Section (The offence) does'.
139 Page 37, line 8, after 'done', insert 'by an individual acting on behalf of a public sector body'.
140 Page 37, line 11, leave out from 'reserves' to end of line 12.
141 Page 37, line 13, after 'void' insert 'or unenforceable'.
142 Page 37, line 13, leave out '35 or 36' and insert '(The offence)'.
The Earl of Caithness: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 114 to 142. It may be for the convenience of the House if I speak at the same time to the other amendments which relate to the insider dealing provisions of the Bill, Amendments Nos. 172 to 179.
Notwithstanding the swift demise by the hand of, and to the delight of, the noble Lord, Lord Wigoder, of that fine word "tippee", it was the noble Baroness, Lady Mallalieu, who said on Third Reading:
"There are some areas of the Bill which may need to be examined closely in another place, in particular the provisions in the final part of the Bill relating to insider dealing. In his heart of hearts the noble Earl will appreciate that those provisions may need further clarification".
Those comments were echoed by other noble Lords. As my noble friend Lord Ferrers said, the Government have listened to those comments, just as they have listened to the valuable and helpful comments from various bodies with which they have been discussing the legislation.
The result is that the part has been extensively amended in another place. I hope that your Lordships will welcome the amendments which clarify significantly the provisions in the Bill relating to insider dealing.
The purpose of the amendments before your Lordships is threefold. They redraft the backbone provisions of Part IV: the definitions of the offence, defences and insiders. They amend existing provisions; these amendments include the introduction of a definition of when information has been "made public". The amendments also regroup the material, for example, to bring key definitions together.
Although the language employed in the Bill and the amendments is different, the overall effect is basically the same. I believe that this will become clear as I explain the amendments. I hope that your Lordships will forgive me if I do so in a way which focuses on the principal amendments which are before the House.
I shall start with Amendment No. 115 which defines the offence of insider dealing by acquiring and disposing of securities, encouraging another to do so and disclosing inside information, in a single clause which defines all three forms of the offence. In broad terms, therefore, it replaces Clauses 35 and 36. It
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remains an essential requirement of all three forms of the offence that an individual has to have information as an insider.
The other essential requirement of the first form of the offence (dealing in securities) is that the individual deals in securities which are price-affected securities in relation to the information in circumstances which are set out in the clause. Those circumstances are, as in the Bill as approved by the House, that he deals either on a regulated market or that he relies on, or is himself, a professional intermediary. The second and third forms of the offence are disclosure of information which could be used for insider dealing and encouraging someone to deal. I should draw your Lordships' attention to the fact that in order to close off a loophole which could be exploited by the unscrupulous, other forms of the offence are slightly modified in the amendment. The encouraging offence is aligned more closely with our existing legislation and applies to encouraging where someone knows, or has reasonable cause to believe, that the person receiving the encouragement would deal in the circumstances covered by the dealing offence. The disclosing form of the offence has also been adjusted to make it clear that it does not apply to someone who discloses information in the proper performance of the functions of his employment, office, or profession.
Amendment No. 116 inserts a new clause into the Bill, which provides defences to the offence of insider dealing. The new clause therefore replaces Clause 37 of the Bill. As well as reflecting the amendments made to the offence, the new clause particularises the defences which the Bill provides. That change reflects concerns put to the Government about the need for a greater degree of certainty about the effect of the defences.
The new clause provides that, so far as concerns dealing, there is no offence in three particular circumstances. The first is that the person dealing did not expect to make a profit attributable to the fact that he possessed information which was price sensitive in relation to the securities in question.
The second defence applies where someone believed, on reasonable grounds, that the information had been disclosed widely enough to ensure that none of those taking part in the dealing would be prejudiced by not having the information. That defence would be applicable to properly conducted corporate finance transactions such as underwriting offers of listed securities.
The third defence applies where someone can show that he would have done what he did even if he had not had the information. Analogous defences are also provided for the encouraging form of the offence. So far as concerns disclosure, defences are provided where no dealing was expected or dealing was not expected to lead to someone making a profit attributable to the fact that the securities concerned were price affected in relation to the information in question.
In addition to the defences I have just mentioned, there are also of course the defences provided by the new schedule which Amendment No. 172 inserts into the Bill. The new schedule is derived from Schedule 2

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of the Bill and carries forward, in amended form, defences related to market making, price stabilisation, and market information. The amendment extends the defences to the encouraging form of the offence as well as its dealing form. They also specify circumstances in which it is reasonable for someone to use market information.
The amendments to the definition of insider dealing (Amendments Nos. 122 to 125) are consequential on the recasting of the offence provided by Amendment No. 115. Who does and does not fall within the ambit of the legislation is not changed by these amendments.
That concludes what I have to say about what I described earlier as the backbone provisions of the part. Accordingly, I now turn to the other amendments to the part, and I shall focus particularly on the amendments which introduce new clauses into the Bill.
Amendment No. 117 provides a new clause which defines the securities to which the part applies. The new clause is, of course, derived from the first part of Clause 31 of the Bill. I should add here that one of amendments to Schedule 1, which sets out the types of securities to which the legislation applies, extends securities to include contracts whose value depends upon the interest payable on money placed on deposit in order to catch certain contracts on short-term interest rates.
Amendment No. 127 introduces a new clause relating to when information is to be regarded as having been made public. When information has and has not been made public is the single issue which has caused most concern about this part and was the subject of valuable discussion during your Lordships' earlier consideration of the Bill.
The new clause takes the form of a non-exhaustive provision which contains two elements. First, it describes circumstances in which information is definitely to be regarded as having been made public. Those include publication of information under the rules of a market or circumstances where the information is readily accessible to investors.
Secondly, it identifies situations where the circumstances in which the information is disclosed may cast doubt on whether the information could be treated as having been made public: it provides that where those circumstances apply the information may have been made public. That covers, for example, situations involving payment of a fee.
Amendment No. 128 introduces the definition of professional intermediaries into the main body of the Bill. As it left this House it formed part of a schedule.
Amendment No. 129 brings together definitions of various terms employed in the part. The new clause provides definitions of regulated markets, issuers, companies and public sector bodies, and makes it clear that information shall be treated as relating to an issuer if it may affect its business prospects. Minor amendments have been made in bringing the provisions together.
Before concluding, I should like to speak briefly about banks' ability to be involved in debt equity swaps in order to remove any possible doubt which might arise from the debate in another place.
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Restructuring through debt equity swaps generally involves the issue of new equity, in which case it will be outside the scope of the legislation, because the legislation will apply to securities which are, rather than are to be, listed. If existing listed equity is involved in a transaction, the second of the recast general defences will apply, where, as will be the case in a debt-for-equity swap, the parties involved in the transaction possess the relevant information. There can be no question therefore of a bank which is involved in a properly conducted corporate restructuring falling foul of the legislation.
My comments have focused upon the most important of the features of the amendments to the insider dealing provisions contained in the Bill. I commend them to your Lordships as improving and clarifying the legislation. I am sure that they will be welcomed by the whole House.
Moved, That the House do agree with the Commons in their Amendments Nos. 114 to 142.— (The Earl of Caithness.)
Lord Wigoder: My Lords, I am grateful to the noble Earl for his clear and lucid explanation of the amendments which we have all followed with the greatest of interest. One of the unhappy features of the Bill's passage through your Lordships' House was that when it came to Part IV (insider dealing) those of us who were taking part in the proceedings found ourselves in receipt of no substantial assistance from any of the professional organisations which were deeply involved in the intricacies of this complicated subject. I believe that I am right in saying that none of the Members of your Lordships' House who are members of those organisations found it possible to be here in Committee and to help us by commenting on the clauses.
In those circumstances it was hardly surprising that on Third Reading considerable anxiety was expressed about these provisions. It was assumed that substantial amendment would be necessary in another place. I welcome the amendments. I should be grateful if the noble Earl would assist the House about the organisations which were consulted before the improvements were agreed.
Lord Harris of Greenwich: My Lords, the noble Earl was absent when I referred to the report of the Hansard Commission on the legislative process. The noble Earl, Lord Ferrers, will be glad to know that I do not propose to repeat those quotations. All that I wish to say to the noble Earl, Lord Caithness, is that most of the criticisms in that report about the way in which governments legislate have been replicated in this Bill. There was a woeful lack of consultation before it was published. Admittedly we have a series of amendments as a result of that consultation. However, I hope that the two economic departments which are involved in this part of the Bill—that is both officials and Ministers—will have their attention drawn to what the Hansard Commission stated about the matter. We should not be forced to legislate in this manner with consultation beginning after the publication of the Bill. That is the criticism to which

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the Government were subjected when the Bill was first published and I hope that we shall not have a repetition of that.
The Earl of Caithness: My Lords, I note what the noble Lord, Lord Harris of Greenwich, said and I shall draw that to the attention of my right honourable friend the Chancellor of the Exchequer. As regards the comments made by the noble Lord, Lord Wigoder, I understand the frustration at not having the proper information when the matter could have been debated using the expertise of your Lordships' House. I, too, was disappointed that those involved in the issue on a day-to-day basis were unable to participate in our debates and that more representation was not made at an earlier stage. If it was, the noble Lord, Lord Harris, might not have made those comments.
On Question, Motion agreed to.
8.15 p.m.
MOTION AND AMENDMENTS TO BE MOVED ON CONSIDERATION OF COMMONS AMENDMENTS
References are to HL Bill 121]
Lord McIntosh of Haringey 143A Lord McIntosh of Haringey to move, That this House do disagree with the Commons in their Amendment No. 143 but do propose the following amendment in lieu thereof—
Before Clause 42, insert the following new clause:
Adjustment of fines
(".—In section 18 of the Criminal Justice Act 1991, after subsection (2) there shall be inserted the following subsection—
"(2A) Rules made by the Lord Chancellor in exercise of the powers conferred on him by paragraph (b) of subsection (2) above shall provide for an expenditure allowance to be deducted from the offender's weekly income before his disposable weekly income is determined, and the size of such allowance shall vary according to which of ten or more bands of income levels includes the offender's income."")
Lord McIntosh of Haringey: My Lords, I beg to move that this House do disagree with the Commons in their Amendment No. 143 but propose the amendment printed on the Marshalled List in lieu thereof.
We move to the extremely important issue which was introduced into the Bill in May of this year—and only in May—of the fixing of fines and of unit fines. I shall not weary the House with the long history of that subject. Suffice it to say that the Criminal Justice Act 1991 was enacted when almost 19,000 people were imprisoned in this country for the non-payment of fines. They made up almost a quarter of the total number of people imprisoned in this country. Generally they were imprisoned for only a short time and therefore at any one time their proportion represented substantially less than one quarter. Nevertheless, the costs of processing such short prison sentences must be considerable. They include the costs of reception, discharge, the paper work involved and the fact that they were put into local prisons which are the most overcrowded. That is quite apart from the justice of the matter because one must reach the
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conclusion that a large number of people were imprisoned for not paying fines which they could never have paid when they were imposed. That was the conclusion of the 1990 Home Office evaluation paper which stated that poor offenders had in the past been fined more than they could afford.
It was that situation—a very serious situation, I hope that your Lordships will agree—which caused the Criminal Justice Act 1991 to be enacted. It is not as though that Act were dreamt up at short notice. It does not suffer the defects which this Bill suffers. The scheme of unit fines was produced after extensive experimentation in Basingstoke, Bradford, Swansea and Teesside and after the Home Office evaluation study reached the conclusion that there were falls of between 24 and 27 per cent. in the rates of imprisonment for the non-payment of fines in three of the courts which imprisoned people for non-payment. Basingstoke had never done so.
It is not as though the 1991 Act was ill-considered, as I have said. But what has happened? Seven months after the Act came into force in a more rigid way than should have been the case, everyone panicked. That came through to many magistrates' courts which could not have been aware of the experience of the four experimental courts. The panic came through to Conservative MPs and to others. The Government, having denied that there was anything wrong with the 1991 Act, and having denied that any change was required—and the Bill had been in Parliament since November of the previous year—suddenly in May changed their mind and proposed to remove the provision of unit fines.
That is not a way in which we should react to issues of public policy and it is not a way in which we should treat Parliament. The amendment does not suggest that we should return to the unit fine provision of the 1991 Act without alteration. We are suggesting that there are relatively simple and easily understood ways of dealing with the problem of unit fines without some of the grotesqueries which occurred. They were caused largely by the fact that the maximum units were introduced at far too low a level of income and because there was no provision for dealing with the problems of those who for whatever reason failed to submit details of their income. We propose that the Lord Chancellor should make rules which provide for an expenditure allowance to be deducted from the offender's weekly income before his disposable weekly income is determined. Those rules should apply to all magistrates' courts and not merely to those which continue to use the unit fines system.
One of the worst features of the Bill as amended will be that although Ministers have clearly said that they do not object to magistrates' courts using a unit fines tariff they will not insist on it. As a result we shall have the worst of all possible worlds. We shall have enormous differences between one magistrates' court and another in the way in which they deal with the size of the fine in relation to an offender's income. Some magistrates' courts will use a unit fines system, as Basingstoke continues to do, and some will not. Some, whether they do so or not, will behave differently from others. There will be no consistency of practice and we

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shall have exactly the same kind of problem as we had with the imprisonment for non-payment of fines before the passage of the 1991 Act.
It must be recognised that acceptance of my amendment would rule out Amendment No. 180, which is the schedule referred to in Amendment No. 143. But of course, Amendment No. 180, the proposed new schedule, is defective in any event. In particular, it seems to suggest that it is quite an acceptable procedure for somebody to write in pleading guilty and then, and only then, to be asked for a statement of his financial situation before a fine is imposed. I put it to the noble Earl, in the hope that it can be incorporated in regulations rather than on the face of the Bill, that it is surely better that when people are notified of their opportunity to plead guilty by post without attending the court, at the same time they should be sent a straightforward form dealing with their financial situation so that the court can, without further inquiry, immediately impose a fine. That may be merely an administrative matter but it would save a considerable amount of court time.
Where the unit fine system has been applied with a degree of flexibility, which would be provided for with the amendment, it has worked. Where it has worked, it has reduced the prison population—the number of admissions to prisons for non-payment of fines. Surely we should take this opportunity to apply a more flexible system which recognises the ability of offenders to pay the fines that are imposed. I beg to move.
Lord Wigoder: My Lords, I prefer Amendment No. 143. I find it difficult to believe that fines can be satisfactorily assessed by somewhat artificial arithmetic formulae. I should much sooner see those fines being assessed by magistrates exercising their enormous pool of common sense, experience and knowledge of the world. Of course, they are advised on legal matters by a clerk to the justices. In those circumstances, although this may have been an experiment worth trying, I believe that within the six or seven months of its duration it proved not to be successful. As I say, I prefer the government amendment.
Baroness Macleod of Borve: My Lords, I begin by saying that I have been in contact with the Magistrates' Association and it wishes me to make one specific point to the Minister. It hopes that magistrates will not be required to put all the amendments into effect before 1st November because time is needed for the revision of sentencing guidelines and for training.
I was a magistrate for 30 years; I have had experience of sitting in Crown Courts; and I was a member of the Parole Board. Therefore, I have an interest in whatever the Government decide to do when dealing with criminal matters. I shall not make a Second Reading speech. I shall speak to the amendments.
I understand that we are at present dealing with Amendment No. 143A. In consequence of what the noble Lord, Lord McIntosh, said, I ask the Minister whether it is intended that a means form should be
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sent out with the original summons. I am not sure whether that would prove to be helpful. I must say that not all the defendants are as honest as some other people in the country. Even if they have signed a form, it is not always necessarily completely correct. But one would suppose that the guidelines which would have to be sent out by the Magistrates' Association and the Lord Chancellor would have to incorporate that.
I ask also whether, as the noble Lord, Lord McIntosh, suggests, the guidelines for payment are based on the weekly take-home pay. As I am well aware, there are various ideas as to how fines should be paid, when they should be paid and what the punishment should be if they are not paid. Many changes will be made to the system that was used in my day. On the other hand, it is very much better to leave such matters as far as possible to the magistrates concerned.
Having been a magistrate for very many years and having served as a member of the Lord Chancellor's Advisory Committee for Middlesex for 12 years, I pay tribute to the common sense of the magistracy. If your Lordships decide that the magistrates should not be trusted to use their own common sense, as they have always done, and that laws and guidelines should be laid down which are almost impossible for them to fulfil, so be it. But I feel that the experiment has been tried. It has caused trouble in most of the country. I hope that the Minister will give us an assurance that the amendment proposed by the noble Lord, Lord McIntosh, will not be agreed to and that we shall accept government Amendments Nos. 143 and 180.
Lord Elton: My Lords, I did not take part in our debates at earlier stages of the Bill. However, in many respects the Bill that we discussed then was a different Bill from that which we are now discussing. I am tempted to take part now and I took part in the proceedings which resulted in the unit fine experiment being implemented. I remain persuaded that it has some merit.
While I do not recommend the amendment in the name of the noble Lord, Lord McIntosh, it would be extremely helpful were we to have some assurances from the Government before we dismiss it.
I was rather surprised to hear the noble Lord, Lord Wigoder, whose opinion I greatly respect, refer to the experiment as a failure. I believe that that is how he described it. I have a summary of the Home Office Research and Planning Unit Paper No. 59 sent to some of your Lordships by NACRO. That report gives one to understand that courts were able to obtain sufficient information about offenders' means without undue difficulty by using a simple form; that fines imposed on the poorest offenders were reduced to more realistic levels; that disparities between courts as regards fines imposed on poorer offenders were significantly reduced; that fines were paid more quickly and there was a lower rate of default; and that there was a large drop in the number of people imprisoned for non-payment. At three of the four courts there were falls of between 24 per cent. and 27 per cent. in the number of people imprisoned for fine default. As the noble Lord, Lord McIntosh, has already said, the

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fourth court, Basingstoke, rarely imprisoned offenders for fine default even before the experiment. The evaluation report concluded:
"The consensus among magistrates and court staff at all the courts involved in the experiments was that unit fines were an improvement on the previous system".
I do not believe that that experiment can be rated as a failure if the description is accurate. What may have been a failure was the way in which it was followed when there was an attempt to introduce the scheme on a wider scale. One would not wish to see some of the absurdities repeated, although the media were much fonder of telling one of ridiculous fines when they were promulgated than of telling one when they had been reduced to a fraction if they were too much, or increased if they were too little before being enforced. Therefore, the country received a falsified view of what was going on and of the experiences of the courts.
I hope that the principle that the unit fine scheme introduced can be preserved; that is to say, that ability to pay shall be a significant factor in the decision of the level of fine as well as other considerations. It is ridiculous for a millionaire to be fined the same amount as someone almost on social security for a similar offence. That is so obvious that it ought not need to be said.
In replying to the debate, I hope that my noble friend will say what steps will be taken in the form of guidelines or other means for ensuring that the fixing of the level of fines, upon which a good deal of the repute of our criminal justice system depends, can be made a visibly influential part of the machinery. The courts may then be able voluntarily to follow a unit fine scheme of their own and call it something else.
However, I hope that my noble friend will say that we shall return in some way to a position in which one can expect the level of fines to bear a relationship not only to the seriousness of the offence but also the ability to pay. If someone rich has a small fine, it has no relationship to the severity of the offence. The level of hurt is infinitely less than for someone with a very small income. I hope that I have made the point clear and that my noble friend will be able to incorporate some response in his reply.
8.30 p.m.
Baroness Seccombe: My Lords, I feel unable to support the amendment of the noble Lord, Lord McIntosh of Haringey. I believe that it would be bureaucratic and detailed. It would take away the flexibility of magistrates.
I am delighted to support the government amendment. However, we should recognise that the principle of unit fines was good. Sadly, in practice it produced a straitjacket for magistrates and eliminated from them all flexibility and discretion.
Although pilot schemes were held in various courts around the country with qualified success, all that experience went out of the window when the maximum financial penalty was raised five-fold. However, I believe that the intensive training that we as magistrates received for the unit fine system will not be wasted. I am sure that the three issues in the
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amendment for consideration will be addressed in an even more sensitive and sensible manner: the financial circumstances of the offender; the seriousness of the offence; and the circumstances of the case.
I congratulate the Minister for responding to the anxieties of my colleagues in such an expeditious way.
Lord Harris of Greenwich: My Lords, clearly there has to be a relationship between the means of an offender and the level of fine. Indeed, it would be an absurdity to argue the reverse. I do not have difficulty with what the noble Lord, Lord Elton, said about some form of voluntary system.
I believe that it is only fair to say that the Government were in a mess over the system. There was no easy solution. Having had the good fortune to sit in on one or two Home Office crisis meetings. I can imagine the different arguments which would have been deployed when one has to deal with the great crisp packet crisis. I refer to the gentleman who was unemployed and was fined about £1,200. We cannot have a situation in which the law is made to appear absurd; and that was the problem.
There is no easy solution. One could argue that the Government might have taken some action other than the course that they have adopted. However, I believe that they were in genuine difficulties. I regret that the experiment —perhaps I should say "full scheme" or I shall be reproved by the noble Lord, Lord Elton—did not succeed. However, it did not; we have to recognise the reality of that. Such critical comment was made that I believe it undermined the integrity of the system. That being so, the Government had a difficult choice. All that we can do today is to regret what happened and to agree with what the noble Lord. Lord Elton, said; namely, that if any form of voluntary system could be introduced, speaking for myself. I would welcome it greatly.
Earl Ferrers: My Lords, I am grateful to your Lordships for the understanding way in which you have dealt with the problem. It may be convenient if we discuss Amendments Nos. 143 and 180 at the same time because they all cover the same point.
My noble friend Lord Elton hoped that we shall return to a point where the level of fines relates to the ability to pay. That is precisely the point that we wish to have in mind. The level of fine which is imposed by a court should not only reflect the seriousness of the offence for which it is being imposed, it should also take into account the offender's means. That principle still remains.
Amendment No. 143 will place upon the courts a duty to inquire into the financial circumstances of an offender before setting a fine. This preserves one of the most important features of the unit fine scheme because, although many magistrates did make such inquiries before the unit fine scheme was introduced, they had no duty to do so, and now they have. It also extends that duty to the Crown Court where there has not, up to now, been any explicit requirement to make inquiries of this kind.
But, in contrast to the present arrangements, the new provisions will allow courts to decide the kind of inquiry which would be appropriate in each individual

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case. There will be no prescribed statutory form although courts will, of course, be free to devise a form for their own local use if they conclude that that would best suit their needs.
The amendment also stipulates certain factors which a court has a duty to consider when it is determining how much an offender should be fined. Under the new arrangements, each fine must reflect the court's view of the seriousness of the offence but, in setting a fine which reflects the seriousness of the offence, we intend that courts should be required to take into account the circumstances of the case and, in particular, the offender's financial position.
My noble friend Lord Elton was concerned that those requirements should acknowledge that the same fine can have a different impact on different offenders; indeed, so it can because of the offenders' different financial circumstances. A fine might represent the equivalent of a month's food and rent for one offender and therefore might result in significant hardship for him and his family. But, for another, the same fine might be nothing more than loose change or the cost of a night out on the tiles—an inconvenience at most. A court may consider that different fines would reflect the seriousness of the same offence for offenders of differing means.
My noble friends Lord Elton and Lady MacLeod, and the noble Lord, Lord Harris, were concerned about guidelines for the courts. The new statutory provisions require means to be taken into account. I understand that the Magistrates' Association will be issuing guidance on the new fining provisions, including sentencing guidelines, and the Home Office will be issuing a circular explaining the change of law in that area.
My noble friend Lord Elton and the noble Lord, Lord Harris, were concerned that the courts should be free to apply their own voluntary schemes if they wish to do so. The new provisions restore discretion to the courts. If individual courts find it helpful to devise their own informal local unit model which allows them to apply the new provisions to fine an individual offender justly and sensibly, perhaps by providing a starting point for sentences, then they will be free to do so. The government amendment explicitly contains the power which was first conferred on magistrates and Crown Courts by the Criminal Justice Act 1991 to raise as well as lower a fine in order to take account of an offender's financial circumstances. In our view, that is central to retaining the principle that courts should be able to set fines which impose, so far as is reasonably practicable, equivalent hardship for all.
We do not think, though, that a fine should be raised or lowered to such a degree that it no longer bears any reasonable relationship to the offence which is committed. An offender with limited means should not be fined a negligible sum for a serious offence. To do so diminishes the seriousness of the offence in the eyes of the public.
However, at the same time we do not think that affluent offenders should be fined thousands of pounds for minor offences—a fact which some of your Lordships may find reassuring, even though to others it may be academic. That means, therefore, that there
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will be a range of possible fines which reflect the seriousness of the offence. The point at which the fine is fixed in any individual case will depend on the financial circumstances of the offender. We believe that sentencers will use their discretion to apply the new provisions both sensibly and justly. The remaining provisions of Amendment No. 143 are consequential. The amendment also brings into operation a schedule which is created by Amendment No. 180.
Amendment No. 143A in the name of the noble Lord, Lord McIntosh, introduces a different matter altogether. It would insert a new clause into the Bill which suggests that the Government should have amended the unit fine scheme rather than have abandoned it. I was grateful to the noble Lord, Lord Wigoder, for saying that he approved the Government's amendment. I was also grateful to my noble friend Lady Seccombe for saying so too. The noble Lord, Lord Harris of Greenwich, will recognise the difficulty that we were in. We recognised that there was a significant problem with the operation of the unit fine scheme. Before we changed it we looked at all the options for amending it. We do not think, though, that introducing a system of banded expenditure allowances, or indeed any other refinement, would have solved the problems which sentencers have experienced with the scheme.
The process of determining local allowances for expenditure and applying them properly in individual cases is already a complicated feature of the unit fine scheme. A system of banded allowances would require magistrates to devise and apply a whole series of such allowances—perhaps 30 or more—for offenders of different incomes. To do this they would need to calculate the probable expenditure of offenders in their local area on a whole range of essential items such as food, housing, clothing, council tax, housing and water rates. And they would need to undertake the same process for the offender's dependants. That simply is not realistic. It would make it wildly complicated and completely incomprehensible.
Lord Elton: My Lords, before my noble friend leaves that point, one thing still worries me. It is that the efficiency of the system seems to depend on the honesty of the accused—or, as he later is, the convicted—in declaring his means and his liabilities. Can my noble friend tell us what will become of the convicted if it later transpires that he has succeeded in misleading the court? In other words, what is the onus or the pressure on a person to declare that he has sufficient money to be fined a reasonable amount?
Earl Ferrers: My Lords, of course it is up to any person to he honest in court. If he is not honest and he misleads the court, he is in trouble. Under Section 20 of the Act, which is amended by Amendment No. 180, if misleading information is given in response to a financial circumstances order, an offence is committed which carries three months' imprisonment and/or a fine up to £2,500. I would hope that that would have what one might call a slowing up effect on people's desire to mislead the court.
Lord Elton: I am most grateful.
Earl Ferrers: My Lords, I think—
Lord Monkswell: My Lords, I am grateful to the noble Earl for giving way. Can he advise the House whether the ceiling on fines under the unit fine system is likely to be changed? Perhaps I can give the noble Earl an example. Earlier this year I was fined £400 for a speeding offence which I felt was an excessive burden although I duly paid the fine on the basis that my understanding was that if someone—one should bear in mind that my income is round about £12,000 a year —appeared in court who was in exactly the same situation and his income was £120,000 a year, he would be fined £4,000. If his income was £1.2 million a year, my understanding was he would be fined £40,000. One can imagine the sense of unfairness I felt when I realised later that there was a ceiling and that very rich people would not be paying pro rata fines; effectively they would get off fairly lightly. Can the noble Earl please advise me whether this terrible unfairness will be correcteed by these measures?
8.45 p.m.
Earl Ferrers: My Lords, this brings the position into reality. The position is that there are certain levels of fines. Each level enables a maximum amount of fine to be obtained. The purpose of the unit fine—it was a complicated purpose—was to achieve continuity on the basis of units, the maximum of which came to the top of the maximum of the level of unit fine. In other words, if a level 3 fine was a certain maximum, then the amount of units one could obtain could not exceed that amount. What we are saying is that the same levels will obtain now as obtained then but it will be up to the court to determine, up to that level, how much the person concerned can afford to pay and how much, in all the circumstances, it is right for him to pay. It is not our intention at the moment to raise the levels. They have been raised relatively recently and they could be raised in the future. For any particular offence there is a maximum which can be charged and the amount charged per person will depend upon the circumstances of the individual and the particular case.
I now return to the amendment of the noble Lord, Lord McIntosh. Even if local bands could be realistically and consistently devised, such a scheme would still not produce satisfactory results. However frequently the bands were set—even at £10 intervals —there would be cases where, by earning a few pounds more, an offender would move into a higher income band where he would attract a higher allowance, which would result in him paying a lesser fine. In this case, the more he earns, the less he will pay. That cannot be right. The whole purpose of justice is that it must not just be done but be seen to be done. If you do not understand it, it is not seen to be done. And in this case even if you do understand it, justice is still not done.
My noble friend Lady Macleod asked whether these arrangements would be implemented before November. I can inform her that we are considering the date of the implementation of these arrangements.
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I am sure your Lordships would agree that once Royal Assent is given, we must try to implement the arrangements as soon as possible so that everything can settle down and the courts can get on with their proper job.
The noble Lord, Lord McIntosh, asked whether people could plead guilty by post. When defendants are invited to plead guilty by post, they can, of course, be offered the chance to tell the court about their means but they should not be obliged to do so unless it is clear that they are pleading guilty. For all those reasons I hope your Lordships will agree that the amendments made in another place are correct and that it would be best not to amend them by the amendment of the noble Lord, Lord McIntosh of Haringey.
Lord McIntosh of Haringey: My Lords, it will be obvious that I am not happy with that situation. I am grateful for the comments of the noble Lord, Lord Elton, and for his support for the principle of unit fines. I am also grateful for the thoughtful and cautious approach of the noble Baroness, Lady Macleod, who has immense experience and the views of the Magistrates' Association behind her.
The fact of the matter is that the situation before 1991 did not work. It resulted in far too high a level of committal to prison, which happened despite the fact that it was the almost universal practice—in fact I suggest it was the universal practice—of magistrates to ask defendants what their income was. Therefore the duty to ask for financial information is not very much greater than it was before 1991.
I am sorry that the result should be that the Government are determined to abandon the unit fine scheme rather than amending it as we suggest. I suspect that there will continue to be guidance from the Home Office to magistrates. Of course, we shall have a Criminal Justice Bill in the next Session, in which it may be necessary to return to this issue. In those circumstances, I beg leave to withdraw my Motion.
Amendment No. 143A, as an amendment to Commons Amendment No. 143, by leave, withdrawn.
Earl Ferrers: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 143.
Moved, That the House do agree with the Commons in their Amendment No. 143.—(Earl Ferrers.)
On Question, Motion agreed to.
COMMONS AMENDMENT
144 Before Clause 42, insert the following clause:
Powers of courts to deal with offenders
'.—(1) In section 1 of the Criminal Justice Act 1991 (restrictions on imposing custodial sentences), the following shall be substituted for subsection (2) (a)—
"(a) that the offence, or the combination of the offence and one or more offences associated with it, was so serious that only such a sentence can be justified for the offence; or".
(2) In section 2 of the Act of 1991 (length of custodial sentences), in subsections (2) (a) and (3), for the word "other" there shall be substituted "one or more".
(3) In section 3 of the Act of 1991 (procedural requirements for custodial sentences), in subsection (3) (a), the words "or (as the case may be) of the offence and the offence or offences associated with it," shall be inserted after the word "offence".
(4) In section 6 of the Act of 1991 (restrictions on imposing community sentences)—

(a) in subsection (1), for the words "other offence" there shall be substituted "or more offences"; and

(b) in subsection (2) (b), for the word "other" there shall be substituted "one or more".

(5) In section 7 of the Act of 1991 (procedural requirements for community sentences), in subsection (1), the words "or (as the case may be) of the offence and the offence or offences associated with it," shall be inserted after the word "offence".
(6) For section 29 of the Act of 1991 (effect of previous convictions) there shall be substituted—
"Effect of previous convictions and of offending while on bail.
29.—(1) In considering the seriousness of any offence, the court may take into account any previous convictions of the offender or any failure of his to respond to previous sentences.
(2) In considering the seriousness of any offence committed while the offender was on bail, the court shall treat the fact that it was committed in those circumstances as an aggravating factor.
(3) A probation order or conditional discharge order made before 1st October 1992 (which. by virtue of section 2 or 7 of the Powers of Criminal Courts Act 1973, would otherwise not be a sentence for the purposes of this section) is to be treated as a sentence for those purposes.
(4) A conviction in respect of which a probation order or conditional discharge order was made before that date (which, by virtue of section 13 of that Act, would otherwise not be a conviction for those purposes) is to be treated as a conviction for those purposes.".
(7) In subsection (1) of section 12D of the Children and Young Persons Act 1969 (duty of court to state in certain cases that requirement is in place of custodial sentence), in paragraph (ii) (a) for the words "other offence" there shall be substituted "or more offences".
(8) In section 38 of the Magistrates' Courts Act 1980 (committal for sentence on summary trial of offence triable either way), in subsection (2) (a), for the word "other" there shall be substituted "one or more".
(9) The amendments made by this section shall apply in relation to offenders convicted (but not sentenced) before the date on which this section comes into force as they apply in relation to offenders convicted after that date'.
Earl Ferrers: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 144. This amendment deals with sentencing matters and makes three significant changes to the powers of the courts.
The most significant of these amendments—and certainly the one which has received the most attention—reverses the effect of Section 29 of the 1991 Act so that courts will be allowed to pay full and proper regard to an offender's previous convictions and to have regard to any failure to respond to previous sentences when forming an opinion about the seriousness of the offence or offences. This change does not alter the fundamental principle which lies
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behind the 1991 Act, which is that the sentence should reflect the seriousness of the offence. We have, though, realised that considerable concern has been expressed by sentencers—including the senior judiciary and others—that, in some cases, the seriousness of the current offence can only adequately be assessed if previous convictions are taken into account and if the response of the offender to previous sentences, which may have been imposed upon him, are also considered. We are, therefore, restoring to sentencers the discretion which they need to sentence justly in individual cases.
The amendment also requires that where an offence is committed on bail this should be regarded by the court as an aggravating factor in weighing the seriousness of the offence. In most cases, this will result in a heavier sentence than would otherwise have been the case. The amendment gives effect to the Government's manifesto commitment to strengthen the powers of the court to deal with those who offend on bail. It has been drafted following consultation with the judiciary. Your Lordships will know that the Government share the widespread public concern about offending on bail, and I hope that this will be an added inducement for the courts to take tough action against those who offend while on bail.
In subsection (1) the amendment also removes the restriction which was imposed by the Criminal Justice Act 1991 which allows the courts to consider only one offence and one other when forming an opinion as to whether custody is justified. The amendment also removes the restriction where it appears elsewhere in the Act.
Moved, That the House do agree with the Commons in their Amendment No. 144.—(Earl Ferrers.)
AMENDMENT TO COMMONS AMENDMENT NO. 144
144A Before Clause 42, in subsection (1), leave out inserted paragraph (a) and insert:
(""(a) that the offence was so serious, or the overall seriousness of the offence and one or more offences associated with it was such, that only such a sentence can be justified for the offence; or"")
Lord McIntosh of Haringey: My Lords, I beg to move Amendment No. 144A as an amendment to Commons Amendment No. 144. I should like to speak also to Amendments Nos. 144B, 144C and 144D.
This is, of course, an immensely complicated problem. It is probable that no formulation in legislation will get the matter entirely right. It is an issue where the practice of the judiciary and the magistrature cannot be completely constrained but where behind those practices there are a number of principles which ought as far as possible to be made effective by legislation.
Amendment No. 144A seeks to change the phrase:
"the combination of the offence and one or more offences associated with it"
to the phrase:
"the overall seriousness of the offence"
and other offences. A more complicated version has been proposed by Justice, but it has the same aim.

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The purpose is to maintain a relationship between the sentence and the gravity of the current offence with which the court is concerned. We have to try to avoid sentencing a petty thief as though he were a more serious criminal. Again, we must refer back to the situation which existed before the Criminal Justice Act 1991 when it was possible for petty thieves, particularly those who were accustomed to spending most of their lives in prison, to be in prison for a very long time for minor offences. That was called the stepladder.
Amendment No. 144B is concerned with a similar element in the same issue. The Government have rightly said that more than two offences can be taken into account in determining the sentence. I hasten to say that I believe that the government amendments improve the position under the 1991 Act. Certainly, it is perfectly proper that a more severe sentence should be passed on an offender with previous convictions. However, I suggest to your Lordships that the sentence should not be out of all proportion to the seriousness of the current offence. In other words, we must not revert to the situation before the 1991 Act.
In 1980 the Court of Appeal said that an offender should not be sentenced for the offences which he has committed in the past and for which he has already been punished. That is an important principle which we ought not to forget. Otherwise, if we did not observe that principle, somebody guilty of repeated burglaries, however small, could be sentenced more severely than a rapist. I believe that the term here is sentencing on the record. We need a limiting principle of proportionality to the offence before the court.
Amendment No. 144C is a fall-back position. It accepts the wording in Amendment No. 144 but suggests that it would be desirable that the court should state which previous convictions or which failure to respond is taken into account and why it is relevant to do so. I should have thought that that was relatively uncontroversial. I may well be reassured by being told by the Minister that that could be incorporated in guidance.
Amendment No. 144D refers to the matter to which the Minister referred in his introduction: namely, the question of offences committed while on bail. I certainly agree with the Minister that there has been a great deal of public anxiety about offences committed on bail. However, I suggest that there could be circumstances when there is no aggravation and no reason for a more severe sentence just because somebody is on bail.
I should like to put two examples to the Minister. The first is where the original offence is a serious offence but the new offence is either minor or completely irrelevant. For example, the original offence might be armed robbery but the new offence might be a parking offence or drunk and disorderly. I suggest that under those circumstances there is no aggravation as a result of the offence being committed while on bail.
The second point which I should like to put to the Minister is the case where the result of offending on bail is the revocation of bail. In that event the offender
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is already suffering significant extra punishment and it might be that in the circumstances in some cases there would be no justification for saying that there was aggravation in the particular case.
Therefore, we propose simply to leave out the word "shall" and insert "may" so that there is a degree of discretion in the cases to which I have referred.
As I said, these are difficult matters and are not ones which will ever be resolved finally. But we do not want to return to the situation before 1991. The Government are making a worthwhile attempt to improve the law with these amendments. We simply suggest that the law could be improved even more with the further amendments. I beg to move.
Moved, that Amendment No. 144A, as an amendment to Commons Amendment No. 144, be agreed to.—(Lord McIntosh of Haringey.)
Lord Ackner: My Lords, before embarking on comments on the amendments, perhaps I may seek to meet the proposition that there was something, back in 1991, which called for the censure which the noble Lord, Lord McIntosh, has just uttered. Over 20 years ago I used to preside over sentencing conferences. The principles of sentencing were as clear then as they are today. One of them was that one imposes a sentence proportional to the offence. If the noble Lord, Lord McIntosh, cares to look in the Library, he will find a two-volume work called Encyclopaedia of Sentencing Principles, dealing, item by item, with principles and offences. If he looks at another document which I caused to be put into the Library, he will see a collection of guideline principles. He speaks as if, prior to the Criminal Justice Act 1991, there were no sensible sentencing principles, that the Court of Appeal did not exist and that judges did not know their job. With great respect, that is complete nonsense.
What is required is a little plain speaking about what is now being done. Sections 1, 2 and 29 constituted aberrations on the part of the Government of quite monumental proportions. They so startled and astonished the former Home Secretary, the right honourable Kenneth Clarke, that he thought and so alleged in the radio programme "Today" on 5th May that his predecessor had fully consulted the judiciary who had agreed with the sections which are now to be amended. He withdrew that statement when its inaccuracy was drawn to his attention. But the fact that he thought that consultation must have taken place shows, in my respectful submission to the House, his astonishment that the provisions existed.
When, seven days later, he came to make a Statement in the House, it is revealing how he put it:
"First, we will seek to amend section 1 of the 1991 Act so as to allow the courts to take into account all the offences for which the offender is being dealt with, instead of only one offence, or that offence and one other offence, which is the case now".—[Official Report, Commons, 13/5/93; col. 939.]
The phrase,
"we will …allow the courts",
is merely a disguised way of saying "we will restore to the courts the powers that we so foolishly took away".
Then he continued:
"Secondly, we propose to restore to the courts their power to have full regard to the criminal record of an offender and

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his response to previous sentences when deciding on the sentence for his current offence. We will do this by repealing Section 29 of the 1991 Act which prevents a court from regarding an offence as more serious by reason of any previous convictions of the offender or his failure to respond to previous sentences.
"These changes which I wish to see made to the 1991 Act will make it clear that sentencers have all reasonable discretion to decide upon the right sentence in a particular case, bearing in mind the seriousness of the offences being dealt with, all the circumstances of the offender and his offending behaviour".
When he talked about the sentencers having all reasonable discretion he was referring to the discretion which they had prior to the Act and which the Act removed.
When the matter came before the House on Second Reading, as your Lordships would have expected, I, as a sitting Law Lord —that is a Lord of Appeal in Ordinary—consulted the Chief Justice before taking part in the debates. I said this:
"Of course it has for long been established that an offender is not to be punished twice for the same offence, and accordingly must be sentenced for the crime or crimes which brought him before the court. However, in evaluating the seriousness of that crime or crimes, with particular regard to the need to protect the public from further offences committed by him, hitherto, among other things, a history of failure to respond to non-custodial penalties or an inability or unwillingness to respond to them were understandably considered …relevant".—[Official Report, 12/3/91; col. 127.]
I then leave out an unnecessary part for the purpose of this debate and at col. 128 say:
"Of course, Parliament is entitled to establish a framework within which judges are to operate; but if that framework is distorted, then so will be the decision of the court".
That is exactly what has happened. It is the distortions which have caused public dismay and hence the amendments.
It was ironic that I was in Poland, leading a small delegation of judges, at the suit of the British Council, addressing the Polish judges on the need for judicial independence and for a proper separation of powers, when the Committee stage came on. I was accordingly unable to be present. I apologised to the House when I attended at the Report stage and moved the very amendment to Clause 1 which the Government have now been obliged to bring in.
Your Lordships may be interested to know that I lost that amendment by 29 votes to 183 votes. Among those who voted in favour of my amendment, including myself, were four Law Lords: the noble and learned Lord, Lord Wilberforce, whose wisdom has been so recently referred to; the noble and learned Lord, Lord Roskill, well known also for his wisdom in this House; and Lord Lowry, the former Chief Justice of Northern Ireland. In addition, there was in favour of the amendment: Lord Havers, a former (albeit briefly) Lord Chancellor and the longest serving Attorney-General this century. There were no judges who voted against the amendment—although perhaps that is not strictly accurate. My noble and learned friend the Lord Chancellor who, I am delighted to see, is back on the Woolsack, was one of the 183. He was, of course, a High Court judge for some years in Scotland, and I enjoyed immensely his company as a Lord of Appeal in Ordinary for some two years. That
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type of defeat occurred in every amendment which I produced focusing on the matters which are now before your Lordships.
How then did this aberration come about? The answer is quite simple. The Government ignored the doctrine of separation of powers. They decided to control the administration of criminal justice by obliging judges to sit in blinkers, insulated, as I respectfully pointed out in the debates, from reality; unable to focus on vital, relevant facts; unable to apply the Government's own doctrine of just deserts emphasised in the White Paper which preceded this Bill. The judges were, as a result, unable to protect the public from the persistent offender.
It may be asked: why am I stressing, or even over-stressing, this matter? The answer is quite simply that there has been a tendency in the Government to fail to recognise that judicial independence—that is, its ability to do its job without interference from the Executive—is an absolutely essential feature for the proper functioning of an effective judiciary.
It was not very long ago that this House debated Clause 25 of what was then the Judicial Pensions and Retirement Bill, now an Act. Under that clause, power was to be taken by my noble and learned friend the Lord Chancellor at his sole discretion to continue the senior judiciary in office beyond what is to be the new compulsory retirement age of 70 from year to year, up to a period of five years—described as a system of judges on contract. Over 50 years ago that concept was rejected by the Royal Commission, the appeal commission, of which Sir Claude Schuster, an outstanding Permanent Secretary in my noble and learned friend's department, was a member. In the debate on the report on 29th October, my noble and learned friend Lord Simon of Glaisdale expressed his astonishment that,
"this unconstitutional provision ever appeared in the Bill".—[Official Report, 29/10/92; col. 1262.]
Thankfully, my noble and learned friend the Lord Chancellor had second thoughts and removed the offending clause, but not until the Third Reading.
Noble Lords may still recall the debates on the Green Papers which preceded the Courts and Legal Services Bill and the dramatic quotation which my noble and learned friend Lord Donaldson, the Master of the Rolls, made when it was considered that the judicial power in certain respects to control its courts was being usurped by the Executive. He quoted the phrase: "Get your tanks off my lawn".
I am delighted that, by the new clause, the clock is to be put back. Judges are to be returned to their power, which it is now recognised on all sides they need, to deal justly and effectively with offenders that come before them.
Once again, in case it may be thought that this emphasis on judicial independence is being overstressed, perhaps I may remind noble Lords, as I have in the past, of the following excerpt from a lecture; the F.A. Mann Lecture given in 1989 by the noble and learned Lord, Lord Hailsham, then the Lord Chancellor, on the subject: "The Office of the Lord Chancellor and the Separation of Powers." He said:
"But surely, it will be asked, everyone supports judicial independence? Oh, do they? Certainly not the public or the

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back-benchers in the House of Commons who constantly revile, frequently from inconsistent standpoints, individual judges or particular decisions, or what they imagine to be judicial policies and daily demand individual judges to be directed or rebuked (presumably by the Executive Government) to move in this direction or that, or even should be removed from office. Certainly not the Opposition, whichever party happens to he on the Speaker's left. Certainly not party conferences… And, least of all, I may assure you, individual members of the Cabinet, whose Departmental interests from time to time basically conflict not only with the views of the judiciary, where they are entitled to differ, but in the provision of the means necessary to enable the courts to discharge their functions".
I end by expressing the hope that the Government may perhaps realise that nothing is to be achieved except disaster if politics are allowed to interfere with the due administration of justice.
Lord Gisborough: My Lords, I am delighted that the unit fines are going. They removed the ability of a magistrate to use his common sense in cases.
Lord McIntosh of Haringey: My Lords, perhaps the noble Lord will allow me to intervene. Unit fines were dealt with on the last amendment. We are now dealing with a quite different matter.
Lord Gisborough: My Lords, is it not the same thing?
Lord McIntosh of Haringey: No, my Lords.
9.15 p.m.
Viscount Colville of Culross: My Lords, I wonder whether the noble Earl, Lord Ferrers, could give us any indication, if these amendments are put into the legislation, when they might be put into effect as a complicated commencement order clause. My recollection is that the new powers will be available to sentencers if people have been convicted but not yet sentenced at the date of a commencement order.
The last thing I wish to suggest is that anybody will go back and ignore the lessons of the 1991 Act and the enormous amount of training that went into the judiciary in the course of preparing for it. Nevertheless, the result is that a considerable number—virtually all—of the more serious cases that come before the courts now have a report prepared for them before sentence is passed and after conviction or a plea of guilty. I feel that there will have to be some warning to people when these powers are to be brought into effect. It may very well be that there will have to be some small amount of training through the Judicial Studies Board—though not so much as happened before the 1991 Act came into effect—before we fully comprehend what has to be done.
It would be very helpful if the Government could give some indication of when that change will come in so that people may be prepared for it.
Lord Harris of Greenwich: My Lords, I agree very strongly with the remarks of the noble Viscount. The noble Earl owes us some kind of clear answer to his question; namely, when and on what date will the new provisions come into operation?
The noble Viscount said that very substantial resources were deployed for judicial training. That
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being so, it is even more necessary that the judiciary should know, preferably tonight, the date of the commencement order so far as concerns this section of the Bill. I simply say to the noble and learned Lord, Lord Ackner, that he was right and we were wrong. He was wholly right. I remember the speech that he made. I was almost certainly one of the 183 Members who voted the wrong way (as he would see it) and now I certainly acknowledge my error in the matter. Undoubtedly, during the discussion I had substantial feelings of disquiet on the matter. I believe that I did go into the Lobby. It is just possible that I did not participate in the Division, though I fear that I did do so.
What concerns me is the matter to which the noble and learned Lord drew our attention; namely, consultation with the judiciary. It seems to me exceptionally difficult to move in the direction that the Government chose to move—with, it has to be said, all party support—and then be surprised when there is a public uproar so soon as that section of the Act comes into operation. Disquiet was voiced not only by the judiciary but, as the noble Earl is aware, the police too were outraged when they discovered what was about to take place. They too had not been consulted.
I do not believe that judges, the police or anybody else has a right of absolute veto on legislation. So far as this Government and any future government are concerned, it does not seem to me that it is particularly wise to try to push through legislation in the teeth of opposition of this character. When it comes into operation, public disquiet is expressed. Public attention is drawn to the fact that the judiciary and the police are wholly opposed to what is being done. In this matter, as in the last, we then have the Government announcing within a few months of the commencement order that a major part of the criminal law of this country recently put on the statute book is about to be repealed. That is no way to legislate. That cannot be emphasised too strongly.
I wish to make only two further points. First, I agree entirely with what the noble Earl said in regard to offences committed by people who are on bail. As the noble Earl is aware, I have taken a keen interest in this issue and pursued him on the matter over a period of some months because of the disquieting evidence of the growth in the number of criminals deciding to commit a series of offences while on bail in the belief that they stand a good chance of not being caught or, if they are caught, that no greater sentence will be imposed by the sentencing judge. That is not an acceptable situation and I welcome the fact that something is to be done about it.
The second matter to which I should like to refer—I gave notice to the noble Earl that I intended to raise this question—is the leak which appeared in the Guardian two or three weeks ago in relation to a letter sent by the director general of the prison service to the Home Secretary. It concerned the consequences of this legislation in relation to the size of the prison population. As I understand it, there were quotation marks in the letter; the Home Office has not denied its authenticity and therefore we can work on the assumption that it is a genuine letter. That being so,

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perhaps the noble Earl can tell us whether or not the Government believe that there is a real prospect that the size of the prison population will increase in the region of 5,000. The resource implications of that are considerable. It has direct implications in relation to the future prison building programme and I welcome any comments the noble Earl can make about it.
As he may be aware, there is a suggestion that the Government may have to introduce prison ships to hold some of the people who will be swelling the numbers of those in custody. He will be aware also that a question was raised in Mr. Lewis's letter to the Home Secretary as to whether it would be lawful to hold them in such circumstances. It would be extremely helpful if the noble Earl could comment on those questions. But I come back to my original point; namely, that the noble and learned Lord, Lord Ackner, is entirely justified in what he said and we owe him an apology.
Lord Marlesford: My Lords, I rise with great diffidence as an outsider to intervene briefly in this debate. However, this issue has aroused interest among a great many outsiders.
I listened with great interest to what the noble and learned Lord, Lord Ackner, said. I agree with him on the point in regard to the judiciary. But the amendment illustrates the need for an important skill which all Ministers should possess—I say that on the basis of having observed Ministers over some years —the skill of knowing when to accept the advice of officials and when to ignore it, and when to take the view of the public and when to ignore it. The history of this amendment is that Ministers took the advice of officials, given in a very pernicious form in the sense that they were trying, as I understand it, to achieve a different objective from the objective which was actually put forward for the original proposal. My right honourable friend the present Chancellor of the Exchequer has, I believe, behaved extremely sensibly in taking the advice of the public by seeking to make this change.
Lord Harris of Greenwich: My Lords, is the noble Lord aware that what he has said just happens to be wholly untrue? These proposals were pushed through by Mr. John Patten, then Minister of State at the Home Office. There is no question of this having been some form of secret agenda by Home Office officials. Many of us paid tribute to Mr. Patten personally when we discussed the 1991 Act. I hope that the noble Lord will not believe in this conspiracy theory of officials. It does not happen to be true.
Lord Wigoder: My Lords, perhaps I may make one brief comment. It is not necessary for us to decide this evening whether or not the 1991 legislation was an improper interference with judicial independence. Perhaps the real issue is whether it was a totally mistaken fetter upon judicial discretion, which is not perhaps quite the same matter. It is perfectly clear now, as the noble and learned Lord, Lord Ackner, has demonstrated beyond peradventure, that the exercise by the judges of their discretion on sentence before the 1991 Act was a great deal more satisfactory than the
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restrictions which were imposed by that Act. Obviously, all sentencing legislation to some extent impairs the discretion of judges on sentencing. That is quite inevitable. The only question is: were those restrictions wrong? I venture to suggest that experience has shown that they were manifestly wrong and that the sooner they are repealed the better.
Baroness Macleod of Borve: My Lords, this amendment is one of the most important of all the amendments with which we are dealing today. It will have far-reaching consequences. On behalf of the magistracy, I am very grateful that this has come about. It is vitally important.
Earl Ferrers: My Lords, I think that the noble and learned Lord, Lord Ackner, approved of the Government's amendments, although I am bound to say that his effusion of congratulations was rather limited in its forthcoming. But I assume from what he said that on the whole he was glad that these alterations had been made.
The noble Lord, Lord Wigoder, said that the real question was whether the previous Act of 1991 was a fetter on judicial discretion. I do not think that it is appropriate necessarily to go into the details of whether or not this was a fettering. The fact is that those changes were made in 1991 for very good and for what appeared to be very sensible reasons. Even the noble Lord, Lord Harris of Greenwich, admitted that he had voted for them. If he has any anguish about that, let me tell him that when he is good enough to accompany me into the Division Lobby, he need not have any fear or any humility about it. I am only too glad to see that his views are running in the right direction. The fact is that, periodically, one has to change one's mind. Periodically, whatever the reasons were, one discovers that the practice has not worked as effectively as was expected. That is why we have introduced these amendments.
The noble Lord, Lord Harris, said that this was no way to legislate. I quite agree with him that, as a matter of principle, one would not wish to alter these provisions as quickly as that. However, it was necessary to do so. The noble Lord also referred to the leak, as he put it, and to the Guardian of 19th July. We have estimated that the total effect of all the changes we are making, including provisions relating to offending on bail and causing death by dangerous driving under the influence of drugs or alcohol, may be in the region of 5,000. Our amendments to Sections 1 and 29 of the Criminal Justice Act 1991 essentially return the discretion to the courts. It is extremely difficult to predict something that depends on judicial behaviour, as I am sure the noble and learned Lord, Lord Ackner, will be the first to understand.
Contingency plans are being made by the prison service to cope with any surge in the prison population. They include identifying the sites for new cell blocks in existing prisons, identifying prison service sites where temporary, secure buildings can be placed and examining the use of floating accommodation units.
The noble Lord, Lord McIntosh, moved some amendments and perhaps I may briefly refer to them

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because they are what we are discussing. The effect of Amendment No. 144A is that the court is allowed to have regard to the overall seriousness of all the associated offences in the way that the wording suggests. But we believe that our wording is more precise than that.
The intention behind Amendment No. 144B is to try to limit the extent to which previous convictions can be taken into account so that mere repetition does not lead to disproportionate sentences for minor offences. I do not believe that it is practically possible or desirable to return to the courts the power to have regard to previous convictions, but to do so only within certain limitations. That was, after all, precisely what Section 29 tried to do in the first place. That amendment attempts in effect to draw a distinction between the effect on the seriousness of an offence which is caused solely by the element of repetition disclosed by previous convictions and the aggravation of seriousness which can be the result of substantive features of previous offending such as the selection of ethnic minority victims.
I am not sure that a distinction between mere repetition and aggravating factors disclosed by previous convictions can be realistically drawn. Many sentencers would wish in principle to be able to take the view that repeated offending can indeed make the current offence more serious, and does not merely deprive the offender of mitigation; many of the public, particularly those who have suffered from multiple offending, would agree.
The "progressive loss of mitigation" principle sits very uneasily with a "just deserts" sentencing framework. It operates on the basis that there is a maximum appropriate sentence for any offence, in the absence of any mitigation. The offender starts off with a certain amount of mitigation "in the bank" as it were, because he has never offended before. As an offender repeats the offence, he progresses upwards towards the maximum sentence. I believe that these are all matters for the judge, using his experience and common sense. The simple language of our amendment will allow that to happen.
Amendment No. 144C would have the effect of obliging sentencers to state in open court which previous convictions they have taken into account in reaching a decision and why they have done so. In our view any such requirement would, for no significant benefit, place an unnecessary burden on sentencers. The Criminal Justice Act 1991 already obliges sentencers to state in open court, and in ordinary language, why a custodial sentence is being passed. It is also very often the case that sentencers will choose to make clear the reasons for their decisions. This is especially so if there are factors which have aggravated an offence. We believe that it is right for courts to remain free to make the kind of statement envisaged by the noble Lord's amendment but that it would be wrong to oblige them to do so.
The Government's amendment on bail to which the noble Lord, Lord Harris, referred, requires the courts to take a step up in the level of seriousness with which they view offences committed while on bail.
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Amendment No. 144D takes us back to where we started. The courts already have discretion under common law to take into account offending on bail when considering sentence.
The Government do not intend that an offence committed on bail will always lead to a longer sentence. That would be absurd where the two offences were totally unconnected, or the second offence a trivial one. The measure is aimed at the career burglar who regards bail with indifference, and is caught and convicted again. If, in the court's opinion, the fact of offending on bail does not make the offence so serious that it deserves a jump to the next level of sentence, there is nothing in the provisions of the Criminal Justice Act 1991 to prevent such a conclusion being reached.
My noble friend Lord Colville and the noble Lord, Lord Harris, asked when these new powers would come into effect. We are considering the date when that should happen in the same way as we are as regards unit fines. I can only tell them as shortly as I can that they will come in as quickly as possible.
9.30 p.m.
Lord McIntosh of Haringey: My Lords, I am grateful for that detailed and, on the whole, helpful response to what, after all, were amendments not seeking to turn back the thrust of the Government's amendments but to point out one or two defects in them. I am also grateful to the noble and learned Lord, Lord Ackner, for his well-researched speech which was particularly valuable to those of us who cannot read Hansard. I do, however, think that he is slightly unjust to accuse me of thinking that there was no consistency in sentencing policy before 1991. I feel some sympathy with the Minister. His response to the noble and learned Lord reminded me of the following:
"Perhaps it was right to dissemble your love,
But why did you kick me downstairs?"
It was not necessary to be quite so forthright. Perhaps that is the best way of putting it.
As I have said, these amendments attempted to point out some of the potential defects in the final drafting of the Government's amendments, the thrust of which we agree with. I do not intend to pursue them and I beg leave to withdraw Amendment No. 144A.
Amendment No. 144A, as an amendment to Commons Amendment No. 144, by leave, withdrawn.
[Amendments Nos. 144B to 144D not moved.]
On Question, Motion agreed to.
COMMONS AMENDMENT
145 Before Clause 42, insert the following clause:
Penalty for causing death by dangerous driving or by careless driving
'.—(1) In Part I of Schedule 2 to the Road Traffic Offenders Act 1988 (prosecution and punishment of offences), in the entries relating to section 1 of the Road Traffic Act 1988 (causing death by dangerous driving) and section 3A of that Act (causing death by careless driving while under influence of drink or drugs), in column 4, for "5 years" there shall be substituted "10 years".
(2) In section 53(2) of the Children and Young Persons Act 1933 (punishment of certain serious crimes), the following shall be inserted after the word "law" in paragraph (a)—
"(aa) a young person is convicted of—

(i) an offence under section 1 of the Road Traffic Act 1988 (causing death by dangerous driving); or

(ii) an offence under section 3A of that Act (causing death by careless driving while under influence of drink or drugs);".'.

Earl Ferrers: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 145.
This amendment increases the penalties for those who are found guilty of causing death by dangerous driving or by careless driving while under the influence of drink or drugs. At the moment, the maximum penalty for both offences is five years' imprisonment. We wish to double that maximum.
The amendment also amends subsection (2) of Section 53 of the Children and Young Persons Act 1933 so that 14 to 17 year-olds can be sentenced to custodial sentences of up to the maximum which is available for adult offenders. Without such an amendment, 14 year-old offenders would not be liable to a custodial penalty at all; and courts would only be able to sentence 15 to 17 year-olds to 12-month custodial sentences. We do not anticipate that the courts will often be called upon to use this power, hut we think that it is right that they should have the discretion to do so in appropriate circumstances.
Moved, That the House do agree with the Commons in their Amendment No. 145.—(Earl Ferrers.)
Lord Monson: My Lords, I certainly agree that causing death by dangerous driving or by driving carelessly while under the influence of drink or drugs is a serious crime. The noble Earl, Lord Caithness, will remember my concern to ensure that the minimum period of disqualification for this crime was raised from 12 months to two years. Having said that, I cannot help feeling slightly uneasy at the tendency of this Government to increase maximum sentences sharply as a result of popular pressure.
I should like to ask the Minister three questions. First, have there been any cases in which the current maximum of five years has been imposed? Secondly, has the judiciary at any time complained about the inadequacy of the present maximum sentence? Thirdly, in particularly heinous examples of this crime, why are the accused not charged instead with manslaughter as an alternative to raising the maximum penalty from five to 10 years' imprisonment?
I remember well discussing these matters 40-odd years ago with my father who was a barrister by training. It was common practice to charge people who caused death in this way with manslaughter and there never seemed to be any difficulty in obtaining a conviction. It must be said, however, that the sentences that were imposed were relatively light by present-day standards. Such crimes were not regarded as seriously as we would regard them today. I remember one such case which took place about four miles from where we lived. In the middle of the day, an extremely drunken driver crashed into a bus queue, killing two people and injuring several more. He was
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convicted of manslaughter and duly sentenced to two years' imprisonment which was considered about right then. That was the way that people thought in those days.
It is a paradox—is it not?—that if somebody drives a speedboat, train or aeroplane dangerously or while under the influence of drink or drugs and kills somebody, that person is charged with manslaughter, but people who drive cars, lorries or motorcycles are treated differently. It seems odd. I wonder whether any thought was given to keeping open the manslaughter option instead of raising the maximum sentence from five to 10 years—the option must he open—for the serious cases. The Minister said that there were only a few cases in which anyone would want to impose a sentence of more than five years. As that option is still currently open, why is not that course taken instead of deciding to double the maximum?
Lord Harris of Greenwich: My Lords, one of the problems with bringing a charge of manslaughter is that the maximum sentence is life imprisonment. It would defeat the purpose of what the noble Lord is suggesting.
Lord Ackner: My Lords, perhaps I may add one or two comments. My understanding is that the statutory offence of causing death by dangerous driving was introduced for the very reason that the juries would not convict in manslaughter cases. Cars and motorcycles are, from a practical point of view, in a different category because of the old approach, "There, but for the grace of God, go I". That does not apply so much to speedboats, aeroplanes and things of that kind. As I understand it, that was the reason for the introduction of a statutory offence.
I do not believe the judges—I may he a little out of touch—have asked for any greater powers to sentence. My recollection is that, not very long ago—perhaps five or six years—there was a general criticism of the judges for under-sentencing. There are guidelines on sentencing in these cases, drawing attention to the fact that imprisonment must, in nearly every case, be imposed. I do not believe that there has been any clamour by the judiciary for greater powers.
One of the essential problems in this type of case is that the person never intended the ghastly consequences of what he did, and either he was reckless and gave no thought, or no proper thought, or, if he was drunk, it follows that he very probably did not recognise the danger of what he was doing. To an extent, one is sentencing on results—namely, the death—and not on the mental element which is usually intent. But I expect that the Minister knows more about it than I do.
Lord Monson: My Lords, before my noble and learned friend sits down, does he agree that the driver of a water-ski boat which runs over someone and kills them does not mean to do what he did, nor does an anaesthetist who gives too much anaesthetic, too little oxygen, or whatever it might be? The same applies there.
Lord Ackner: My Lords, I agree entirely. I should be very surprised if a manslaughter conviction would be achieved.
Earl Ferrers: My Lords, I am grateful to the noble and learned Lord, Lord Ackner, for explaining so clearly to the noble Lord, Lord Monson, and others of your Lordships what is the position. I can only tell the noble Lord, Lord Monson, that it is up to the CPS and the police to decide whether a charge of manslaughter should be brought. That is entirely a matter for them. If the circumstances fit, they can do so. He asked why it was necessary to introduce this provision. The answer is that causing death by dangerous driving or by careless driving while under the influence of drink or drugs are appalling things to do. It was a manifesto commitment that we would strengthen the law. That is why we are doing so.
Lord Wigoder: My Lords, are there many recent instances of the maximum sentence having been passed?
Earl Ferrers: My Lords, I do not have the figures. I cannot tell the noble Lord.
On Question, Motion agreed to.
COMMONS AMENDMENT
146 Before Clause 42, insert the following clause:
Appeals in Scotland against lenient disposals. etc
'.—(1) In section 228(1) of the Criminal Procedure (Scotland) Act 1975 (right of appeal of person convicted on indictment)—
(a) after paragraph (b) (and before the word "or") insert—
"(bb) against his absolute discharge or admonition;
(bc) against any probation order or any community service order under the Community Service by Offenders (Scotland) Act 1978;
(bd) against any order deferring sentence;"; and
(b) in paragraph (c), after "sentence" add "or disposal or order".
(2) In section 228A of that Act (appeal by Lord Advocate against sentence in solemn proceedings etc.)—
(a) after "conviction" insert "or against any probation order or any community service order under the Community Service by Offenders (Scotland) Act 1978 or against the person's absolute discharge or admonition or against any order deferring sentence"; and
(b) for paragraph (a) substitute—
"(a) if it appears to the Lord Advocate that, as the case may be—

(i) the sentence is unduly lenient;

(ii) the making of the probation order or community service order is unduly lenient or its terms are unduly lenient;

(iii) to dismiss with an admonition or to discharge absolutely is unduly lenient; or

(iv) the deferment of sentence is inappropriate or on unduly lenient conditions;".

(3) In section 442(1) of that Act (rights of appeal in summary proceedings)—
(a) in paragraph (a)—
(i) after "person convicted" insert ", or found to have committed an offence,";
(ii) in sub-paragraph (i), after "conviction" insert "or finding";
(iii) after sub-paragraph (ii) (and before the word "or") insert—
"(iia) against his absolute discharge or admonition or any probation order or any community service order under the Community Service by Offenders (Scotland) Act 1978 or any order deferring sentence;"; and
(iv) in sub-paragraph (iii), after "sentence" add "or disposal or order"; and
(b) in paragraph (c)—
(i) after "conviction" insert "or, whether the person has been convicted or not, against any probation order or any community service order under the Community Service by Offenders (Scotland) Act 1978 or against the person's absolute discharge or admonition or against any order deferring sentence";
(ii) for "the sentence is unduly lenient" substitute—
",as the case may be—

(i) the sentence is unduly lenient;

(ii) the making of the probation order or community service order is unduly lenient or its terms are unduly lenient;

(iii) to dismiss with an admonition or to discharge absolutely is unduly lenient; or

(iv) the deferment of sentence is inappropriate or on unduly lenient conditions;".'.

147 Before Clause 42, insert the following clause:
Supervised release of certain young offenders in Scotland
'. In section 212A of the Criminal Procedure (Scotland) Act 1975 (which makes provision for the supervised release of short-term prisoners in Scotland) at the end add—
"(7) The foregoing provisions of this section apply to a person sentenced under section 207 or 415 of this Act as the provisions apply to a person sentenced to a period of imprisonment.".'.
Earl Ferrers: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 146 and 147.
Perhaps I may speak also to Amendments Nos. 152 and 153. The purpose of the new clauses is to clarify certain provisions which are made in the Prisoners and Criminal Proceedings (Scotland) Act 1993 and which reflect provisions in the Criminal Procedure (Scotland) Act 1975. I beg to move.
Moved, That the House do agree with the Commons in their Amendments Nos. 146 and 147. —(Earl Ferrers.)
On Question, Motion agreed to.
9.45 p.m.
COMMONS AMENDMENTS
148 Clause 42, page 37, line 24. after '42.-' insert:
'(1) Paragraphs 8(3), 9(2) and 10(3) of Schedule 8 to the Banking Coordination (Second Council Directive) Regulations 1992 shall cease to have effect.'
149 Page 37, line 31, after 'Articles' insert '3,'.
150 Page 37, line 32, after 'to' insert 'the consolidated supervision of'.
151 Page 37, line 45, at end insert:
'(3) Subsection (1) shall not affect the punishment for an offence committed before that subsection comes into force.'.
The Earl of Caithness: My Lords, I beg to move that the House do agree with the Commons in their clarificatory Amendments Nos. 148 to 151 en bloc.

1101
Moved, That the House do agree with the Commons in their Amendments Nos. 148 to 151 en bloc.—(The Earl of Caithness.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
152 After Clause 46, insert the following clause:
Compassionate release of certain children and other persons in Scotland
'.—(1) In section 7(5) of the Prisoners and Criminal Proceedings (Scotland) Act 1993 (which applies provisions of that Act to certain children), for "Sections", where it first occurs, substitute "Without prejudice to section 6(1) (b) (ii) of this Act, sections 3,".
(2) In paragraph 2(2) of Schedule 6 to that Act (which makes transitional provision as respects release on licence on compassionate grounds) after "Act" insert ", and sections 12 and 17 of this Act in so far as relating to a licence granted, or person released, by virtue of this sub-paragraph,".'.
153 After Clause 46, insert the following clause:
Life prisoners transferred to Scotland
'.—(1) The Prisoners and Criminal Proceedings (Scotland) Act 1993 shall be amended as follows.
(2) In section 10 (life prisoners transferred to Scotland)—

(a) in subsection (1), the words "(whether before or after the commencement of this section)" shall cease to have effect;

(b) in subsection (2), after "life prisoner" insert ", except such case as is mentioned in paragraph 7 of Schedule 6 to this Act,"; and

(c) in subsection (4)—

(i) in paragraph (a), after "has" insert "(whether before or after the commencement of this section)"; and

(ii) in paragraph (b), after "Scotland" insert "(whether before or after that commencement)".

(3) In Schedule 6 (transitional provisions and savings)—

(a) in paragraph 1, in the definition of "existing life prisoner", after "person" insert "(other than a transferred life prisoner)";

(b) in paragraph 2(1), for "paragraph 7 below" substitute "to section 10(4) of this Act"; and

(c) for paragraph 7 substitute—

"7. In the case of a transferred life prisoner who is a discretionary life prisoner for the purposes of Part II of the Criminal Justice Act 1991 by virtue of section 48 of or paragraph 9 of Schedule 12 to that Act, subsection (3) of section 10 of this Act applies and the certificate mentioned in paragraph (b) of that subsection is the certificate under the said section 48 or paragraph 9.".'
Earl Ferrers: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 152 and 153. They were spoken to with Amendment No. 146.
Moved, That the House do agree with the Commons in their Amendments Nos. 152 and 153. —(Earl Ferrers.)
On Question, Motion agreed to.
COMMONS AMENDMENT
154 After Clause 46, insert the following clause:
Power to extend certain offences to Croon servants and to exempt regulators etc
'. Schedule (Extensions and exemptions), which confers power on the Secretary of State to make regulations extending certain provisions to Crown servants and to make regulations exempting persons from certain offences, shall have effect.'.
Earl Ferrers: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 154. I shall speak also to Amendment No. 181. Amendment No. 154 inserts a new clause into Part V of the Bill. This gives effect to the new schedule which was inserted by Amendment No. 181.
Moved, That the House do agree with the Commons in their Amendment No. 154.—(Earl Ferrers.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
155 Clause 47, page 42, line 43, leave out 'Section 48(9)' and insert 'Sections (Appeals in Scotland against lenient disposals, etc.), (Supervised release of certain young offenders in Scotland), (Compassionate release of certain children and other persons in Scotland), (Life prisoners transferred to Scotland) and 48(l) to (9), paragraph (Criminal Procedure (Scotland) Act 1975) of Schedule 3 and, in so far as relating to the Criminal Procedure (Scotland) Act 1975 and the Prisoners and Criminal Proceedings (Scotland) Act 1993, Schedule 4'.
156 Page 43, line 9, leave out from 'Part II' to 'that', in line 10, and insert 'Part III, or (as the case may be) Part IIIA.
157 Page 43, line 12, at end insert:
'() Section 4A(3) and (4) of the Drug Trafficking Offences Act 1986 (inserted by section 14) shall not apply to any proceedings—

(a) for an offence committed before the commencement of section 14; or

(b) for one or more offences, any one of which was so committed.'.

158 Page 43. line 12, at end insert:
'() Section 52B(3) and (4) of the Northern Ireland (Emergency Provisions) Act 1991 (inserted by section (Defendant who has died or absconded)) shall not apply to any proceedings—

(a) for an offence committed before the commencement of section (Defendant who has died or absconded); or

(b) for one or more offences, any one of which was so committed.'.

159 Page 43. line 14, leave out from 'Part II' to 'other' and insert 'Part III or Part IIIA.
160 Page 43, line 17, at end insert:
'(9) For the purposes of section 27 of the Prevention of Terrorism (Temporary Provisions) Act 1989 (temporary provisions), any amendment made in that Act by a provision of Part IIIA of, or paragraph 8A of Schedule 3 to, this Act shall be treated, as from the time when that provision comes into force, as having been continued in force by the order under subsection (6) of that section which has effect at that time.
(10) For the purposes of section 69 of the Northern Ireland (Emergency Provisions) Act 1991 (temporary provisions), any amendment made in that Act by a provision of Part IIIA of, or paragraph 9A(1), (2), (5), (6) and (7) of Schedule 3 to, this Act (other than sections (Compensation) and (Enforcement)) shall be treated, as from the time when that provision comes into force, as having been continued in force by the order under section 69(3) of the Act of 1991 which has effect at that time.'.
161 Clause 48, page 43, line 22, leave out '21(2) (so far as it amends the first section referred to)' and insert 'and (3) (h)'.
162 Page 43, line 23, after '22' insert '(Appeal against order forfeiting drug trafficking cash), (Enforcement), (Enforcement of orders outside Northern Ireland), (Offences relating to proceeds of terrorist-related activities), (Failure to disclose knowledge or suspicion relating to proceeds of terrorist-related activities), (Financial assistance for terrorism), (Investigation of terrorist activities), (Failure to disclose knowledge or suspicion of financial assistance for terrorism)'.
163 Page 43, line 23, after '44,' insert '(Power to extend certain offences to Crown servants and to exempt regulators etc.),'.
164 Page 43, line 24, leave out '1 and 2' and insert '(Special defences) and 1'.
165 Page 43, line 24, at end insert:
'paragraphs 4, 5 and 6 of Schedule (Extensions and exemptions).'.
166 Page 43, line 25, leave out from beginning to end of line 29 and insert:
'(3) The following provisions of this Act extend only to Great Britain—
sections 13(9) to (I 1), 21(3) (e), 23(2), (3) and (7) to (10), 26 to 29, (Enforcement of Northern Ireland orders: proceeds of criminal conduct) (1), (Prosecution by order of the Commissioners of Customs and Excise), (Penalty for causing death by dangerous driving or by careless driving) (1) and 45; and paragraph 3 of Schedule (Extensions and exemptions).
(4) The following provisions of this Act extend only to Scotland—
sections 17, 19, 20(2), 21(3) (c) and (d), (Enforcement of Northern Ireland orders: drug trafficking) (2), 23(12) to (15), (Disclosure of information etc. received in privileged circumstances) (2), 30, (Appeals in Scotland against lenient disposals, etc.), (Supervised release of certain young offenders in Scotland), (Compassionate release of certain children and other persons in Scotland), and (Life prisoners transferred to Scotland), and
paragraph 2 of Schedule (Extensions and exemptions).'.
167 Page 43, line 29, at end insert:
'() Sections (Confiscation orders), (Revised assessments), (Statements, etc. relevant to making confiscation orders), (Provision of information), (Variation of confiscation orders), (Availability of certain powers and satisfaction of orders), (Defendant who has died or absconded), (Compensation) and (Realisable property) extend only to Northern Ireland.'.
168 Page 43, line 29, at end insert:
'() Sections 21(3) (f) and (Enforcement of Northern Ireland orders: proceeds of criminal conduct) (2) extend to Scotland and Northern Ireland only.'.
169 Page 43, line 30 at end insert:
'() The provisions of Schedules 3 and 4 have the same extent as the provisions on which they operate.'.
170 Page 44, line 6, leave out subsection (I11) and insert:
'(11) The repeals and revocations set out in Schedule 4 (which include the repeal of two enactments which are spent) shall have effect.'.
171 Page 44, line 7, leave out subsection (12).
Earl Ferrers: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 155 to 171 en bloc. These amendments are technical amendments which change the commencement and extent provisions of the Bill. They are required mainly as a result of changes made elsewhere in the Bill.
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Moved, That the House do agree with the Commons in their Amendments Nos. 155 to 171 en bloc.—(Earl Ferrers.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
172 Before Schedule I, insert the following schedule:
'SCHEDULE
Special defences
Market makers
1.—(1) An individual is not guilty of insider dealing by virtue of dealing in securities or encouraging another person to deal if he shows that he acted in good faith in the course of—

(a) his business as a market maker, or

(b) his employment in the business of a market maker.

(2) A market maker is a person who—

(a) holds himself out at all normal times in compliance with the rules of a regulated market or an approved organisation as willing to acquire or dispose of securities; and

(b) is recognised as doing so under those rules.

(3) In this paragraph "approved organisation" means an international securities self-regulating organisation approved under paragraph 25B of Schedule 1 to the Financial Services Act 1986.
Market information
2.—(1) An individual is not guilty of insider dealing by virtue of dealing in securities or encouraging another person to deal if he shows that—

(a) the information which he had as an insider was market information; and

(b) it was reasonable for an individual in his position to have acted as he did despite having that information as an insider at the time.

(2) In determining whether it is reasonable for an individual to do any act despite having market information at the time, there shall, in particular, be taken into account—

(a) the content of the information;

(b) the circumstances in which he first had the information and in what capacity; and

(c) the capacity in which he now acts.

3. An individual is not guilty of insider dealing by virtue of dealing in securities or encouraging another person to deal if he shows—

(a) that he acted—

(i) in connection with an acquisition or disposal which was under consideration or the subject of negotiation, or in the course of a series of such acquisitions or disposals; and

(ii) with a view to facilitating the accomplishment of the acquisition or disposal or the series of acquisitions or disposals; and

(b) that the information which he had as an insider was market information arising directly out of his involvement in the acquisition or disposal or series of acquisitions or disposals.

4. For the purposes of paragraphs 2 and 3 market information is information consisting of one or more of the following facts—

(a) that securities of a particular kind have been or are to be acquired or disposed of, or that their acquisition or disposal is under consideration or the subject of negotiation;

(b) that securities of a particular kind have not been or are not to be acquired or disposed of;

(c) the number of securities acquired or disposed of or to be acquired or disposed of or whose acquisition or disposal is under consideration or the subject of negotiation;

1105

(d) the price (or range of prices) at which securities have been or are to be acquired or disposed of or the price (or range of prices) at which securities whose acquisition or disposal is under consideration or the subject of negotiation may be acquired or disposed of;

(e) the identity of the persons involved or likely to be involved in any capacity in an acquisition or disposal.

Price stabilisation
5.—(1) An individual is not guilty of insider dealing by virtue of dealing in securities or encouraging another person to deal if he shows that he acted in conformity with the price stabilisation rules.
(2) In this paragraph "the price stabilisation rules" means rules which—

(a) are made under section 48 of the Financial Services Act 1986 (conduct of business rules); and

(b) make provision of a description mentioned in paragraph (i) of subsection (2) of that section (price stabilisation rules).'

173 Schedule 1, page 45, line 24, leave out 'thing' and insert 'security'.
174 Page 45, line 27, leave out 'at a future date of any relevant securities' and insert 'of relevant securities under which delivery is to he made at a future date and'.
175 Page 45, line 29, after '(1)' insert '—

(a) the references to a future date and to a price agreed when the contract is made include references to a date and a price determined in accordance with terms of the contract; and

(b)'.

176 Page 45, line 29, leave out 'thing' and insert 'security'.
177 Page 45, line 32, leave out from first 'contract' to end of line 39 and insert 'which does not provide for the delivery of securities but whose purpose or pretended purpose is to secure a profit or avoid a loss by reference to fluctuations in—

(a) a share index or other similar factor connected with relevant securities;

(b) the price of particular relevant securities; or

(c) the interest rate offered on money placed on deposit.'

178 Page 46, line 1, leave out 'thing' and insert 'security'.
179 Schedule 2, page 46, line 3, leave Out Schedule 2.
The Earl of Caithness: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 172 to 179 en bloc.
Moved, That the House do agree with the Commons in their Amendments Nos. 172 to 179 en bloc.—(The Earl of Caithness.)
On Question, Motion agreed to.
COMMONS AMENDMENT
180 Before Schedule 3, insert the following schedule:
'SCHEDULE
Financial penalties
Increases in certain maximum fines
1.—(1) In section 17 of the Criminal Justice Act 1991 (increases in certain maximum fines), subsection (3) (e) shall cease to have effect.
(2) In Schedule 4 to that Act (increase of certain maxima) Part V shall cease to have effect.
Statements as to offenders' financial circumstances
2.—(1) In section 20 of the Act of 1991 (statements as to offenders' means) the following shall be substituted for subsection (1)—
"(1) Where a person has been convicted of an offence, the court may, before sentencing him, make a financial circumstances order with respect to him.
(1A) Where a magistrates' court has been notified in accordance with section 12(2) of the Magistrates' Courts Act 1980 that a person desires to plead guilty without appearing before the court, the court may make a financial circumstances order with respect to him.
(1B) Before exercising its powers under section 55 of the Children and Young Persons Act 1933 against the parent or guardian of any person who has been convicted of an offence, the court may make a financial circumstances order with respect to the parent or (as the case may be) guardian.
(1C) In this section "a financial circumstances order" means, in relation to any person, an order requiring him to give to the court, within such period as may be specified in the order, such a statement of his financial circumstances as the court may require.".
(2) In subsections (2) and (3) of section 20 of the Act of 1991, for the words "an order under subsection (1) above" there shall be substituted "a financial circumstances order".
(3) Section 20(5) of the Act of 1991 shall cease to have effect.
Remission of fines
3. The following section shall be substituted for section 21 of the Act of 1991 (remission of fines)—
"Remission of fines.
21.—(1) This section applies where a court has, in fixing the amount of a fine, determined the offender's financial circumstances under section 18(3) above.
(2) If, on subsequently inquiring into the offender's financial circumstances, the court is satisfied that had it had the results of that inquiry when sentencing the offender it would—

(a) have fixed a smaller amount; or

(b) not have fined him,

it may remit the whole or any part of the fine.
(3) Where under this section the court remits the whole or part of a fine after a term of imprisonment has been fixed under section 82(5) of the Magistrates' Courts Act 1980 (issue of warrant of commitment for default) or section 31 of the Powers of Criminal Courts Act 1973 (powers of Crown Court in relation to fines), it shall reduce the term by the corresponding proportion.
(4) In calculating any reduction required by subsection (3) above, any fraction of a day shall he ignored.".
Default in paying unit fines
4. Section 22 of the Act of 1991 (default in paying fines fixed under section 18 of that Act) shall cease to have effect.
Responsibility of parents and guardians
5. In section 57 of the Act of 1991 (responsibility of parent or guardian for financial penalties), the following shall be substituted for subsections (3) and (4)—
"(3) For the purposes of any order under that section made against the parent or guardian of a child or young person—

(a) sections 18 and 21 above; and

(b) section 35(4) (a) of the 1973 Act (fixing amount of compensation order),

shall have effect (so far as applicable) as if any reference to the financial circumstances of the offender, or (as the case may be) to the means of the person against whom the compensation order is made, were a reference to the financial circumstances of the parent or guardian.
(4) For the purposes of any such order made against a local authority (as defined for the purposes of the Children Act 1989)—

(a) section 18(1) above, and section 35(4) (a) of the 1973 Act, shall not apply; and

(b) section 18(3) above shall apply as if the words from "including" to the end were omitted.".

Other amendments
6.—(1) In section 15 of the Children and Young Persons Act 1969 (variation and discharge of supervision orders), the following subsection shall be substituted for subsection (7)—
"(7) A fine imposed under subsection (3) or (4) above shall be deemed, for the purposes of any enactment, to be a sum adjudged to be paid by a conviction.".
(2) In section 27 of the Powers of Criminal Courts Act 1973 (breach of requirement of suspended sentence supervision order), the following subsection shall be substituted for subsection (4)—
"(4) A fine imposed under subsection (3) above shall be deemed, for the purposes of any enactment, to be a sum adjudged to be paid by a conviction.".
(3) In section 97 of the Magistrates' Courts Act 1980 (maximum fine for refusal to give evidence), the following subsection shall be substituted for subsection (5)—
"(5) A fine imposed under subsection (4) above shall be deemed, for the purposes of any enactment, to be a sum adjudged to be paid by a conviction.".
(4) In section 12 of the Contempt of Court Act 1981 (maximum fine for contempt in face of magistrates' court), the following subsection shall be substituted for subsection (2A)—
"(2A) A fine imposed under subsection (2) above shall be deemed, for the purposes of any enactment, to be a sum adjudged to be paid by a conviction.".
(5) In section 14 of that Act (maximum fine for contempt in an inferior court), the following subsection shall be substituted for the subsection (2A) inserted by the Criminal Justice Act 1991—
"(2A) A fine imposed under subsection (2) above shall be deemed, for the purposes of any enactment, to be a sum adjudged to be paid by a conviction.".
(6) In section 58 of the Criminal Justice Act 1991 (binding over of parent or guardian), the following subsection shall he substituted for subsection (4)—
"(4) A fine imposed under subsection (2) (b) above shall be deemed, for the purposes of any enactment, to be a sum adjudged to be paid by a conviction.".
(7) In paragraph 6 of Schedule 2 to the Criminal Justice Act 1991 (miscellaneous supplemental provisions), the following sub-paragraph shall be substituted for sub-paragraph (2)—
"(2) A fine imposed under paragraph 3(1) (a) or 4(1) (a) above shall he deemed, for the purposes of any enactment, to be a sum adjudged to be paid by a conviction.".'.
Earl Ferrers: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 180. This was taken with Amendment No. 143.
Moved, That the House do agree with the Commons in their Amendment No. 180.—(Earl Ferrers.)
On Question, Motion agreed to.
COMMONS AMENDMENT
181 Before Schedule 3, insert the following schedule:
'Schedule
Extensions and Exemptions
The Drug Trafficking Offences Act 1986 (c.32)
1. The following section shall be inserted in the Drug Trafficking Offences Act 1986, after section 36A—
"Extension of certain offences to Crown servants and exemptions for regulators etc.
36B.—(1) The Secretary of State may by regulations provide that, in such circumstances as may be prescribed, sections 23A, 24, 2613, 26C and 31 of this Act shall apply to such persons in the public service of the Crown, or such categories of person in that service, as may be prescribed.
(2) Section 26B of this Act shall not apply to—

(a) any person designated by regulations made by the Secretary of State for the purpose of this paragraph; or

(b) in such circumstances as may be prescribed, any person who falls within such category of person as may be prescribed for the purpose of this paragraph.

(3) The Secretary of State may designate, for the purpose of paragraph (a) of subsection (2) above, any person appearing to him to be performing regulatory, supervisory, investigative or registration functions.
(4) The categories of person prescribed by the Secretary of State, for the purpose of paragraph (b) of subsection (2) above, shall be such categories of person connected with the performance by any designated person of regulatory, supervisory, investigative or registration functions as he considers it appropriate to prescribe.
(5) In this section—
"the Crown" includes the Crown in right of Her Majesty's Government in Northern Ireland; and
"prescribed" means prescribed by regulations made by the Secretary of State.
(6) The power to make regulations under this section shall be exercisable by statutory instrument.
(7) Any such instrument shall be subject to annulment in pursuance of a resolution of either House of Parliament.".
The Criminal Justice (Scotland) Act 1987 (c.41)
2. The same section as is inserted in the Act of 1986 by paragraph 1 shall he inserted in the Criminal Justice (Scotland) Act 1987, after section 46, as section 46A, but with the substitution—

(a) in subsection (1), of "sections 42 to 43B of this Act" for "sections 23A, 24, 26B, 26C and 31 of this Act"; and

(b) in subsection (2), of "43A" for "26B".'

The Criminal Justice Act 1988 (c.33)
3. The same section as is inserted in the Act of 1986 by paragraph 1 shall be inserted in the Criminal Justice Act 1988, after section 93F, as section 93G, but with—

(a) the substitution in subsection (1), of "sections 93A, 93B, 93C(2) and 93D above" for "sections 23A, 24, 26B, 26C and 31 of this Act"; and

(b) the omission of subsections (2) to (4).

The Prevention of Terrorism (Temporary Provisions) Act 1989 (c.4)
4. The same section as is inserted in the Act of 1986 by paragraph 1 shall be inserted in the Prevention of Terrorism (Temporary Provisions) Act 1989, immediately after section 19, as section 19A, but with the substitution—

(a) in subsection (1), of "sections 9 to 11. 17 and 18A above" for "sections 23A, 24, 26B, 26C and 31 of this Act"; and

(b) in subsection (2), of "18A" for "26B".

The Criminal Justice (International Co-operation) Act 1990 (c.5)
5. The same section as is inserted in the Act of 1986 by paragraph 1 shall be inserted in the Criminal Justice (International Co-operation) Act 1990, after section 23, as section 23A, but with—

1109

(a) the substitution in subsection (1), of "section 14(2) above" for "sections 23A, 24, 26B, 26C and 31 of this Act"; and

(b) the omission of subsections (2) to (4).

The Northern Ireland (Emergency Provisions) Act 1991 (c.24)
6. The same section as is inserted in the Act of 1986 by paragraph 1 shall be inserted in the Northern Ireland (Emergency Provisions) Act 1991, after section 55, as section 55A, but with the substitution—

(a) in subsection (1), of "sections 53, 54(2) to (6) and 54A above" for "sections 23A, 24, 26B, 26C and 31 of this Act"; and

(b) in subsection (2), of "54A" for "26B".'.

Earl Ferrers: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 181. This was taken with Amendment No. 154.
Moved, That the House do agree with the Commons in their Amendment No. 181.—(Earl Ferrers.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
182 Schedule 3, page 47, line 32, at end insert:
'The Criminal Appeal Act 1968 (c.19)
In section 50 of the Criminal Appeal Act 1968 (meaning of "sentence"), the following shall be substituted for subsection (1)—
"(1) In this Act "sentence", in relation to an offence, includes any order made by a court when dealing with an offender including, in particular—

(a) a hospital order under Part III of the Mental Health Act 1983, with or without a restriction order;

(b) an interim hospital order under that Part;

(c) a recommendation for deportation;

(d) a confiscation order under the Drug Trafficking Offences Act 1986 other than one made by the High Court;

(e) a confiscation order under Part VI of the Criminal Justice Act 1988;

(f) an order varying a confiscation order of a kind which is included by virtue of paragraph (d) or (e) above;

(g) an order made by the Crown Court varying a confiscation order which was made by the High Court by virtue of section 4A of the Act of 1986; and

(h) a declaration of relevance under the Football Spectators Act I989."'.

183 Page 47, line 32, at end insert:
'The Criminal Procedure (Scotland) Act 1975 (c.21)
.—(1) The Criminal Procedure (Scotland) Act 1975 shall be amended as follows.
(2) In each of sections 181 and 382 (admonition in, respectively, solemn and summary proceedings), for "found guilty" substitute "convicted".
(3) In section 191 (effects of probation and absolute discharge: solemn proceedings), for paragraph (a) of subsection (3) substitute—
"(a) any right to appeal;".
(4) In section 233 (note of appeal)—

(a) in subsection (1)—

(i) in paragraph (a), for "against sentence alone" substitute "under section 228(1) (b), (bb), (be) or (bd) of this Act" and after "sentence", where it occurs for the second time, insert "(or as the case may be, of the making of the order disposing of the case or deferring sentence)"; and

1110

(ii) in paragraph (b), after "sentence" insert "(or as the case may be, of the making of the order disposing of the case or deferring sentence)"; and

(b) in subsection (4), for "against sentence alone" substitute "under section 228(1) (b), (bb), (be) or (bd)".

(5) In section 238(1) (admission to bail), for paragraph (b) substitute—
"(b) any relevant appeal by the Lord Advocate under section 228A of this Act.".
(6) In section 244(2) (abandonment of appeal), after "sentence"—

(a) where it first occurs, insert "(or as the case may be against both conviction and disposal or order)"; and

(b) where it occurs for the second time, insert "(or disposal or order)".

(7) In section 254 (disposal of appeals in solemn proceedings)—

(a) in subsection (2)—

(i) after "appellant" insert "(or as the case may be any disposal or order made)";

(ii) in each of paragraphs (a) and (b), after "sentence" insert "(or disposal or order)";

(iii) after "sentence", where it occurs for the fourth time, insert "or make another (but not more severe) disposal or order"; and

(iv) after "sentence", where it occurs for the fifth time, insert ", disposal or order";

(b) in subsection (4), after "appellant" insert "(or disposal or order made)"; and

(c) after subsection (4) insert—

"(4A) In subsection (3) above, "appeal against sentence" shall, without prejudice to the generality of the expression, be construed as including an appeal under section 228(1) (bb), (be) or (bd), and any appeal under section 228A, of this Act; and other references to sentence in that subsection shall be construed accordingly.".
(8) In section 268 (reckoning of time spent in custody pending appeal), in each of subsections (1) and (2), for "appeal by the Lord Advocate against the sentence passed on conviction" substitute "relevant appeal by the Lord Advocate under section 228A of this Act".
(9) In section 392 (effects of probation and absolute discharge: summary proceedings) for paragraph (a) of subsection (3) substitute—
"(a) any right to appeal;".
(10) In section 442B (method of appeal against sentence alone in summary proceedings)—

(a) after "person" insert ", or as the case may be a person found to have committed an offence,";

(b) the words "against sentence alone" shall cease to have effect; and

(c) after "442(1) (a) (ii)" insert "or (iia)".

(11) In section 443A (suspension of disqualification, forfeiture, etc.), in each of subsections (1) and (2), at the end add "(or disposal or order)".
(12) In section 444(1) (b) (contents of application for stated case), after "sentence" insert "or disposal or order".
(13) In section 452A (disposal of stated case)—

(a) in subsection (2), after "sentence", where it first occurs, insert "("sentence" being construed in this subsection and in subsection (3) below as including disposal or order)"; and

(b) after subsection (4) insert—

"(4A) Any reference in subsection (4) above to convicting and sentencing shall be construed as including a reference to convicting and making some other disposal or convicting and deferring sentence."
(14) In section 453B (appeals against sentence only in summary proceedings)—

(a) in each of subsections (1), (2), (7) and (8), after "442(1) (a) (ii)" insert "or (iia)";

1111

(b) in subsection (2)—

(i) in paragraph (a), after "sentence" insert "(or as the case may be of the making of the order disposing of the case or deferring sentence)"; and

(ii) in paragraph (b), at the end add "(or making)";

(c) in subsection (3) (b), at the end add "(or as the case may be who disposed of the case or deferred sentence)"; and

(d) in subsection (4), after "sentence" add "(or within two weeks of the disposal or order)".

(15) In section 453C (disposal in summary proceedings of appeal by note of appeal)—

(a) in subsection (3), after "442(1) (a) (ii)" insert "or (iia)"; and

(b) at the end add—

"(4) In subsection (1) above, "appeal against sentence" shall, without prejudice to the generality of the expression, be construed as including an appeal under section 442(1) (a) (iia), and any appeal under section 442(1) (c), of this Act; and without prejudice to subsection (5) below, other references to sentence in that subsection and in subsection (3) above shall be construed accordingly.
(5) In disposing of any appeal in a case where the accused has not been convicted, the High Court may proceed to convict him; and where it does, the reference in subsection (3) above to the conviction in respect of which the sentence appealed against was imposed shall be construed as a reference to the disposal or order appealed against.".'.
184 Page 47, line 32, at end insert:
'The Criminal Appeal (Northern Ireland) Act 1980 (c.47)
. The provisions of section 30 of the Criminal Appeal (Northern Ireland) Act 1980 (interpretation of Part I) shall become subsection (1) of that section and the following subsection shall be added—
"(2) In this Part of this Act "sentence" also includes—

(a) a confiscation order made by the Crown Court under the Northern Ireland (Emergency Provisions) Act 1991;

(b) an order varying such an order; and

(c) an order made by the Crown Court varying a confiscation order made by the High Court by virtue of section 52B of the Act of 1991."'.

185 Page 47, line 39, at end insert:
'The Drug Trafficking Offences Act 1986 (c.32)
In section 3(3) of the Drug Trafficking Offences Act 1986 (statements relating to drug trafficking) for "(2)" there shall be substituted "(1D)".'.
186 Page 47, line 39, at end insert:
'. In section 38(1) of the 1986 Act (interpretation), the following definitions shall be inserted at the appropriate places—
" "confiscation order" means an order under section 1 of this Act and includes, in particular, an order under that section which is made by virtue of section 4A, 5A or 5B;"
" "defendant" means a person against whom proceedings have been instituted for a drug trafficking offence (whether or not he has been convicted);".'.
187 Page 48, line 37, at end insert:
'The Criminal Justice Act 1988 (c.33)
.—(1) Section 98 of the Criminal Justice Act 1988 (disclosure of information subject to contractual restriction on disclosure) shall cease to have effect.
(2) In section 172 of the 1988 Act (extent)—

(a) in subsection (2), after "84 to 88" there shall be inserted "sections 93A to 93D; sections 93F and 93G"; and

(b) in subsection (4), after "sections 90 to 93" there shall be inserted "section 93E".'.

188 Page 48, line 37, at end insert:
'The Prevention of Terrorism (Temporary Provisions) Act 1989 (c.4)
8A. In section 19(1) of the Prevention of Terrorism (Temporary Provisions) Act 1989 (institution of proceedings) for the words "or 18" in both places where they occur there shall be substituted ", 18 or 18A".'.
189 Page 48, line 42, at end insert:
'The Northern Ireland (Emergency Provisions) Act 1991 (c.24)
9A.—(1) In section 49(1) (a) of the Northern Ireland (Emergency Provisions) Act 1991 (relevant offences)—

(a) after "(c)" there shall be inserted ", (dd)"; and

(b) after "(k)" there shall be inserted ", (kk);".

(2) In section 56(1) of the 1991 Act (interpretation of confiscation provisions), at the end of the definition of "confiscation order", there shall be added "and includes, in particular, an order under that section which is made by virtue of section 48A or 52B above".
(3) In section 69(2) (c) of the 1991 Act, for "paragraph 20" there shall be substituted "paragraphs 20 to 20C".
(4) In section 71(2) of the 1991 Act (extent), for "54" there shall be substituted "to 54A, 55A".
(5) In Part I of Schedule 1 (scheduled offences) to the 1991 Act—
(a) after paragraph 20(d) there shall be inserted—
"(dd) section 18A (failure to disclose knowledge or suspicion of financial assistance for terrorism);" and
(b) after paragraph 22(k) there shall he inserted—
"(kk) section 54A;".
(6) In paragraph 2(5) of Schedule 4 to the 1991 Act (application of procedure for enforcing fines), after "made by", where those words first occur, there shall be inserted "the High Court. by virtue of section 52B of this Act, or by".
(7) The following sub-paragraph shall he added at the end of paragraph 2 of Schedule 4 to the 1991 Act—
"(7) Where the High Court makes a confiscation order by virtue of section 52B of this Act in relation to a defendant who has died, subparagraph (1) above shall be read as referring only to sections 35(1) (a), (b) and (d) and 35(4) (a) and (b) of the Act of 1945."'.
190 Schedule 4, page 49, line 33, at end insert:

'1980 c. 43.

The Magistrates' Courts Act 1980.

In section 12(1) (a) the words "and section 18 of the Criminal Justice Act 1991 (unit fines)".'.

191 Page 49, line 33, at end insert:

'1975 c. 21

The Criminal Procedure (Scotland) Act 1975.

In section 442B, the words "against sentence alone".'.

192 Page 49, line 37, column 3, at beginning insert 'In section 1, in subsection (5) (b) (iii), the words from "section 39" to "bankruptcy orders)" and subsection (8)'.
193 Page 49, line 38, column 3, at end insert 'In section 26A(3), the words from "or by" to the end.'.
194 Page 49, line 41, column 3, at end insert 'In section 38(2), the entries relating to a confiscation order and a defendant.'.
195 Page 50, line 27, column 3, at end insert 'Section 98.'.
196 Page 50, line 28, at end insert:

1113

'1989 c. 4.

The Prevention of Terrorism (Temporary Provisions) Act 1989.

In section 9(1), the word "or" immediately before paragraph (b).'.

197 Page 50, line 32 at end insert:

'1993 c.9.

The Prisoners and Criminal Proceedingsd (Scotland) Act 1993.

In section 10(1), the words "(whether before or after the commencement of this section)".'.

198 Page 50, line 32, at end insert:

'1991 c. 24.

The Northern Ireland (Emergency Provisions) Act 1991.

In section 48(3), the words "during the period of postponement". In section 50(2), the word "or" immediately before paragraph (c). Section 51(3). Section 67(6).'.

199 Page 50, line 32, at end insert:

'1191 c. 53.

The Criminal Justice Act 1991.

Section 17(3) (e). Section 19. Section 20(5). Section 22. Section 28 (3). In section 30 (1), the words "or the Lord Chancellor". In Schedule 4, Part V. In Schedule 11, paragraph 24.'.

200 Page 51, line 5, at end insert:

'S.I. 1992/3218.

The Banking Coordination (Second Council Directive) Regulations 1992.

In Schedule 8, paragraphs 8(3), 9(2) and 10(3). In Schedule 10, paragraphs 17 and 25.'.

Earl Ferrers: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 182 to 200 en bloc. These amendments to Schedules 3 and 4 are consequential on changes made elsewhere in the Bill.
Moved, That the House do agree with the Commons in their Amendments Nos. 182 to 200 en bloc.—(Earl Ferrers.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
201 In the Title, line 6, after '1988;' insert 'to make provision with respect to the financing of terrorism, the proceeds of terrorist-related activities and the investigation of terrorist activities;'.
202 Line 6, after'1988;', insert 'to amend Part I of the Criminal Justice Act 1991;'.
203 Line 8, after 'securities;' insert 'to provide for certain offences created by the Banking Coordination (Second Council Directive) Regulations 1992 to be punishable in the same way as offences under sections 39, 40 and 41 of the Banking Act 1987 and".
204 Line 10, after |Articles' insert '3,'.
205 Line 11, leave out from 'in' to 'to' where it first occurs in line 13 and insert 'that way'.
206 Line 13, after '1987' insert 'to make provision with respect to the penalty for causing death by dangerous driving or causing death by careless driving while under the influence of drink or drugs;'.
207 Line 18, after 'arrangements:' insert 'to amend the Criminal Procedure (Scotland) Act 1975 and Part I of the Prisoners and Criminal Proceedings (Scotland) Act 1993;'.
Earl Ferrers: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 201 to 207 en bloc. These amendments to the Title of the Bill are necessary to take account of new clauses which have been added in another place.
Moved, That the House do agree with the Commons in their Amendments Nos. 201 to 207 en bloc.—(Earl Ferrers.)
On Question, Motion agreed to.

Consolidated Fund (Appropriation) (No. 2) Bill
9.47 p.m.
The Bill was brought from the Commons, endorsed with the certificate of the Speaker that the Bill is a Money Bill, and read a first time.

Agriculture Bill [H.L.]
9.48 p.m.
Earl Howe: My Lords, I beg to move that the Commons amendments be now considered.
Moved, That the Commons amendments be now considered.—(Earl Howe.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
[The page and line refer to Bill [127] as first printed in the Commons.]
1 Clause 3, page 3, line 44, leave out 'milk produced' and insert 'the occurrence'.
2 Page 3, line 45. after 'year)', insert 'of any relevant matter'.
3 Page 3, line 46, leave out 'the authority is satisfied that'.
4 Page 3, line 47, leave out from 'is' to end of line 48 and insert 'not earlier than 31st March 1993 and not later than the vesting day under the scheme.'.
5 Page 3, line 48, at end insert:
'(6) For the purposes of subsection (5) above, the following are relevant matters—

(a) the production of milk, and

(b) the sale of milk by the person responsible for producing it.

(7) For the purposes of subsection (6) (b) above, milk shall be treated as sold if it is sold in the form of milk or in the form of a product which is wholly or partly derived from milk or which includes milk as an ingredient.'.
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 1 to 5 en bloc. One of the matters to which the Minister must have regard in deciding whether to approve a re-organisation scheme for a

1115
milk marketing board is whether that scheme makes reasonable provision for the distribution of assets to registered producers. Clause 3(5) describes a number of bases for such a distribution which should not be considered unreasonable.
As amended, the situations covered by this clause would be as follows: a distribution to producers who were registered on a specified date or at some time during a specified period; and a distribution related to registered producers' sale of milk and milk products from milk produced by their own cows over a specified period. The date or the end of the period would have to be no earlier than 31st March 1993 and no later than vesting day.
The main change is to enable 1992-93 to be used as a reference period, which should be more practicable than the year 1993-94 if vesting is to go ahead on 1st April 1994, which is the board's present objective.
For the sake of clarity and completeness I should add that a board is not constrained to propose a distribution in accordance with one of the possible ways described in Clause 3(5) to 3(7). A board could propose some other basis of distribution, which might, however, be more open to challenge on the grounds of its being unreasonable.
Moved, That the House do agree with the Commons in their Amendment No. 5.—(Earl Howe.)
On Question, Motion agreed to.
COMMONS AMENDMENT
6 Clause 7, page 6, line 41, leave out '21' and insert '14'.
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 6. With the leave of the House, I would also like to speak to Amendment No. 24.
Clause 7 provides that if Ministers require information from a milk marketing board which has submitted a reorganisation scheme, and that board fails to supply the information, then the board's application is treated as having been withdrawn. Clause 28 contains an equivalent provision in relation to a transfer scheme from the Potato Marketing Board.
The Government accepted the Opposition's suggestion in another place that a board should have only 14 days, rather than 21 days, to show that any failure to supply information was accidental. These amendments make the necessary changes.
Moved, That the House do agree with the Commons in their Amendment No. 6.—(Earl Howe.)
On Question, Motion agreed to.
COMMONS AMENDMENT
7 After Clause 7, insert the following new clause:
Publicity for determinations
'.—(1) As soon as reasonably practicable after granting an application under section 2 or 5 above, the authority granting the application shall make public in such manner as it thinks fit—

(a) the fact that it has granted the application, and

(b) the principles of the approved scheme or, as the case may be, of the approved variation.

(2) As soon as reasonably practicable after deciding under section 6 above to withdraw an approved scheme's approval, the authority making the decision shall make its decision public in such manner as it thinks fit.'.
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 7. With the leave of the House, I should like to speak also to Amendment No. 25. These amendments provide for the publication of the principles of an approved milk reorganisation scheme and any major subsequent changes including withdrawal of approval.
There is equivalent provision in respect of a potato transfer scheme except that, as Part II of the Bill makes no provision for the Potato Marketing Board to apply for approval of a transfer scheme to be withdrawn, there is no need for a requirement to publicise the fact of withdrawal.
Moved, That the House do agree with the Commons in their Amendment No. 7.—(Earl Howe.)
Lord Carter: My Lords, as I understand it, the amendment deals with the publication of an approved scheme after it has been agreed by the Government. I believe that we can assume that under Clause 3 the proposals will be published because obviously there will be consultation on the proposals of the various boards. Will the Minister explain what will be the procedure with regard to the publication of reorganisation schemes before they are determined by Ministers? How will they be published? Will they be published in full? Will it be a government document? How will the industry and others know the proposals of the various boards?
The amendment deals with the publication after Ministers have decided on the scheme, but perhaps the Minister will explain the procedure so that the proposals of the various boards are known.
Earl Howe: My Lords, the Bill as originally drafted would require a milk marketing board to bring the principles of its reorganisation scheme to the attention of registered producers. Following an amendment in this House, Ministers would have to consult representatives of producers, processors, retailers and consumers of milk on the scheme. Therefore, the principles of any scheme will be in the public domain at the outset.
However, under the provisions of Clause 4, a reorganisation scheme may be modified between submission and approval if Ministers cannot approve the scheme in its original form. Therefore, a scheme as approved may be different from that originally submitted for approval. Therefore, this amendment would require Ministers to make public the principles of an approved scheme.
An approved scheme may also be varied or, in the case of an MMB scheme only, withdrawn with Ministers' approval if there is a material change of circumstances. These amendments require those events to be publicised.
On Question, Motion agreed to.
COMMONS AMENDMENTS
8 Clause 10, page 8, line 19, after 'a', insert 'qualifying'.
9 Page 8, line 19, leave out from 'transfer' to and' in line 21.
10 Page 8, line 29, at end insert:
'(2A) For the purposes of subsection (1) (a) above, a transfer is a qualifying transfer if it is—

(a) a transfer of property, rights or liabilities of—

(i) the relevant board, or

(ii) a subsidiary of that board,

to a body which is a qualifying body, or

(b) a transfer of property, rights or liabilities of a subsidiary of the relevant board to that board.

(2B) For the purposes of subsection (2A) above, a body is a qualifying body if it is—

(a) a development council established under the Industrial Organisation and Development Act 1947,

(b) a society registered under the Industrial and Provident Societies Act 1965 which has not previously traded,

(c) a company registered under the Companies Act 1985 which has not previously traded, or

(d) a company registered under that Act which was a subsidiary of the relevant board immediately before the day on which this Act is passed.'.

Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 8 to 10 en bloc. With the leave of the House I shall speak also to Amendments Nos. 26 to 28, 53 to 55, 58 and 59, 228 to 236, 239, 245, 247, 249 to 251 and 254. This group of amendments concerns the types of body to which assets of a board, or of a subsidiary of one, could be transferred under a reorganisation scheme. They add a development council to the types of body to which assets of a milk marketing board, or of a subsidiary of one, could be transferred under a reorganisation scheme. For example, it has been suggested that national milk records should in future be operated by a development council. The amendments would keep that possibility open, but of course no decisions have yet been taken. It is up to the board to propose, and Ministers to decide, accordingly.
The other amendments in the group make drafting changes. I beg to move.
Moved, That the House do agree with the Commons in their Amendments Nos. 8 to 10 en bloc. —(Earl Howe.)
Lord Carter: My Lords, the amendments refer to transfer of liabilities. Perhaps I may ask the Minister this question; I believe that it is the right time to ask it. I refer to the position affecting the Scottish Milk Marketing Board and the deduction of the capital levies from producers. The situation has been challenged. I believe that the case is now sub judice. What effect will that issue have on the calculation of the liabilities of the marketing boards? Will the matter be left to the residuary bodies which succeed the marketing boards? It would he ironic if the capital levies had to be paid back and then a levy raised under Clause 16 to meet the liabilities of the marketing boards which arose from the repayment of the capital levies. I am not sure that that position is affected by the amendment. However, it would be helpful for the
1118
industry if the Minister will spell out the situation with regard to capital levies as it affects the five milk marketing boards when they bring forward their reorganisation schemes.
Earl Howe: My Lords, I am happy to help the noble Lord in so far as I can. The Commission has pointed out in a reasoned opinion that EC regulations prohibit the MM Bs from withholding money from milk producers in order to finance their commercial operations. That mainly affects the Scottish and Northern Ireland MMBs which have outstanding financial commitments which they would intend to meet by raising a statutory levy. The Commission is primarily concerned that no new levies should be raised. That could create a problem for the MMBs concerned and possibly give rise to a liability which would fall to be met under a scheme of reorganisation.
The Bill provides the necessary mechanisms for dealing with outstanding liabilities, as the noble Lord well appreciates. As for levies raised in the past, the Commission appears to accept that, if substantial assets are returned to producers when the milk marketing schemes are ended, that should take care of the problem. Thus if it were established that Dairy Crest had at any time since 1978 benefited from a statutory levy contrary to EC regulations, the proposed distribution of Dairy Crest shares to registered producers should take care of that problem. That is obviously a sensible approach. It would clearly not be sensible to raise new money from producers in order to give them back money withheld from them at some time in the past.
On Question, Motion agreed to.
COMMONS AMENDMENTS
11 After Clause 16, insert the following new clause:
Power to carry out preparatory work,
'.—(1) The functions of a milk marketing board shall be deemed always to have included the function of preparing for the enactment of this Part of this Act.
(2) In this section, "milk marketing board" includes the board established under the Milk Marketing Scheme (Northern Ireland) 1989; and, in the application of this section to that board, the reference to the enactment of this Part of this Act shall be construed as a reference to the making of Northern Ireland legislation corresponding to this Part.'.
12 After Clause 17, insert the following new clause:
Functions under section 19 of the Agricultural Marketing Act 1958
'. The functions of a committee appointed under section 19 of the Agricultural Marketing Act 1958 (consumers' committees and committees of investigation) shall not include the consideration of anything done by a milk marketing board—

(a) by way of preparing for the enactment of this Part of this Act, or

(b) in connection with an application under this Part of this Act or the carrying out of an approved scheme.'.

Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 11 and 12. With the leave of the House, I should like also to speak to Amendments Nos. 31, 48 and 49.

1119
The milk marketing boards have already carried out a considerable amount of work on their reorganisation proposals in anticipation of the enactment of the Bill. They have relied upon existing powers in their respective milk marketing schemes. In view of the fact that the provisions of the milk marketing schemes were not drawn up with those particular circumstances in mind, the Government consider it desirable to remove any potential areas of doubt about the adequacy of the powers in question. These amendments, in particular Amendment No. 11, would do precisely that.
Secondly, the amendments clarify the positions of the committees of investigation and consumers' committees established under the Agricultural Marketing Act 1958. Those committees' purposes are, respectively, to consider complaints about the operation of the milk marketing schemes, to monitor the schemes' effect on consumers and to report to Ministers. The new clause introduced by Amendment No. 12 would make it clear that the committees' remit does not extend to the boards' activities relating to schemes of reorganisation before or after enactment of the Bill.
The approval and monitoring of the implementation of reorganisation schemes are already directly the responsibility of Ministers, as provided for in the Bill.
1120
Amendment No. 31 has an effect equivalent to Amendment No. 12 in relation to the potato marketing scheme with one difference. Unlike the milk boards, the Potato Marketing Board has not had to consider in detail what any transfer scheme might contain. There is therefore no need for Amendment No. 31 to refer to activities carried out by the board in preparation for the enactment of the relevant part of the Act.
These amendments will not affect the existing roles of the committees in any way. The Committees will remain responsible for overseeing the boards' operation of the milk marketing schemes until they are revoked.
Moved, That the House do agree with the Commons in their Amendments Nos. 11 and 12 en bloc.—(Earl Howe.)
Lord Carter: My Lords, when I read this it looks remarkably like retrospective legislation. It is as well for the Minister that the noble and learned Lord, Lord Simon of Glaisdale, is not in the House; otherwise, he might have some observations to make. I understand this provision deals with the ultra vires point that has been raised on various occasions. We welcome this, and we hope that it will not be subject to judicial review.
On Question, Motion agreed to.
COMMONS AMENDMENT
13 Clause 22, page 12, line 45, at end insert:
'(1A) Until a decision has been made by the Council of the European Communities to introduce a regulation on the establishment of a common organisation of the market in potatoes, subsection (1) above shall have effect with the substitution for "expedient" of "in the public interest".'.
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 13. With the leave of the House, I wish to speak also to Amendments Nos. 15 to 23, 29, 30 and 47.
In dealing with these amendments, I should like to set them in context, and in doing so make the Government's position quite clear. The Bill as now before the House provides for two possibilities, depending upon the existence or otherwise of an EC regime for potatoes. Let me deal first with the situation should there be such a regime.
I shall not go into any detail on the proposal put forward by the Commission last November, other than to remind the House that it is extremely lightweight. It does not provide for any market support measures; and if it is adopted in its present form, it will mean the end of national arrangements, both here and elsewhere. We have already made it quite clear that, in the context of this proposal, we do not intend to press for retention of our quota and support buying arrangements. No other member state wishes to adopt quotas, and it would clearly not be in the national interest, even were we allowed to do so, to limit our own growers while others could grow as many potatoes as they liked. In the context of a common organisation of the potato market, our quota system would be neither sustainable nor desirable. Noble Lords may recall that your Lordships' Select Committee on European Communities endorsed this view. Indeed, it went even further by saying that the committee believed Britain would be better able to compete in Europe without the constraints of the potato marketing scheme, whether or not there is an EC regime for potatoes.
This Bill therefore prepares us to respond to any Community regime, and most importantly, to retain the many highly constructive and desirable activities of the board, such as research and development and market promotion, if that is what growers want. The Bill allows for the establishment of a successor body for this purpose. Without the Bill, we would have no alternative but to revoke the scheme and wind up the board without any possibility of a successor.
I should now like to bring the House up to date with discussions in Brussels. The proposal was considered by the May Council, together with presidency proposals incorporating marketing standards. Agreement was not possible on the proposals as they stood, and the Special Committee for Agriculture has been asked to do further work. The proposal was not discussed at the June Council and we have no indication of when it will be brought forward again.
This brings me to what might happen in the continued absence of an EC regime. Here I should like to emphasise that the Government have not made any decision to revoke the scheme. My right honourable
1122
friend the Minister wishes to acquaint herself first hand with all the arguments, and meetings are already being arranged with the industry bodies concerned. She will then be in a position to discuss the matter in an informed way with the Secretaries of State for Scotland and Wales, who are of course also involved in making any decision. She has already made it clear that she will want to spend a considerable amount of time and effort listening to growers—and to processors and others—before she reaches any conclusions about the future of the scheme.
In this connection during Report stage in another place, my right honourable friend the Minister said that, in order to give herself time for full consultation, she was prepared for the present arrangements for the target (and quota) area arrangements to apply to the 1994 season. There is therefore no question of an immediate end to the present scheme.
Turning now to this group of amendments, I emphasise to the House that the Government have retained the full spirit of the amendments made by your Lordships during Third Reading on 2nd February. We have made some tidying up amendments, which noble Lords in moving the amendments accepted would be necessary, but the thrust of the amendments is unaffected.
Perhaps I may remind the House that the effects of the amendments were, first, to specify that any order revoking the potato marketing scheme should be subject to affirmative resolution procedure unless the scheme's continued existence became inconsistent with an EC regulation. Furthermore, in the absence of a regulation, Ministers would only be able to make such an order if they considered it necessary or in the public interest. Secondly, the amendments would require the Potato Marketing Board, if the scheme were to be revoked, to apply to Ministers for approval of a transfer scheme, unless a poll of producers was against that course of action. Thirdly, they would require the PM B to consider the desirability of certain successor arrangements when preparing its transfer scheme and insert a requirement on Ministers to consult appropriate representatives on the principles of any transfer scheme submitted to them for approval.
Amendments Nos. 13, 15, 16 and 17 make minor drafting changes and incorporate the newly inserted Clause 22(3) into a new Clause 22(2). This places the two subsections which specify the circumstances in which Ministers can make the order invoking Part II together at the beginning of the clause. The distinction between "expedient" and "in the public interest", which your Lordships considered important, has been retained, esoteric though it may be. For completeness, Amendment No. 47 inserts a reference into Clause 54 (which deals with all other order-making powers) to the fact that Clause 22 contains its own provisions relating to parliamentary procedures.
The introductory print of the Bill gave the Potato Marketing Board a discretionary power to apply to Ministers for approval of a transfer scheme. It also empowered them to withdraw such an application. The intention of your Lordships' amendment requiring the board to submit a scheme would not be

1123
met if at any time after making the application the board could withdraw it and be under no requirement to take further action. Amendments Nos. 18 and 21 therefore remove the facility for such a withdrawal.
Your Lordships' clear intention was that the PMB should be bound by the results of any poll of producers which put the question whether or not the board should make an application to Ministers for approval of a transfer scheme. Amendment No. 29 therefore makes it clear that if a poll of producers voted against the PMB making an application for approval of a transfer scheme the board would be released from its duty to submit a scheme. Similarly, if producers voted against the board on the principles of a particular transfer scheme the board could not proceed with that scheme. The new clause in Amendment No. 30 ensures that the voting procedure used in any poll would be the same as that used for polls under the potato marketing scheme.
Finally, Amendments Nos. 22 and 23 amend Clause 25 to make clear the division of responsibilities between the PMB and Ministers on the steps to be completed before Ministers could approve a transfer scheme.
In the light of that rather lengthy explanation, I hope that the House will accept that these amendments do not change the intention of the amendment passed by your Lordships during Third Reading and will agree them accordingly.
Moved, That the House do agree with the Commons in their Amendment No. 13.—(Earl Howe.)
Lord Carter: My Lords, the House will be extremely grateful to the Minister for explaining the matter so clearly and will wish to thank the Government for accepting the amendments which were originally passed in this House. I am glad that the Minister agreed that the Government had accepted the spirit of the amendments, because I had a sneaking suspicion that that was the case when we passed them.
The Minister explained extremely clearly the order of play and exactly what happens now, whether or not there is an EC regime. He referred to the report of Sub-Committee D of this House. The noble Earl will remember that when we debated the report in this House there was not overwhelming support for some of the conclusions of that report.
We welcome the new Minister, Gillian Shephard, but when the noble Earl said that she proposed to consult all the organisations to apprise herself fully of the facts, he agreed by implication with what some of us thought—that her predecessor had consulted all the organisations, and was not fully apprised of all the facts.
There is still some confusion in the industry about exactly what will happen. Does the Minister agree that the department understands the need for speed in the matter so that the industry is not left in a state of limbo? We are grateful that it has been cleared that for the 1994 season the scheme will still apply. I do not know whether, when he replies, the Minister will be able to tell the House how long it will be before there is a final decision on the matter, one way or the other, so that we know where we stand.
1124
I was a little amused to see that the noble Earl regarded the distinction between "in the public interest" and "expedient" as esoteric. I remember that the noble Baroness, Lady Carnegy of Lour, spent many happy hours, as we did, trying to convince the Minister that the public interest was the better choice. I am glad that the Government have seen the strength of the arguments which the noble Baroness produced and of course we accept that.
A small final point on Amendment No. 15: why "Communities" instead of "Community"?
Lord Stanley of Alderley: My Lords, I think it is right that I should say a few words as one of the amendments was mine. Again, I wish to thank my noble friend for explaining so carefully what has happened. In welcoming the amendments, perhaps I may also speak to Amendment No. 14 which refers to the potato marketing scheme. I should like to thank noble Lords, particularly my noble friend on the Front Bench, for the way in which, during the Bill's passage through this House, they appreciated the problems facing the potato industry.
I welcome the assurance of my right honourable friend the Minister that she will spend time and effort before reaching any conclusion about the future of the potato marketing scheme.
Everyone in the industry realises that there is a need for change. I can say that the Potato Marketing Board itself is looking at the changes within the scheme which will benefit the industry as a whole. Like the noble Lord, Lord Carter, I hope that my right honourable friend will feel able, after consultation, to provide as soon as possible long-term plans, including an assurance that the scheme will continue beyond the 1994-95 season. That is, of course, in the absence of an EC scheme. I thank my noble friend and my right honourable friend for the way in which they have dealt with the matter.
Baroness Carnegy of Lour: My Lords, perhaps I may endorse those remarks. I think that all noble Lords will be grateful and those concerned in the industry will appreciate the sensitivity with which the matter has been handled, both by my noble friend on the Front Bench here and by my right honourable friend.
Earl Howe: My Lords, I am grateful to the noble Lord, Lord Carter, and both my noble friends for their remarks. It is helpful to the potato industry that my right honourable friend has agreed to take a long, careful look at all sides of the argument.
As to when a decision will be reached, I am afraid that I cannot be of much help, except to say that I agree that uncertainty is unhelpful. My right honourable friend will endeavour to apprise herself of all the facts in a speedy fashion and thereafter take a decision one way or the other.
The noble Lord, Lord Carter, asked why in Amendment No. 15:
"the Council of the European Community"
has been amended to:
"the Council of the European Communities".

1125
There is one Council covering the three Communities, that is to say: the European Economic Community, Euratom and the Coal and Steel Community. That is the reason for that amendment.
On Question, Motion agreed to.
COMMONS AMENDMENT
14 Clause 22, page 12, line 45, at end insert:
'(1B) Where subsection (1A) above applies, no order shall be made under subsection (1) above unless the Ministers have consulted on a proposal to bring the Potato Marketing Scheme to an end with such persons appearing to them to be representative of the interests of producers, purchasers, retailers and consumers of potatoes as they consider appropriate.'.
10.15 p.m.
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 14 which would require Ministers to consult before making an order to end the potato marketing scheme in the absence of a Community regime. The Government were happy to accept this amendment in another place, and I now commend it to the House.
Moved, That the House do agree with the Commons in their Amendment No. 14.—(Earl Howe.)
Lord Carter: My Lords, this amendment is highly welcome. It strengthens the various discussions that we had in this House. The Government's recognition of the need to consult on any change to the scheme is to be wholly welcomed.
On Question, Motion agreed to.
COMMONS AMENDMENTS
15 Clause 22, page 13, line 4, leave out 'Community' and insert 'Communities'.
16 Page 13, line 5, leave out 'include' and insert 'included'.
17 Page 13, line 7, leave out subsection (3).
18 Clause 24, page 13, line 41, leave out 'or withdrawn'.
19 Page 13, line 47, leave out 'not' and insert before the end of the period mentioned in subsection (1) above,'.
20 Page 13, line 47, after first 'application', insert 'but not'.
21 Page 13, line 48, leave out 'or withdrawn'.
22 Clause 25, page 14, line 11, at end insert 'and'.
23 Page 14, line 25, leave out '(d) that' and insert 'unless'.
24 Clause 28, page 17, line 6, leave out '21' and insert '14'.
25 After Clause 28, insert the following new clause:
Publicity for determinations
'. As soon as reasonably practicable after granting an application under section 24 or 27 above, the Ministers shall make public in such manner as they think fit—

(a) the fact that they have granted the application, and

(b) the principles of the approved scheme or, as the case may he, of the approved variation.'.

26 Clause 31, page 18, line 8, after 'transfer', insert 'under the scheme which—
(a) is a transfer'.
27 Page 18, line 9, after 'Board', insert:
'(b) is a transfer to a body which is a qualifying body, and
(c) is a transfer'.
28 Page 18, line 14, at end insert:
'(3) For the purposes of subsection (1) above, a body is a qualifying body if it is—

(a) a development council established under the Industrial Organisation and Development Act 1947,

(b) a society registered under the Industrial and Provident Societies Act 1965 which has not previously traded, or

(c) a company registered under the Companies Act 1985 which has not previously traded.'.

29 Clause 36, page 19, line 31, leave out from 'under' to end of line 33 and insert 'subsection (1) (a) above and a majority of the votes cast are cast against the making of any application under section 24 above, the Board shall cease to be subject to the duty imposed by subsection (1) of that section.
(3) Where the Board carries out a poll under subsection (1) (b) above and a majority of the votes cast are cast against the making of an application under section 24 above in relation to the scheme which is the subject of the poll, no such application may be made in relation to that scheme.'.
30 After Clause 36, insert the following new clause:
Voting in poll under section 36
'.—(1) A person shall only be eligible to vote in a poll under section 36 above if—

(a) he was registered as a producer under the Potato Marketing Scheme at noon on the day four weeks before the day of the poll ("the relevant time"), and

(b) he was, at the relevant time, in occupation of land which—

(i) was under potatoes on 1st June immediately preceding the day of the poll, or

(ii) was under potatoes at any time in the period beginning with 2nd June immediately preceding the day of the poll and ending with the day four weeks before the day of the poll.

(2) A person voting in a poll under section 36 above shall be treated as having cast his standard number of votes, which shall he determined as provided below.
(3) Where a person who is eligible to vote in a poll under section 36 above was, at the relevant time, in occupation of land which was under potatoes on 1st June immediately preceding the day of the poll, his standard number of votes shall be calculated as provided by paragraph 14(5) of the Potato Marketing Scheme, the appropriate area for the purposes of that provision being taken to be the area of such land of which he was in occupation at that time.
(4) Where a person who is eligible to vote in a poll under section 36 above was not, at the relevant time, in occupation of land which was under potatoes on 1st June immediately preceding the day of the poll, his standard number of votes shall be one.
(5) For the purposes of this section, a poll shall be treated as taking place on the last day for the return of voting papers.'.
31 After Clause 38, insert the following new clause:
Functions under section 19 of the Agricultural Marketing Act 1958
'. The functions of a committee appointed under section 19 of the Agricultural Marketing Act 1958 (consumers' committees and committees of investigation) shall not include the consideration of anything done by the Board in connection with an application under this Part of this Act or the carrying out of an approved scheme.'.
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 15 to 31 en bloc, which have already been spoken to.
Moved, That the House do agree with the Commons in their Amendments Nos. 15 to 31.—(Earl Howe.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
32 Clause 44. page 22, line 23, leave out 'a' and insert 'the'.
33 Clause 45, page 23, leave out lines 14 to 17 and insert 'knowingly or recklessly makes a statement which is false or misleading in a material respect'.
34 Clause 46. page 23, line 23, leave out 'brought' and insert 'commenced'.
35 Page 23, line 26, leave out 'brought' li.nd insert 'commenced'.
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 32 to 35 en bloc.
Moved, That the House do agree with the Commons in their Amendments Nos. 32 to 35.—(Earl Howe.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
36 Clause 48, page 24, line 6, leave out 'as from 1st May 1993'.
37 Page 24, line 10, leave out first 'that date' and insert 'the day on which this Act is passed'.
38 Page 24, line 10, leave out second 'date' and insert 'day'.
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 36 to 38 en bloc. With the leave of the House, I should like to speak also to Amendment No. 263.
These amendments alter the date on which the repeal of the legal basis in primary legislation for operating a wool guarantee has effect. Clause 48 of the Bill was initially drafted so that this repeal would have effect from 1st May 1993. This was based on the assumption that the Bill would be enacted by that date. This clearly did not prove possible. Thus to avoid what would otherwise become a retrospective provision, these amendments alter the effective date from 1st May to the date of enactment of the Bill.
In addition, Amendment No. 263 includes a purely technical clarification that the repeal of Schedule 1 to the 1957 Act, which lists those products which qualify for a guarantee, does not affect the saving clauses in relation to the wool and potato guarantees.
Moved, That the House do agree with the Commons in their Amendments Nos. 36 to 38.—(Earl Howe.)
On Question, Motion agreed to.
COMMONS AMENDMENT
39 Before Clause 50, insert the following new clause:
Commercial activities of milk marketing boards: distribution of profits
'.—(1) It shall be deemed to be an overriding requirement of a milk marketing scheme that any distribution in respect of profits attributable to any relevant commercial activities shall be made so as not to discriminate, as between persons who are registered as producers under the scheme—

(a) by reference to the identity of the person to whom milk is sold, or

(b) by reference to whether milk is sold in the form of milk or in the form of a product which is wholly or partly derived from milk or which includes milk as an ingredient.

(2) The powers conferred by a milk marketing scheme on the board administering the scheme shall be deemed to include whatever powers are necessary for the purpose of giving effect to the requirement under subsection (1) above.
(3) For the purposes of subsection (1) above, the following are relevant commercial activities, namely—

(a) the separation of milk,

(b) the heat treatment of milk,

(c) the retail packaging of milk,

(d) the manufacture of milk products, and

(e) the provision of services for reward, otherwise than under the arrangements for the sale of milk to the board.

(4) In that subsection, the reference to a milk marketing scheme is to a scheme having effect under—

(a) the Agricultural Marketing Act 1958, or

(b) the Agricultural Marketing (Northern Ireland) Order 1982,

for the marketing of milk.
(5) This section shall apply in relation to any distribution the amount of which is declared on or after the passing of this Act, irrespective of when the profits concerned were made.'.
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 39. With the leave of the House, I would also like to speak to Amendment No. 50.
These amendments deal with the distribution of profits which the milk marketing boards make from their commercial activities as against the boards' statutory functions of buying and selling raw milk. Commercial activities include the processing of milk into products such as yoghurt, butter and cheese and the provision of on-farm services.
All registered producers have to operate within the terms set by their relevant milk marketing scheme, even where they are not bound to sell their milk to the board. For one thing, the pricing structure of the entire market is dictated by agreements reached between the board and the Dairy Trade Federation in the relevant joint committee.
Even more significantly, the Agricultural Marketing Act 1958 requires all registered producers to contribute to the debt of a board on a winding up, not just those producers who sell to the board. To discriminate between producers who sell to the board and those who do not, for the purposes of distributing commercial profits, is therefore in the Government's view not justifiable. It is also unacceptable to the EC Commission, which considers it to be contrary to the provisions of the EC regulations authorising the boards' activities, and to the principles of the Common Market. The Government have taken account of the Commission's views and the likelihood of action against us under Article 169 of the treaty if we fail to act.

1129
Moved, That the House do agree with the Commons in their Amendment No. 39.—(Earl Howe.)
Lord Carter: My Lords, the only point that I wish to make is a drafting point. I was surprised to see that the Government had introduced a new clause under Part IV, under the "other miscellanous provisions", and not under Part I, which has to do with milk marketing. I am not sure whether that is covered by this amendment. Would this be the right stage to ask whether the details of the allocation for Dairy Crest, which is part of the commercial activities of the milk boards, will have to be in the reorganisation schemes which are presented to the Minister and made known to the industry? I presume that they will. I do not think that it has been confirmed that the details of the formula to be used in the allocation will be in the reorganisation schemes that the Minister has to consider.
Earl Howe: My Lords, Ministers will have to consider whether a scheme put forward by the milk marketing board is reasonable, taking account of the views of all the interested parties. Dairy Crest, according to the MMB, represents approximately four-fifths of the MMB's assets, which is a very significant proportion. Ministers will have to look extremely carefully at those assertions in conjunction with their accountants and those of the board. The valuation of Dairy Crest will in part be dependent upon the market. Obviously it is of substantial value but, as I say, it must be properly assessed.
As to the detail of the distribution of shares, clearly the boards will be expected to submit their proposals on that score also and Ministers will have to look to see whether the basis of distribution is fair to producers.
On Question, Motion agreed to.
COMMONS AMENDMENT
40 Before Clause 50, insert the following new clause:
British Wool Marketing Board: power to grant relief
'. For the purposes of section 727 of the Companies Act 1985 and Article 675 of the Companies (Northern Ireland) Order 1986 (power of court to grant relief in certain cases), the British Wool Marketing Board shall be treated as a company and its members shall he treated as officers of it.'.
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 40. With the leave of the House I should like to speak also to Amendment No. 51.
The provision arises from the British Wool Marketing Board's concern that—in terms of legal liability—members and officers of the board do not currently enjoy a degree of protection equivalent to that ordinarily available to directors of limited companies. The Government are sympathetic to the board's desire—given the ending of the wool guarantee—to take steps to address the usual risks associated with operating within a more commercial business environment. The new clause therefore places board members and executives on an equal footing
1130
with company directors as regards the scope for relief from liability. I commend the amendment to the House.
Moved, That the House do agree with the Commons in their Amendment No. 40.—(Earl Howe.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
41 Clause 51, page 26, line 9, at end insert:
'() In any proceedings of the Joint Consultative Committee for the purposes of this section, decisions shall he made by a majority of the members present, with the Chairman voting only in the event of a tie.'.
42 Page 26, line 17, leave out 'Advisory'.
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 41 and 42.
Amendment No. 41 is necessary in order to establish the voting procedure to be used by the joint consultative committee of the potato marketing board in deciding upon the target area. The procedure is slightly different from that currently in the potato marketing scheme, where the JCC puts recommendations to Ministers or the board, and the chairman is given some flexibility in order to ensure that a recommendation does come forward.
Under Clause 51, the JCC is given the duty of reaching its own decisions on target area, and simple majority voting, with the chairman having the casting vote in the event of a tie, is more appropriate.
The deletion of "Advisory" in Amendment No. 42 is simply an acknowledgement of the new executive functions of the committee. I commend these amendments to the House.
Moved, That the House do agree with the Commons in their Amendments Nos. 41 and 42.—(Earl Howe.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
43 Clause 52, page 26, line 23, leave out from '(1)' to end of line 25 and insert:
'(a) after the words "made on" there shall be inserted "such persons as may be specified in the order, being", and
(b) the words "on persons", in the second place where they occur, shall be omitted.'.
44 Page 26, line 45, at end insert:
'(4A) For the purposes of subsection (1) above, a development council order shall be taken to relate to agriculture if any of the activities that are to be treated as constituting the industry to which the order relates is an agricultural activity.'.
45 Page 26, line 46, leave out 'subsection (1) above' and insert 'this section'.
46 Page 26, line 47, after '1947', insert ', and "agricultural" shall be construed accordingly'.
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 43 to 46 en bloc.
Clause 52 would modify Section 4 of the Industrial Organisation and Development Act 1947 to allow an agricultural development council to collect its levies through intermediaries rather than direct from those on whom they are raised. The intention is to facilitate

1131
the collection of a levy in a fragmented industry. The effect of the amendments is to apply Clause 52 to a development council which included processors as well as primary producers. I should make it clear that they do not prejudge the question of whether a development council should in any particular case include the processors. It is for the industry itself to make proposals in each case. I commend the amendments to the House.
Moved, That the House do agree with the Commons in their Amendments Nos. 43 to 46.—(Earl Howe.)
Lord Carter: My Lords, since this group of amendments deals with the proposed milk development council, it would be helpful if the Government could confirm the welcome that I am sure they will give to proposals for a milk development council as they come forward. I hope that they will also agree with the point that was made when we debated the matter in this House with regard to the timetable. It is extremely important that the milk development council, should it be set up, is up and running from 1st April 1994 if that is the vesting date of the new arrangements. It is extremely important, if there is to be a deduction from producers' returns of a statutory levy, that it should operate at the same time, from the beginning of the new regime, as it were, and that there is not a gap between the vesting day and the deduction of statutory levies if it can possibly be avoided.
Can the Minister say whether the Government are expecting representations from the industry in the fairly near future? If so, what sort of timetable are they anticipating? If the representations are to come forward—whether or not they include the processors —can we look forward to a quick response from the Government to the proposals? It is perhaps unfair to ask at this stage, but perhaps the Minister could say whether or not the Government have been able to form a view on the question of central testing and national milk records.
In a previous group of amendments the Minister referred to the possibility of national milk records being a function of a milk development council, which is an idea I have not heard before. There is general agreement that there are certain functions about which there is no argument—for instance, research and development is now conducted by the milk marketing board; the Animal Data Centre functions and generic promotion will be carried on by the dairy council. Those are natural functions for a milk development council. However, there is still a difference of view over central testing and perhaps national milk records.
If the Minister could give the Government's views on the ideas, the possible functions and timetable for a milk development council, it will be extremely helpful to the industry.
Earl Howe: My Lords, the Government have always said that they stand ready to consider proposals from the milk industry for a development council. Clearly the procedures in the 1947 Act would have to be followed. We have now received a proposal
1132
from the NFU to consider the establishment of a milk development council. We are looking at the proposal with due expedition and care. But Ministers will have to be satisfied that such a council is desired by a substantial number of those in the industry. That is laid down in the 1947 Act. We shall need to look carefully at the evidence provided by the NFU to that effect.
With regard to central testing and national milk records, I have said, as the noble Lord reminded the House, that we are open to the suggestion that national milk records should be a function performed by a future development council. We cannot go further than that at this stage until we receive a formal proposal from the board. The same comment can be made in regard to central testing. Clearly we shall need to take a long, cold look at what is reasonable and what makes sense for the industry as a whole. Our thinking has moved a little way since we were last in debate in your Lordships' House on these issues, as may be discerned from the amendments.
Lord Carter: My Lords, with the leave of the House, can the Minister say whether it is likely that the response of the Government to the proposals for a development council will be made known to the industry at about the same time as they will advise the industry of their response to the reorganisation scheme? It will be helpful if that were the case.
Earl Howe: My Lords, we shall endeavour to do that. I agree with the noble Lord's earlier remarks, that it is desirable for there to be some simultaneity between the establishment of a development council and vesting day. The timetable for both is extremely tight. We are aware of that, and I know that the industry is also. We shall need to keep that in mind as we look through the proposals presented to us.
Lord Monk Bretton: My Lords, I rather start from the premise, in regard to national milk records, that those who pay for recording their cows should have the copyright in that. I hope that at some stage the matter will be in their hands to decide. They have more right to decide about it than anyone else.
Earl Howe: My Lords, the right to decide on these matters, as my noble friend is aware, rests with Ministers. But Ministers have to take account of the interests of the whole sector, from producers to consumers, in the industry. I am sure that the views of those sectors will not be slow in coming forward. However, I take the point that my noble friend made.
Lord Monk Bretton: My Lords, I apologise for perhaps overstating the case. I am sure that my noble friend knows what I meant.
On Question, Motion agreed to.
10.30 p.m.
COMMONS AMENDMENTS
47 Clause 54, page 27, line 31, at end insert:
'(4A) Section 22 above contains its own provisions about parliamentary procedure in relation to an order under that section.'
48 Clause 55, page 27, line 38, after 'I', insert '(except section 11 (so far as relating to Part I of Schedule 2) and section [Power to carry out preparatory work ])'.
49 Clause 57, page 28, line 19, at end insert 'section [Power to carry out preparatory work],'.
50 Page 28, line 20, at end insert 'section [Commercial activities of milk marketing boards: distribution of profits],'.
51 Page 28, line 20, at end insert 'section [British Wool Marketing Board: power to grant relief],'.
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 47 to 51. They have already been spoken to.
Moved, That the House do agree with the Commons in their Amendments Nos. 47 to 51.—(Earl Howe.)
On Question, Motion agreed to.
COMMONS AMENDMENT
52 Clause 57, page 28, line 24, leave out subsection (6).
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 52. This amendment removes the Privilege amendment.
Moved, That the House do agree with the Commons in their Amendment No. 52.—(Earl Howe.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
53 Schedule 1, page 30, line 4, leave out 'paragraph 11(2) (a), (b) or (c) below' and insert 'section I0(2B) (a), (b), (c) or (d) above'.
54 Page 30, line 7, leave out 'paragraph 11(2) (a) or (b) below' and insert 'section 10(2B) (a), (b) or (c) above'.
55 Page 30, line 24, leave out 'to one or more qualifying successor bodies'.
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 53 to 55. These amendments have already been spoken to.
Moved, That the House do agree with the Commons in their Amendments Nos. 53 to 55.—(Earl Howe.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
56 Schedule 1, page 30, line 29, leave out 'and'.
57 Page 30, line 32, at end insert, and
(d) any property or rights whose transfer would involve a breach by the board of the restriction imposed by section 47(2) of the Agricultural Marketing Act 1958 (restriction on disclosure of information obtained under the Act).'.
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 56 and 57. With the leave of the House, I should like to speak also to Amendments Nos. 60, 185, 237, 238, 242 and 253.
Amendments Nos. 56 and 57, 60 and 185 tighten up the rules concerning the disclosure of confidential information by the milk marketing boards as part of the implementation of an approved reorganisation
1134
scheme. Any category of information which is to be disclosed to a third party by a milk marketing board will, as a result, have to be specified in a reorganisation scheme. In addition, any information relating to an individual purchaser may be disclosed only with that purchaser's written consent. I am sure your Lordships will agree that these additional safeguards are highly desirable. Amendments Nos. 237 and 238, 242 and 253 make equivalent changes in respect of potatoes except that there is no requirement to obtain the written consent of purchasers. That is because the Potato Marketing Board, unlike the MMBs, is not essentially a trading body. I beg to move.
Moved, That the House do agree with the Commons in their Amendments Nos. 56 and 57.—(Earl Howe.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
58 Schedule I, page 30, line 33, leave out subparagraph (2).
59 Page 30, line 43, leave out `paragraph 11 (2) (a) or (b)' and insert 'section 10(2B) (b) or (c)'.
60 Page 31, line 12, at end insert:
.—(1) The scheme must specify what information to which this sub-paragraph applies is to be disclosed by the board for the purposes of the scheme and to whom.
(2) Sub-paragraph (1) above applies to information the disclosure of which is (apart from paragraph 19 of Schedule 2 to this Act) restricted by section 47(2) of the Agricultural Marketing Act 1958.
(3) Where information specified under subparagraph (1) above identifies a person as a purchaser of milk from the hoard, the scheme must provide for the information to be disclosed only with his written consent.'.
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 58 to 60. The amendments have already been spoken to.
Moved, That the House do agree with the Commons in their Amendments Nos. 58 to 60.—(Earl Howe.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
61 Schedule 2, page 31, line 35, leave out 'successor'.
62 Page 31, line 37, leave out 'the successor' and insert 'that'.
63 Page 31, line 39, leave out 'the trade carried on by a qualifying successor body' and insert 'where any trade, or part of a trade, carried on by a milk marketing board is transferred under section 10 above to a qualifying body, the trade carried on by that body'.
64 Page 31, line 40, after 'under', insert 'that'.
65 Page 31, line 40, leave out '10 above'.
66 Page 31, line 43, leave out 'all' and insert 'any'.
67 Page 31, line 43, leave out 'and' and insert 'or'.
68 Page 31, line 44, leave out 'successor'.
69 Page 31, line 46, leave out second 'and' and insert 'or'.
70 Page 31, line 47, leave out 'the qualifying successor' and insert 'that'.
71 Page 32, line 2, leave out 'and' and insert 'or'.
72 Page 32, line 3, leave out 'successor'.
73 Page 32, line 5, leave out sub-paragraph (2) and insert:
'(2) In its application to this paragraph, paragraph 17D(1) below (definition of "qualifying body") shall have effect with the omission of paragraph (b).'.
74 Page 32, line 21, leave out 'successor'.
75 Page 32, line 23, leave out 'the successor' and insert 'that'.
76 Page 32, line 24, leave out 'the trade carried on by a qualifying successor body' and insert 'where any trade, or part of a trade, carried on by a subsidiary of a milk marketing board is transferred under section 10 above to a qualifying body, the trade carried on by that body'.
77 Page 32, line 25, after 'under', insert 'that'.
78 Page 32, line 25, leave out '10 above'.
79 Page 32, line 28, leave out 'all' and insert 'any'.
80 Page 32, line 28, leave out 'and' and insert 'or'.
81 Page 32, line 30, leave out 'successor'.
82 Page 32, line 32, leave out 'and' and insert 'or'.
83 Page 32, line 32, leave out 'the qualifying successor' and insert 'that'.
84 Page 32, line 34, leave out 'and' and insert 'or'.
85 Page 32, line 35, leave out 'successor'
86 Page 32, line 37, leave out sub-paragraph (2) and insert:
'(2) In its application to this paragraph, paragraph 17D(1) below (definition of "qualifying body") shall have effect with the omission of paragraph (b).'.
87 Page 32, line 48, at end insert:
'2A—(1) This paragraph applies where—

(a) in accordance with an approved scheme, shares in a subsidiary of the board to which the scheme relates are transferred otherwise than under section 10 above to a qualifying body ("the successor"), and

(b) the scheme provides—

(i) for free shares in the successor to be issued or transferred to persons by virtue of their being, or having been, registered producers, and

(ii) for the taking of steps with a view to securing the quotation of the successor on the Stock Exchange.

(2) For the purposes of the Corporation Tax Acts—

(a) the shares transferred to the successor shall be treated as having been, at the time when they became vested in the transferor and at all times since that time, vested in the successor; and

(b) anything done by the transferor in relation to the shares transferred to the successor shall be deemed to have been done by the successor.

(3) For the purposes of sub-paragraph (1) (b) (i) above, shares are free if they are issued or transferred without any consideration being provided by the persons acquiring them, there being disregarded for this purpose any depreciatory effect of transfers under the scheme on the value of a right to participate in the winding up of the board to which the scheme relates.
(4) This paragraph shall have effect in relation to accounting periods beginning after the last complete accounting period of the transferor ending before the date of the transfer to the successor.'.
88 Page 32, line 48, at end insert:
'2B.—(1) Where—
1136

(a) in accordance with an approved scheme, shares in a subsidiary of the relevant board ("the transferred company") are transferred otherwise than under section 10 above to a qualifying body ("the successor"),

(b) immediately after the transfer, the successor is a member of a group of which the relevant board is a member, and

(c) the scheme provides as mentioned in paragraph 2B(1) (b) above,

sections 178 and 179 of the Taxation of Chargeable Gains Act 1992 shall not apply on the transferred company ceasing to be a member of a group of which the relevant board is a member if, immediately after doing so, it is a member of a group of which the successor is a member.
(2) Where by virtue of sub-paragraph (1) above sections 178 and 179 of the Taxation of Chargeable Gains Act 1992 do not apply, then, on the transferred company ceasing to be a member of a group of which the successor is a member, those sections shall apply—

(a) as if any assets acquired by the transferred company, at any time when it was a member of a group of which the relevant board was a member, from any member of that group had been acquired by it at that time from the successor, and

(b) as if the transferred company and the successor had at all material times been associated companies for the purposes of those sections.

(3) In this paragraph—
"group" has the meaning given by section 170 of the Taxation of Chargeable Gains Act 1992; and
"relevant board" means the board to which the scheme relates.'.
89 Page 33, line 3, after first 'a', insert 'qualifying'.
90 Page 33, line 3, leave out from 'transfer' to 'a' in line 4.
91 Page 33, line 5, leave out 'or 2' and insert ', 2 or 2A'.
92 Page 33, line 9, leave out 'or 2' and insert ', 2 or 2A'.
93 Page 33, line 10, at end insert 'and which, both immediately before and immediately after the transfer, is a member of the same group as that company.'.
94 Page 33, line II, leave out 'transferee' and insert 'body to which the qualifying transfer is made'.
95 Page 33, line 14, leave out 'the transferee' and insert 'that body'.
96 Page 33, line 16, at end insert '; and
"qualifying transfer" means a transfer under an approved scheme to a qualifying body of shares in a subsidiary of the board to which the scheme relates, being a transfer which takes place under section 10 above or in circumstances in which paragraph 2A above applies.'.
97 Page 33, line 22, leave out 'successor' and insert 'qualifying'.
98 Page 33, line 25, leave out 'successor' and insert 'qualifying'.
99 Page 33, line 27, leave out paragraph 5.
100 Page 33, line 41, leave out sub-paragraphs (1) and (2) and insert:
'(1) This paragraph applies where under an approved scheme there are one or more relevant successors in relation to the relevant board.
(2) Where there is one relevant successor in relation to the relevant board, any unallowed capital losses of the relevant board shall—

(a) be apportioned between the relevant board and the relevant successor in accordance with the scheme, and

1137

(b) so far as apportioned to the relevant successor, be treated as allowable capital losses accruing to it on the disposal of an asset on the vesting day under the scheme.

(2A) Where there is more than one relevant successor in relation to the relevant board, any unallowed capital losses of the relevant board shall—

(a) be apportioned amongst the relevant board and the relevant successors in accordance with the scheme, and

(b) in the case of each relevant successor to which such losses are so apportioned, be treated as allowable capital losses accruing to it on the disposal of an asset on the vesting day under the scheme.'.

101 Page 33, line 47, at end insert:
'() In this paragraph, references to relevant successor, in relation to the relevant board, include a body to which shares held by that hoard in a subsidiary of its are transferred in circumstances in which paragraph 2A above applies.'.
102 Page 33, line 48, leave out sub-paragraph (3) and insert:
'(3) In this paragraph—
"allowable capital losses" means losses which are allowable losses for the purposes of corporation tax on chargeable gains;
"relevant board" means the board to which the scheme relates; and
"unallowed capital losses" means any allowable capital losses which have accrued to the relevant hoard before the vesting day under the scheme, in so far as they have not been allowed as deductions from chargeable gains.'.
103 Page 33, line 49, at end insert:
'6A.—(1) This paragraph applies where an approved scheme provides for the transfer of all the property, rights and liabilities to which a subsidiary of the relevant board is entitled or subject on the vesting day under the scheme.
(2) Where there is one relevant successor in relation to the subsidiary, any unallowed capital losses of the subsidiary shall be treated as allowable capital losses accruing to the relevant successor on the disposal of an asset on the vesting day under the scheme.
(3) Where there is more than one relevant successor in relation to the subsidiary, any unallowed capital losses of the subsidiary shall—

(a) be apportioned between the relevant successors in accordance with the scheme, and

(b) in the case of each relevant successor to which such losses are so apportioned, be treated as allowable capital losses accruing to it on the disposal of an asset on the vesting day under the scheme.

(4) In this paragraph—
"allowable capital losses" means losses which are allowable losses for the purposes of corporation tax on chargeable gains;
"relevant hoard" means the milk marketing board to which the scheme relates; and
"unallowed capital losses" means any allowable capital losses which have accrued to the subsidiary before the vesting day under the scheme, in so far as they have not been allowed as deductions from chargeable gains.
6B.—(1) This paragraph applies where an approved scheme provides for the transfer of some, but not all, of the property, rights and liabilities to which a subsidiary of the relevant board is entitled or subject on the vesting day under the scheme.
(2) Where there is one relevant successor in relation to the subsidiary, any unallowed capital losses of the subsidiary shall—

(a) be apportioned between the subsidiary and the relevant successor in accordance with the scheme, and

1138

(b) so far as apportioned to the relevant successor, be treated as allowable capital losses accruing to it on the disposal of an asset on the vesting day under the scheme.

(3) Where there is more than one relevant successor in relation to the subsidiary, any unallowed capital losses of the subsidiary shall—

(a) be apportioned amongst the subsidiary and the relevant successors in accordance with the scheme, and

(b) in the case of each relevant successor to which such losses are so apportioned, be treated as allowable capital losses accruing to it on the disposal of an asset on the vesting day under the scheme.

(4) Sub-paragraph (4) of paragraph 6A above shall apply for the purposes of this paragraph as it applies for the purposes of that.'.
104 Page 33, line 49, at end insert:
'6C. Where by virtue of paragraph 6A or 6B above losses of one body are treated as accruing to another body, they shall not be allowed as deductions from chargeable gains accruing to that other body on a disposal of shares in, or securities of, the first-mentioned body.'.
105 Page 34, line 3, leave out 'successor' and insert 'qualifying'.
106 Page 34, line 3, at end insert '("the successor bodies")'.
107 Page 34, line 15, leave out sub-paragraphs (4) and (5).
108 Page 34, line 32, leave out sub-paragraph (6).
109 Page 34, line 34, at end insert:
'() In this paragraph, "unallowed tax losses" means—

(a) any losses which, as at the end of the last complete accounting period of the board ending before the date of the transfer under section 10 above, are losses which under section 393(1) of the Income and Corporation Taxes Act 1988 are or, if a claim had been made under that subsection, would be available for relief against the hoard's trading income for the next accounting period, and

(b) any allowances which, as at the end of the last complete accounting period of the board ending before that date, are allowances which, under section 145(2) of the Capital Allowances Act 1990, are available for carry forward to the next accounting period.'.

110 Page 34, line 34, at end insert:
'7A.—(1) This paragraph applies where a trade carried on by a subsidiary of a milk marketing board is transferred under section 10 above to more than one qualifying body ("the successor bodies").
(2) There shall be apportioned between the successor bodies—

(a) the unallowed tax losses of the subsidiary, and

(b) any expenditure incurred by the subsidiary before the date of the transfer and by reference to which capital allowances may be made.

(3) The apportionment under sub-paragraph (2) above shall be made in such manner as is just and reasonable having regard—

(a) to the extent to which the losses and expenditure mentioned in that sub-paragraph are attributable to the different parts of the trade transferred, and

(b) as respects the apportionment of such expenditure, to the division of the subsidiary's assets between the successor bodies.

(4) In this paragraph, "unallowed tax losses" means—

1139

(a) any losses which, as at the end of the last complete accounting period of the subsidiary ending before the date of the transfer under section 10 above, are losses which under section 393(1) of the Income and Corporation Taxes Act 1988 are or, if a claim had been made under that subsection, would be available for relief against the subsidiary's trading income for the next accounting period, and

(b) any allowances which, as at the end of the last accounting period of the subsidiary ending before that date, are allowances which, under section 145(2) of the Capital Allowances Act 1990, are available for carry forward to the next accounting period.

7B.—(1) This paragraph applies where part of a trade carried on by a subsidiary of a milk marketing board is transferred under section 10 above to one qualifying body ("the successor body") and the remainder is retained by the subsidiary.
(2) There shall be apportioned between the subsidiary and the successor body—

(a) the unallowed tax losses of the subsidiary, and

(b) any expenditure incurred by the subsidiary before the date of the transfer and by reference to which capital allowances may be made.

(3) The apportionment under sub-paragraph (2) above shall be made in such manner as is just and reasonable having regard—

(a) to the extent to which the losses and expenditure mentioned in that sub-paragraph are attributable to the different parts of the trade, and

(b) as respects the apportionment of such expenditure, to the division of the subsidiary's assets between itself and the successor body.

(4) In this paragraph, "unallowed tax losses" has the same meaning as in paragraph 7A above.
7C.—(1) This paragraph applies where part of a trade carried on by a subsidiary of a milk marketing hoard is transferred under section 10 above to more than one qualifying body ("the successor bodies") and the remainder is retained by the subsidiary.
(2) There shall be apportioned amongst the subsidiary and the successor bodies—

(a) the unallowed tax losses of the subsidiary, and

(b) any expenditure incurred by the subsidiary before the date of the transfer and by reference to which capital allowances may be made.

(3) The apportionment under sub-paragraph (2) above shall be made in such manner as is just and reasonable having regard—

(a) to the extent to which the losses and expenditure mentioned in that sub-paragraph are attributable to the different parts of the trade, and

(b) as respects the apportionment of such expenditure, to the division of the subsidiary's assets amongst itself and the successor bodies.

(4) in this paragraph, "unallowed tax losses" has the same meaning as in paragraph 7A above.
7D.—(1) Any question which arises as to the manner in which the apportionment under any of paragraphs 7 to 7C above is to he made shall be determined, for the purposes of the tax of the parties concerned—

(a) in a case where one body of General Commissioners have jurisdiction with respect to all the parties concerned, by those Commissioners, unless the parties concerned agree that it shall be determined by the Special Commissioners;

1140

(b) in a case where more than one body of General Commissioners have jurisdiction with respect to the parties concerned, by such of those bodies of General Commissioners as the Commissioners of Inland Revenue may direct, unless the parties concerned agree that it shall be determined by the Special Commissioners; and

(c) in any other case, by the Special Commissioners.

(2) The Commissioners by whom the question falls to be determined shall make the determination in like manner as if it were an appeal except that the parties concerned shall be entitled to appear and be heard by the Commissioners or to make representations to them in writing.
(3) In this paragraph, references to the parties concerned are to the persons between or amongst whom the apportionment in question falls to be made.'.
111 Page 34, leave out lines 36 and 37 and insert:
'8.—(1) This paragraph applies to the following events—'.
112 Page 34. line 38, after 'scheme', insert 'on or'.
113 Page 34, line 39, at end insert:
'(aa) the issue or transfer under an approved scheme to trustees of any shares in, or securities of, a company on terms which provide for the transfer of those shares or securities to persons by virtue of their being, or having been, registered producers:'.
114 Page 34. line 42, at end insert:
'(bb) the conferring under an approved scheme on or before the vesting day under the scheme of any such right as is mentioned in paragraph (a), (b) or (c) of paragraph 15(1) below:'.
115 Page 34, line 44, leave out 'a subsidiary of'.
116 Page 34, line 45, after first 'board', insert ', or of a subsidiary of such a board,'.
117 Page 34, line 45, leave out first 'successor' and insert 'qualifying'.
118 Page 34, line 45, leave out from first 'body' to 'and' in line 46.
119 Page 35, line 1, leave out sub-paragraph (2).
120 Page 35, line 7, at end insert:
'(2A) None of the events to which this paragraph applies, and no combination of the events mentioned in paragraphs (a) (so far as relating to the issue or transfer of shares) and (c) of sub-paragraph (1) above, shall be regarded as—

(a) a distribution for the purposes of the Corporation Tax Acts, or

(b) a capital distribution for the purposes of section 122 of the Taxation of Chargeable Gains Act 1992.'.

121 Page 35, line 9, at beginning insert '(a)'.
122 Page 35, line 10, after 'production', insert 'or storage'.
123 Page 35, line 12, at beginning insert '(b)'.
124 Page 35, line 13, after first 'a', insert 'relevant'.
125 Page 35, line 13, leave out 'body'.
126 Page 35, line 15, after first 'a', insert 'relevant'.
127 Page 35, line 15, leave out 'body'.
128 Page 35, line 15, at end insert ', and
(c) references to relevant successor—

(i) in relation to a milk marketing board, include a body to which shares held by the board in a subsidiary of its are transferred in circumstances in which paragraph 2A above applies, and

1141

(ii) in relation to a subsidiary of such a board, include a body to which shares held by the subsidiary in a subsidiary of its are transferred in circumstances in which that paragraph applies.'

129 Page 35, leave out lines 16 to 21.
130 Page 35, line 22, leave out paragraph 9.
131 Page 35, line 25, at end insert:
'Disapplication of section 22 of the Taxation of Chargeable Gains Act 1992
9A. Section 22 of the Taxation of Chargeable Gains Act 1992 (disposal where capital sums derived from assets) shall not apply in relation to any of the events to which paragraph 8 above applies.'.
132 Page 35, line 25, at end insert:
'Depreciatory transactions,
9B.—(1) This paragraph applies where—

(a) by virtue of the occurrence of any of the events to which paragraph 8 above applies ("the relevant event"), one company ("the first company") would, apart from the provisions of this Part of this Schedule, be treated for the purposes of the taxation of chargeable gains as disposing of, or of an interest in, any shares in, or securities of, another company ("the second company"), and

(b) as a result of the occurrence of that event the value of those shares or securities ("the shares or securities concerned") is materially reduced.

(2) Section 176 of the Taxation of Chargeable Gains Act 1992 shall apply to any disposal to which sub-paragraph (3), (4) or (5) below applies—

(a) as if the relevant event were a depreciatory transaction, and

(b) if the first company and the second company and, if different, the company which makes the disposal are not, throughout the period beginning with the occurrence of the relevant event and ending with the disposal, members of a group of companies (within the meaning of that section), as if they were.

(3) This sub-paragraph applies to any disposal by the first company which—

(a) is a disposal of the asset of which the shares or securities concerned are deemed for the purposes of the Taxation of Chargeable Gains Act 1992 to consist at the time of the event, and

(b) is not a disposal which by virtue of any enactment is treated as one on which neither a gain nor a loss accrues to the person making the disposal.

(4) This sub-paragraph applies to any disposal, by a company to which shares or securities comprised in the asset mentioned in sub-paragraph (3) above are transferred under section 10 above, or in circumstances in which paragraph 2A above applies, which—

(a) is a disposal of the asset which those shares or securities are deemed for the purposes of the Taxation of Chargeable Gains Act 1992 to consist of, or to be included in, immediately after the transfer, and

(b) is not a disposal which by virtue of any enactment is treated as one on which neither a gain nor a loss accrues to the person making the disposal.

(5) This sub-paragraph applies to any disposal, by a company which acquires shares or securities on an excepted disposal, which—

(a) is a disposal of the asset which those shares or securities are deemed for the purposes of the Taxation of Chargeable Gains Act 1992 to consist of, or to be included in, immediately after the acquisition, and

(b) is not a disposal which by virtue of any enactment is treated as one on which neither a gain nor a loss accrues to the person making the disposal.

(6) In sub-paragraph (5) above, the reference to an excepted disposal is to a disposal to which sub-paragraph (3), (4) or (5) above would have applied but for paragraph (b) of that sub-paragraph.
(7) In this paragraph, "company" has the same meaning as in the Taxation of Chargeable Gains Act 1992.'.
133 Page 35, line 29, at end insert:
'(1A) The acquisition of the asset shall not be taken into account as a receipt in computing, under Case I or VI of the Schedule set out in section 18 of the Income and Corporation Taxes Act 1988 (Schedule D), the profits of the person acquiring it.'.
134 Page 35, line 32 at end insert 'and without making a disposal.'.
135 Page 35, leave out lines 33 to 37.
136 Page 35, line 37, at end insert:
'(2A) No allowance in respect of the asset shall be made under the Capital Allowances Act 1990 to the person acquiring it.'.
137 Page 35, line 46, after 'production', insert 'or storage'.
138 Page 36, line 3, after third 'a', insert 'relevant'.
139 Page 36, line 6, after 'in', insert ',or security of,'.
140 Page 36, line 7, after third 'a', insert 'relevant'.
141 Page 36, line 10, at end insert:
'(1A) The acquisition of the asset shall not be taken into account as a receipt in computing, under Case I or VI of the Schedule set out in section 18 of the Income and Corporation Taxes Act 1988 (Schedule D), the profits of the person acquiring it.'.
142 Page 36, line 13, at end insert 'and without making a disposal.'.
143 Page 36, leave out lines 14 to 18.
144 Page 36, line 22, at end insert:
'(3A) For the purposes of this paragraph, a person shall not be regarded as providing consideration by virtue only of the fact that transfers under the scheme reduce the value of his right to participate in a winding up of the relevant board.'.
145 Page 36, line 24, leave out 'approved'.
146 Page 36, line 25, leave out from 'relates' to end of line 29.
147 Page 36, line 29, at end insert ', and
(c) references to relevant successor—

(i) in relation to the relevant board, include a body to which shares held by that board in a subsidiary of its are transferred in circumstances in which paragraph 2A above applies, and

(ii) in relation to a subsidiary of that board, include a body to which shares held by the subsidiary in a subsidiary of its are transferred in circumstances in which that paragraph applies.'

148 Page 36, line 29, at end insert:
'Trusts for registered producers
11 A.—(1) This paragraph applies where—

(a) under an approved scheme, shares in, or securities of, a company are issued or transferred to trustees on terms which provide for the transfer of those shares or securities to persons by virtue of their being, or having been, registered producers, and

(b) the circumstances are such that in the hands of the trustees the shares or securities constitute settled property within the meaning of the Taxation of Chargeable Gains Act 1992.

(2) For the purposes of tax on chargeable gains—

1143

(a) where the trustees acquire the shares or securities on a disposal, the person making the disposal shall be treated as if the consideration for the disposal were of such amount as would secure that on the disposal neither a gain nor a loss accrues to him,

(b) the shares or securities shall be treated as acquired by the trustees for no consideration,

(c) the interest of any beneficiary in the settled property constituted by the shares or securities shall be treated as acquired by him for no consideration and as having no value at the time of its acquisition,

(d) where a beneficiary becomes absolutely entitled as against the trustees to any of the settled property, both the trustees and the beneficiary shall be treated as if, on his becoming so entitled, the shares or securities in question had been disposed of and immediately reacquired by the trustees, in their capacity as trustees within section 60(1) of the Taxation of Chargeable Gains Act 1992, for a consideration of such amount as would secure that on the disposal neither a gain nor a loss would accrue to the trustees (and accordingly section 71 of that Act shall not apply in relation to that occasion), and

(e) on the disposal by a beneficiary of an interest in the settled property, other than the disposal treated as occurring for the purposes of paragraph (d) above, any gain accruing shall be a chargeable gain (and accordingly section 76(1) of the Taxation of Chargeable Gains Act 1992 shall not apply in relation to the disposal).

11B.—(1) This paragraph applies where, under an approved scheme, shares in, or securities of, a company are issued or transferred to trustees on terms which provide for the transfer of those shares or securities to persons by virtue of their being, or having been, registered producers.
(2) The trust shall not be treated as a unit trust scheme for the purposes of section 469 of the Income and Corporation Taxes Act 1988 or section 99 of the Taxation of Chargeable Gains Act 1992 if it would not fall to be so treated were there disregarded—

(a) any depreciatory effect of transfers under the approved scheme on a right to participate in a winding up of the board to which that scheme relates, and

(b) any management of the trust property as a whole by or on behalf of the trustees.'.

149 Page 36, line 42, leave out 'share is' and insert 'shares are'.
150 Page 36, line 42, at end insert 'allotted, or'.
151 Page 36, line 43, leave out from 'issued' to `to' in line 44 and insert 'without prior allotment—(a)'.
152 Page 36, line 45, at end insert 'and without any consideration being provided by him,
(b) to trustees on terms which provide for the transfer of the shares to persons by virtue of their being, or having been, registered producers,'.
153 Page 36, line 45, at end insert, ' or
(c) to the relevant board, by a body to which sub-paragraph (1A) below applies.
(1A) This sub-paragraph applies to a body which—

(a) is a relevant successor of the relevant board, or of a subsidiary of that board, and

(b) is not a body in relation to which the scheme makes provision for the transfer to it of anything other than shares in a subsidiary of the relevant board.'.

154 Page 36, line 46, leave out 'share' and insert 'shares'.
155 Page 36, line 47, leave out 'it' and insert 'they'.
156 Page 36, line 48, after 'the', insert 'relevant'.
157 Page 36, line 48, leave out 'body'.
158 Page 36, line 49, leave out 'nominal' and insert 'market'.
159 Page 36, line 49, leave out 'share' and insert 'shares'.
160 Page 36, . line 49, at end insert 'at the time of allotment or, if issued without prior allotment, at the time of issue.
(2A) In sub-paragraph (2) above, the reference to the market value of the shares is to the price which they might reasonably be expected to fetch on a sale in the open market.
(2B) Section 272(2) to (4) of the Taxation of Chargeable Gains Act 1992 (general principles for determining market value of shares) shall apply for the purposes of this paragraph.
(2C) Where, as at the time at which the market value of any shares falls to be determined for the purposes of this paragraph, the shares are not quoted on a recognised stock exchange, subsection (3) of section 273 of that Act (assumption with respect to information available to prospective purchaser) shall apply for the purposes of the determination as it applies for the purposes of a determination falling within subsection (1) of that section.
(2D) In sub-paragraph (2C) above, "recognised stock exchange" has the meaning given by section 841 of the Income and Corporation Taxes Act 1988.'.
161 Page 37, line 1. leave out 'Sub-paragraph' and insert 'Sub-paragraphs (3A) and'.
162 Page 37, line 2, leave out 'it applies' and insert 'they apply'.
163 Page 37, line 4, after 'debenture', insert '(a)'.
164 Page 37, line 4, after second 'a', insert 'relevant'.
165 Page 37, line 5, after 'board,', insert 'and
(b) is either—
(i) issued'.
166 Page 37, line 6, at end insert 'and without any consideration being provided by him.'.
167 Page 37, line 6, at end insert or
(ii) included in an issue of debentures to trustees on terms which provide for the debentures to be transferred to persons by virtue of their being, or having been, registered producers.'.
168 Page 37, line 8, after 'to', insert 'the taxation of company distributions, or to'.
169 Page 37, line 9, leave out 'that company' and insert 'the relevant successor'.
170 Page 37, line II, leave out 'that company' and insert 'the relevant successor'.
171 Page 37, line 12, at end insert:
'(2A) For the purposes of section 117(1) of the Taxation of Chargeable Gains Act 1992 (meaning of "qualifying corporate bond"), the indebtedness acknowledged by the debenture shall be treated as representing a normal commercial loan at any time after the debenture has been acquired by a person as a result of a disposal which is not excluded for the purposes of section 117(7) of that Act.
(2B) Except as provided by sub-paragraph (2A) above, the indebtedness acknowledged by the debenture shall not be treated for those purposes as representing a normal commercial loan.'.
172 Page 37, line 13, leave out 'Sub-paragraph' and insert `Sub-paragraphs (3A) and'.
173 Page 37, line 14, leave out 'it applies' and insert 'they apply'.
174 Page 37, line 18. after second 'a', insert 'relevant'.
175 Page 37. line 18, leave out second 'body'.
176 Page 37, line 19, at end insert ', in priority to other persons'.
177 Page 37, line 26, at end insert:
'(2A) For the purposes of sub-paragraph (1) (c) above, shares are free if they are issued or transferred without any consideration being provided by the person acquiring them, there being disregarded for this purpose any depreciatory effect of transfers under the scheme on the value of a right to participate in a winding up of the relevant board
178 Page 37, leave out lines 29 to 46.
179 Page 38, line 4, at end insert:
'Stamp duty
17A.—(1) No transfer effected under section 10 above shall give rise to any liability to stamp duty.
(2) Stamp duty shall not be chargeable—

(a) on an approved scheme, or

(b) on an instrument which is certified to the Commissioners of Inland Revenue by the relevant authority—

(i) to be an instrument made in pursuance of such a scheme, and

(ii) to be an instrument in respect of which no disqualifying consideration has been given.

(3) For the purposes of sub-paragraph (2) (b) (ii) above, consideration given in respect of an instrument made in pursuance of an approved scheme shall be treated as disqualifying consideration unless—

(a) it is given by the milk marketing board to which the scheme relates ("the relevant hoard"),

(b) it is given by a person to whom property, rights or liabilities of the relevant board, or of a subsidiary of that hoard, are transferred under the scheme, other than a person who is, or has been, a registered producer, or

(c) it is given by a person who is, or has been, a registered producer and takes the form of a surrender in whole or part of a right to participate in the winding up of the relevant board.

(4) For the purposes of sub-paragraph (3) (b) above, a person to whom property is leased shall be treated as a person to whom property is transferred if the scheme could, without breaching the requirement in paragraph 7(2) of Schedule 1 to this Act, have provided for the property concerned to be transferred to him.
(5) No instrument which is certified as mentioned in paragraph (b) of sub-paragraph (2) above shall be taken to be duly stamped unless—

(a) it is stamped with the duty to which it would, but for that sub-paragraph, be liable, or

(b) it has, in accordance with section 12 of the Stamp Act 1891, been stamped with a particular stamp denoting that it is not chargeable with any duty or that it is duly stamped.

(6) In sub-paragraph (2) (b) above, "relevant authority" means—

(a) in the case of a certificate with respect to a scheme relating to the England and Wales Milk Marketing Board, the Minister of Agriculture, Fisheries and Food and the Secretary of State acting jointly,

(b) in the case of a certificate with respect to a scheme relating to the board established under the Milk Marketing Scheme (Northern Ireland) 1989, the Department of Agriculture for Northern Ireland, and

(c) in the case of a certificate with respect to any other scheme, the Secretary of State.

Stamp duty reserve tax
17B. No agreement made in pursuance of an approved scheme shall give rise to a charge to stamp duty reserve tax.'.
180 Page 38, line 4, at end insert:
'Interpretation
17C.—(1) In this Part of this Schedule, references to relevant successor, in relation to a milk marketing board, are to a body—

(a) to which property, rights or liabilities of the board are transferred under section 10 above, and

(b) which is a qualifying body in relation to the transfer.

(2) In this Part of this Schedule, references to relevant successor, in relation to a subsidiary of a milk marketing board, are to a body—

(a) to which property, rights or liabilities of the subsidiary are transferred under section 10 above, and

(b) which, by virtue of paragraph 17D(1) (a), (c), (d) or (e) below, is a qualifying body in relation to the transfer.

17D.—(1) For the purposes of this Part of this Schedule, a body is a qualifying body, in relation to a transfer under an approved scheme, if it is—

(a) a development council established under the Industrial Organisation and Development Act 1947,

(b) a company registered under the Companies Act 1985 which was, immediately before the day on which this Act is passed, a 100 per cent. subsidiary of the board to which the scheme relates,

(c) a company registered under the Companies Act 1985 in relation to which either or both of the first and second conditions are met and in relation to which the third condition is met,

(d) a society registered under the Industrial and Provident Societies Act 1965 in relation to which either or both of the fourth and fifth conditions are met, or

(e) a company registered under the Companies Act 1985 in relation to which the sixth condition is met.

(2) The first condition is that—

(a) the scheme makes provision for the issue or transfer of shares in the company to members of the relevant class without any consideration, or with only a nominal consideration, being provided by the members acquiring them, and

(b) the members of that class who fall within the provision represent at least 90 per cent. of the total number of members of that class.

(3) The second condition is that—

(a) the company is one of a number of companies registered under the Companies Act 1985 in relation to each of which the scheme provides as mentioned in sub-paragraph (2) (a) above, and

(b) the members of the relevant class who fall within the provision relating to the company, when taken together with the members of that class who fall within the provision, or provisions, relating to the other company, or companies, represent at least 90 per cent. of the total number of members of that class.

(4) The third condition is that, immediately after the transfer, at least 90 per cent. of the ordinary share capital of the company consists of shares which—

(a) are owned directly or indirectly by the board to which the scheme relates,

(b) have been issued or transferred under the scheme to members of the relevant class without any consideration, or with only a nominal consideration, being provided by the members acquiring them,

(c) have been issued or transferred under the scheme to persons who are, or have been, registered producers in settlement of claims against the board to which the scheme relates, being claims arising out of the supply or production of milk,

1147

(d) have been issued or transferred under the scheme to trustees on terms which provide for their transfer to members of the relevant class, or

(e) are held by persons to whom they have been issued or transferred under the scheme in connection with securing the quotation of the company on the Stock Exchange.

(5) The fourth condition is that—

(a) the scheme provides for membership of the society to be open to members of the relevant class, and

(b) the members of that class who fall within the provision represent at least 90 per cent. of the total number of members of that class who are engaged in milk production on the day of the transfer.

(6) The fifth condition is that—

(a) the society is one of a number of societies registered under the Industrial and Provident Societies Act 1965 in relation to each of which the scheme provides as mentioned in subparagraph (5) (a) above, and

(b) the members of the relevant class who fall within the provision relating to the society, when taken together with the members of that class who fall within the provision, or provisions, relating to the other society, or societies, represent at least 90 per cent. of the total number of members of that class who are engaged in milk production on the day of the transfer.

(7) The sixth condition is that the company is a 100 per cent. subsidiary of a company falling within paragraph (c) of sub-paragraph (I) above or of a society falling within paragraph (d) of that sub-paragraph.
(8) For the purposes of this paragraph, a body corporate shall be deemed to be a 100 per cent. subsidiary of another body corporate if and so long as the whole of its ordinary share capital is owned directly or indirectly by that other body corporate.
(9) In determining for the purposes of this paragraph whether under an approved scheme shares are issued or transferred without any consideration, or with only a nominal consideration, being provided by the persons acquiring them, there shall be disregarded any depreciatory effect of transfers under the scheme on the value of a right to participate in the winding up of the board to which the scheme relates.
(10) For the purposes of this paragraph, the relevant class, in relation to an approved scheme, consists of those to whom property or rights are to be distributed under the scheme by virtue of their being, or having been, registered producers.
(11) Subsections (4) to (10) of section 838 of the Income and Corporation Taxes Act 1988 (rules for determining amount of share capital owned) shall apply for the purposes of this paragraph as they apply for the purposes of that section.
(12) In this paragraph—

(a) "ordinary share capital" has the same meaning as in the Income and Corporation Taxes Act 1988,

(b) "owned directly or indirectly", in relation to a body corporate, means owned directly or through another body corporate or other bodies corporate or partly directly and partly through another body corporate or other bodies corporate, and

(c) references to ownership shall be construed as references to beneficial ownership.'.

181 Page 38, line 6, after 'Schedule', insert:
'(a) "approved scheme" includes a scheme of reorganisation approved under any provision in Northern Ireland legislation corresponding to section 3 above (with any variation approved under any provision in such legislation corresponding to section 5 above) and in relation to which approval has not been withdrawn under any provision in such legislation corresponding to section 6 above, and
(b)'.
182 Page 38, line 8, leave out from 'Schedule' to end of line 9 and insert `by virtue of sub-paragraph (1) above—'.
183 Page 38, line 17, leave out paragraph (d) and insert:
'(d) "registered producers", in relation to the board established under the Milk Marketing Scheme (Northern Ireland) 1989, means persons registered as producers under the marketing scheme administered by the board;'.
184 Page 38. line 24. at end insert:
'(3) In paragraph 17 above, the reference to section 16 above shall be construed as including a reference to any corresponding provision in Northern Ireland legislation.'.
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 61 to 184. With the leave of the House, I should like also to speak to Amendments Nos. 243, 244, 246, 248 and 252.
Our objective in considering the tax consequences of a reorganisation scheme has been to avoid tax charges arising solely as a result of the reorganisation. Part I of Schedule 2 therefore contains a number of tax provisions which are intended to make the implementation of a scheme broadly tax neutral and to provide even-handed treatment of the parties concerned. They effectively defer the payment of charges until the next time they would otherwise have arisen.
The taxation provisions were considerably expanded in another place. Although numerous, these amendments do not represent a change in policy. Many were merely clarificatory and drafting changes. Their main effect was to extend the areas to which the provisions applied to cover further possibilities which a board might wish to include in its reorganisation scheme. For example, most of the tax provisions apply only to statutory transfers on vesting day. The England and Wales board, however, would like to be able to float Dairy Crest before vesting day. That would involve a transfer of the board's assets to its producers. We consider that the final transfers necessary for the flotation of a milk marketing board's subsidiary should be treated for tax purposes in broadly the same way as those transfers which occur on vesting day. The amendments would achieve this.
The other significant effect of the amendments to the schedule was to insert safeguards ensuring that special tax treatment should only be available to bodies which genuinely represented the collective interest of producers. We would not wish tax benefits to pass to those who did not represent the interests of a board's members. I beg to move.
Moved, That the House do agree with the Commons in their Amendments Nos. 61 to 184.—(Earl Howe.)
Lord Carter: My Lords, I presume that this is entirely to do with taxation as it affects the boards and their successor bodies and not with the likely taxation treatment in the hands of producers when the board comes to distribute its assets to producers by way of shares or however it is done. This is entirely to do with the taxation as it affects the boards themselves and is nothing to do with the taxation in the hands of producers, whatever may happen with the transfer documents, cash or whatever they receive.
Earl Howe: My Lords, that is my understanding. However, if I am incorrect in that assumption I shall write to the noble Lord. I believe that he has expressed the matter very well.
On Question, Motion agreed to.
COMMONS AMENDMENT
185 Schedule 2, page 38, line 30, leave out 'for the purposes of carrying out' and insert 'in accordance with the provisions of'.
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 185. I have already spoken to it.
Moved, That the House do agree with the Commons in their Amendment No. 185.—(Earl Howe.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
186 Schedule 2, page 39, line 2, leave out 'This paragraph' and insert 'Sub-paragraph (2) below'.
187 Page 39, line 4, after third 'the', insert 'principal'.
188 Page 39, line 4, leave out 'whose employees may belong to the scheme'.
189 Page 39, line 6, after 'existing', insert 'principal'.
190 Page 39, line 7, after 'body', insert—
(a) which already participates in the scheme, or
(b)'.
191 Page 39, line 7, after 'existing', insert 'principal'.
192 Page 39, line 8, at end insert:
'(3) Sub-paragraph (2) above shall not apply if the substitution is made otherwise than in connection with the carrying out of an approved scheme.'.
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 186 to 192 en bloc. As my right honourable friends have explained in another place, the rearrangement of the milk marketing boards' pension schemes to take account of the changes envisaged by this Bill will he the responsibility of the boards as employers and the trustees of their pension schemes. They will be subject to the principles of trust law and must act in accordance with the comprehensive legislation governing occupational pension schemes. The Bill therefore does not deal with pensions in any great detail, although this is, of course, one of the matters Ministers will have in the front of their minds when considering a board's reorganisation scheme.
Paragraph 22 of Schedule 2 is the only provision relating directly to pensions in the Bill. It puts beyond doubt the propriety of the trustees of a pension
1150
scheme operated by a milk marketing board, or a subsidiary of one, using any power under their pension scheme to change the identity of the principal employer for that scheme when this is used to substitute a successor body under a reorganisation scheme for the existing employer. This would ensure, for example, that the trustees of the England and Wales Board pension schemes could, if they wished, substitute Milk Marque for the board as the principal employer for the schemes.
These amendments make a few technical changes to paragraph 22 because, as presently drafted, it does not apply to all the reasonable changes the trustees may wish to make. In particular it might not cover the replacement of the England and Wales Board by Dairy Crest. That is because, if the board were not to propose that any of its property, rights or liabilities should be transferred to Dairy Crest, then Dairy Crest would not, in formal terms, be a successor body.
This group of amendments therefore extends paragraph 22 to cover substitution of a board, or of a subsidiary of one, as principal employer by an employer which already participates in the particular pension scheme concerned. The amendments also clarify the intention of the provision by inserting a specific reference to the term "principal employer" and restrict use of paragraph 22 to changes made in connection with the carrying out of an approved scheme.
Moved, That the House do agree with the Commons in their Amendments Nos. 186 to 192 en bloc.—(Earl Howe.)
Lord Carter: My Lords, these are important amendments and we should spend a few moments discussing them. The Minister will know that a number of the pensioners of the milk marketing boards have expressed some concern and this is a good chance to allay those anxieties. For example, I believe that the valuation of the fund at 31st March this year, 1993, is not yet available to pensioners. Has the department seen it and can the Minister confirm that there is a surplus on the fund? The most recent figures I have seen are to March 1990. It will be helpful to know whether the Government are satisfied that there is a surplus on the fund.
It is fair to point out that, after all, it is the Government which have wound up the milk marketing boards and it is therefore not unreasonable to say that they should now be prepared to fulfil their responsibilities and ensure that pensioners who are left as a result of that winding up are properly looked after. The Minister used an interesting phrase that they would have in the front of their minds the fortunes of the pension fund. Does that mean that they will consider the pension funds when considering the reorganisation schemes that are presented to them or will their minds be compartmentalised so that they look at the reorganisation scheme and at the pension arrangements separately? How exactly will they ascertain that they have all the information that they need to ensure that the pensioners will be properly looked after in the reorganisation? For example, will the pensioners have the right of consultation'?

1151
Presumably, like anybody else the pensioners can make known their views about the reorganisation schemes. But if those schemes do not include what is supposed to happen to the pension schemes, it is a little hard to know how the pensioners can be consulted. Perhaps the Minister can tell us how the Ministry proposes to deal with that. Indeed, an assurance from the Minister that she will not agree to the final distribution of the assets and the demise of the board without first satisfying herself that the pension arrangements are satisfactory, with the consultation and participation of the pensioners, would be helpful.
I have had an extremely helpful brief from the Milk Marketing Board. I am sure that the trustees are trying hard to ensure that the schemes are handed over properly and looked after. The brief states:
"The employers also propose (without legally binding themselves) that subject to the availability of funds they will continue the practice that has existed with the MMB Group Pension Fund of awarding higher discretionary pension increases where the increase in the retail prices index exceeds the minimum guaranteed pension increase".
Obviously, that is extremely welcome and I understand why they are not able legally to bind themselves. However, as a potential member of Milk Marque I am a little concerned—perhaps the Minister can put all our minds at rest—about whether Milk Marque is, as a result, likely to end up with a moral obligation that would affect its overheads if there were a deficiency in the funds which its commercial competitors do not have. This point has been put to me by a number of producers. Obviously, it is extremely welcome that Milk Marque is taking over the group fund but what would be the position if, for any reason, the fund had any problems? Under the existing arrangements with the Milk Marketing Board the MMB is obviously able to make up any deficit. Perhaps the Minister could spell out the position.
There is absolutely no doubt at all of the good intentions of all those concerned. I know that they are working hard to ensure that the pensioners' concerns are properly allayed. As I have said, the Government are winding up the MMB, so they cannot simply walk away from this problem which results from that winding-up. I hope that the Minster will be able to give us a little more information than has been available so far. It has been made clear—this is extremely welcome—that there is no way in which any surplus on the funds can be used in the reorganisation schemes or to pay any of the reorganisation costs.
Earl Howe: My Lords, we have received a considerable number of representations from and on behalf of pensioners of the England and Wales board over the past year. The central theme in all these letters has been uncertainty and concern for the future. I am sure we all understand and sympathise with these concerns which are quite natural in a period of such change. The Government have sought to address them by urging the board and the trustees to keep the pension scheme members in touch with their progress. They have responded by writing several times to all pensioners, particularly over the past few months as their proposals for the future have developed.
1152
The reorganisation scheme which a board submits to Ministers will have to specify to whom any property, rights or liabilities of the board which it still owns on vesting day will be transferred. A board will also be free, but not obliged, to provide in its scheme for the transfer of property, rights and liabilities before vesting day.
Ministers will therefore only have a formal role under the Bill in relation to changes to a milk marketing board's pension arrangements in two possible respects. These are, first, to the extent that the liability to pay pensions and the assets necessary to generate them rest with the boards rather than the scheme trustees and, secondly, if any fund surpluses have to be considered property or rights of the board and thus fall to be dealt with in a reorganisation scheme.
When considering any reorganisation scheme of the England and Wales board, the Minister and the Secretary of State for Wales shall wish to be satisfied that its coverage is complete. We have appointed independent consultants, KPMG Peat Marwick, to advise us when we consider the England and Wales board's reorganisation scheme. This is one point on which we may well seek the consultants' advice.
The Secretary of State for Scotland will need to take a view in relation to reorganisation schemes submitted by the three Scottish boards.
The position with respect to the England and Wales board is that it has at present two main pension funds of which it is the principal employer. Those are the MMB Group Pension Fund which has both board and Dairy Crest members, and the 'C' fund which has Dairy Crest members only.
The Milk Marketing Board and the Dairy Crest Board have agreed in principle to proposals for changes to those arrangements. I understand that the trustees also approved the proposals in principle at a meeting on 1st July and will be writing shortly to all scheme members with more details. Scheme members will be given the opportunity to comment in a series of meetings planned for August and September before a final decision is taken.
The board's proposals would maintain board scheme members' entitlements to benefit. In the case of the scheme 'C' fund, they would involve the replacement of the board by Dairy Crest as the principal employer for that scheme. Dairy Crest would thus take over the board's obligations in respect of that scheme.
The proposals envisage the division of the MMB Group Pension Fund scheme between Dairy Crest and the board. Those members, both employees and pensioners, associated with Dairy Crest would be transferred to a replacement scheme operated by Dairy Crest. A proportionate share of the fund, including the relevant proportion of any surplus, would also be transferred. The proposals aim to ensure that both the ongoing group fund and the new Dairy Crest scheme would have a similar membership profile, thus avoiding, for example, one scheme having a particularly large proportion of members in receipt of pensions. It is also hoped to give pensioners the option of exchanging their pension for a fixed rate

1153
insurance policy, should they wish to do so. I understand that the trustees will be writing very shortly to all pensioners to explain those proposals in more detail.
The advantages and disadvantages of a particular route must of course be for the trustees and the employers concerned to decide. I understand, however, that the MMB group fund has sufficient funds to meet its liabilities on an ongoing basis and can therefore see no reason in principle why it should be unreasonably expensive to maintain.
The noble Lord asked me whether any of the English, Welsh or Scottish schemes were in surplus. An actuarial valuation of the England and Wales MMB group fund at 31st March 1993 is being finalised and is likely to show a small surplus of about 5 per cent. on an ongoing basis and no surplus using assumptions prescribed by the Government Actuary for the purposes required by the Inland Revenue for checking surplus in a scheme.
The most recent actuarial valuation of the board's 'C' scheme has revealed a small surplus on a winding-up basis and a small deficit on an ongoing basis. There is a small surplus in the 'part-timers' fund. The Scottish boards have advised us that it is almost certain that there will be no surplus in their pension plan.
On Question, Motion agreed to.
COMMONS AMENDMENTS
193 Page 39, line 11, leave out from 'say,' to end of line 13 and insert 'a body to which property, rights or liabilities of a milk marketing board are transferred under section 10 above.'.
194 Page 40, leave out lines 14 and 15 and insert: '"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.'.
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their ' Amendments Nos. 193 and 194.
Paragraph 23 of Schedule 2 and paragraph 5 of Schedule 4 specify which values are to be entered for accounting purposes into the books of successor bodies in respect of assets and liabilities transferred to them under an approved scheme.
The two paragraphs are worded differently but that does not reflect a significant difference in their effect. The two amendments would make the provisions for milk marketing boards in Schedule 2 follow the pattern of those in Schedule 4 relating to the Potato Marketing Board. That will avoid anyone looking for a significant difference between the two provisions which does not exist.
With the leave of the House, perhaps I may take the opportunity to clarify a point that I made earlier to the noble Lord, Lord Carter, on tax provisions. The Bill also affects the tax treatment of shares and so forth which are distributed to producers. It specifies that they will not be liable to income tax on those shares when they are in receipt of them. But if the noble Lord would like me to write to him, I should be delighted to do so.
1154
Moved, That the House do agree with the Commons in their Amendments Nos. 193 and 194.—(Earl Howe.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
195 Schedule 2, page 40, line 19, leave out from first 'of' to end of line and insert 'the making of any application under section 2 or 5 above'.
196 Page 40, line 20, leave out 'thing done' and insert 'making of such an application'.
197 Page 40, line 23, leave out from 'which' to first 'of' in line 24 and insert 'imposes a prohibition (whether absolute or qualified) on the transfer'.
198 Page 40, line 31, leave out 'penalises' and insert 'has the effect of penalising'.
199 Page 40, line 32, leave out or a transfer without consent,'.
200 Page 40, line 33, leave out from 'which' to 'of' and insert 'imposes a prohibition (whether absolute or qualified) on the transfer'.
201 Page 40, line 35, leave out 'if' and insert 'unless'.
202 Page 40, line 35, leave out 'private' and insert 'public'.
203 Page 40, line 42, leave out 'penalises' and insert 'has the effect of penalising'.
204 Page 40, line 43, leave out 'without consent'.
205 Page 40, line 44, leave out 'prohibits the effecting without consent' and insert 'imposes a qualified prohibition on the effecting'.
206 Page 41, line 2, leave out 'private' and insert 'purposes other than public'.
207 Page 41, line 9, leave out 'penalises' and insert 'has the effect of penalising'.
208 Page 41, line 10, leave out 'without consent'.
209 Page 41, line 12, leave out from 'If' to 'such' in line 14 and insert 'any person suffers a diminution in the value of any property or interest in consequence of the operation of paragraph 26 or 27 above or, where sub-paragraph (IA) below applies, paragraph 25 above,'
210 Page 41, line 16, at end insert:
'(1A) This sub-paragraph applies where the effect of the transfer is to sever the ownership of the property or rights to which the provision concerned relates.'.
211 Page 41, line 18, leave out 'to or'.
212 Page 41, line 28, leave out 'prohibits' and insert 'imposes an absolute prohibition on'.
213 Page 41, line 31, leave out paragraph (b).
214 Page 41, line 32, leave out 'private' and insert 'purposes other than public'.
215 Page 41, line 37, after 'below', insert 'in relation to the identified provision'.
216 Page 41, line 38, leave out 'the' and insert 'that'.
217 Page 42, line 14, leave out 'penalises' and insert 'has the effect of penalising'.
218 Page 42, line 17, after 'above', insert in relation to any provision'.
219 Page 42, line 30, after 'paragraph', insert ', in relation to the provision concerned,'.
220 Page 42, line 30, at end insert:
'Restrictions on change of location
30A.—(1) For the purposes of this paragraph, a provision is a qualifying provision if—

(a) it is contained in a qualifying agreement,

(b) it imposes an absolute or qualified prohibition on the movement outside a specified area of property to which the agreement relates, and

1155

(c) the prohibition which it imposes is imposed for purposes other than public purposes.

(2) For the purposes of sub-paragraph (1) above, an agreement is a qualifying agreement if—

(a) it is an agreement under which moveable property is leased to a milk marketing board or to a subsidiary of such a board, and

(b) an approved scheme makes provision for the transfer of rights and liabilities of the lessee under the agreement.

(3) Where an approved —

(a) identifies a qualifying provision as one to which this paragraph applies,

(b) specifies a relevant modification in relation to that provision,

(c) specifies a commencement date in relation to the modification, and

(d) specifies one of the relevant bodies as the body against which any claim under paragraph 30B below, in relation to that provision, is to be made,

then, subject to any provision of regulations under sub-paragraph (4) (c) below, that provision shall have effect subject to the specified modification on and after the commencement date specified in relation to it.
(4) The appropriate authority may make regulations—

(a) with respect to the giving of notice of a provision of an approved scheme which does any of the things mentioned in paragraphs (a) to (c) of sub-paragraph (3) above,

(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

(c) excluding sub-paragraph (3) above where no certificate of compliance under paragraph (b) above has been given before such date as may be specified in the regulations.

(5) Where by virtue of sub-paragraph (3) above a qualifying provision is modified in its application to any property, the fact that, at any time in the week beginning with the date on which the modification first has effect, that property is outside the permitted area shall not be treated as constituting a breach of the provision if the property—

(a) is in the area which was the permitted area before the modification had effect, or

(b) is in transit from that area to the permitted area.

(6) In sub-paragraph (3) (b) above, "relevant modification", in relation to a qualifying provision, means a change, in relation to any of the property to which the provision applies, in the area by reference to which the qualifying provision has effect.
(7) In sub-paragraph (3) (d) above, the reference to the relevant bodies is to—

(a) the milk marketing board to which the scheme relates, and

(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.

(8) In sub-paragraph (4) above, "appropriate authority" means—

(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

(b) in any other case, the Secretary of State.

(9) For the purposes of this paragraph, any provision which has the effect of penalising the movement of property outside a specified area shall be treated as prohibiting it.
30B. Paragraph 30 above shall apply in relation to a person who suffers a diminution in the value of any property or interest in consequence of the operation of paragraph 30A above as it applies in relation to a person who suffers a diminution in the value of any property or interest in consequence of the operation of paragraph 29 above.'.
221 Page 42, line 30, at end insert:
'Transfers relevant to flotation
30C.—(1) Where an approved scheme provides for rights and liabilities of a lessee under a qualifying agreement to be transferred to a company on a day earlier than the vesting day under the scheme, the provision shall have effect by virtue of this paragraph if, immediately before the day of the transfer, the company is a qualifying transferee.
(2) In sub-paragraph (1) above, "qualifying agreement" means an agreement under which moveable property is leased to the board to which the scheme relates or to a subsidiary of that board.
(3) For the purposes of sub-paragraph (I) above, a company is a qualifying transferee if it is—

(a) a company in relation to which the scheme provides for the taking of steps with a view to securing its quotation on the Stock Exchange,

(b) a subsidiary of a company falling within paragraph (a) above, or

(c) a company which, if the scheme is carried out, will become a subsidiary of a company falling within paragraph (a) above before that company is quoted on the Stock Exchange.'.

Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 195 to 221 en bloc. With the leave of the House I should also like to speak to Amendments Nos. 223 to 227 and 255 to 262.
The main purpose of the property provisions in Schedules 2 and 4 is to ensure that third party rights cannot be exercised in such a way as to delay or disrupt the implementation of an approved MMB reorganisation scheme or a transfer scheme of the Potato Marketing Board. Compensation would be available where the overriding of third party rights resulted in a material reduction in the value of that third party's interest. The provisions also ensure that there will be documentary proof of transfers effected under a transfer scheme and provide for a successor body to stand in the shoes of its predecessor board in respect of agreements or transactions relating to property, rights or liabilities transferred to it.
Since we last considered Schedule 2 in this House a number of points came to light, both as a result of our own reflection and in discussions with the boards, which persuaded us of the need to make a number of amendments. Many of the changes simply clarify the intention behind the provision concerned or make drafting improvements. Others, such as Amendments Nos. 209 and 210, extend the compensation provisions to cover additional circumstances in which a third party might suffer a reduction in the value of his interest in property transferred under an approved scheme. In addition the Commons amendments insert equivalent provisions, adjusted when necessary, in respect of transfers of the Potato Marketing Board's property.
Finally, Amendments Nos. 220, 221, 226 and 227 facilitate the transfer of finance leases under an approved scheme. For example, they would enable certain provisions of the leases to be overridden by an

1157
approved scheme and enable the transfers to be completed before the vesting day for the scheme concerned.
Moved, That the House do agree with the Commons in their Amendments Nos. 195 to 221 en bloc.—(Earl Howe.)
On Question, Motion agreed to.
COMMONS AMENDMENT
222 Schedule 2, page 42, line 30, at end insert:
'30D.—(1) Where—

(a) an approved scheme provides for the taking of steps with a view to securing the quotation of a company on the Stock Exchange, and

(b) the board to which the scheme relates makes under the scheme a qualifying transfer of shares in a subsidiary of its,

then, if the shares transferred were subject in the hands of that board to a resulting or constructive trust, they shall by virtue of the transfer cease to be subject to that trust.
(2) For the purposes of sub-paragraph (1) above, a transfer is a qualifying transfer if—

(a) it takes place in connection with the carrying out of the provision mentioned in paragraph (a) of that sub-paragraph, or

(b) the transferee is a qualifying person and the shares transferred are of the same class as other shares in the subsidiary which fall to be transferred as mentioned in that paragraph.

(3) For the purposes of sub-paragraph (2) above, the transferee is a qualifying person if the shares are transferred to him—

(a) by virtue of his being, or having been, a registered producer, or

(b) as trustee for persons who are entitled to participate in the trust by virtue of their being, or having been, registered producers.

(4) For the purposes of this paragraph, shares of a company shall not be treated as being of the same class unless they are so treated by the practice of the Stock Exchange or would be so treated if dealt with on the Stock Exchange.'.
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 222. The point of this amendment is to ensure that if a flotation is proposed as part of a reorganisation scheme it will not be jeopardised by a potential claim by former producers to the title of shares in the company concerned. Leaving open the merest possibility of such a claim, which would have to be publicly disclosed, could be more than enough to stop a flotation from going ahead.
This amendment therefore removes a potentially serious source of delay to the reorganisation timetable, on the assumption that the England and Wales board will, as anticipated, propose the flotation of Dairy Crest as part of its reorganisation scheme. The Government consider that the sort of claim which this amendment is intended to deal with would have no more than a remote chance of succeeding. Action is no less necessary for that. The amendment deals with the matter in a manner which does not prejudice the right of potential complainants to challenge approval of a reorganisation scheme or their right to compensation if their arguments are in the event upheld. If a court were to find that former producers who had not received shares in a company did have a
1158
valid claim, they would be entitled to financial compensation and their claim would be directed against the residuary body.
Moved, That the House do agree with the Commons in their Amemdment No. 222.—(Earl Howe.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
223 Schedule 2, page 42, line 35, leave out 'that'.
224 Page 42, line 35, after 'section', insert '10 above'.
225 Page 44, line 44, leave out 'The' and insert 'A'.
226 Page 45, line 44, after 'above', insert 'or paragraph 30C above'.
227 Page 45, line 46, leave out 'vesting day' and insert 'day of the transfer'.
228 Page 46, line 35, leave out 'corporate'.
229 Page 46, line 44, leave out `corporate'.
230 Page 47, line 3, leave out `to a body corporate'.
231 Page 47, line 4, leave out 'that body corporate' and insert `the body to which it is so transferred'.
232 Page 47, line 5, leave out 'corporate'.
233 Page 47, line 7, leave out 'corporate'.
234 Page 47, line 12, leave out 'corporate'.
235 Schedule 3, page 48, line 9, leave out 'to one or more qualifying successor bodies'.
236 Page 48, line 11, leave out 'the successor body or bodies' and insert 'a body to which property, rights or liabilities of the Board are to be transferred under that section'.
237 Page 48, line 11, leave out 'and'.
238 Page 48, line 13, at end insert and
(c) any property or rights whose transfer would involve a breach by the Board of the restriction imposed by section 47(2) of the Agricultural Marketing Act 1958 (restriction on disclosure of information obtained under the Act).'.
239 Page 48, line 14, leave out sub-paragraph (2).
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 223 to 239 en bloc.
Moved, That the House do agree with the Commons in their Amendments Nos. 223 to 239 en bloc.—(Earl Howe.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
240 Schedule 3, page 48, line 28, after `(2)', insert 'Sub-paragraph (1) above shall not apply'.
241 Page 48, line 29, leave out from '1947' to end of line 35 and insert `(development council).'.
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 240 and 241.
Under the Industrial Organisation and Development Act 1947 it is for Ministers to specify in the order establishing a development council its name and the functions to be assigned to it and for Parliament to approve the order. The original draft of the Bill required the Potato Marketing Board to specify in its transfer scheme the name and functions of any successor body that was to be a development council. While Ministers will obviously wish to have the PMB's views on what a development council

1159
should do, it is not the board's place to specify them. This group therefore removes the requirement on the board and, in so doing, brings the potatoes provisions into line with those on milk.
Moved, That the House do agree with the Commons in their Amendments Nos. 240 and 241. —(Earl Howe.)
Lord Carter: My Lords, I believe that this is the last group to which the Minister will speak. Perhaps I could move a little outside our rules. It is the last opportunity to wish the Bill well and to thank the Minister for explaining the amendments so clearly.
Earl Howe: My Lords, I am most grateful to the noble Lord, and for the constructive way in which he has addressed the amendments we have been discussing.
On Question, Motion agreed to.
COMMONS AMENDMENTS
242 Schedule 3, page 48, line 35, at end insert:
'Disclosure of information,
.—(1) The scheme must specify what information to which this sub-paragraph applies is to be disclosed by the Board for the purposes of the scheme and to whom.
(2) Sub-paragraph (1) above applies to information the disclosure of which is (apart from paragraph 3 of Schedule 4 to this Act) restricted by section 47(2) of the Agricultural Marketing Act 1958.'.
243 Schedule 4, page 49, line 6, leave out 'all' and insert 'any'.
244 Page 49, line 6, leave out 'and' and insert 'or'.
245 Page 49, line 7, leave out 'to a qualifying successor body'.
246 Page 49, line 9, leave out 'and' and insert 'or'.
247 Page 49, line 9, leave out 'qualifying successor body' and insert 'transferee'.
248 Page 49, line II, leave out 'and' and insert 'or'.
249 Page 49, line 12, leave out 'to a qualifying successor body'.
250 Page 49, line 13, leave out 'that body' and insert 'the transferee'.
251 Page 49, line 14, leave out sub-paragraph (2).
252 Page 49, line 16, at end insert:
'() This paragraph shall have effect in relation to accounting periods beginning after the last complete accounting period of the Board ending before the date of the transfer under section 31 above.'.
253 Page 49, line 30, leave out 'for the purposes of carrying out' and insert 'in accordance with the provisions of.
254 Page 49, leave out lines 44 and 45.
255 Page 50, line 40, at end insert:
'Restraints on alienation etc.,
6.—(1) Any provision which imposes a prohibition (whether absolute or qualified) on the transfer of any property or rights of the Board shall be treated as not applying in the case of a transfer under section 31 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 the 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 has the effect of penalising a transfer shall be treated as prohibiting it.'.
256 Page 50, line 40, at end insert:
'7.—(1) This paragraph applies to any provision which imposes a qualified prohibition on the effecting of any description of transaction, other than a transfer, with respect to any property or rights of the Board.
(2) Where the prohibition imposed by a provision to which this paragraph applies is imposed for purposes other than public 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 the 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 has the effect of penalising the effecting of any description of transaction shall be treated as prohibiting it.
8.—(1) If any person suffers a diminution in the value of any property or interest in consequence of the operation of paragraph 7 above or, where sub-paragraph (2) below applies, paragraph 6 above, 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) This sub-paragraph applies where the effect of the transfer is to sever the ownership of the property or rights to which the provision concerned relates.
(3) Any dispute as to whether, and, if so, how much, compensation is payable under this paragraph, or as to the person by whom it shall be paid, shall be referred to and determined by an arbitrator appointed by the Ministers.'.
257 Page 50, line 40, at end insert:
'9.—(1) For the purposes of this paragraph, a provision is a qualifying provision if—

(a) it imposes an absolute prohibition on the effecting of any description of transaction, other than a transfer, with respect to any property or rights of the Board, and

(b) the prohibition which it imposes is imposed for purposes other than public purposes.

(2) Where an approved scheme—

(a) identifies a qualifying provision as one to which this paragraph applies, and

(b) if the scheme provides for there to be more than one transferee under section 31 above, specifies one of them as the body against which any claim under paragraph 10 below in relation to the identified provision is to be made,

that 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 Ministers may make regulations—

(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,

(b) with respect to the giving by the Ministers of a certificate of compliance in relation to the giving of notice under paragraph (a) above, and

(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 the Board being transferred otherwise than to a board constituted by a scheme under Part I of the Agricultural Marketing Act 1958.
(5) For the purposes of this paragraph, any provision which has the effect of penalising the effecting of a description of transaction shall be treated as prohibiting it.
10.—(1) If any person suffers a diminution in the value of any property or interest in consequence of the operation of paragraph 9 above in relation to any provision, such compensation as may be just shall be paid to him—

(a) where the approved scheme provides for there to be one transferee under section 31 above, by that body, and

(b) where the scheme provides for there to be more than one transferee under that section, by the body which the approved scheme specifies as the body against which any claim for compensation under this paragraph, in relation to the provision concerned, is to be made.

(2) Any dispute as to whether, and, if so, how much compensation is payable under this paragraph, or as to the person to whom it shall be paid, shall be referred to and determined by an arbitrator appointed by the Ministers.'.
258 Page 50, line 40, at end insert:
'Certificates of vesting,
11.—(1) Where section 31 (1) above applies on the vesting day under an approved scheme, the Ministers shall give to each person identified by the scheme as a person to whom any property, right or liability of the Board is to be transferred under section 31 above ("a relevant transferee") a certificate ("qualification certificate") stating—

(a) that he is identified by the scheme as a relevant transferee,

(b) whether the concurrence of any person is required to the issue by him of a certificate of vesting in relation to the Board, and

(c) if it is, whose concurrence is required.

(2) For the purposes of sub-paragraph (1) above, a person's concurrence is required to the issue of a certificate of vesting in relation to the Board if he is identified by the scheme as a relevant transferee.
(3) Where a person to whom a qualification certificate is given issues a certificate of vesting in relation to the Board, then, subject to subparagraphs (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 31 above in relation to any property, right or liability of the 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 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 31 above in relation to it.
(6) Sub-paragraph (3) above shall cease to apply to a certificate of vesting in relation to the Board—

(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

(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 31 above.

(7) In this paragraph—
1162

(a) references to a certificate of vesting in relation to the Board are to a certificate with respect to the effect of section 31 above in relation to any property, right or liability of the Board, and

(b) references to registered land are to registered land within the meaning of the Land Registration Act 1925.'.

259 Page 50, line 40, at end insert:
'Land registration
12.—(1) Where section 31(1) above applies on the vesting day under an approved scheme, the Ministers shall—

(a) give a copy of the order under section 23(5) above to each person from or to whom property, rights or liabilities are transferred under section 31 above in accordance with the scheme, and

(b) annex to the copy order a copy of the scheme certified by them to be a true copy.

(2) A copy of the scheme given under sub-paragraph (1) above shall he treated for land registration purposes in England and Wales as conclusive evidence of the terms of the scheme.
13.—(1) This paragraph applies where any registered land in England and Wales is transferred under section 31 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.
14.—(1) This paragraph applies where any land in England and Wales which is not registered land is transferred by virtue of section 31 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 31 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—

(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

(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.
15. 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.'.
260 Page 50, line 40, at end insert:
'Transfers under section 31: transition
16.—(1) Any agreement, transaction or other thing which—

(a) is made, effected or done with respect to anything transferred under section 31 above in accordance with an approved scheme,

(b) is made, effected or done by, to or in relation to the transferor, and

(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 the Board being transferred otherwise than to a board constituted by a scheme under Part I of the Agricultural Marketing Act 1958.'.
261 Page 50, line 40, at end insert:
'Provisions of scheme effective on statutory vesting
17.—(1) Where section 31(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—

(a) to impose on one relevant body 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 relevant body;

(b) to create for one relevant body, on the vesting day under the scheme, an interest in or right over property transferred under section 31 above to another relevant body; or

(c) to adapt, with effect from the vesting day under the scheme, references to members or officers of the Board in a document or oral agreement relating to anything transferred under section 31 above.

(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 following are relevant bodies in relation to an approved scheme—

(a) the Board, and

(b) any body to which property, rights or liabilities of the Board are transferred under section 31 above.'.

262 Page 50, line 40, at end insert:
18.—(1) Where section 31(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—

(a) to impose on the Board, or on any body to which property, rights or liabilities are transferred under section 31 above, duties to take, on or after the vesting day under the scheme, such steps as may be requisite to secure that the vesting under that section of any foreign property, right or liability of the Board is effective under the relevant foreign law;

(b) to impose on the Board a duty, in relation to any foreign property, right or liability of its which is transferred under section 31 above, to hold that property or right for the benefit of, or discharge that liability on behalf of, the body to which it is so transferred, until the vesting of that property, right or liability in that body is effective under the relevant foreign law;

(c) to require a body to which any foreign property, right or liability of the Board is transferred under section 31 above to act on behalf of the 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; or

(d) to require any body to which property, rights or liabilities of the Board are transferred under section 31 above to meet expenses incurred by the 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 31 above of any foreign property, right or liability.
(4) Where provisions of an approved scheme have effect by virtue of this paragraph, the 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, 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.'.
263 Schedule 5, page 51, leave out line 26 and insert:
'1. The repeals in the Agriculture Act 1957 are without prejudice to sections 48(2) and 49(2) above.'.
Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 242 to 263 en bloc. The amendments have already been spoken to.
Moved, That the House do agree with the Commons in their Amendments Nos. 242 to 263.—(Earl Howe.)
On Question, Motion agreed to.

Leeds Supertram Bill
Returned from the Commons with the amendments agreed to.
House adjourned at four minutes before eleven o'clock.