Lords Sitting of 18 October 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 Bristol.

Middle East: Peace Initiatives
Lord Molloy Lord Molloy asked Her Majesty's Government:
What steps they are taking to broaden the extent of recent peace initiatives including the Palestinians, Israel and other Middle Eastern states.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, we are urging on all sides the need for progress towards a comprehensive settlement. My right honourable friend the Foreign Secretary is visiting Syria on 23rd and 24th October.
Lord Molloy: My Lords, I thank the Minister for that encouraging Answer. She probably understands better than most people that the name of the United Kingdom stands high in the Middle East, and that the Israeli Government and their Prime Minister, with Mr. Yasser Arafat, have performed in a remarkable and worthwhile manner. But there will be other problems. There will be problems with some other Arab states and some Israelis. I hope that the Government will urge the United Nations to give help when it is required. Will the Minister also consider the problem that faces Kuwait, which has so many of its countrymen and women prisoners suffering terribly in Iraq? Will that too be taken into account as a direct consequence of the Middle East problem?
Baroness Chalker of Wallasey: My Lords, I thank the noble Lord, Lord Molloy, for what he said. He is right. Despite the fact that the majority on both sides, in Israel and the Palestinians, are in support, there is opposition to the agreement. Unfortunately, there are also extremist elements who might resort to violence to overturn it. Such groups must not be allowed to succeed. We believe that all other Arab states and the Israelis must be helped by the international community to the maximum possible extent to make the peace agreement stick and to begin the business of rehabilitation. I shall look at what the noble Lord said about Kuwaiti prisoners in Iraq.
Viscount Tonypandy: My Lords, while I express great admiration for the part that the Foreign Secretary is playing in the Middle East, will the Minister be kind enough to ask her right honourable friend the Secretary of State whether, while he is in Syria, he will raise the case of Mr. Ron Arad, an Israeli pilot who was captured eight years ago, and seek if possible, on humanitarian grounds, to get that man restored to his family?
Baroness Chalker of Wallasey: My Lords, I thank the noble Viscount, Lord Tonypandy, for his question. We have deep sympathy for the relatives of Ron Arad
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and other hostages still held. The family of Mr. Arad called upon a senior FCO official this morning and raised those points. We have already engaged the staff of the United Nations Secretary General on Mr. Arad's case. We believe that the best hope lies with their efforts, but I shall bring the noble Viscount's question to the attention of my right honourable friend. If, by talking to the Syrians, we can do more to secure his release, I have no doubt that my right honourable friend will do so. The difficulty is not so much with the Syrians but perhaps more with the Iranians.
Lord Archer of Sandwell: My Lords, does the Minister agree that the peace process is an intricate jigsaw which has to be assembled painstakingly piece by piece? Has she noted the comments of Mr. Shaat, who leads the Palestinian delegation at Taba, that the low key discussions there made more progress in a few hours than more dramatic discussions have made in two years? Except where the safety of individuals such as Mr. Ron Arad is concerned, or where we can make a specific contribution, such as resources for the West Bank, does she agree that our most helpful course is probably to wish the negotiators well and to abstain from too much public comment?
Baroness Chalker of Wallasey: My Lords, I agree fully with the noble and learned Lord, Lord Archer of Sandwell, that quiet diplomacy is often the best diplomacy. It worked to the benefit of Israelis and Palestinians in this case. We hope that it will work to the benefit of many others, not just in the Middle East but all over the world. The noble and learned Lord will understand that the intricate negotiation of a peace process is something after which the media hunger. To say nothing is assumed automatically by some to mean that one does nothing. That is not true. Quiet diplomacy will continue, whatever the media may call for.
Baroness Seear: My Lords, will the Minister tell us how it happened that the press never got a hint of what was going on in Norway? Cart that process be repeated?
Baroness Chalker of Wallasey: My Lords, the noble Baroness, Lady Seear, has put her finger on an issue which has puzzled us all: how on earth did we succeed in what went on? I believe that the emergence during the negotiations of a nine year-old boy alongside his father must have put everyone off. We must see whether children are a good influence in future peace negotiations. I do not know why the process was so successful but all I can say is thank goodness it was.
Lord Chalfont: My Lords, does the Minister agree that enormous progress has been made in the peace process? However, to follow the question put by my noble friend Lord Tonypandy, would it not be a gesture of reconciliation which would help the peace process on its way if those who hold Ron Arad in captivity were persuaded to release him as soon as possible not only on humanitarian grounds but on the ground of helping forward the peace process?
Baroness Chalker of Wallasey: My Lords, the noble Lord, Lord Chalfont, is absolutely right. As was said by my honourable friend Mr. Lennox-Boyd on 21st

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June, we are certain that, given that there is a willingness on Israel's part to release Sheikh Obeid and other prisoners if Ron Arad is released, the peace process would be further helped. However, as I remarked last week in this House during Question Time, the matter is not merely between Israel and the Palestinians but between Israel and other Middle East countries. We shall continue to use quiet diplomacy to try to achieve those very ends.
Lord Molloy: My Lords, does the Minister agree that the remarkable Israeli-PLO endeavour, which cannot be praised high enough, has left authorised but inexperienced Arabs responsible for education, culture, health, social welfare and taxation? Is it not now time for the United Nations to help the Arab and Israeli people in those areas to set up a sensible organisation to carry out their duties?
Baroness Chalker of Wallasey: My Lords, it is right not only that the United Nations should help but also that help should be given by those of us who on 1st October attended the Middle East Support Conference in Washington. There is a great deal to be done. Within the Community a substantial medium-term package is under consideration. In addition, Britain will build on the work that it has been doing in the occupied territories. That will in particular alleviate the plight of those living in the Gaza Strip and the West Bank who have had no sizeable input as regards their education, health provision and housing.

Local Authorities: Capital Receipts
2.45 p.m.
Lord Dean of Beswick Lord Dean of Beswick asked Her Majesty's Government:
Whether the policy, announced in the 1992 Autumn Financial Statement, of allowing local authorities to use the total receipts from the sale of assets in the following 12 months to build council homes, has achieved its objectives.
The Parliamentary Under-Secretary of State, Department of the Environment (Baroness Denton of Wakefield): My Lords, the policy has achieved its objective of enhancing local authorities' resources for spending on capital projects. Our latest provisional estimate of the additional spending power, based upon local authorities' own recent forecasts, is £1.3 billion in England. This money may be used for any kind of capital expenditure and may either be spent immediately or held over for future years.
Lord Dean of Beswick: My Lords, perhaps I may, first, congratulate the Minister on her first appearance at the Dispatch Box in her new role, which is very difficult. I am grateful for the figure which the Minister gave of £1.3 billion. That is in excess of what other people say has been gathered in and can be used. However, the Minister must be aware that the then Chancellor, Mr. Lamont, stated specifically that the figure would be £1.75 billion, which means that there is £0.5 billion less
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than expected. That is an enormous disappointment to local authorities which wish to build housing in order to deal with the difficult problem of homelessness. Furthermore, it is an enormous disappointment to the building industry which, despite all the predictions of an uplift in the economy, remains in severe recession. Will the Minister ask the Secretary of State to make up the shortfall by making available an additional sum of £0.5 billion from the capital receipts which are held by local authorities and on which there is a tight moratorium?
Baroness Denton of Wakefield: My Lords, I thank the noble Lord, Lord Dean, for welcoming me to the Dispatch Box in my new role. It is, indeed, a difficult subject but a very worthwhile role. I suggest that he looks again at the Autumn Statement made by my right honourable friend the Chancellor of the Exchequer. The estimate of £1.75 billion did not represent a target; it was a projection based on English local authorities' own estimates of receipts. Therefore there is no question of making up a shortfall. I suggest that many local authorities could, with initiative and enthusiasm, add to that total.
Lord Campbell of Alloway: My Lords, in order to understand the dimensions of the Question, will the Minister give the House the total receipts for the sales of assets and the amount spent?
Baroness Denton of Wakefield: My Lords, I repeat for my noble friend that the estimated figure for capital receipts, which is based upon local authorities' own figures, is £1.3 billion. They can spend that during the coming years and there is no question of the spend being related to income.
Lord Bruce of Donington: My Lords, the noble Baroness mentioned the £1.3 billion capital receipts. Will she say how much loss has been incurred in the receipt of that money by selling assets at well below their market value? Is that a practice which she would commend to industry generally in order to achieve the recovery which is so devoutly desired?
Baroness Denton of Wakefield: My Lords, I am pleased to tell the noble Lord, Lord Bruce of Donington, that it is not for local authorities to sell below market value, and that is not what has happened.
Baroness Hollis of Heigham: My Lords, I join with the noble Lord, Lord Dean, in welcoming the Minister to her portfolio, which we are sure she will grace with her usual competence and courtesy.
Is the Minister aware that local authority associations no longer keep records of the numbers of new council houses being built because they are too few—probably barely 1,000 in the entire country this year? Yet at the Tory Party Conference Minister after Minister, to his shame, scapegoated homeless families for the country's housing crisis. Will the Minister agree that we need to build houses for both homeless families and for families on the waiting lists, which is why those capital receipts are so desperately needed? The only way to do that is to build and not blame, and to construct more houses and not more moral homilies.
Baroness Denton of Wakefield: My Lords, I thank the noble Baroness, Lady Hollis, for her welcome. I am also pleased that she was one of the people listening so keenly to what was said at the Conservative Party Conference. I stress that total starts on new house-building projects in the three months to July 1993 were 9 per cent. higher than in the same period last year. Homelessness acceptances declined in 1992 for the first year ever. Having said that, I agree with the noble Baroness that we must continue to concentrate wholeheartedly on that issue.
Lord Stoddart of Swindon: My Lords, is the noble Baroness aware that some of us were rather puzzled by her answer to my noble friend Lord Bruce of Donington who suggested that council houses have been sold at below their market value? The noble Baroness denied that. I was under the impression—and perhaps she will confirm it—that council houses had been sold at anything between 25 per cent. and 40 per cent. below market value, as those were the discounts given to council tenants. In addition, some council tenants have been given lump sums of £20,000 to get out of their houses. If that is not selling assets at below market value, I do not know what is.
Baroness Denton of Wakefield: My Lords, I confirm to the noble Lord, Lord Stoddart, that local authorities have to sell for the best consideration reasonably obtainable. We believe that to allow tenants the right to buy their homes is one of the best policies which this Government have ever brought forward.
Lord Dean of Beswick: My Lords, I was grateful for the detailed answer by the Minister to my supplementary question. However, her perception of what has taken place is totally different from mine. I am quite clear in my recollection that Members in another place, and also in your Lordships' House, said at the time that the figure projected by the Chancellor of the Exchequer would never be reached. The Minister must understand that the local authorities are disappointed because they were ready to set designs and let out contracts on the basis that they would be receiving £1.7 billion. That is not the case. Is it not realistic and fair for the Government to make available a similar sum from the capital receipts which the local authorities already have?
Baroness Denton of Wakefield: My Lords, those figures were estimates made at that time by the local authorities, which have revised their estimates. As they are responsible for attracting the income, I would expect their spending programmes to be based on those estimates. An extension of the period of the relaxation of the rules would add to pressures on public expenditure. When capital receipts are used to repay debts or are invested for future debt repayments, public expenditure and public sector borrowing are reduced. I was in Ealing this morning and the council has paid back £50 million of its debt. That is to the benefit of its residents.

Gibraltar
2.55 p.m.
Lord Merrivale Lord Merrivale asked Her Majesty's Government:
What is their response to the address of the Chief Minister of Gibraltar to the UN Committee of 24 on 14th July 1993 on the right to self-determination.
Baroness Chalker of Wallasey: My Lords, we shall continue to fulfil our obligations to non-self-governing territories under Chapter XI of the UN Charter. The situation in Gibraltar is complicated by historical realities, particularly the Treaty of Utrecht. We stand by our commitment to the people of Gibraltar enshrined in the constitution.
Lord Merrivale: My Lords, I thank the Minister for that reply. Does she agree that UN Resolution 2734, paragraph 3, of 16th December 1970 reaffirms the General Assembly's statement that obligations under the charter shall prevail over obligations under any other international agreement? Does she further agree that that declaration is applicable to self-determination in the context of decolonisation?
Baroness Chalker of Wallasey: My Lords, we are keenly aware of the debate in Gibraltar about self-determination. Of course the British Government accept the right of the Gibraltarian people to self-determination but we take other rights and responsibilities and the Treaty of Utrecht into account. I know that the Chief Minister, Mr. Bossano, made an extremely important address to the UN Committee of 24 in July and then to the UN Fourth Committee, which is the decolonisation parent committee, on 12th October. We are well aware of the need for negotiations, to which we are committed, with Spain about Gibraltar under the 1984 Brussels agreement. We stand by our commitment to respect the wishes of the people of Gibraltar as set out in their 1969 constitution. But I do not believe that my noble friend is right to say that the UN Charter can prevail over all else when those are more recent decisions. We must bring together the Gibraltarians with the Spanish to resolve that issue. My noble friend will know that I have sought to do that on several occasions and we continue to try.
Lord Boyd-Carpenter: My Lords, in view of the loyalty to this country of both the Government and people of Gibraltar, will my noble friend give an assurance that the wishes of the Government and the people in Gibraltar will be given very high priority indeed in those forthcoming discussions?
Baroness Chalker of Wallasey: My Lords, I can only reassure my noble friend that the wishes of the people of Gibraltar are given due consideration at all times. But, as he knows, the situation is complicated by Gibraltar's status in the EC and the Treaty of Utrecht, which was the basis for British sovereignty but which still gives Spain the right of refusal in the event of any change. We shall continue to try to resolve the issue, as I have said on many previous occasions to my noble friend.
Lord Archer of Sandwell: My Lords, is the noble Baroness aware that in consequence of recent measures introduced by the Government of Gibraltar, British subjects are in a worse position in relation to employment than the subjects of other EC states? If the Government of Gibraltar expect, as I hope they will receive, the loyalty of this country, is that not a matter which should be addressed?
Baroness Chalker of Wallasey: My Lords, there is no reason that British subjects should be in a worse position. But I shall look at the detail of what the noble Lord said. However, over a period of time we have had extremely positive discussions with Chief Minister Bossano and if there is a problem in that regard, I am quite prepared to look again at that matter.
Lord Merrivale: My Lords, in answer to my noble friend Lord Boyd-Carpenter, the noble Baroness referred to dialogue. Does she agree that there was a massive turnout and enthusiasm for Gibraltar's first national day on 10th September last, the anniversary of the 1967 referendum? Therefore, do Her Majesty's Government recognise that in a process of dialogue with Spain, Gibraltar is entitled to recognition of its separate identity as a people?
Baroness Chalker of Wallasey: My Lords, I am well aware that in 1967 over 99 per cent. of the people of Gibraltar voted in favour of retaining links with the United Kingdom and that, as my noble friend said, there was a massive turnout on 10th September last. Popular attitudes in Spain seem to be changing. A recent poll among Spaniards indicated that almost a quarter of them favoured self-determination for Gibraltar. Sadly, however, the Spanish Foreign Minister's statement to the United Nations at the end of September did not indicate a similar impending change of heart on the part of the government. Nevertheless, Gibraltar has a growing number of friends in Spain ready to espouse its cause; among them is the recently formed organisation, Friends of Gibraltar, which we wish well in the work that it is undertaking for Gibraltarians.
Lord Morris: My Lords, is my noble friend aware that in response to the question asked by my noble friend Lord Boyd-Carpenter she stated that Her Majesty's Government would give "due consideration" to the wishes of the governor and the people of Gibraltar, while he asked whether the Government would give "priority" to those wishes? Will she be good enough to distinguish between "due consideration" and consideration as a "priority"?
Baroness Chalker of Wallasey: My Lords, perhaps I should not have used the word "due", but we have made our position absolutely clear. We are committed to negotiation. We stand by our commitment to respect the wishes of the people of Gibraltar as set out in the 1969 constitution. There is no going back on that. My "due" was meant to take all that into account. I apologise if it did not sound like it.

THORP: Plutonium Reprocessing
3.2 p.m.
Lord Jenkins of Putney Lord Jenkins of Putney asked Her Majesty's Government:
Whether any of the plutonium reprocessed by the THORP plant at Sellafield will be used in Trident warheads.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Strathclyde): My Lords, both the THORP plant and the plutonium arising in it will be subject to international safeguards. Her Majesty's Government have no plans to transfer any plutonium from THORP to defence use.
Lord Jenkins of Putney: My Lords, is the Minister aware that his Answer means, I think, a confirmation of the view that the product which is intended to come from THORP will primarily be a matter of export and re-export? In that case, is he further aware that the United States defence department has said that in its opinion this trade is very dangerous and will not be at all helpful in relation to non-proliferation? In those circumstances, will the Government reconsider their decision to start THORP?
Lord Strathclyde: My Lords, the noble Lord can read into my Answer whatever he wants. It was a very plain Answer that the Government have no plans to transfer any plutonium from THORP to defence use. It had no other repercussions.
Lord Williams of Elvel: My Lords, is the Minister aware that the United States has tested a nuclear weapon made with reactor-grade plutonium? Therefore, the material which THORP will be returning to Japan and Germany and, if current contract negotiations are successful, to South Korea could quite easily be used for nuclear weapons at any level of technical sophistication. Would the noble Lord care to comment on that?
Lord Strathclyde: My Lords, it is not for me to speculate on what nuclear tests may or may not have been carried out by the United States. However, on the broader issue of exports, when considering applications to return plutonium from reprocessing the Government would, of course, not permit that export unless they were confident that no attempt would be made to divert the material for military use.
Lord McIntosh of Haringey: My Lords, it may not be for the Minister to speculate but it is for the Government to know and it is for the Minister to respond, in the light of proper briefings, to the Question that is asked of him.
Lord Strathclyde: My Lords, that is not the case. Government spokesman have consistently refused to speculate on what nuclear tests may or may not have been carried out by the United States.
The Earl of Halsbury: My Lords, can the Minister confirm that the defence authorities in America have

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attempted to make an atomic bomb out of commercial-grade plutonium and the best that they have been able to achieve so far is what is known as a "fizzle"?
Lord Strathclyde: My Lords, I cannot confirm that because it is not in the public interest to speculate on such matters.
Lord Mayhew: My Lords, is the noble Lord aware that this is an awkward question; that it is possible to make bombs from ex-reactor fuel and that whatever the intentions of the governments concerned—the British Government, the Germans or the Japanese—the non-proliferation treaty forbids the export of such material?
Lord Strathclyde: My Lords, it may be possible to make a bomb out of reprocessed material, but that of course depends entirely on its composition.
Lord Williams of Elvel: My Lords, of course it depends on its composition. That goes without saying. However, is the noble Lord aware that, while we respect the technical knowledge of the noble Earl, Lord Halsbury, on these matters, the United States has successfully tested a weapon made of reactor-grade plutonium? THORP will therefore be returning to Japan, Germany and possibly South Korea material which can be used in nuclear weapons. Does the noble Lord think that that is in the interest either of the non-proliferation treaty or of the UK Government?
Lord Strathclyde: My Lords, whether or not the material from THORP could be used for making a bomb is irrelevant because all plutonium recovered in reprocessing is subject to stringent, internationally accepted standards of safeguards and physical protection.
Lord Jenkins of Putney: My Lords, is the noble Lord aware that there is none so blind as those who will not see? It is not a question of speculation; it is a question of the Government refusing to accept what is generally known and internationally agreed. Why are they refusing to consider the possibilities which will flow from their decision, if they take it, to open THORP? Is he not aware that one of those possibilities is that the Government will be marching dead against the vast majority of opinion in the world which will be that they are creating a risk which is unacceptable and which they ought not to create?
Lord Strathclyde: My Lords, I do not accept that that is the Government's position.

Welling: Disturbances
3.7 p.m.
Lord Harris of Greenwich: My Lords, I beg leave to ask a Question of which I have given private notice, namely: whether Her Majesty's Government will make a Statement about the recent disturbances in Welling.
The Minister of State, Home Office (Earl Ferrers): My Lords, the Answer is as follows:
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"The police became aware that the Anti-Nazi League planned a major march past the site of the British National Party bookshop in Welling on Saturday 16th October.
"The Commissioner considered that for the march to progress through this area would be to risk serious public disorder. He therefore decided to re-route the march, using his powers under Section 12 of the Public Order Act 1986, to a safer area Some 20,000 people were estimated to have taken part in the march; 2,600 police officers were deployed, together with 84 police horses, with a further 3,000 police officers held in reserve.
"When the march reached the point where the revised route departed from the organisers' preferred one, there was a confrontation which resulted in many appalling acts of violence. Thirty-one arrests were made and more are expected once the police have had time to review the video evidence. Twenty-one police officers and 41 demonstrators were injured. All the police officers are now out of hospital.
"As the Commissioner said at his press conference, it is highly regrettable that what should have been a peaceful demonstration against the despicable views of the British National Party was hijacked by a malevolent minority bent on confrontation of the police. I am satisfied that, had the Commissioner not taken firm and decisive action to re-route the march, the level of violence could have been much worse.
"It is a matter of great regret that the police and the public should be subjected to this disgraceful level of violence. The police acted with astonishing bravery, as is their custom, and according to the highest standards of their profession."
My Lords, that concludes the Answer.
Lord Harris of Greenwich: My Lords, in thanking the noble Earl for replying to this Question, would he not agree—I am sure that he will—that this was a deplorable episode? It involved calculated attacks upon the police and created an immense amount of fear among law-abiding people who have the misfortune to live near the headquarters of this thoroughly unpleasant organisation.
Does he not also agree that the behaviour of a minority of the demonstrators reminded one only of the conduct of fascist bully boys? Will he pass on the congratulations of the whole House—I am sure that is the case—to the commissioner on the way in which he organised a response to this incident? Will he also pass on our regrets to those officers who were injured, and in particular to the black officer who was attacked solely because he was black? Will the Government remember this incident, as well as others that have involved a substantial level of violence against the police, when they are considering their response to the recommendations of Sir Patrick Sheehy? Does he not agree that it would be deplorable if the starting salary of police officers—if the recommendations are accepted—were reduced to a level below that of traffic wardens?
Earl Ferrers: My Lords, I agree with the noble Lord, Lord Harris of Greenwich, that this was a deplorable act and it was a calculated one. I agree with him that the fear inculcated into not only the people in the locality but also, let us not forget, into the police themselves was absolutely shocking. I hope that when these people appear before the courts they will be dealt with severely. I agree with the noble Lord, Lord Harris, that the behaviour of some of these people was that of bully boys. Our information is that some 10 per cent. of the people—this is only a rough guess—attended the march not because they sympathised with its cause but rather because they intended to create mayhem. I shall be happy to pass on to the Commissioner of the Metropolitan Police the noble Lord's congratulations, which he offers on behalf of the whole House—I know everyone in the House shares in those congratulations—on the work of the police officers. I shall pass on his regrets to those who were injured, and particularly to the black officer who I understand was singled out for particularly offensive treatment. I can assure the noble Lord, Lord Harris, that Sir Patrick Sheehy considered all the conditions relating to policing when making his proposals. This incident and all the other conditions relating to policing will be taken into account in the Government's response.
Lord McIntosh of Haringey: My Lords, I hope the Minister accepts that we on these Benches agree with what has been said with regard to the decision of the commissioner of police to use his powers under Section 12 of the Public Order Act to divert the march from its intended objective. We share the horror felt by all decent people at the injuries that were inflicted on Saturday afternoon at Welling. Does the Minister also accept that two demonstrations took place against nazism? One took place, completely peacefully, at Trafalgar Square. That march was organised by the Anti-Racist Alliance. The other, as has been said, took place under the auspices of the Anti-Nazi League. The vast majority of members of that organisation are peaceably inclined and belong to all political parties and to none. We share the Minister's view that it was a tiny minority of the people who took part in the demonstration at Welling who were responsible for the damage and the injuries that were caused. I congratulate the Minister on resisting any temptation to call for a change in the law with regard to the confrontation last Saturday. It is apparent that, although it is not possible to stop those who are hell-bent on violence, the right to demonstrate peacefully in our streets is of great importance and ought not to be diminished.
Earl Ferrers: My Lords, the noble Lord, Lord McIntosh of Haringey, is correct to say that another march took place. It went from the Strand to Trafalgar Square and some 3,000 people took part in it. The march was conducted entirely with decorum and there was no trouble. It is a great pity that the other march did not follow the same pattern. The reason for that, as I have already said, is that many other people, extraneous to the organisers of the march, decided to batten themselves on to the march and cause trouble.
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However, we have no intention of changing the law to which the noble Lord referred. The right to free speech is essential. The right to go on marches is also essential, but the right to protect people from the disasters which these marches can cause is also essential. That is a responsibility for the Commissioner of the Metropolitan Police. As the noble Lords, Lord McIntosh and Lord Harris, have said, the commissioner conducted that exercise wholly correctly and in the interests of all those who live in the area through which the march passed.
Lord Avebury: My Lords, will the Minister consider the planning laws which allow nazis to site their offices in certain places and to engage in provocative and intolerant acts of racism which incite acts of hatred and violence against members of ethnic minorities in the centre of our urban areas? Will the Minister consider the planning laws which allow offices of such organisations to be sited in such areas? Will he reflect on the possibility that if the local authority had been able to refuse permission for the BNP to operate from its premises, no march would ever have taken place and the violence would not have occurred?
Earl Ferrers: My Lords, we are getting on to dangerous ground if the Government or local authorities are in a position to permit certain people to do things and certain people not to do things which are perfectly legal operations in themselves. The British National Party is not a proscribed organisation. If it were, other considerations would apply. I believe that it would be dangerous to give planning authorities the right to discount those people they do not like.
Viscount Whitelaw: My Lords, I am sure that among all the people in this country there will be a wide acceptance of one simple fact concerning this disgraceful behaviour: that the Commissioner of the Metropolitan Police and his officers not only knew what was happening by means of good intelligence but also knew how to deal with the situation and save a great deal of trouble. The Metropolitan Police deserve the greatest congratulations. They are so often criticised. Sometimes they are rightly criticised, but on an occasion such as this they should receive all the credit they deserve.
Earl Ferrers: My Lords, I am most grateful to my noble friend Lord Whitelaw for those comments, which I know the police service will receive with pleasure. My noble friend is quite right to say that the commissioner had plenty of intelligence about this matter. He informed my right honourable friend the Home Secretary that there was likely to be trouble. He also informed the Home Secretary that he could take sufficient action to contain that trouble.
This is yet another example of how hooligans can bring this country into disrepute as they did last week on the occasion of the football match in the Netherlands. So often the people of this country are blamed for such action when it is a matter of only one or two people who are intent on creating trouble and who have no interest in either football or in the march that took place on

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Saturday. Nevertheless they bring the whole country into disrepute and they upset and put fear into ordinary law-abiding people.
Lord John-Mackie: My Lords, is there any indication that the tiny minority who created the trouble are members of the British National Party?
Earl Ferrers: My Lords, it is too early to say at the moment whether that is the case but the Commissioner of the Metropolitan Police is studying all the evidence which is available to him.
The Earl of Lauderdale: My Lords, will my noble friend take care to repudiate the suggestion always made by the rioters on these occasions; namely, that the police overreacted?
Earl Ferrers: My Lords, I believe that such a concept would be totally absurd in this connection. The police knew there was going to be trouble. They informed the marchers that they intended to re-route the march from the place the marchers wished to proceed to, which was the British National Party's headquarters, because the police knew that the roads in that area were restricted and therefore it would be impossible to control the march, and any mayhem which arose would be much worse. I suggest that there is no question that the police acted in an untoward fashion. However, if anyone has a complaint to make, the commissioner will, of course, investigate it.

Protection of Young People at Work: ECC Report
3.19 p.m.
Lord Lewis of Newnham Lord Lewis of Newnham rose to move, That this House takes note of the report of the European Communities Committee on the Protection of Young People at Work [23rd Report, HL Paper 100].
The noble Lord said: My Lords, before I discuss the report referred to in the Motion standing in my name on the Order Paper, perhaps I should bring your Lordships' House up to date with the position in Brussels. The Social Affairs Council met on the 12th October, when key changes to the draft directive were agreed. Those are expected to go forward for formal adoption of a Common Position by the Council. The Common Position will then be transmitted to the European Parliament for its opinion before returning to the Council for final adoption of the directive, probably in the first half of 1994.
I am not clear what that means so far as concerns today's discussion. have a horrible feeling that it means arriving too late for the main event. However, we discussed the situation in Sub-Committee C and it was generally felt that we should proceed as that would give the noble Lord, Lord Henley, an opportunity to tell us in detail the outcome of the deliberations in Brussels. It would also allow your Lordships to consider any aspects of the directive which may be of specific concern.
I turn now to the report. Sub-Committee C of the Select Committee on the European Communities has
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carried out a short inquiry into the amended proposal for a council directive on the protection of young people at work. The Council's proposal involves the consideration of work carried out by children and young people below the age of 18. The main topics covered are: restriction on hours of work; risk evaluation and health assessment associated with work; and the prohibition of work in certain areas. I believe that we would all agree that those are important aspects of working conditions for children and young people.
The Select Committee reported on those proposals and the report was published in July of this year. The Government response was received in August. I should like to take this opportunity to thank Ministers for their replies.
We would all agree that the employment of children within society has always occurred, often with exploitation. Perhaps we can use as a measure of the civilisation of a society how it has been able to deal with such exploitation. There is no doubt that children and young people at work require protection. Equally, there is no doubt that the experience gained by the young from work is important. It therefore follows that the rules governing work by children must be carefully considered to allow for gradual transition from childhood to adulthood and to lubricate what can be a very difficult change.
I have very little direct experience of this particular form of training for young people. However, for about 20 years I was involved in examining for the Higher National Certificate in chemistry, which is a subject which has a very large work training component. Equally, I find within my own university that many engineers take a year off before going up to university, and so have industrial experience. There is little doubt in my mind that that leads to the development of maturity in young people. It is a very valuable aspect which complements their academic attainments.
The sub-committee considered the proposals with considerable care because of our belief in the importance of managing that transition from school to work, which is not only of potential importance to the individual but also to society as a whole.
Before considering the detailed conclusions of the committee I should like to deal with two considerations which may be regarded as technical, although I am not sure how far these are now appropriate if the directive has reached an adoptive stage. The first is that the proposal was based on Article 118a of the EC treaty. As your Lordships may be aware, that article authorises the Council to adopt directives having as their prime objective the harmonisation of conditions, especially in the work environment, with regard to health and safety. The article states:
"Member States shall pay particular attention to encouraging improvements, especially in the working environment, as regards the health and safety of workers, and shall set as their objective the harmonization of conditions in this area, while maintaining the improvements made".
The evidence before the committee was divided as to whether the then draft directive was correctly based in Article 118a. However, there was no doubt in our minds that Article 11 of the draft directive, which is concerned with paid leave, was most inappropriate in this

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connection. I fear that we are now reaching a very delicate decision as to which of the various articles will be used for legislation. The Social Charter is an underlying problem which I believe will come to the surface on a number of occasions.
The other question which taxed the committee and some witnesses was the problem of subsidiarity. There are clearly wide variations in the laws concerning working practices. The times at which school starts, the length of the day within a school and even leaving ages vary considerably across the Community. It was felt by some that the present directive imposed unnecessary uniformity across the Community. The alternative view was that the directive would set a minimum standard for the Community as a whole. I remind the House that under Article 118a any member state is allowed to enhance the conditions for its own particular community.
Some witnesses believed that employers could be discouraged from giving jobs or training work because of the new rules. That is an extremely important point, because in the present economic environment it is becoming difficult for many employers to provide appropriate training experience. I know that industry as a whole is finding it very difficult to fulfil that commitment at present.
So far as concerns the adequacy of the law in this country, there was a sharp difference of opinion between those who believed that the UK's law and practice were fully adequate and those who regarded the situation as potentially dangerous for young people. The main legislation in this country governing work by children derives from the 1920s and 1930s. The Employment of Women, Young Persons, and Children Act was introduced in 1920 and the Children and Young Persons Act came into force in 1933. It is also important to note that the Employment of Children Act 1973, which was passed in order to provide a national standard across the country, remains unimplemented. In the light of evidence given to us we question whether the situation in the UK is satisfactory. In other words, the law may exist but enforcement of the law is becoming important.
A survey carried out in Birmingham found that 43 per cent. of children between the ages of 10 and 16 have some part-time employment. About 75 per cent. were employed illegally and 25 per cent. were under the age of 13, the age below which no work is permissible under existing UK regulations. It has been argued, particularly by the Minister, that that evidence is anecdotal and that hard evidence is not available. However, to put it at its lowest, we cannot be confident that the present laws and by-laws concerned with work by children and young people are widely known or enforced. It is probable that they are not.
Until I was involved in this inquiry I was totally unaware of the need to obtain a work permit for the employment of a child. In my discussions I have met few people who knew of the existence of such a document. I have obtained a copy. I find that it is necessary to have the application countersigned by a parent, the employer and the headmaster of the school
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which the child attends. I understand the reasoning for that. But, equally well, I understand that that will be a somewhat cumbersome operation which will not be attractive to many employers. A further point is that the possibility of not fulfilling that procedure is becoming great. Allowing children of this age to ignore the law does not start them on a good trail or with a good example.
Perhaps I may console some noble Lords with the fact that it is possible to have one's lawns cut by one's own kith and kin. Regulations often provide for that. For instance, in the Cambridgeshire area the regulation states that,
"a child who has attained the age of 10 may be employed by his parent or guardian under the direct supervision of a responsible person in light agricultural or horticultural work but only on the agricultural or horticultural holding of such parent or guardian".
In other words, it is not legal to go next door and cut the lawn. In this instance, if the child is under a certain age the type of lawn cutter that one can use is somewhat limited. I am not clear whether such employment will now become illegal in this country if the directive is passed.
Another aspect worries me, I refer to the close inter-relationship between work and school. At present there is considerable concern over truancy and attendance at schools in general. I am not clear whether there may be some correlation between those facts.
Perhaps I may consider some specific points in the proposal. I shall not elaborate upon them in too great detail because I am not sure of the future of the programme. We accept that special rules for children must exist. However, we cannot see the justification for special rules for those above minimum school-leaving age which do not apply to adults. In other words, for over 16 year-olds different sets of regulations will apply depending upon whether one is or is not attending school. That does not seem to us to be a wise procedure.
We cannot see the justification for lowering the maximum weekly working time outside the school holidays from 15 to 12 hours. However, we welcome the revised proposal that protects the position of work experience and training. We undoubtedly view that as one of the more important aspects of training available to young people. I emphasise that we regard work experience and training as an important part of the total development of children. We should like to ensure that we are not in any way limiting that possibility.
In conclusion, I thank the members of Sub-Committee C. It is the first report since the reconstitution of the sub-committees of the Select Committee on the European Communities. I remind noble Lords that it involved the merger of Sub-Committees C and F. I much appreciate the help and support which the committee gave me during the investigation. I wish also to take the opportunity to thank the previous chairmen of Sub-Committees C and F, the noble Baroness, Lady Lockwood, and my noble friend Lord Nathan, who is present today. Both provided excellent leadership of their committees and are difficult to follow. I thank our clerk, Mr. John Goddard, for his considerable help and dedication

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during the inquiry. Finally, perhaps I may also thank all who helped the inquiry by giving evidence to the committee. I beg to move.
Moved, That this House takes note of the report of the European Communities Committee on the Protection of Young People at Work [23rd Report, HL Paper 100].—(Lord Lewis of Newnham.)
3.35 p.m.
Lord Beloff: My Lords, I am sure that all noble Lords will be grateful to the sub-committee for the most interesting, informative and well drafted report, and to the noble Lord, Lord Lewis of Newnham, for his speech today. In the course of that speech, he gave us some idea of the problems of regulating the employment of both school children and young adolescents. In the light of existing legislation—enforced or in some cases perhaps unenforced—and the importance of getting it right, both because we would wish to continue the tradition of protecting children against exploitation—that has been a mark of our social legislation since early in the last century—and, as the noble Lord rightly pointed out, because the transfer from dependence and study to active participation to the world at work is an important phase in the life of every young person, if proposals were made to your Lordships' House on behalf of this or any future government to look again at our legislation and the degree to which it is enforced, my sympathies might certainly be with such a step.
However, what I find difficult—it was alluded to by the noble Lord—is the position in respect of the directive which forms the object of investigation. When the Government gave their evidence to the committee—it is recorded in the evidence in the report—it was made clear that the Government held the view, first, that Article 118a was an unsuitable clause for covering much of the material in the proposed directive. It had to be stretched a great deal to cover many of the clauses in the proposed directive. They also took the view—I understand that it was shared by the committee—that subsidiarity would indicate that the control of the work of young people, most of which does not enter directly into international commerce (I refer to mowing daddy's lawn), would not appropriately be dealt with by international or supranational action and was indeed exactly the kind of thing which the concept of subsidiarity was expected by the British Government—perhaps by no one else—to cover. Therefore we have a prime example in the directive of what I and some other noble Lords in this House frequently warned the Government about during the passage of the Maastricht Bill; namely, that the Government might clutch at subsidiarity thinking that the concept meant that more would be left to them but that that was not what they were going to receive from the Commission or from some European governments favourable to the cause of European integration.
It is interesting that the issue has arisen so quickly. However, I should warn your Lordships that if the directive is passed—I base this warning on plenty of evidence from the Continent of Europe—we may expect further directives concerning, although perhaps not exclusively regarding, our labour legislation. They will
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be dressed up to depend upon one or other of the elastic clauses in the Treaty of Rome in which the notion of subsidiarity will be regarded as a curious British quirk.
As the noble Lord, Lord Lewis, pointed out, we need to know what has actually happened. We do not know that. According to the press, at the meeting to which the noble Lord referred and which I think was some time last week, the British Government accepted the directive, though perhaps in a revised form. We wait to hear from the Minister what revision the Government succeeded in obtaining.
However, it seems to me peculiar, in the light of the evidence that the Government gave to the subcommittee, that they should have accepted it at all. That is because their view that Article 118a was not sufficient to justify it, and their belief that subsidiarity made that in any event an unsuitable area for Community action should have made them refuse to accept it under any circumstances. In other words, have the Government climbed down? Do they no longer take the position which the Minister himself gave to the sub-committee? If there has been such a change, are we to regard it as second thoughts? Are we to regard it as the fact that a noted Europhile has become Secretary of State for Employment rather than a more robust lady who preceded him? We should very much like to know, because if we are to have that kind of thing again and again, we need to understand how the Government will operate in regard to such directives.
In particular, it is important for your Lordships' House. We have a whole series of sub-committees to deal with proposed Community legislation. As in this case, their reports were delivered with considerable promptness. The committee worked hard; it produced a document which is convincing and, as I said at the beginning, well phrased and well drafted. Then the committee finds that, irrespective of that, the Government apparently change their mind. If that is going to be common, if House of Lords reports will not be considered seriously before the Government accept a directive from the Community, we may as well save the Treasury a little money and wind up our European Communities Committee altogether. I think the Minister has some important explanations to offer the House this afternoon.
3.43 p.m.
Baroness David: My Lords, first, I should like to thank the noble Lord, Lord Lewis, for chairing the committee so ably and for his exposition this afternoon of what the report is about, as well as for the explanation he gave about what happened last week in Luxembourg. The noble Lord, Lord Beloff. referred to it in a speech which for him was not totally unexpected, but it was directed more to the Minister for his reply rather than to members of the committee.
When the report was being considered by the Select Committee, one member asked what had been the point of having the inquiry if in fact the need for a directive was being queried. In a way that is what I think the noble Lord, Lord Beloff, was asking. However, I believe that the evidence we received shows conclusively that there is a need for better knowledge of what is

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happening in this area and what the law is, depending, as it does, on a vast number of by-laws produced by the local authorities.
That is not to say that the situation in Europe is satisfactory. It palpably is not, as I shall point out later. We did not seek evidence on the situation in member states, but we have received evidence from a range of organisations with varied responsibilities for young people in this country, including local authorities, employers, trade unions and those concerned with the welfare of children and young people. In the light of that, we are not convinced that the situation is satisfactory. Research shows that there is a high level of illegal working by children below the minimum school-leaving age.
We detected a good deal of complacency from the two Ministers who gave oral evidence. They seemed to think that matters were under control; that it was the responsibility of the local authorities to create by-laws and to inspect and enforce them. It was up to them. I cannot help commenting that it is convenient for Ministers and the Government to pass responsibility to local authorities—for which at times they show a good deal of scorn—and then not to give them the resources to carry out the work. I asked the Minister about the failure of any government to implement the Employment Act 1973, now 20 years old. He responded that most local authorities had introduced by-laws as required by the Act. I am not so sure. We had written evidence about one shire county where in 1981 there were four separate child employment by-laws covering the county, each differing from the other. The local authority made an attempt to update them but in 1992 that had not been achieved.
It was not until a new head of the education welfare service from Birmingham arrived that action was taken. She had knowledge of the work undertaken in Birmingham for the National Child Employment Study, to which the noble Lord, Lord Lewis, referred, and she found evidence of gross infringements. I quote from her evidence on page 51 of the report. She found, for example:
"Evidence of recent prosecution against employers regarding children and young people 'carrot Topping' … Children absent from school because of injury sustained by the removal of the top of fingers through 'carrot Topping' … Children as young as ten working on a market stall … Village schools turning a blind eye to whole families taking their children out of school to help with the fruit picking … Only 1,500 children registered for employment with the Authority. (The National Child Employment Study suggests that there is likely to be two thirds more children working illegally)".
Anyway, new by-laws were then made and given the seal of approval by the department, to take effect in June 1993.
It is difficult to believe that all other authorities are perfect, and in fact the Association of County Councils in its evidence admits that they are not. But even now the Government's response to our report continues to be complacent.
When the noble Lord, Lord Gregson, and I asked Mr. Yeo whether local authorities were enforcing the by-laws, the answers were far from satisfactory. On page 8 of the report he said:
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"the evidence is probably a little patchy … Some authorities are very much more zealous than others".
The noble Lord, Lord Gregson, asked whether the Minister knew of any local authority which employed people to enforce the laws. He said, in paragraph 31 on page 8, "I do not know". Well, I do. The National Association of Social Workers in Education is the professional organisation for all staff who work in the education welfare services. It gave written evidence which is disturbing. There are only 3,000 of them in the country and they have other duties besides enforcing child employment legislation. They believe that there must be some national standardised legislation which would make the law more easily understood and therefore more easily enforced. This, they thought, could be achieved by the Government implementing and supporting the directive, which is similar to the 1973 Act.
We now know that that will probably not happen, but we shall not be certain until we have heard definitely. More research has been called for by a number of people and in the situation in which we now find ourselves I believe that that is important.
I wish to speak of the likely effects of child employment on education. The Department for Education has recently been concentrating a good deal on truancy, which the noble Lord, Lord Lewis, mentioned. I guess that a great deal of truancy is linked to illegal employment. So far as I can make out, the department's concentration does not seem to be on that. The recession, with many families suffering financial hardship, encourages parents to turn a blind eye if the child is bringing home additional pennies to help the family budget. I suspect also that many children are working more than the permitted hours per day or week, probably again in many cases for more cash.
The Government must realise that there has to be better knowledge of the law among local authorities, employers, teachers and parents and the law needs to be enforced; and that means that sufficient resources are needed. The welfare officers believe that the Department of Health should make certain that illegal child employment and the exploitation of children and young people are recognised as a form of child abuse. The Children Act 1989 should be amended accordingly.
We should be really anxious about the effect of working too long hours on a child's education. If children are tired—and they have been known to fall asleep in lessons—they will not absorb what is being taught and will not have the energy or perhaps the time for homework. If they are truanting, they will miss out altogether on education. We hear a good many complaints from the Government about standards of literacy and numeracy. Maybe if more trouble were taken about protecting children in that area there would be an improvement.
In that context, in answer to the noble Lord, Lord Swinfen, who asked whether, if the work turned out to be detrimental to the child's education, the school would have an opportunity of saying that the child should stop work for the sake of the education, Mr. Yeo said:
"The education authority has a statutory duty to stop that work from taking place … if it is detrimental".

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The noble Lord asked, "Even within permitted hours?", to which the answer was yes. I believe that research would prove that that is not what is happening.
I should like to say a word on work experience, which we all agree is a good thing. The directive posed problems in Article 8. Young people working eight hours a day might need to go to evening classes. People in further education undergoing work experience might also need to attend an evening class and would have been prevented from doing so.
I said earlier that I would mention member states, and I want to refer to Portugal. During the Recess I read a short book, Child Labour in Portugal, by Suzanne Williams. It was supported by the European Human Rights Foundation. It had some horrifying tales of the exploitation of young people. A boy, Nuno, aged 13 had worked in a bakery since the age of 11. He worked from 9.30 in the evening until 12 noon; he slept from 1 p.m. to 8 p.m.—that is 93 hours' work. The pay was £23. In ceramics, shoe-making, textiles, the service sector and stone-breaking, which led to lung disease, there were more horrific stories. Fifteen is the minimum working age. It is estimated that 200,000 under-15s are working. Their education is totally disrupted.
In written evidence we heard that Portugal has one of the most comprehensive legal frameworks preventing the exploitation of young people but one of the worst practical records. Presumably it will agree to the directive. As a member of the Community I do not think that we should be complacent about what is going on elsewhere in the Community.
Now the Social Affairs Council has had its meeting, as the chairman said. There seems to have been fierce disagreement, according to the papers, about whether Mr. Hunt had won a famous victory or suffered a humiliating defeat in gaining a six-year renewable opt-out from measures which would have forced the Government to scrap the legislation that they passed in 1989 to remove restrictions on child labour.
It seems rather ridiculous that we are debating a report which is redundant. But I hope that it will not be neglected.
The deletion of one sub-committee and the amalgamation of the Social and Consumer Affairs Committee with the Environment Committee was a big mistake. They do not mix well. It may well be that some directive needing scrutiny gets put aside. We might well have concentrated earlier on this one if we had not started on packaging and packaging wastes. If so, we could have had the report earlier and perhaps debated it before the decisions had been taken by the Social Affairs Council. I hope that the Leader of the House and others who came to that unnecessary decision will think again, and think quickly. The European Communities committees are very good value and extremely cheap.
3.53 p.m.
Lord Pearson of Rannoch: My Lords, I would have thought that your Lordships' Select Committee report on the European Council's Directive on the Protection of Young People at Work is something of a gem. I say that only partly because of its content, although I am sure that all noble Lords will agree that it is indeed of the
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very high quality which the world has come to expect of your Lordships' Select Committee reports. However, since I had the privilege of sitting on the committee which produced this particular report, I fear that it would not be appropriate for me to dwell upon its excellence; although I think it is in order for me to congratulate and to thank our chairman, the noble Lord, Lord Lewis of Newnham, for the patience and skill with which he conducted our business, and all those who assisted us.
I believe that it is appropriate for me to touch briefly on what most of our witnesses saw as the deeply misguided quality of the directive itself. However, I propose to spend most of my few minutes looking at what I regard as the report's star quality; namely, its timing, and the wider questions which its publication therefore begs. I say that because this debate comes close on the heels of our debates in June and July on the Treaty on European Union signed at Maastricht. The circumstances surrounding the directive on young people at work appear to belie all the vital assurances given by the Government then about subsidiarity and the Luxembourg Court; and because we thus have the opportunity of asking the Government exactly where they think they are going from here, particularly at the proposed Euro Summit at the end of this month.
At this point I should perhaps offer an apology to my noble friend Lord Henley (who I see is to answer for the Government) if he were to feel that some of my questions might be more fairly directed at my noble friend Lady Chalker and at my noble and learned friend the Lord Chancellor, who between them gave most of the assurances to which I refer; or indeed, at my right honourable friend the Prime Minister himself, whose article in the Economist on 25th September makes such encouraging reading but which does not seem to relate to the reality of where we find ourselves with this directive on young people at work. I cast no aspersions on my noble friend's ability to answer for the Government—quite the reverse. If he feels that my apology is out of place, then I trust that no harm has been done.
Other noble Lords have dealt with much of the detail of this unfortunate directive far more ably than could I. Suffice it for me to say that the British Broadcasting Corporation, the Confederation of British Industry, the Engineering Employers' Federation, Grand Metropolitan Hotels, the Institute of Directors, the Independent Television Network Centre, the National Farmers' Union, the National Federation of Retail Newsagents and the Society of West End Theatre all agree that it is likely to do much more harm than good to young people at work.
The general savour of their submissions is that the directive is likely to increase youth unemployment and to restrict work experience, employment and training opportunities for young people. Those who disagree with them have to explain how a European directive, and especially one which rests on a false legal base, as does this one, can be expected to help with the problems that they perceive when adequate UK law already exists. There may be a case, as the noble Baroness, Lady David, has pointed out, for enforcing existing UK law

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more rigorously. But I cannot think that there is much case for this interfering and damaging nonsense from Europe.
To give noble Lords some idea of the insidious stupidity of this directive I must tell the House that it proposes to ban all work by children under 13 years of age. In its original form, the directive did propose to make an exception for children working on a limited or occasional basis for their family. But the vigilantes of the European Economic and Social Committee got at it, aided and abetted by the European Parliament, and appear to have removed the exemption. That seems so absurd that I have to ask my noble friend if I have got this right. Will it in future be lawful for me to pay my nine year-old daughter to clean my shoes; or indeed her own shoes? Where will those of us who do not believe in giving pocket money to our children unless it is earned by some limited or occasional work for the family stand towards the law? Shall we be breaking it? If so, perhaps I may remind my noble friend that bad laws eventually make bad people.
Perhaps I may go further, and point out that this whole process of having bad laws thrust down our throats by the European socialist super-state is bound in the end to turn the British people into less law-abiding citizens. Surely my noble friend would agree that that would be a tragedy if it were to happen.
I come then to the wider questions which this wretched directive begs. To start with, it is clear that the Government rightly do not agree that the directive should be based on Article 118a of the Treaty of Rome, which proposes to harmonize the health and safety of workers across the Community. To quote from the Government's response to our report dated 2nd August 1993, to the chairman of your Lordships' Select Committee, the noble Lord, Lord Boston of Faversham, and signed by my right honourable friend the Secretary of State for Employment, Mr. David Hunt:
"We … remain to be convinced that the Treaty Base is appropriate. In our view the proposals involve a range of social and educational considerations and go beyond the protection that would be justified on Health and Safety grounds".
The letter continues with a statement which may prove useful to anyone wishing to gauge the value of our opt-out from the Social Charter. My right honourable friend has this to say about what he rightly calls "the prescriptive nature" of the proposal:
"The Government welcomes the point made by the Committee on the need to emphasise the requirement for leaving the Member States to argue the objective case for the need for regulation at a level other than the national level. As the Committee knows the UK did not sign the Social Charter. We nevertheless welcome the Committee's conclusion that, even by the requirements of the Charter, the directive is excessively prescriptive".
I am sure that all noble Lords on these Benches and indeed elsewhere in the House, though perhaps not on the Benches opposite, will welcome the words of the Secretary of State. The trouble is that his opinion was not shared in Luxembourg last week at the Social Affairs Council when he met with his colleagues. I understand that he was out-voted by 11 votes to one. If I have that wrong, no doubt my noble friend will advise us.
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So I should warn my noble friend on the Front Bench that my first general question will be: "Of what value is subsidiarity or our opt-out from the Social Charter in resisting this and other similar directives?"
The other European initiatives that I have in mind are works councils, sex discrimination, working time and the acquired rights directive. I should be most grateful if my noble friend could tell the House what value the Government now place on the subsidiarity clause in the Union treaty and more particularly how they intend to use subsidiarity to resist the young people at work directive. Before my noble friend comes to reply, it might help your Lordships if I quote a little more from the Government's response to our report dated 2nd August 1993. The Government's response is not available to most noble Lords because it has only just reached the Select Committee. My right honourable friend the Secretary of State for Employment made clear the Government's determination to resist the directive. He was also under no illusion as to the seriousness of the national interest. I quote:
"The proposals will affect an important element of our society and deal with the serious matter of young people's transition from school to work. The Report is an extremely useful consideration of the proposals and will help in our negotiations in Europe".
My right honourable friend then took the subsidiarity issue head on and made it clear that he believed our report would have strengthened the Government's hand when they came to invoke Article 3b of the Treaty on European Union; namely, the subsidiarity clause. His letter went on:
"We welcome in particular the Committee's confirmation of the Government's view that while accepting that children and young people need to be protected, much of the draft directive is unacceptable on the grounds of subsidiarity, and inappropriate for Community legislation. The Committee's endorsement of the Government's view that there is no convincing case for detailed Community action gives valuable support to our efforts to press the Commission on points of principle and practice in the negotiations to come".
Your Lordships will no doubt agree that nothing could be clearer or fairer than that.
However, to get the full flavour of the Government's determination in this matter, I must ask your Lordships' indulgence to quote two further paragraphs from the Secretary of State's letter. My right honourable friend continued thus:
"Finally, the Committee's recommendations and views on: the need for a distinction between those above and below school leaving age; the definition of the 'employment relationship'; the need to reinstate a limit of 15 rather than 12 hours weekly work; the general undermining of job opportunities by derogation; the impracticability of accumulating working time for different employers; the need to safeguard training opportunities for young people; the inappropriateness of different assessment regimes between adolescents and adults are most welcome and will strengthen the Government's hand in the negotiations to come …
I must restate the Government's intention to resist the directive as it is currently drafted and generally handle matters in line with the Committee's recommendations. We agree that the matters of ensuring and encouraging training, work experience and young people's employment opportunities are very serious ones. These should not be left to the mercies of arbitrary and inadequately focused regulations, whose basis for introduction into the EC programme of initiatives are themselves questionable. We will aim to convince our European colleagues of the Government's views and will no doubt be much helped by the report to secure their conversion".
Noble Lords will be relieved to hear that that is the end of the quotation. They are fine words and show

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courageous tenacity to the lofty principle of subsidiarity; but the vote last week was still 11 to one against us on the substance of the directive about which my right honourable friend was so eloquent in his thanks to your Lordships' committee. I am told that my right honourable friend was also fairly forthright in his condemnation of this and other similar directives at this year's Tory Party Conference. If so, he was perhaps echoing the truly excellent article in the Economist of 25th September by no less an authority than my right honourable friend the Prime Minister himself. I am sure that noble Lords will have read that article and so I shall not burden the House with further extensive quotations, apart from one short one which is very much to my point. It goes as follows:
"Long term unemployment is higher in the European Community than in either Japan or the United States. There is now increasing agreement that these problems stem from the inflexibility of European labour markets, from the tangle of regulations, from wasteful systems of welfare, from the burden of too high taxation, which Europeans have imposed upon themselves in the last 40 years".
Quite so. I should have thought that the young people at work directive is just one further extension of what my right: honourable friend so rightly criticises.
So I must ask my noble friend on the Front Bench whether the Government still believe that subsidiarity can save us from the young people at work directive and similar directives. Noble Lords will be aware that I am among those who have always regarded the subsidiarity clause as worthless. But I suggest that the young people at work directive sets up an interesting test case. I very much hope that the Government will prove me and others who agree with me to be wrong. But the omens are not good for the Government. It seems that they are not always well advised as to what the attitude of our European partners may be to these matters and indeed to subsidiarity itself. I say that because I am told that the UK representatives were caught on the wrong leg, to put it mildly, by last week's 11 to one decision against us in Luxembourg. Apparently they had not thought that the issue would even go to a vote and advised our Ministers accordingly.
Finally, I should like to ask my noble friend the Minister whether the Government are thinking of referring this directive to the Luxembourg court. Here again, it would be an interesting test case. Those of us who objected to the Union treaty regard the Luxembourg court as no court of justice at all, in the British understanding of that expression, but merely as the engine of the Treaty of Rome. We believe that it is most unlikely to find against an 11 to one decision in the Council. But as I said, it could be an interesting test case.
I end by throwing down two gauntlets for my noble friend and his colleagues on the Front Bench. First, I say that the story of the young people at work directive shows that subsidiarity is worthless to our national interest. Secondly, I say that justice will not be available to us in the Luxembourg court. I very much hope that the Government will prove me wrong.
4.8 p.m.
Baroness Seear: My Lords, we are warned—are we not?—that the Maastricht debate is by no means over. So it seems from today's contributions to the debate. However, I should like to agree with the noble Lord, Lord Beloff, on one matter; namely, that it is most regrettable that decisions should be taken by the Government before your Lordships' House has had the opportunity to discuss the reports produced by the Select Committee.
A great deal of work goes into the preparation of the reports, excellent evidence is taken and the deliberations are most carefully carried out. I am not a member of the committee but I feel that it is both discouraging to he committee and slightly less than complimentary to your Lordships' House that the Government should take action before there has been a proper opportunity to consider the matters put forward in these reports. I recognise that perhaps this is an exceptional occasion in that we are just at the edge of the Recess and no doubt the timetable for considering these matters was not entirely in the Government's hands. But I hope that the Minister will confirm that there is every intention that reports should be properly debated in your Lordships' House before the Government arrive at a conclusion about what they intend to do. Having said that, that is the only point on which I can find any agreement whatsoever with what has been said from speakers behind the Government on this occasion.
It seems to me that this is a matter for which there should be a directive. I do not understand the arguments. After all, we accepted in the Treaty of Rome that there should be directives in relation to equal pay. The argument was not that this was being put forward by great libertarians or feminists when the Treaty of Rome was being adopted; it was that if some countries paid equal pay and others did not, the countries that paid would be at a disadvantage economically. It follows equally that if some countries are able to employ large numbers of children at very low rates of pay that is an economic disadvantage to the countries which are trying to apply reasonable standards—the standards which have been laid down in the legislation of this country and laid down in the legislation of this country before the European Community ever came into being.
It is in our economic interest, leaving on one side all social considerations, that countries which are exploiting child labour—we have had good examples from the noble Baroness, Lady David, and there are no doubt many others—should not be tolerated and that on strong economic grounds we should be able to demand that minimum standards be enforced throughout the Community. I know everyone will say that the problem is enforcement. Of course there is a problem of enforcement. That is something on which we have to work, and to work much harder than we have done in the past. But I would agree that this is a subject for subsidiarity.
I do not take the view that has been taken by the dyed-in-the-wool anti-Maastricht people that subsidiarity is some sinister device for doing down this country. I want subsidiarity in this case because I believe that this

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country should be prepared to go further than the minimum standards laid down. It may be that this directive puts too much detail into those minimum standards and does not leave enough for countries which are able and wish and consider that they ought to apply higher standards to apply them without being handicapped by details which in some ways run across the better practice which we are already carrying out, or which some of us hope we will in future carry out in this country—although, as we have already been reminded, our legislation in this country is not being enforced as it ought to be enforced.
In my view, the requirements laid down here are an absolute minimum, and in some cases are not high enough even at the level of enforcement, let alone at the level at which countries which are able to do better ought to do better. I find it quite extraordinary that people should think it desirable that children under the age of 15—under school-leaving age—should be able to work even 12 hours a week let alone 15 hours a week. Children should be in school. We deplore all the time the low level of performance of so many children coming out of school. I cannot believe that encouraging them and allowing them to work is a way in which to improve their educational standards. It is on that that we should be focusing as much as we possibly can. To go from 12 hours to 15 hours is very retrogressive. We ought to be reducing rather than increasing the number of hours that children are able to work.
I am also sorry that the committee took the line—I think I have this correct—that there should not be a distinction between those above minimum school leaving age and adults. It is the view of many of us that youngsters between the ages of 16 and 18 should be regarded primarily as trainees and that they should be given the opportunity to learn based inside a place of work. These are years of learning and training and not years of production. In this connection, in talking about the transitional period when youngsters leave school and go into work, the question of work experience has been discussed and is discussed in the report.
Those of us who have had anything to do with the transfer from school to work recognise that work experience is important. But there is a tremendous distinction to be made between planned work experience, which fits in and is devised in order to enhance the skills and learning processes of the youngster, and any old job which they happen to pick up in which there may be no training content whatsoever and which is entered into simply in order to earn a little more money. From the point of view of the health and safety of youngsters and indeed the health of the economy, the level of training is what really matters. That is not gained by any kind of job. It is gained only by planned work experience, which is something quite different from letting youngsters pick up a little knowledge about work by delivering the papers or whatever else it may be.
For these reasons, I think that the Government not only should accept the basic principle that there should be directives in this field but that they should look at
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their own provision and recognise that it is far from adequate. So far from cutting it back, it should be enhanced.
4.15 p.m.
Baroness Turner of Camden: My Lords, I begin by congratulating the committee on its report. As usual, the committee has done a great deal of work. It has taken evidence from a wide range of interested parties, from organisations concerned with the welfare of young people and from trade unions and employers' organisations as well as from the Government themselves. Not surprisingly, those organisations, while expressing concern for the welfare of young people, came to very different conclusions about the EC directive.
Meantime, as we all know, there have been some further developments, to which the noble Lord, Lord Lewis, has already referred. The EC in Brussels wanted to move on with this directive, but the British Government have objected and the Secretary of State emerged last week with what he apparently thought was some kind of triumph. As I understand it from newspaper reports, the UK now has six years before it need put the provisions of the directive into operation. This has been presented to the media as a great victory on behalf of boys and girls who are extremely anxious to be able to do newspaper rounds. Their freedom to do so was threatened, so we are led to believe, by this directive. In fact, I think that this probably had nothing to do with it, since I understand that Britain had already, at the time of the Secretary of State's intervention, secured for itself a special exemption in regard to newspaper deliveries.
At the time the committee considered this directive, a revised version had been produced which altered the original version under which workers under 18 working on a limited or occasional basis for their family were excluded. The revised version brings within the scope of the directive all persons under 18 working for one or more employers. In other words, it brings into consideration people working for their families. Admittedly, there may be some difficulties about enforcement here; but many witnesses made the point—I think rightly—that it is often in family businesses that children and young people are vulnerable and exploited. I therefore take the view that the directive was right to move away from the original exclusion.
Perhaps I may give an example from my own experience. My husband was the bright child of small shopkeepers. He has never got over the resentment he felt that he had to work in the business instead of working at school. He has said to me repeatedly, "I didn't do as well as I might have done at school because they made me work in the shop". That still is true for many children in those circumstances.
The directive quite specifically rules out nightwork for young people under the age of 18, and places limitations on hours worked. In the case of children under compulsory school-leaving age, it reduces the hours from 15 to 12 a week. On the other hand, the directive accepts that the provision of work experience

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and training should be safeguarded. The committee and various of the respondents to the committee welcomed those references in the directive to work and training.
The directive, as we have heard, has as its legal basis Article 118a, which is used to harmonise conditions in regard to health and safety in the working environment, and as such can become operative by qualified majority voting. It seems to me that as concerns young people, it is vital to ensure that their working conditions are conducive to maintaining good health. At that period of adolescence with which the directive is concerned young people are still developing, and a bad working environment can be seriously damaging. Working hours and leave may therefore be more important in that context regarding health than for older people.
Therefore, it does not seem to me to be entirely inappropriate to use Article 118a as the legal base although I note that both the committee, and of course the Government, take a contrary view.
The Government's standpoint in this directive, as with others, has been entirely predictable. They regard any regulation of employment conditions as unnecessary—worse, as an interference with the market; a disincentive to employers to employ more labour and thus a diminution of employment prospects. It does not seem to matter to the Government what kind of jobs, if any, are created as a result of this free-for-all philosophy.
In the context of this report, the Government also seem to me to take a rather odd view of subsidiarity. They believe that a directive to harmonise is not necessary since few young people are likely to move across transnational borders looking for work. But I thought that harmonisation was about more than that. Surely, it is regarded as good in itself; avoiding social dumping to which the noble Baroness, Lady Seear, has referred, and allowing everyone to feel that they may benefit in the EC single market. In other words, there is a social dimension designed to ensure basic protection for the most vulnerable. As I understand it, the subsidiarity doctrine applies when the social objectives can best be achieved by national parliaments enacting legislation to suit their own circumstances. Surely that is reasonable and sensible.
There is already some sort of provision in the UK designed to regulate hours for children below the minimum school-leaving age. It is the employment card system. But witnesses gave evidence to the effect that it was little known and rarely enforced. Moreover, protective legislation covering 16 to 18 year-olds—legislation which prohibited night work in accordance with the directive—disappeared in 1989 as a result of one of the all too frequent Employment Acts. Therefore, in two key areas covered by this directive, whatever provision existed in UK legislation is either not enforced or has been abolished.
Many of the organisations submitting evidence expressed anxiety that UK legislation of itself seemed unable to prevent the exploitation of vulnerable young people. The Trades Union Congress was concerned at the level of health and safety protection for the young, pointing out that in agriculture, for example, there had been 22 deaths of young people in the past three years.
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Even the Government's spokesman, in giving evidence to the committee, expressed worry at the level of industrial injury among young people working in farming. Any steps which might reduce the risk of injury or death should surely be taken. Long hours do result in fatigue, and that is recognised as one of the causes of industrial injury.
The Government's position appears to be that there is no justification for introducing special protection for young people on health and safety grounds and, as already indicated, used this argument to justify removing most of the protective legislation covering 16 to 18 year-olds in the Employment Act 1989. They were also removed from the protection of the wages council by the Wages Act 1986. These measures have resulted, as the Children's Rights Development Unit said in its evidence, in young people entering the workforce being treated as adults. The unit says that there has been an increased incidence of accidents to young people, particularly in the first year at work. There was also some anxiety expressed about Article 2c which appears to provide an exemption in the case of children not less than 13 years of age, performing "light work". Derogations are permitted under this article to cope with established national practice.
I understand that it is under this article that the UK would be allowed to continue with the practice of employing children still at school to deliver newspapers in the early morning or in the evening. Despite the fact that there may well be noble Lords—perhaps even Ministers—to tell us that they were delivering newspapers at the age of 12 and enjoying it, and that it never did them any harm (we have often heard those kinds of arguments) I have never been very happy with this good old British custom. One cannot help noticing that it is often the children of poorer families who engage in this sort of activity. One should not always assume that they enjoy doing it. Children are only too well aware of what is going on if their parents are having difficulty making ends meet and often will want to help out. I accept that there is nothing much that can be done about it, particularly when so many are having to cope with reduced living standards. But it does not exactly fill me with unrestrained joy that a British Secretary of State should regard it as a triumph that he has preserved the "freedom" for this kind of exploitation to continue.
Of course, we must expect that employers' organisations will not want restrictions on the rights of their members to employ vulnerable labour as cheaply as possible. I say to the noble Lord, Lord Pearson, that that is just to be expected—hence the comments of the IoD, the CBI, the EEF, the National Federation of Retail Newsagents, and others. But it is the duty of the Government to protect the vulnerable, and the duty of parliamentarians to make sure that the Government do that.
It is to the credit of the committee that while it does not believe that the directive was appropriate, it refused to be complacent about what its research had revealed. It said,
"We are not convinced that the situation here is satisfactory".
The committee refers to the fact that research indicates that there is a high level of illegal working by children

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below the minimum school-leaving age, with by no means trivial breaches of the "no work before 7 a.m. or after 7 p.m." rules. My noble friend Lady David gave us some examples of that. Moreover, the committee has expressed concern that the Employment of Children Act 1973, passed in order to establish national standards, remains unimplemented.
In case the Minister says that it remained unimplemented by Labour Governments as well, I am not impressed by that argument because I believe that things have moved on. Anyway, for 14 years we have had Conservative administrations committed to reducing the amount of protective legislation in employment on the plea that only in this way can employment be provided, since regulation is a "burden on employers". Deregulation has not produced more employment, and those in employment have had significantly less protection than hitherto, as have young people who are the subject of the EC directive.
I commend the committee for suggesting that the Government should commission research into enforcement and the adequacy of the present laws. I would have preferred it had the committee supported the directive at least in principle. But now that the Government have obtained their so-called "renewable opt-out", it becomes even more necessary that something should be done by ourselves to ensure that young and vulnerable people are protected. As the TUC points out in its evidence, in times of high unemployment many young people feel constrained to take whatever is on offer. Some unscrupulous employers see young people as a source of cheap labour, often willing to carry out dirty or dangerous jobs that more experienced workers would decline. Such young people may not be aware of rights that already exist under health and safety legislation. As I said earlier, the Government must ensure that the vulnerable are protected. The committee's report makes that point very clearly, and I fully concur with that.
4.27 p.m.
The Parliamentary Under-Secretary of State, Department of Employment (Lord Henley): My Lords, as the noble Baroness, Lady Seear, put it, two strands have developed in this debate. As they have developed, and with their links, I found myself very much between the devil and the deep blue sea. The first strand of the debate relating to the question of the European Community to some extent continues the debate which we had at some length last summer. I shall deal with that in due course. Secondly—and this is what the draft directive and also the report of the Select Committee is about—is the principal question of the protection of children and young people at work. There was a third point which I shall briefly touch on—that is to say, the remark made by the noble Baroness, Lady David, about the work of the sub-committees. I believe that the noble Baroness will appreciate that it would not be for me to respond to these particular points she made, but I am sure that they will be noticed by both my noble friend the Leader of the House and by the Chairman of Committees.
We welcome the committee's report and its findings.
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We fully agree that children and young people need adequate protection of their health and safety and of their educational development. That has never been in dispute. Where we have differed from our partners in Europe is over the extent to which community legislation in this field is either necessary or appropriate. In drawing the attention of the House to his report, the noble Lord, Lord Lewis, quite rightly drew attention to the appropriateness of Article 118a and voiced the concerns that subsidiarity should rule. That was a point made both by my noble friends Lord Beloff and Lord Pearson. I must stress that we are still not convinced that there is a need for Community legislation in this field. The Council that met last week did not reach a decision that was put to a vote, so I say to my noble friend Lord Pearson that there is no question of a 11:1 vote. The Council recognised the diversity of national arrangements and, in particular, the United Kingdom's approach to health and safety. The amendments agreed by the Council show a far greater recognition of the principle of subsidiarity than did the original proposals which the Select Committee was considering. My noble friend also wished to know whether we intended to challenge the directive and the use of Article 118a.
The text of the draft directive, as agreed, focuses far more firmly on health and safety matters. The agreement that we reached addresses the vital anxieties that we put; and therefore we shall not be challenging the directive in the European Court of Justice, if it is adopted in its present form. I should stress that the United Kingdom's challenge to the proposed directive on working time will enable the issues of principle in Article 118a to be ventilated fully. We believe that that will be sufficient.
The House will be aware that there was much discussion at the Council last week, and that it reached broad agreement. I shall describe that more fully in a little while. The essential point is that on the major points in the proposed directive where it would have conflicted with our own approach we shall be free to continue that approach.
Our prime concern must of course always be the best interests of the young people themselves. We must take account not only of their health and safety, but also their social and educational development and their preparation for adult life. Ultimately, our aim is to help them realise their full potential and make full use of all their talents and abilities.
The protection of children and young people in the United Kingdom has a long history. I do not believe that I need to review it now. It runs from Lord Shaftesbury, through the Factories Acts, factory inspectors and other legislation right up to the Health and Safety at Work, etc. Act 1974 and beyond. We believe that we have one of the most effective and admired systems of health and safety protection in the world.
In relation to children—by which I mean those below the minimum school leaving age—we have long prohibited their work in factories, mines and quarries, construction, ships and road and rail transport. We do however see no harm, and much positive benefit, in permitting suitable light, non-industrial, work from the

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age of 13 upwards, always provided children's health and safety and their educational development is not compromised.
My noble friend Lord Pearson asked whether the under-13s could do odd jobs at present and would be allowed to do so in the future. Doing those types of odd jobs is not part of an ongoing commercial undertaking, and there should be nothing wrong in such a child doing such work. The wording of the draft directive takes us no further in that. I can assure my noble friend that my understanding is that he can continue to have his shoes cleaned by his children aged under 13, or whatever.
For young people above the minimum school leaving age (broadly speaking 16 and 17-year olds), the basis of our current legislation is to provide additional protection where there are specific risks greater than those to adults in the same occupation. Although I may have misunderstood him, I believe that it was the noble Lord, Lord Lewis, who said that he saw no need for such protection. I am sure that he will agree that there is a case for it where the risk to the young person is greater than the risk to an adult. For example, there are regulations on the work of young people involving potentially dangerous machinery, chemicals and other substances, and ionising radiation. Obviously, as all will recognise, that can affect a young person to a greater extent than it will an older and more mature person. That is of course in addition to the general duties of all employers under the Health and Safety at Work, etc. Act and the vigorous enforcement powers of the HSE.
We do not however see a convincing case for imposing special restrictions on young people's hours of work. Such restrictions may have been justified in the past, when the general system of health and safety protection for all employees was less developed; and when, moreover, the school leaving age was substantially lower than it is today. But the regulations that had been put in place became increasingly complex and outdated. They were difficult to understand, to enforce, or to justify on any scientific basis.
The noble Baroness, Lady Turner, referred to the point—although with no great enthusiasm—that in 1989 Parliament enacted a major reform of the existing legislation, retaining all protection for children below the school leaving age, and all the protection of young people above that age which the Health and Safety Commission advised was necessary on health and safety grounds, but repealing restrictions on hours of work and night work for which there was no health and safety basis.
There is no evidence to suggest that that reform of our legislation has had any adverse effects on the health or safety of young people. In so far as accident rates of young people are a guide to this (I appreciate that they are only a guide) not only have they not risen since 1989, but they have actually fallen. While we must never be complacent about such matters, there is no reason to believe that our current system of protection for young people is inadequate or that restrictions on their working time of the kind envisaged in the draft directive are necessary.
I come to the outcome of the Social Affairs Council itself. There were confusing reports of the outcome in
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the press. I ask noble Lords not to believe everything that they read in the press. I shall come to the points made by the noble Baroness, Lady Turner, in due course. The noble Lord, Lord Lewis, rightly said—I believe that he spoke for the entire committee—that they were too late for the event in that the Council had taken place before the House had had an opportunity to consider the report. My noble friend Lord Beloff and the noble Baroness, Lady Seear, pressed me to say why we were debating the report now when it appeared that it would be of little effect. It was not our decision that the matter should go to the Council now. It was in fact the desire of the Belgian presidency. My noble friend put a rather strange interpretation on Her Majesty's Government's action. We were not ignoring everything in the report and taking no note of the committee's work. We did take note of the report—and, as I shall show, it influenced last week's deliberations. I should he the last to decry the efforts and work of this committee.
I should like to stress that it is untrue to say that everything was agreed in advance, as the noble Baroness, Lady Turner, seemed to imply. Seine possible amendments had been discussed before the Council, but nothing had been agreed. The lengthy discussions in Council would not have been necessary had the amendments been agreed in advance. Moreover, some of the important changes were only threshed out in the Council itself. I do not believe that our Community partners would recognise the descriptions in the press reports to which I presume the noble Baroness was alluding. I repeat our regret to the noble Lord, Lord Lewis, the chairman of the committee, that the Council reached its decisions on this matter before today's debate. I must stress that we took full account of that report which influenced the outcome of the Council meeting.
The Government remain of the view that member states themselves are in the best position to provide protection, taking account of their own particular circumstances and traditions. It became clear, however, in the course of negotiations that a majority of member states felt committed by their adherence to the Social Charter to taking action at Community level.
Our partners have recognised the strength of concern in the United Kingdom about the impact of the directive on our different national approach to the protection of young people, and the need to take account of the principle of subsidiarity. Building upon that recognition, the Council agreed to make substantial changes to the draft directive to accommodate our principal concerns. I will mention three main points.
First, in the light of the committee's recommendations, my right honourable friend the Secretary of State emphasised the need for the directive to give some acknowledgment of the positive value of appropriate work by children, subject of course to necessary safeguards, as stressed by the noble Lord, Lord Lewis. The Council has adopted the suggestion of the sub-committee that that point should be incorporated in the preamble to the directive.
Secondly, the Council recognised that the directive as it stood would present some obstacles to the traditional practice of newspaper deliveries. I do not accept what

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was said by the noble Baroness, Lady Turner. Notably, it accepted that a requirement for two days' rest in every week would be unnecessary in such cases, and that a requirement of 14 hours' consecutive daily rest would be an obstacle to some children who deliver newspapers in both the morning and the evening. Those potential problems have been removed by an appropriate amendment.
Thirdly, the Council recognised the strength of our anxieties as regards unnecessary limits on daily and weekly work and evening or night work by young people above the school-leaving age. While our labour force survey statistics show that comparatively few young people work beyond the limits previously proposed, they would nevertheless have affected significant numbers of young people and would have involved a complex administrative burden on employers. As a result of the Council's decision, these provisions will not apply in the United Kingdom for at least four years following the date set for the implementation of the directive. At the end of the four-year period—at least six years from now—the Commission and the Council will review the arrangements and decide whether to amend them.
The noble Lord, Lord Lewis, alluded to the view of the committee that there is a significant level of illegal working below the minimum school leaving age in the United Kingdom and that the present laws, which date from the 1920s and 1930s, need to be updated, preferably through the implementation of the Employment of Children Act 1973. The enforcement of the law relating to children below the minimum school-leaving age is primarily a matter for local education authorities. They have the power to enforce not only the national framework of legislation but also to enforce their own by-laws which central government approve in the normal way.
As regards illegal working, it is for local authorities to take action if they have any concerns. Some local authorities may argue that their resources are inadequate; but it is for the authorities themselves to decide their priorities and to allocate the resources accordingly. We have no reason to think that, generally speaking, local authorities are failing to make and to act on informed and responsible local judgments.
In the areas where the Health and Safety Executive is responsible for enforcement—notably where children are found to be working illegally in industrial premises—I can assure the House that the policy of the executive is to take immediate and vigorous action in the first instance by excluding children from the workplace and, if necessary, by closing it. The matter is then reported for possible prosecution.
The noble Lord, Lord Lewis, the noble Baroness, Lady David, and others suggested that there is a need for further research into the extent and effects of children's work. We remain unconvinced that local authorities are experiencing problems with the adequacy or the enforcement of legislation. In our consultation with local authorities in connection with the draft directive, they have certainly not represented the issue to us as a significant problem. Therefore, it is to be expected that
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this will not feature high on the Government's priority list for further research, and it will certainly not be appropriate to divert what research funds are available from other much more pressing research on childcare and child protection.
I turn to the suggestion made by the noble Baroness, Lady David, that the 1973 Act should be brought into operation. The noble Baroness, Lady Turner, reminded the House that the Labour Government of 1974 decided not to implement that Act because of the resource implications for local authorities. Since then the vast majority of local authorities have brought their by-laws into line with the proposed content of the national regulations under the 1973 Act. We believe that the degree of standardisation envisaged by the 1973 Act has therefore largely been achieved. The advantage of by-laws is that local authorities may update them in order to take into account local circumstances and modern conditions. Therefore, we do not believe that it is necessary to bring the 1973 Act into force.
We made it clear from the outset that we see no need for this directive. I can assure the House that the vigorous presentation of our anxieties by my right honourable friend has succeeded in removing the directive's potentially most damaging effects. Moreover, the principle of subsidiarity has been taken into account in provisions which recognise the validity of the United Kingdom's approach to the protection of young people. The draft directive will now go forward for formal adoption of a common position by the Council and then for further consideration by the European Parliament.
I conclude by thanking all noble Lords who took part in the debate, in particular those who took part as members of Sub-committee C, for their careful analysis and comments which, as I have tried to make clear, greatly assisted Her Majesty's Government in their endeavours to present the United Kingdom's concerns to our Community partners.
4.45 p.m.
Lord Lewis of Newnham: My Lords, I thank the Minister for his full exposition of the position in which we find ourselves. Today's debate has been a fair representation of the variation of views which the committee received. I am still concerned that the Government are not prepared to look in some detail into the enforcement side of the problem. I believe that it is dangerous to have laws and not to be concerned with their enforcement. The sentiments voiced in the House make it clear that there is considerable anxiety about the employment of young people and children. If that is true it is a natural consequence to see how the law is being enforced, but I can readily see that the Government are not prepared to take that view.
I thank noble Lords who have spoken in the debate. All fairly represented the various facets of our experience in the committee. The problem as regards subsidiarity, with which the noble Lords, Lord Beloff and Lord Pearson, were concerned, taxed us. I fear that this is by no means the last time that the House will be concerned with it. On one occasion the noble Lord, Lord Bruce of Donington, kindly offered to make available to

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me copies of the Edinburgh discussion on subsidiarity. For about 30 seconds I thought that I understood it but after that it was as elusive as will-o'-the-wisp. I still do not understand it and would love to have an insight into the issue.
The noble Baroness, Lady David, made her position clear. There is no doubt that the imposition which enforcement will place on local authorities will be great and will certainly cost money. I found most poignant her sentiments about the situation as regards school, education as a whole and work.
It is clear that the noble Baroness, Lady Seear, and I do not agree on many of the basic issues. I do believe, however, that the planning of experience at work is essential and I do not believe that there would have been disagreement with the sub-committee on that issue. However, the suggestion of 12 to 15 hours did not reflect the way in which the committee was looking at the programme.
I turn to the comments made by the noble Baroness, Lady Turner of Camden. We dealt again with the problem of Article 118a and subsidiarity. As regards the 1973 Act, it is one of those problems which comes and goes. It is interesting to note that the appearance of a work permit for children was as a result of the non-implementation of the 1973 Act. It was put forward in that Act as an alternative procedure until the Act was introduced. It is one of the primary problems which exists in such a form of enforcement.
Having said that, I thank your Lordships for your considerable attention on this occasion.
On Question, Motion agreed to.

Livestock Premium Quotas
4.50 p.m.
Lord Hamilton of Dalzell Lord Hamilton of Dalzell rose to move to resolve, That this House considers that the Sheep Annual Premium and Suckler Cow Premium Quota Regulations 1993 (S.I. 1993, No. 1626) do not contain adequate measures, either to tackle the adverse economic effects which arise from the transferability of quotas away from particular holdings, or to protect vulnerable livestock rearing areas and the communities that depend on them; and therefore calls upon Her Majesty's Government to introduce further measures, sufficient to provide full redress for these adverse consequences of livestock premium quotas.
The noble Lord said: My Lords, I have an interest in this debate both as a landowner and a member of the Country Landowners' Association, which supports this Motion.
At the time at which I originally tabled the Motion for debate I was obliged to pray for an annulment of the statutory instrument implementing the regulations on sheep and suckler cow premium quotas. Due to a number of days' legal proceedings during the Recess, the time has run out for a Prayer and I am grateful to the Government for allowing time for this important debate to take place as an ordinary Motion.
I have also changed the substance of the Motion. It now calls for the Government to take further measures
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to correct deficiencies in the operation of those regulations. As a result, the Motion before your Lordships will observe what I am told is the tradition of the House by not seeking to throw out a statutory instrument. It will ensure also that it cannot give rise to a retrospective effect on those who may have already carried out transactions in quota.
It follows from that that, in spite of motives which some of your Lordships may have attributed to me for initiating the debate derived from the part that I played in another debate in this House which took place before the Recess, this Motion does not challenge the principle of applying quotas to agricultural production. The British Government have fought against them in Brussels but their opinions have not been taken by the other countries in the Community, and that it is a fact of life which we must sadly accept.
This debate is focused on the particular problems created by the arrangements made by our Government for applying premium quotas to sheep and stickler cows. But it is of far greater importance than that. It will set the precedent for measures to implement further quota regulations which could very well follow.
Why is it that I ask your Lordships to conclude that the Government's regulations are inadequate? The starting point is that a producer is eligible for a maximum premium payment according to the number of sheep or suckler cows which he happened to have and registered—at the end of 1991 for sheep. The arrangements for suckler cows arrived on my desk this morning and appear to be similar in principle but with a registration date at the end of 1992.
The number of animals which can be produced is dependent upon the amount and quality of land, in hand or tenanted, available to the producer. Therefore, I argue that the value of the quota for premium now payable can only have come from a combination of capital assets, incorporating both livestock and land.
The producer under those regulations may sell that quota. Where there were two assets needed for profitable livestock rearing, now there are, in effect, three; namely, land, livestock and quota. Anyone wishing to farm land from which quota has been removed will have to acquire quota or bring it with them. The value of the contribution of land to the equation has been diminished. The only way in which the land value will not be reduced is if there is an economic alternative to livestock rearing on it. In both uplands and lowlands the flexibility of farmers is becoming ever more restricted by set-aside, milk quotas and planning designations, so these alternatives may be few and in many cases non-existent.
This problem becomes an issue between landlord and tenant only because an owner-occupier has less incentive to sell his quota than his tenant because, as I have just explained to your Lordships, the sale of the quota has the effect of creating a reduction in the value of the land. An owner-occupier will make little or no net gain by selling, whereas this measure is a direct inducement to encourage tenants, particularly elderly ones with no succession, to take their money and retire, partly at the landlord's expense.
We claim, therefore, that there are five detrimental effects in the measure as it now stands. First, it devalues land and, therefore, the landlord's assets, as I have explained. Secondly, the ability to capitalise quota rights means that substantial sums will be realised and, by their nature, are likely to leave the industry. A thousand sheep on a less favoured area have premium rights with a capital value of between £40 and £45 per animal or £40,000 to £45,000—less the 15 per cent. syphon if the quota is sold to anyone other than the landlord or incoming tenant. The potential for a drain of money out of agriculture seems to run against government policy over many years when both Conservative and Labour Governments have used substantial sums of taxpayers' money to maintain rural employment and to prevent the emigration of the rural population to the towns.
Thirdly, there is the possibility—I might say likelihood—that quota rights will move away from some marginal areas where conservation goes hand in hand with grazing. There are wild plants which will survive the grazing of animals, particularly sheep, but not the mower; and some that actually require the grazing of sheep to survive. This measure will not help ecology.
Furthermore, the loss of income arising from reduced rents on new tenancies will strike a further blow at places where there are obligations placed on their owners to maintain the heritage. It will bring closer the point, already reached by some when those liabilities will exceed the assets available. This measure will, in my opinion and doubtless in the opinion of many of your Lordships who are faced with this problem and are aware of the perilous state of the national heritage entrusted to their care, give rise to a further deterioration in what they hold, deemed to be in the national interest.
Fourthly—and this is an important point in this debate—the Government's regulations on these quotas will, whether or not they wish it, guide landowners in decisions on whether to let land in the future. Because this legislation will be seen as the precursor to further measures, it will influence decisions across the range of farming activities.
It is, therefore, not only landowners who should be concerned. It is also those enterprising young men and women who need tenancies to become the nation's future farmers. If owners will not let, new entrants cannot rent.
The Government, on their announcement of the shape of landlord-tenant legislation, only about a fortnight ago reiterated their desire to see more land let. There is little point in reforming the framework of the legislation if at the same time the Government pursue policies which will discourage owners from letting at all before they even look at the new legislation.
Fifthly, following the May 1992 CAP reform settlement, in November last year the Community agreed to insert a provision—Article 13—into EC law requiring member states to adopt measures to tackle problems arising when the producer is not the owner of
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the land. That covered the transfer of quotas or other equivalent actions. It was a victory for the British Government in Brussels.
However, the Government now say that they did not win after all but lost. They recognise the adverse effects of transferability of quota rights on land but claim that under their interpretation of Article 13 they can do nothing about it. The issue is the subject of a judicial review initiated by the CLA.
Clearly this House cannot resolve the legal arguments of the judicial review in this debate. But it is relevant to note that the Commissioner for Agriculture, Rene Steichen, has said that Article 13 was agreed expressly to allow the United Kingdom to solve the problems created by having the most highly regulated landlord tenant system in Europe.
I have a letter from M. Steichen to my noble friend Lord Inglewood in which he concludes:
"Thus, it is clearly a matter for Member States to act in the area of problems arising between producers who own quota rights and the owners of the land they farm".
That is from the horse's mouth.
I would ask your Lordships to note too that the Council of Ministers has also stated that the resolution of landlord-tenant issues is a matter for member states. In my opinion this is a correct and proper view of the purpose of subsidiarity which I heard many noble Lords claim to be the jewel in the Maastricht Treaty. Why are the Government denying it?
In looking at the possible solutions to this problem, I am of the opinion that a compensation mechanism would be the most practical cure for it. It would mean that, where a landlord could prove that his land had been devalued by a loss of quota rights, he would be compensated by being entitled to claim a proportion of the proceeds of their sale.
I do not, however, claim a monopoly of wisdom, and doubtless noble Lords will have other suggestions to make. I can accept that a guarantee of replenishment of the national reserve for let land left denuded of quota would serve to neutralise the negative effects of the present regulations. I shall listen with interest to any ideas your Lordships may put forward.
In any event, I hope that the House will agree that the regulations as they stand pose real problems. They are problems which the Government themselves recognise and which will have far-reaching knock-on effects. This Motion is designed to make the Government address these problems and I commend it to your Lordships' House. I beg to move.
Moved, That this House considers that the Sheep Annual Premium and Suckler Cow Premium Quota Regulations 1993 (S.I. 1993, No. 1626) do not contain adequate measures, either to tackle the adverse economic effects which arise from the transferability of quotas away from particular holdings, or to protect vulnerable livestock rearing areas and the communities that depend on them; and therefore calls upon Her Majesty's Government to introduce further measures, sufficient to provide full redress for these adverse consequences of livestock premium quotas.—(Lord Hamilton of Dalzell.)
5.2 p.m.
Lord Chorley: My Lords, I start with a confession: I am no farmer. Accordingly, I am somewhat surprised to find myself speaking immediately after the noble Lord, Lord Hamilton of Dalzell, who so comprehensively and ably moved this Motion. Indeed, many distinguished farmers are due to speak after me. I would not have put my name down to speak on this undoubtedly important but, I am sure we all agree, rather technical issue if it were not for the difficult problems which it raises for the organisation of which I have the privilege of being chairman. I refer to the National Trust.
Your Lordships may be aware that the trust owns nearly 600,000 acres of land in England, Wales and Northern Ireland. Much of that land, which we have acquired over the years for its landscape and amenity value. is upland country. It is hill farming and sheep country. We have, for example, 1,200 tenant farmers and nearly 100 farms in the Lake District. So, the good economic health of the upland sheep farmer is of the utmost importance to the trust.
I do not say that particularly because of the rents that they bring in—important though they are—nor because of their importance to the rural economy—although that is extremely important—but because of a further factor, the sheep themselves. Our upland landscape, the landscape of Wordsworth and the lakeland poets, has been shaped over the centuries by the sheep. Without sheep, the landscape would revert to scrub because sheep are natural lawnmowers. Therefore, any measures which wittingly or unwittingly endanger the future of sheep farming are of direct concern to the trust. It is in that context that we are concerned about the effects of the quota regulations on tenanted farms and on conservation grazing.
Established tenants will generally have received sufficient quota, but the tenants who have taken farms since mid-1991 and those who have been allocated extra land on the splitting of a vacant holding are in difficulty. The main problem concerns the letting of vacant holdings. The capital required by an incoming tenant is considerable and has to cover ingoing valuations, purchase of livestock and machinery and working capital. The hill farmer will be required to purchase or rent the hefted flock. The additional cost of leasing ewe premium quota at £10 to £12 per ewe or purchasing it at £40 to £50 is prohibitive and there is a real fear that hill farms will be increasingly difficult or impossible to let. The noble Lord, Lord Hamilton, referred to that.
The trust devotes considerable resources to upland management for our statutory purpose of conservation. In the Lake District alone, we spend about £3.5 million a year on conservation work. The trust, as landlord, owns the hefted flocks of Herdwick sheep which are leased to tenants. These flocks are an important part of the Lake District scene and, as I have explained, they are important for conservation. But their existence is threatened by the quota system because, although the flocks are owned by the trust, the quota necessary to claim the premium has been given to the tenant. I find that extraordinary.
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An outgoing tenant will sell or lease his quota. It would seem logical to transfer the quota to the incoming tenant, but any quota that the incomer purchases will be counted against any allocation that he may get from the national reserve, thus providing a disincentive to keeping the quota on the farm.
It might be argued that an alternative would be for the trust to buy the outgoing tenant's quota and lease it to the incomer. But the regulations prohibit holding of quota by non-producers for more than two years. The trust has also been designated a single producer for the whole country. That bears hardly on us 'because any premium claims in excess of 500 ewes attract only 50 per cent. of the premium. Since the trust already manages some 2,000 ewes in-hand, any additional ewe premium claims will reduce even further the amount of subsidy received. This seems most unreasonable.
What are the options for rectifying these weaknesses? Let me say right away that I agree with the noble Lord, Lord Hamilton, and that we recognise that there is little prospect of altering the EEC regulation to vest quota in the owner rather than the producer. However, the definition of a producer could perhaps be interpreted more liberally so that non-producers could hold and lease quota for the purpose of ensuring that sufficient quota was available to enable a farm to be let. We believe that this would be justified on general grounds, but there is a further justification in that it would help ensure that areas of conservation value would continue to be grazed.
The Country Landowners' Association arid the Royal Institution of Chartered Surveyors are pressing for a system of compensation to landlords for the devaluation of the holding where quota is transferred away. I have great sympathy with this claim but, as far as the trust is concerned, the more important point is to ensure that sufficient quota is available to tenants. Our conservation objectives are more important to us than diminished land values.
A better suggestion, I would suggest, would be for a larger national reserve so that all legitimate claimants receive a full allocation. Incoming tenants would thereby get sufficient quota for the proper farming of the holding. To get a larger reserve, the percentage put into the reserve when quota is transferred away from a farm, which I understand is currently 15 per cent., needs in our view to be increased to at least 25 per cent. Similar rules should apply to leased quota.
As quota only goes into the reserve when it is transferred away from the farm, the higher the percentage into the reserve, the greater will be the incentive to retain the quota on the farm. An adequate national reserve will bring down the price of quota so benefiting new entrants and reducing the windfall gain to existing producers.
Finally, I understand that this whole problem has been, and continues to be, exacerbated by administrative delays. We have experienced this ourselves over a hill farm which we have been trying to let for some months in the Lake District.
This is an unsatisfactory state of affairs. It is inequitable as regards the landowner; it is inequitable as regards our hefted flocks; and, perhaps most

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importantly, it bears heavily on new entrant farmers or those seeking to enlarge their farm. Moreover, much of this takes place on land which is today economically right at the margin. It probably has no other use except for forestry, yet much of this land is of the highest conservation value and it depends on grazing for that conservation and for its appearance. It bears heavily on the trust financially, but perhaps much more importantly, because of the work we do. I hope the Minister will take on board not just the fact that we have problems with equity here and of an economic nature, but also the great importance of the uplands to landscape conservation and the fact that there are a number of what appear to me to be relatively easy ways of dealing with this matter.
5.10 p.m.
The Earl of Swinton: My Lords, personally I do not much like sheep. When I farmed them myself I always found that if they had anything wrong with them the first thing they did was to lie on their backs, flap their feet in the air and die. They seemed to put up little natural resistance. They also had some nasty personal habits. I have never known anything which spent more time on doing what you or I do a few times a day than they did. They also seemed to do it in the dirtiest possible way, with the maximum amount of mess. I also do not like seeing sheep much when I visit moorland. I do not like to see such land covered with sheep. However, I like the end product of sheep and I like the people who produce them; namely, the hill farmers. There is a place for them on the hills as one cannot do anything else with some hill farms other than farm sheep. Provided that farmers do not put too many sheep on the open moors, I am all for them farming up there.
The matter of quotas is proving a dangerous threat to the livelihoods of the people I have just mentioned. The term "quota" in the context of this debate is probably a misnomer. After all milk and potato quotas give one the right to produce and there are penalties if one overproduces, but beef and sheep quotas give one the right to receive a subsidy for specific production. There are no penalties for overproduction. However, if one does not achieve the quota, the subsidy is simply not paid. It is acknowledged that sheep farming on the uplands would be totally uneconomic without subsidies. Without a sheep quota, therefore, an upland farm ceases to be an economic concern. When therefore a farmer, particularly a tenant farmer is tempted—the temptations are great—to up sticks, cashing in on the quota, the damage done to the farm which that tenant leaves can be overwhelming.
I shall elaborate on two cases from my own estate which may provide examples of what I fear. My first example concerns a hill farm on the edge of the moor of about 334 acres which became available to let because of the retirement of the tenant in April 1993, immediately after the regulations we are discussing now had come into effect. The farm in question was rather a good hill farm but I only received three offers from future tenants, of which two were totally unsuitable. I am sure this occurred because of the threat of the sheep
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quotas which hung over farmers at the time. Luckily the only suitable offer came from an existing tenant who happened to be the neighbour and son-in-law of the retiring tenant. This led to a happy outcome which only resulted because the retiring tenant wanted to help his son-in-law by leaving the sheep on the farm. I am sure that if these extremely fortunate circumstances had not occurred, I should not have been able to find a tenant for that farm.
The second example concerns a similar hill farm of 296 acres which becomes vacant in April 1994. The tenant on that farm took over the tenancy from his father in 1991 and has decided to buy his own small-holding and remove the stock and the quota. By this time the beef quota will be in place as well as the sheep quota and it is estimated that it will cost an incoming tenant some £33,000 to purchase the relevant quota. This item is on top of the tenant's normal capital which is required for the purchase of live and dead stock. The figure of £33,000 is equivalent to £111 an acre, or, if the amount is borrowed from a bank, it is equivalent to a rent charge of about £11.14 an acre. One can compare these figures to the current rental value of the farm of £21 per acre. The charge on the quota of about £11.14 is over 50 per cent. more than the current rental value.
In the meantime the young farmer who has been a tenant for a mere three years leaves the holding with a golden handshake of approximately £33,000. I do not criticise the young man for doing that. I say good luck to him as he is taking advantage of a windfall, and why should he not do so? But surely these regulations were designed to control supply and not, as in this case, to transfer a windfall profit for the benefit of tenant farmers who can then simply remove it and leave the holding. I am sure that when my noble friend Earl Howe replies to the debate, he will make much of the disincentive posed by the 15 per cent. that producers have to surrender to the national reserve if they transfer quota away from the holding. A 15 per cent. tax on a windfall profit really is an enormous disincentive, is it not? When I think of some of the deals I have done in my life, I would have been jolly happy to pay a 15 per cent. tax. I am certain that many noble Lords would agree with me. A disincentive of a 15 per cent. tax does not even equal the current rate of value added tax. I do not believe that that is much of a disincentive.
I believe my noble friend will also mention ring-fencing of less favoured areas. I am afraid that those points also do not constitute great disincentives as the areas we are talking about are so large. I am, of course, worried about the drop in rental value of hill farms and I gladly declare this interest to your Lordships. My next sentence may make me sound rather a prig but that is not the case. I am far more worried about the general effect of the quota on the uplands than about how the loss of rental value will hit my pocket, because I believe the quota system will produce alarming effects on hillside farms. I believe some of those farms will be badly farmed simply because the tenant does not have the money to farm properly when he has paid for his quota. What is worse than that, I fear some farms will not be farmed at all. I am extremely worried about the environmental damage that such a

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course may result in. Some of that damage will occur in the loveliest areas of our land, in the national parks and areas of outstanding natural beauty.
I believe social damage will also occur when farms are not farmed in struggling hill-farming communities as local shops and post offices will suffer. The whole position will be simply appalling. I am alarmed at this position and I beg the Government even at this late hour to reconsider this matter to see whether they cannot do something about it. I could not support more strongly the Motion of my noble friend Lord Hamilton of Dalzell.
5.18 p.m.
The Duke of Somerset: My Lords, all those concerned with the well being of agriculture will thank the noble Lord, Lord Hamilton of Dalzell, for initiating this debate, for among other points it touches deeply upon the future of the landlord and tenant system in this country. It concerns the legitimate interests of both parties in implementing CAP reforms. Quotas are increasing their control over different enterprises and cereals may become the next target and these regulations a precedent. Many noble Lords have argued in this Chamber in the past about the dangers of supply management but when it has a direct effect on the value of land we must start to ask various questions.
I acknowledge my interest as a landowner of let farms in the lowlands, but I feel that the future of land tenure rises above that personal interest. For some years it has been difficult to find future farm tenants with sufficient capital. Any proposals which add to initial capital costs, such as the purchase of livestock quotas, will make it that much harder, if not impossible, for young men to apply successfully for a tenancy. Under these plans new entrants will buy their CAP support in advance.
The CAP reforms of last year were not intended to discriminate between landlord and tenant. Even though the Commission is generally regarded as being slightly anti-landlord, the new regulations include a provision allowing individual member states to solve such problems. Indeed, I believe that MAFF negotiated hard for that right. As we have heard, the right was confirmed in the European Parliament in April and by the agricultural commissioner in May.
I should make it clear that I am referring to loss of land value where the tenant has sold the livestock quota and the farm is unsuitable to some degree for other enterprises. That severely limits the options of an incoming tenant and must therefore affect the farm's rentable value. Therefore, I am speaking only of assessable and provable loss.
MAFF takes the view that it is not legally entitled to compensate for such loss, despite my previous point concerning its negotiations and despite a judicial review obtained by the CLA and legal opinions contrary to that of MAFF. Indeed, I am told that the Government have said that they would not wish to introduce further measures even if it was resolved that they had such a power. Perhaps when he winds up the debate the Minister can tell the House whether that is true. If we find that legislation for the general reform of the
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landlord and tenant system so long expected is not included in the forthcoming Queen's Speech we shall perhaps have to presume that this Conservative Government are no longer a supporter of the system.
I hope that MAFF will try to keep the hearing of the judicial review in the High Court in London, in the interests of a speedy resolution and of lower costs, and will not encourage procrastination in the European Court of Justice.
MAFF has instigated a national reserve and a siphon system, which is good. However, even MAFF admits that there is no guarantee that a particular holding can he allocated a new quota when the original quota has been sold. Therefore, the system will still fail. If MAFF could provide such a guarantee many problems would disappear.
There are other important reasons that further measures are necessary. The 1990 report of the Select Committee on the European Communities on the Future of Rural Society alluded at length to the importance, economically and thus socially, of keeping livestock on the hills of LFAs. Environmentally, it is vital to have some sheep on the hills. Therefore, it is a pity that the broadly placed ring fence around the LFAs, as outlined in these regulations, will not have sufficient effect in protecting marginal hill areas. That is because quotas will still be transferable, for example, between Dartmoor and Exmoor, or from poorer to better land within the LFAs. That report is still valid. It points out the human cost involved where viable agriculture is forced to cease as a result of changes in the rules.
Perhaps I may end by asking two questions of the Government. First, am I right in thinking that there should be no change in rents as a result of the introduction of quotas? If that is the case, what is the position where a tenant sells the quota but remains in occupation? Secondly, why did not the Government take up the option of operating a national pool for transfer of premium quotas, thus leaving quotas with zero value and obviating all the stress? That option was available in the 1992 CAP reforms.
It is clear to me that the Government have made a mistake with the statutory instrument and that the UK has ended up with the worst of all worlds. Therefore, I hope that they will take notice of this Motion and that all noble Lords will support it.
5.25 p.m.
Lord Middleton: My Lords, although I do not own any agricultural land, I am paid by a company which owns land, some of which is farmed and some of which is let to farming tenants. To that extent I have an interest in Statutory Instrument No. 1626.
By now it will be clear from what other noble Lords have said that the root of the difficulties arising from the sheep and beef cow premium quota regime lies in the decision by the European Council of Ministers to allocate quotas not to land but to individual producers. As we have heard, quotas are valuable and can be bought and sold. My noble friend Lord Hamilton told us that the current price for a sheep quota in LFAs is £40 to £45 a head. I agree with my noble friend Lord Swinton that it must be very tempting for a farmer in

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financial difficulty or at the point of retiring to cash in on that windfall gain. The harm that will result was described by my noble friend Lord Hamilton: the drain of capital from agriculture; social and environmental damage in the uplands, to which the noble Lord, Lord Chorley, referred; the devaluation of land bereft of the right to receive payments for livestock; and the undermining of the landlord and tenant system.
The Government cannot be held responsible for the decision of the Council of Ministers to allocate individual quotas. I know that they opposed it. They were well aware of the problems that would arise and, greatly to their credit, expended considerable effort in achieving the inclusion of Article 13 in the EC legislation. That article was referred to by the noble Duke who has just spoken.
Article 13 provides that member states shall take appropriate measures to deal with problems arising from the transfer of a quota or other equivalent actions when the producer is not the owner of the land. The Government rightly foresaw the problems that would arise; they succeeded in having Article 13 included; and they admit the existence of the problems which they foresaw. Therefore, it is difficult to understand why they now say that they have no power to intervene and to take appropriate measures by invoking Article 13.
The legal argument on which the Government base that refusal seems to me to be a poor one. As we have heard, it is to be tested by means of judicial review, which I understand is to be in January. Therefore, this is not the time to examine the Government's legal case. However, as I understand it, and as no doubt we shall hear when my noble friend the Minister replies, in essence they say that diminution of land values takes place at the time of allocation of a quota and not at the time of transfer of a quota. Therefore, they say, they are powerless to invoke Article 13, which they say allows them to act only to alleviate problems arising out of transferability of quotas.
I cannot for the life of me see how in itself the introduction of quota (which merely gives a right to an occupier to receive premium on his sheep which are already there) can alter the manner of his farming, the value of the land he farms or the rent which it should command. What may alter its value is when he gets rid of his quota so that he or a future occupier cannot obtain sheep premium. Depending upon the location of the holding and the availability of alternative enterprises, such impact could range from 0 per cent. to 50 per cent. of the capital value.
What form could the appropriate measures required under Article 13 take? My noble friend Lord Hamilton referred to compensation but only where the loss in the value of land can be proved. Compensation would go no further than making good any loss sustained. It could not exceed the value of the quota. Yet the Government are making extraordinarily heavy weather of that aspect. I dare say that we shall hear something about that later.
So long as I have had experience of agricultural holdings legislation, and well before that, provision has always been made at the end of a farm tenancy to weigh up, on the one hand, what improvements have been
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made by the tenant to a landlord's assets; and, on the other hand, what damage may have been done. The end of term valuation is performed by professional valuers acting for each party who finally agree figures so that a tenant is compensated for any improvements to the holding and dilapidated for any damage. For instance, he might diminish the value of the holding by destroying gates or fences or by various kinds of neglect. Valuers have long been accustomed to assessing damage to a holding so as to arrive at a dilapidations figure. I should have thought that it would not be too difficult for them to assess diminution of value following a removal of quota. Yet the Government appear to be obsessed by difficulties which they envisage in working a compensation mechanism. I believe that their worries are groundless.
It may be that judicial review will confirm the Government's view about their power to act under Article 13. I do not think that it is likely, but it may happen. However, the Government might then say that that rules out compensation. What else could be done to mitigate the admitted difficulties? Those difficulties are admitted by government. Already they have established a national reserve of quota, as we have heard; and there is the siphon whereby on disposal of quota 15 per cent. of it goes into that reserve. The Government intend to use that reserve to provide quota for incoming tenants to replace that which has been sold off as let land.
But there are other competing uses for which the reserve is required. The Government admit that there will not be enough in the reserve to go round. A guarantee of priority for the let sector would be helpful. However, only a guaranteed undertaking that quotas transferred from let land will be replenished from the national reserve would remove the adverse effect of those regulations on that sector.
The Government have sought to limit the migration of quota away from the uplands by means of what they call less favoured area ring fences. That would stop quota going outside a less favoured area. However, there could still be marginal upland areas denuded of quota, and therefore almost certainly of sheep as well, to the detriment of the environment, possibly leading to overstocking lower down the hill and further environmental damage. The ring fencing could probably be more tightly drawn.
I support my noble friend in asking the Government to introduce further measures such as those that I have suggested in order to redress the adverse consequences of marketable livestock quotas.
I do not know whether my noble friend Lord Hamilton will press this Motion to a Division. Clearly that will depend upon what kind of reply he has elicited from the Minister. First, I have heard it said that a vote against the Government on this Conservative Back-Bench Motion would be disloyal. But it is hardly a party matter. It is a matter of administration. There are precedents where a Conservative Government have, through an order, created an undesirable administrative situation which has been pointed out to them by their own supporters. In this specific case I understand that the matter has been under discussion with government

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for well over a year, with no satisfactory result. The Government are keenly aware of the problems but appear to be paralysed and unable to solve them.
Secondly, I have also heard it said that a vote against the Government would be damaging to agriculture in general and to the landlord and tenant system in particular. It is the strong belief of my noble friend and those who support him that what will cause damage is the way in which the Government, through the order, are implementing the EC legislation. Any measures which will mitigate that damage will only benefit agriculture and the landlord and tenant system and prevent tension between landlord and tenant.
Thirdly, I have heard it said too that such a vote would be bad for the House of Lords. It is said that it would be harmful to this House to press the Government on what will be perceived to be a landlords' interest. But the order affects the whole spectrum of those in agriculture, including landlords and tenants. It affects others living in the countryside too. As we have heard, environmental and social issues are involved.
If one were to pursue that argument further, Members of this House who own land should therefore be disqualified from debating or legislating upon any agricultural matters where agricultural holdings law is involved. I should have thought that that would go far further than the ordinary rules and conventions about Peers' financial interests. It would in effect be a gag on a particular category of Members because it might be thought that these were still the days when landed interests exerted influence upon government. That perception is 100 years out of date and I am very surprised to hear it put forward.
Therefore after hearing the debate and after listening to the Government's case, if my noble friend is still dissatisfied, then I would follow him into the Lobby with a clear conscience on all those three points.
5.38 p.m.
Lord Lyell: My Lords, we are all grateful to my noble friend Lord Hamilton of Dalzell for giving us the opportunity to discuss this problem today. Like many other Members of your Lordships' House, I have to declare my interest, first, as a producer, secondly, as a landlord and, thirdly, as a member of one of the organisations which has showered noble Lords with advice.
My noble friends Lord Middleton and Lord Swinton referred to the fact that the quotas that we discuss today are the right to receive a premium as opposed to quotas that we have already had on milk. The quotas that we discuss are not problems of the Government's making. The Government merely pick up the difficulties.
The concept of tradable quotas has been referred to in one of your Lordships' sub-committees. Professor Tangemann referred to bonds. That might be a solution. Perhaps my noble friend on the Front Bench will take that into consideration in the future, although not this afternoon.
The consistent line running through the remarks made by all noble Lords this afternoon is the extra cost on existing producers in areas which are already somewhat handicapped. In Scotland, we call them
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"disadvantaged" and "specially disadvantaged" areas. The complications, not just financial but administrative, on any producer or landlord with problems, let alone a producer or landlord who wants to expand his operation or enter an operation, have an enormous effect on finances. That point was well put by the noble Lord, Lord Chorley, who, I believe, was and still is a distinguished chartered accountant, and I took on board his thoughts which had particular relevance.
The sums which have been mentioned are more marked in the hills than they would be on a comparable holding outside the less favoured areas, perhaps in arable areas. That is well known to many of us, particularly my noble friend the Captain of the Yeomen of the Guard, sitting on the Front Bench (the Earl of Strathmore and Kinghorne). He and I both know the problems in Angus and several Members of your Lordships' House here this evening come from Angus.
So far as I am aware, on the figures produced in paragraph 6(1) of the regulations, if a producer has 500 ewes outside a less favoured area, on a transfer he will lose the right to obtain a premium on 7.5 ewes. If there is a second transfer, as my noble friend Lord Swinton mentioned, he loses 27 per cent. of the quota. In the less favoured areas that is serious enough, but in the specially disadvantaged areas, mentioned on page 7 of the regulations, that is a particularly harsh handicap.
Another side to the point put by the noble Lord, Lord Chorley, was that under paragraph 6(1) the "siphon"—which I believe is the technical name—might be raised to 25 per cent. That would accentuate the problem.
I have two questions for the Minister. First, I do not wish to go deeply into the definition of "holding" which is in the regulations, but would I be right in thinking that a tenant in a less favoured area who gives up, sells or moves from his holding of land will lose 15 per cent. of the value of the quota which he might receive through the siphon mentioned in paragraph 6(1)? However, if the tenant moves to another holding in the same area—quoting the example given by my noble friend Lord Swinton—he would not lose any quota through the siphon. Am I right in thinking that that is the case? If so, then the former holding of land is effectively sterilised. The producer on the former holding or the landlord will have to buy or somehow acquire a quota.
That has been the consistent line through the debate and if I am right, it is a harsh penalty in areas which are already somewhat handicapped. Perhaps a plain swap could be negotiated. However, in any case, the new producer will have to bring the quota with him or he may be required to buy it. In any case, it is a new overhead in agriculture, which is already handicapped. For that reason, I should be interested to hear what the Minister has to say.
Thirdly, in paragraph 9 on page 4 of the regulations there is what is classified as "Transfers and leases between sensitive zones". Will my noble friend confirm that paragraphs 9(1) and 9(2) will provide the protection that my noble friend Lord Middleton sought over leakage from upland to the more marginal areas right

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down to within 100 yards of what is delineated as less favoured areas? One might be able to turn them into arable areas with a little effort.
If the ring fences that have been mentioned, and which one hopes will work through the regulations, are not adequate, there will be an additional factor in the transfer of quota from the upland areas. That is not the intention of the Government. I believe that the intention of the Government and the Commission is that the quota should remain in the hills and not be transferred right down to the margins of the less favoured areas.
My noble friend Lord Hamilton hoped that the ring fences would work. I hope that they will be able to, without undue dispute and argument. This afternoon we have heard pretty strong arguments and I think that I am the first Scot to speak in the debate, although there are three or four more. When noble Lords come to hear my noble friends, they will realise that I have been extremely moderate and I look forward to hearing what my Scottish friends have to say. I am grateful to my noble friend Lord Hamilton of Dalzell, a Scot in exile, and look forward to what the Minister has to say.
5.45 p.m.
Baroness Masham of Ilton: My Lords, I thank the noble Lord, Lord Hamilton of Dalzell, for moving this Motion. I must declare an interest as I am a producer and a sort of tenant, with my noble kinsman Lord Swinton being the landlord. Unlike my noble kinsman, I like sheep, for the good reason that their wool keeps us warm.
I think that I am the piggy in the middle and it is because of that that I am grateful to the noble Lord for giving us the opportunity of airing some of the problems surrounding the sheep quota. As problems are here for solving, I hope that the Government will succeed in finding a solution to make the new quota system more fair to everybody. As this Chamber is for improving legislation, I hope the debate will have that effect on the matter before your Lordships this evening.
I have a flock of sheep at the moment without a quota. I know I speak for many people who have had to contain their frustrations over the lack of information coming forth about the appeal system of the sheep quota and then the rush to fill in forms, with only a few days' or weeks' notice.
As the base year was 1992, I shall try to explain, as an example, how complicated the situation has been and still is for some of us tenants who took over land which comprised the three farms which had been farmed by my noble kinsman. When he gave up farming on 1st November 1991, the quota was allocated automatically only to those who claimed premium in 1991 and 1992. The tenants concerned, with me, could not claim in 1991 as they did not take over their holdings until November. The rules regarding taking over the previous producers' quota apply only if one takes over or inherits the entire holding. So a problem arose.
It is totally uneconomic to have a commercial flock of sheep without the support of the annual sheep premium, which is paid only if one has a sheep quota. Most sheep farmers who have not yet received any
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quota have supported their flocks from their own resources throughout 1993, living in hope, as information dates were repeatedly postponed. This dilatory action on the part of the authorities will cost unsuccessful applicants £20, £30 or £40, or whatever the ewe quota is, through no fault of the farmer's.
Do the Government really want farmers who do not receive a quota to plough out their grassland, where possible, for arable crops which are already in surplus in the European Community, where lamb meat is still imported from the rest of the world? In my case, there are eight other tenants involved. There must be many throughout the country with complications. An article in the Yorkshire Post was headed:
"Ministry warns of ewe quota disappointment".
I hope that the Minister will try to understand the problems of unlucky producers and be able to give more hopeful news tonight.
In the long term there is anxiety that people wanting to start farming will not be able to afford to do so if they have to buy or rent a farm, stock it, equip it and buy quota. There are many farms on the high ground which are suitable only for sheep. Sheep farming is an isolated life in winter with many hazards, such as snow and the loss of sheep. Many young people do not wish to dedicate their lives to that sort of routine. The subsidies are now so big that a farmer could not afford to farm without them.
I can see that the quota system controls the amount of stock in the country. But Europe still imports lamb. When we traded at world market prices the subsidies were more simple. The EC seems to be creating more bureaucracy and complicating the lives of farmers who want to get on with the planning of their breeding programmes. We have been told that the computer at Northallerton has broken down—just one more delay and complication of modern life.
I have sympathy with landlords who will be left with hill farms with no quota if the farmer leaves taking his quota with him. If there is no reserve for incoming quota-less farmers to apply for and they cannot afford to buy quota, will the farms remain empty, causing desolation to the countryside? It is important that there should be good relationships between all people living on, looking after and working the land. The countryside needs looking after. Why cannot Britain interpret the European regulations to suit our way of life instead of complicating the issues?
The Minister is a helpful and well motivated Member of the Government. I hope that, having heard the debate, he will understand better some of the many difficulties. It is always a problem to please everybody, but working together in harmony is better than causing divisions among landowners and farming tenants.
5.52 p.m.
Lord Burton: My Lords, I am delighted to add my gratitude to my noble friend Lord Hamilton of Dalzell. I fear that much of the thinking behind the Government's proposals comes from the better arable areas of the country and that more thought should be given to the LFAs in the hills. In many cases the stock, whether sheep or cattle, has to be hefted to these areas.

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Many of the areas are unfenced. One cannot just go into the marketplace to replace such stock. The ewes on the ground must know their way around. It is vital that they know where to go in a storm and where to find the best grazing, and that they are acclimatised to the area and stay upon the area.
So far as cattle are concerned, I have personal experience. I made the mistake of trying to boost my stock by buying in some Irish cattle. It was a mistake because they were infected with red water fever. It was not until my own stock started to die that I realised what had happened. By that time the ticks on that hill had been infected and now it is not possible to put any other cattle on to the hill unless they are immunised by having come off an area which has red water fever. So it is quite vital to have a hefted stock of cattle on this area. The hefted stocks are of key importance to the future welfare of some of our rural areas.
Some five million hectares of Scotland are classified as either less favoured or disadvantaged. That amounts to 90 per cent. of the total agricultural area of Scotland. In much of this area—I believe it is about 4 million hectares—there is little or no alternative method of farming. The loss of quotas from such areas would render them uneconomic. There is no surplus cash in these fragile areas. The drainage of cash will hit them very severely. I already know of one old boy who has put off his retirement so that he can go with a golden handshake, given to him by the Government at the expense of his holding. Either an incoming tenant or his landlord will have to pay for his golden handshake, and the future of the hefted stock is in jeopardy. My noble friend Lord Swinton has put this point most strongly, and I heartily applaud him on behalf of those concerned with the welfare of the hill areas of this country.
I gather that the NFU's point is that the landlord can write into his lease that quotas may not be removed from the holdings. But that will apply only to new leases—or possibly to a tenant who may agree to it being written in to his existing lease.
In certain circumstances quota can be removed from the LFA ring fence. I know that the number of circumstances is not large, but there are circumstances in which it can be done. However, I cannot find anything which permits fresh quota to come within the ring fence. Consequently, it seems to me (I may be wrong) that the amount of quota in the area will steadily run down. I am very doubtful whether the 15 per cent. syphon will be adequate to keep these LFA areas stocked.
I cannot understand the Government's attitude to this matter. I wonder whether it could be that other commodities are shortly to come onto quota and that the Government are worried about setting some sort of precedent in relation to quota. I wonder whether there is anyone here today, particularly on the Front Bench, who would disagree that the landlord-tenant system is a good one, one which has stood the test of time. Yet this legislation will now undoubtedly make landlords less willing to let their property on agricultural leases. The quota proposals seem to advocate short-term gain while jeopardising the long-term profitability of our farming.
5.57 p.m.
Earl Peel: My Lords, I too should like to thank my noble friend for having raised this topic for debate. I am bound to say that I think the timing is in some way unfortunate. I am sure that it would have been preferable if we could have discussed this matter after the judicial review. We should have had a clearer idea of the Government's commitments. I accept of course that this is no fault of my noble friend. He had to find a slot, and this is where we find ourselves this evening.
I too must declare an interest in this as an owner of an upland estate and as a member of the CLA, which is of course involved in the judicial review. I am also a member of the NFU. I like to keep a balanced view of these matters. I hope that the discussion will not turn into a slanging match between those two organisations. That would be a great tragedy. At the heart of this matter is the welfare particularly of upland farms. We must concentrate our minds on that and, if possible, try to strike a balance between the landlord on one side and the tenant on the other (the CLA and the NFU).
I suppose that I like quota. We have it, and we must try to make it work. But I have to say that I find it rather distasteful that we now find ourselves in a position where farmers are to be trading in subsidies. They are to be trading in taxpayers' money. I do not find that a particularly attractive aspect of this quota business.
Noble Lords have already expressed the importance of the viability of hill farms and the fact that they rely very much on the subsidies that they receive. Again, the socio-economic effects on hill farms without subsidies would be drastic. Certainly, under the existing proposals for attaching quota to the producer, without a satisfactory solution there will undoubtedly be extreme difficulties.
It is very easy to exaggerate in these matters but I believe, as noble Lords have already said, that we have a very real problem. As my noble friend Lord Swinton pointed out, quota is a very valuable asset. Certainly tenant farmers will be attracted to the idea of disposing of that quota at the end of their tenancy. I beg the question whether some of them might even consider it before the end of their tenancy. We have all done our figures. Taking a rough view on 700 ewes., the quota would be worth £23,800. It is a lot of money and very tempting to many hill farmers when that is the sort of level of support that they can now trade, particularly if they see the future of hill farming as doubtful. With the considerable changes which have taken place over the past few years, one cannot blame them for thinking like that.
My noble friend Lord Burton mentioned the problem of the hefted flock. Very often such hefted flocks belong to the landlord. They are the landlord's capital. So the landlord could find himself in a situation in which he has a flock without any quota as well as land without any quota. That is a double problem—a double whammy, as a government Minister once said.
In my own case I have eight tenant farmers. If they go with their quota, I shall not know what to do. I hope that my noble friend the Minister will advise me on this matter. I do not say that they will all walk off with the

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quota here and now, but over the next few years, as some of them retire, that problem will arise. It will arise in my case and in many other cases also. We must have some clear guidance as to the way we are going. I can only see it resulting in either increased rent for the farmer, if the landlord has to buy the quota, or indeed a situation where, if a tenant has bought quota, he may not be able to afford the rents which exist at the moment. Those questions must be answered.
The Government have consistently supported the LFA's over the years. Millions of pounds have been invested in retaining the socio-economic aspects of the uplands in providing a system whereby farmers can continue to farm. But I believe that, by failing to provide a solution to this very thorny problem, the Government could be undermining those millions of pounds worth of support that we have seen over the years. We must have a solution to this problem. As I said, it must not be seen as a landlord/tenant argument; we are talking about the welfare of the upland communities and farming in that area.
I have known the noble Baroness, Lady Masham, for years and know that she is an eminent rearer of ponies. I was not aware that she also bred sheep. She never ceases to amaze me. The noble Baroness quoted from the Yorkshire Post. I should like to quote from another great northern newspaper: the Darlington and Stockton Times. The paper quotes a particular individual as saying what I believe is very relevant:
"MAFF must take firm and effective action if it is to avoid the undoubtable hardship and inequity that will certainly be suffered by genuine cases and if it is to avoid becoming the object of total ridicule by the Country Landowners' Association when new tenants do not receive the quotas they have been so faithfully promised".
I believe that that is the nub of the matter.
Perhaps I may change tack for a moment. As a member of the council of English Nature, I should like to raise a problem concerning nature conservation. Sections 15 and 16 of the Wildlife and Countryside Act refer to management agreements on sites of special scientific interest and national nature reserves. For some reason they have not been recognised in the regulations as qualifying environmental schemes. That makes no sense to me at all because they are the hard core of the environmental process in the countryside. There could be a case in which a farmer entering into a management agreement on an SSSI to reduce his sheep will be obliged to sell his unused quota rather than lease it for the duration of the agreement. That poses enormous problems. If and when those agreements terminate, it may well result in farmers being reluctant to enter into such agreements. One cannot blame them.
Similarly, problems may exist when the reintroduction of grazing on sites of special scientific interest is desirable. An example of that might be the chalk grasslands, which have deteriorated over the years through a lack of grazing. How will the quota be made available in such cases?
What is perhaps of even more concern is that the lack of an equitable solution may result in the UK Government not meeting its international obligations under the EC habitats and species directive. I hope that
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my noble friend the Minister will give considerable thought to that problem which, along with many other problems that have been raised, must be addressed.
A number of solutions have been put forward by your Lordships this afternoon. Compensation in some way or another may be the answer. Amending the Agricultural Holdings Act to allow for the same quota to be intact at the end of the tenancy—in other words a covenant against assignment—is one solution that has been put to me. I am also informed that that would not infringe European legislation as it would not restrict the use of the quota by the producer during the tenancy. It would simply ensure that it was handed over intact at the end. I believe that it was the noble Duke, the Duke of Somerset, who suggested—I hope that I interpret him correctly—that the Government should act as a broker so far as the quota is concerned. So there would not be any trading. It would be distributed by the Government—nil value. Again, that is a perfectly reasonable solution which would overcome the whole business of trading.
But whatever the final solution, it has to be better than that we have at the moment. I know that my noble friend realises and appreciates the problem. His department has a duty to try to resolve it. Quite frankly, if it is not resolved, it will be expensive and, perhaps more importantly, divisive—divisive between landlords and divisive for tenants. That is the last thing we need. We must look to tenants and landlords to resolve this matter with the help of the Government. Most important of all, we must look after the upland farms.
6.9 p.m.
The Earl of Lytton: My Lords, after so many excellent speeches, it is very difficult to put forward a cohesive, technical rationale to these regulations. I should like to start by thanking the noble Lord, Lord Hamilton, for giving us the opportunity to discuss them today. I have various interests to declare. First, I am a member of the Country Landowners' Association and of the National Farmers Union. I farm jointly with my wife in a less favoured area and I even possess a share of the quota. But it is in my role as a chartered surveyor and therefore someone who supposedly has some knowledge of the economic background to this issue that I should like to make my comments. It is legitimate to make some general comments about the way in which the quota regulations have come about, notwithstanding the fact that many of them are imposed by the EC.
I agree that there has been a failure to address the question of overgrazing or prudent stocking levels which has been raised already. If anything, the regulations reward bad husbandry for enshrining past poor practices. That carries a high risk of damage to sensitive landscapes.
There is an element of intellectual improbability in the quotas because they are trying to make a freely tradeable asset divorced from the activity that nurtures it; namely, the use and occupation of land. I accept that that has been imposed by the EC. Nonetheless, it is the duty of the UK Government to attempt to mitigate its effect. Moreover, the exclusively tradeable item is for the benefit of one party only. That does not matter where

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there is an owner-occupier. But it does matter where there is a tenancy and when both have an interest in what amounts to a legal co-partnership. It is not legitimate to disadvantage one al the expense of the other.
In less favoured areas such as Exmoor, where I have my farming interests, I cannot see that livestock husbandry with the benefit of a quota can be anything other than completely unprofitable. I say that in the knowledge of how the economics work in that part of the world. Without quota there is no economic use of that land for agriculture. There may be other uses but it will not be agriculture.
The quotas produce a high risk of dislocation. We heard of the dislocation of landlord-tenant relationships. I should like to point to the dislocation of investment and forward planning in agriculture in the areas that stand to be most severely affected because of uncertainty and the procedural difficulties about which we have heard. I cannot think of one landlord who would be willing to let land or construct new livestock buildings in those circumstances. It is not only a question of the National Trust and its tenants but also county councils and other similar bodies. The quotas uncouple the geographical distribution of livestock, holding by holding, and in so doing allow an element of freedom of migration, which was simply not possible before. That will produce a major difficulty in policing.
By creating the uncertainty there is an increase in risk. which in turn raises yield. An increase in yield damages the resource of the land, the buildings and the whole economic infrastructure. There are no minimum or maximum stocking density provisions to give any safety net.
I do not perceive any gains through quota allocation as between 1991 and 1993, unless for some remarkable reason the producer is given some greater quota allocation than he had reason to expect. But I worry about the barriers to tenants and new entrants to the industry who will have to buy quota in addition to bringing in their livestock. In the latest reports regarding the number of transfers of quota we are talking about it is £46 a head for sheep down in the Dartmoor area. Bearing in mind that the breeding ewe may cost a similar amount, it doubles the cost of the livestock.
I believe that the regulations will have an effect on rents unless somebody can reassure me that tenants will not take advantage of the situation presented to them. I do not blame them for that. Were I advising a tenant professionally I would tell him exactly that. It is therefore unlikely that there will be anything but an effect on rents. The market place will operate patchily. I do not anticipate for many years a good match between quota allocation and land available. In the meantime there will be uncertainty and muddle.
I fear for the likely effect on the consensus only recently hammered out on the matter of agricultural tenancy reform. I agree with the point made earlier that it is an important element in the sharing of the capital asset with a producer who pays a rent. It is something which is enshrined heavily in our land use and planning system. But the tenant can now affect the future viability of the holding as never before. I should like to know how the Minister would expect a local planning
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authority to view an application for new livestock buildings in circumstances where there was a clear uncertainty over the long-term continuation of quota on that land.
Valuers will advise extreme caution. Therefore, whether or not actual falls in capital value occur in theory, the market will now reflect the uncertainty and risk, with significant capital and liquidity consequences. It is the creation of a large and expensive bureaucracy that worries me more than anything else. All those involved in agriculture know how much bureaucracy already exists. There is no attempt to go towards a proper free market. There will be rigidity for existing producers and new entrants. Difficulties of expansion and contraction in the flock or herd size will occur because of the way the regulations operate. The public perception of all that will be that overgrazing will continue; and that there will be an unseemly squabble, referred to by the noble Earl, Lord Peel, over handouts of public money. With no sheep extensification scheme, I fear that the perception among the general public will be a continuation of support for the unsupportable, with little support for the beneficial owners.
As did many other noble Lords, I received comments from all sources. I cannot agree with the position of the National Farmers Union that alternative agricultural enterprises are available. In my part of Exmoor that simply is not the case. In large parts of less favoured areas I suspect that a similar situation exists. I cannot agree also that no falls in value will occur. On the best impartial evidence of the Royal Institution of Chartered Surveyors, the strong likelihood is that there 'will be falls in value.
The value of the quota is created out of another economic asset. It is either land value or ease of use in practice. It is not a free good. It is something which is created out of existing activity. The market for that transferable element is unlikely to produce early stability. I suggest that it may not even produce long-term equilibrium. The siphon and the national reserve provisions are insufficient for all of that.
The measures must be seen in the light of what amounts to the effect of nationalisation of arable cropping rights under the integrated administration and control system. Seen in that light I believe that the quotas will, as does the IACS scheme, reduce choice and competition. It makes a balance of payments deficit in temperate foodstuffs more likely to continue rather than the converse.
Both the Country Landowners' Association and the Royal Institution of Chartered Surveyors are of one mind; that is, that there need to be measures to produce stability. Landlords and tenants do not operate in isolation from one another. I would point out that the Country Landowners' Association, for one, represents owner-occupiers like myself as well as tenants and landlords. We need to reach the situation where we view the matter as impartially as possible among all the various interests. There must be some form of quota guarantee. I do not use the word "compensation"; that is tendentious. But somewhere along the line something will move from one person to another and there must be some form of guarantee that quota is available to make

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good the deficiency, if not free, then at relatively modest cost. That needs to be coupled with a direction to arbitrators in rent reviews to prevent advantage being taken of the new situation in the context of rent reviews on agricultural tenancies. I am very much for freedom of action—good luck to these producers who have quotas allocated to them and can transfer them away. But this should not be done at the expense of the industry or other operators in it.
The Royal Institution of Chartered Surveyors warned from inception of the problems that were going to arise. I believe that to a degree it has been misrepresented in the sense that it has been asked to comment about issues such as when loss occurs rather than about the question which is really at the heart of this: if loss occurs, how do we mitigate the problems that arise from it? By "loss", I do not just mean financial loss; I mean the disruption to the industry.
I am very disappointed that having gone to negotiate the Article 13 provisions we are now told that they cannot be implemented. What about subsidiarity? Where is this question of protecting United Kingdom interests in the context of EC regulation? I find it very difficult to come to terms with that and very difficult that this Government are not protecting the interests of the industry as a whole. If the National Farmers Union is correct that there is no loss in value, a quota guarantee system would not cost anything at all. If the market was shaky, it would reinforce confidence. If there is a drop in value, why is it left to the industry to deal with it rather than the Government taking account of this?
I see that time is getting on and I have spoken long enough. I certainly support the Motion in the name of the noble Lord, Lord Hamilton, and look forward with interest to what other noble Lords have to say.
6.22 p.m.
Lord Hastings: My Lords, I declare my interest at once both as a landowner and a "farmer"—I prefer that word to "producer"—and I shall be entitled to receive payment on quotas both for ewes and suckler cows.
The more I have read this vast sheet of briefing papers not only from the Country Landowners' Association but from many other sources, the more I am astonished that the Government seem intent on resisting this quite modest and sensible amendment. I turn at once to the closing words of the noble Earl, Lord Lytton, about Article 13 of the European Community. The Commission has already confirmed that the Government have powers legally to do what they are expected to do to not disturb—those are the words of the Commission—the landlord-tenant relationship and yet they are refusing to do so. Why? I think that any objective layman reading all these papers and hearing all these speeches would come to the conclusion that the Government are quibbling and are hiding behind a legal technicality. I think it very surprising that they are willing even to be taken, if necessary, so far as the European Court where they are much more likely to lose their case. So why this obstinacy?
They have declared that they have no wish to upset the landlord-tenant relationship and yet they admit at the
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same time that there will be distortions which will affect that relationship. Their only solution is to set up some monitoring device; and if things go wrong then they say—they have given an undertaking to the Country Landowners' Association—that they will do something to put it right. But that will be too little too late. Many people will suffer in the meanwhile and perhaps many holdings will have gone out of production altogether. It is not a solution at all.
It seems to me that they have put forward this solution with the main purpose of saving costs. They have calculated that it will cost at least £50 million to accept any kind of compensation or guarantee scheme in arbitration. Yet the CLA and the Royal Institution of Chartered Surveyors, which after all must have more practical experience, with respect, than the civil servants in the Ministry of Agriculture in these matters, have calculated that in only about 5 per cent. of cases would it be necessary to go to arbitration. Once the pattern is set by a few cases in the early days then voluntary agreements will be the order of the day. That is precisely what has happened in respect of milk quotas. I have been able to settle a milk quota capital value with a tenant perfectly amicably and without any difficulty at all. That will be the usual custom. So I think that their fears are completely baseless.
I understand that they want to save money in view of the appalling cost and the waste of time and money imposed on them by the European Commission in respect of the set-aside regulations and other environmental issues where, as the noble Baroness has said, people have been flooded out with horrible paperwork, which I remember by noble friend Lord Carrington, in an aside during a Maastricht debate, describing as absolutely intolerable. The noble Baroness is absolutely right. No assessment has ever been made either by the Commission or by our own Government of the economic viability or even the possible achievement of the objectives of those regulations, which will cost the taxpayer as well as the farmer a great deal of money in administration and time-wasting. I mention that as an aside—the kind of bureaucracy that one wants to avoid in this instance. I think that the Government's intentions will create more bureaucracy that the amendment itself.
I do not think that there will be any cost to the Government at all in any guarantee scheme or compensation scheme because money will pass between the tenant and the landowner, and vice versa. But what about the new tenant? I am not at all confident that anyone has asked or answered that question yet. How will the new tenant come in when the landlord cannot afford to allow him a lower rent if he has to buy a quota? It does not seem practical to me, and the Government do not seem to have thought this matter out.
I come finally to the words uttered by the noble Lord, Lord Middleton, about the intentions of noble Lords in their voting. I am astounded that the question of loyalty comes into it at all. As the noble Earls, Lord Peel and Lord Swinton, and other noble Lords have mentioned, this is not really a battle between the landowner and the tenant. It is a question of the future health of the agricultural industry—most particularly, as has been

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pointed out, in the uplands, but everywhere. To suggest that there is any question of disloyalty in voting for the amendment is absurd.
It was also suggested that such a course might do damage to your Lordships' House. That is another suggestion that I cannot quite stomach. I have been a Member here for quite a long time—37 years—and I do not think I need any instruction as to what will do damage to your Lordships' House. I suggest that noble Lords have a very pleasant habit—or perhaps unpleasant from the point of view sometimes of the government in power—of exercising their own judgment. We rather like doing that here more than is allowed in another place.
I believe that my noble friend the Minister who is to reply, having heard all the arguments, may be—and ought to be—considerably shaken in voicing the brief that he has, having heard all the speeches. I do not know how he is going to address us with conviction. I ask noble Lords to exercise their own judgment in this case. If noble Lords do that I am pretty confident that they will be voting for this Motion and I hope I shall be right.
6.30 p.m.
Viscount Mountgarret: My Lords, I too will follow the example of previous speakers in declaring an interest. I am a landlord and also a member of the Country Landowners' Association. Although I may not be a member of the National Farmers Union like others of my colleagues, I have a very great regard for that organisation, as indeed I have for the Tenant Farmers Association. I find their views and comments most helpful to me in discussing various matters with one's tenants. As a result I like to feel that I have a very happy relationship with them, but whether they have such a relationship with me or not is quite another question, although I obviously hope so.
This has been a most interesting debate because so far—unless I have not heard, and I am sometimes rather deaf—we have not heard one single word spoken against the Motion raised by my noble friend Lord Hamilton. I can tell noble Lords this: I am not going to be the one to start. I support it absolutely. The reason I support it is this: the Motion we have in front of us is another example of a further nail in the coffin for this country's landlord and tenant system, which has served the industry so well over hundreds of years. We have taken on the chin successive tenancy legislation which has weakened the enthusiasm of landlords and potential landlords for the letting of land.
Now we have these regulations, which again will act precisely as a disincentive to landlords as regards future tenants, and I regret that. If our party—of which I am proud to be a member—is going to stick by its professed intention of encouraging the landlord and tenant system, then for the life of me I cannot see why it has failed so consistently in this matter and has permitted this order to proceed unchanged.
I support quotas arid see the need for them. I am not against them in principle. But quotas cannot lie with the occupiers of land because, as my noble friend Lord Peel so rightly said, that opens the floodgates to potential trading with the nation's finances and the taxpayer's
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money. It is undoubtedly a very dangerous step to take. Quotas are probably necessary and we must do the best we can with them.
If these regulations were allowed to remain in force unchanged, I believe that that could be—and almost certainly would be—the thin edge of the wedge for further quotas which may, and I suspect will, come. We have already the system of set-aside to reduce the amount of production of cereal growing. I am riot sure that set-aside itself will be sustainable for very long because of the enormous cost involved in paying compensation to people to do nothing. Therefore, the logical progression from that is to introduce quotas for cereal growers.
Are we to have a system where quotas shall apply to the tenants and not to the land? I hope not. Once one has a precedent then it is easy to hide behind it in the same way as it is relatively easy to hide behind the fact that it is the desire of our lords and masters in Brussels to impose these sorts of regulations on us because they perceive it to be good for them. Their system of farming is so totally different. As far as I am concerned—I believe that I also speak for a number of other noble Lords—they can do what they like, but for the life of me I cannot see why we should in any way subscribe to a system which pleases those eminent people to our detriment. Again, for that reason I hope that these regulations will be substantially changed.
My noble friend Lord Middleton referred to what can be done. He brought to light one of the possible routes—that is to say, compensation. I believe compensation is a most difficult thing to calculate. It would open the floodgates to endless argument. I believe my noble friend Lord Peel used the word "divisive". There should be no value attached to quotas. Once one begins to attach value to them one is creating something concrete which can be traded. Compensation is not very attractive although I see the logic of it. I see no reason why it should not be possible—only if the will is there—for the quota to be attached to land and, land being an immovable object, no value being attached to the quota.
I hope that it will be possible, even at this stage, to stand back, look at the problem which has been generated and be prepared to hold up one's hand and say, "We have got this wrong. From now on the quota will be attached to the land. There will be no compensation. The quota cannot be transferred away from the land and the owner is stuck with it". When the land is sold or acquired by another owner, then he acquires the quota at nil value because there will he no value attached to it. There will be the same value to the land as the grass which grows on it, the trees or whatever.
That is the point I want to make. I believe it was my noble friend Lord Hastings who suggested that compensation might cost about £50 million.
Lord Hastings: My Lords, no. The point is that the Government have suggested that. The CLA disagrees entirely.
Viscount Mountgarret: My Lords, I am very grateful to my noble friend. Whoever suggested it, the fact of the matter is that compensation may cost £50

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million so that is a very good reason for not having it. I hope that we shall be able to find a different route and that the suggestion I have made is a possibility.
When my noble friend comes to reply in the most charming and persuasive way that he has, I hope that he will realise that he has an army of dissenters behind him. It is interesting to note that there are not so many dissenters in front of him. I would rather not be in his shoes, as I should find it extremely difficult to discover many arguments to persuade the noble Lords who have spoken so eloquently—myself certainly excepted—to change their views at a moment's notice.
6.39 p.m.
Lord Palmer: My Lords, I think it has nearly all been said so I shall be extremely brief. I have in fact no financial interest to declare, albeit I do belong to the Scottish National Farmers Union and indeed the Scottish Landowners' Federation. I do however strongly support this Motion as I believe it is vital for the survival of the uplands and the less favoured areas throughout Great Britain. I also think, as other noble Lords have pointed out, that there is a very serious danger of the situation causing bad blood and ill-feeling between tenant and landlord, and I would ask the Minister just to reaffirm that this is the last thing that the Government wish to foster.
I would like to take a moment to cite one example which I think clearly demonstrates the unfairness of the present situation. A neighbour of mine had saved all his life to buy himself a small upland farm, which he succeeded in doing in November 1991. He leased the farm back to the seller on a five-year limited partnership agreement. Within six months of the lease taking effect, quotas had been introduced, as a result of which the tenant was able to claim the livestock quotas for himself, even though he had only been the tenant for six months when they were introduced.
My neighbour did manage to obtain a condition in the lease whereby the tenant cannot sell the quotas during the term of the lease, and at the end of it he is bound to offer them to the landlord. However, this is little consolation as there is no way in which he will be able to afford to buy them at current values, which are somewhere in the region of £50,000. If he does not buy them, he is left with a farm which has no quota and is therefore rendered virtually unlettable and not worth farming for himself because he would be unable to obtain the livestock premiums without the quotas. I agree with the noble Viscount, Lord Mountgarret, that there surely is a very strong case for having nil value on the quotas, which must remain attached to the land.
This problem will also arise in the lowlands as flexibility and alternative enterprises to sheep rearing disappear with the arrival of set aside and its dearly beloved IACS forms.
As many other noble Lords have said tonight, it is surely only right and proper that the Government must now make provision to see that landlords' interests are protected, and tenants are required to compensate landlords for any proven loss, as the noble Lord, Lord Middleton, pointed out, in the value of their land not
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exceeding the value of the quota if the tenant removes or sells it. As things currently stand, the tenant has obtained a gift at the landlord's expense, as the noble Earl, Lord Swinton, pointed out, which I believe could have disastrous repercussions, not only for the future of landlord/tenant relationships but for the whole pattern of livestock farming today, particularly the way the less favoured areas are managed and maintained. I fear that without such compensation our natural heritage and those responsible for it will be devastated.
6.43 p.m.
The Duke of Roxburghe: My Lords, I, too, should like to add my thanks to my noble friend Lord Hamilton for giving your Lordships the opportunity to debate the serious problems related to the sheep annual premium quotas. I must first declare an interest in that the Roxburghe Estates encompass 22 farms within less favoured areas. So it will be of little surprise to your Lordships that, as a landowner, I, like many others, am deeply concerned about the implications of the transferability of quotas. On the other hand, as an eternal optimist I live in hope that my noble friend the Minister will heed what I and other far more eminent noble Lords have had to say tonight.
It is vital for landowners to foster a healthy and vibrant relationship with their farm tenants, the let farms forming, as they do, the backbone of the predominantly agricultural estate. Many farms are occupied by second or third generation successors, others by newer tenants, most of whom have expanded from smaller holdings with the attraction of a larger and more economic unit.
A large part of the Roxburghe Estates comprises land in the LFA. In the past 10 years, eight hill farms have been relet, including four which were previously farmed in hand. In the case of one new tenant, he started farming on his own at the age of 23, renting 33 acres and having 60 sheep. Twenty years later, he is now responsible for 2,800 hill ewes. That is proof indeed that there are opportunities for new entrants to the industry and for progression up the farming ladder. However, as many other noble Lords have said, it is vital that such opportunities are not stifled and that the livestock sector, particularly in the more marginal upland areas, is supported to ensure that the rural communities and economies, which are so heavily dependent upon agriculture, are sustained in the future.
Much has been made by noble Lords of the value of subsidies in upland areas. Indeed, one half of the gross farm income is represented by the sheep annual premium. Without subsidies therefore, farms in those most vulnerable areas would cease to be viable. If a tenant is permitted to transfer the quota off his holding without any restitution, the rights to a major part of the farm income are therefore removed with it. It is no idle threat to say that such a severe effect on the earning capacity of the breeding flock, herd, or even the land, would, in the poorest areas, render the holding unlettable and unfarmable, with damaging consequences for the local communities, the environmental management of the land and its value.
Where no alternative to agriculture exists—this is very much the case in many of the upland areas, where

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now "no-go" designations for forestry are increasing—the land would fall into disuse and dereliction. That is a doom-laden scenario, but the damaging consequences are entirely avoidable, as we have heard from almost every speaker. The introduction of fair and equitable measures to address. the problems can and should be accepted by the Government. Landowners are merely seeking a fair deal to preserve confidence in the landlord and tenant system, and to maintain the viability of stock-rearing land in the event of a transfer of quota.
If the national reserve fails to meet the demand for quota from new tenants, an incoming tenant will be forced to purchase quota in the market in order to maintain livestock numbers at the previous stocking level, increasing the tenant's capital requirements and reducing the profitability of the holding. It would have serious repercussions, as the noble Earl, Lord Lytton, said, not just on the value of the land, the rental values and the economic viability of land owning, but—and perhaps most importantly—on the willingness and ability of potential tenants to offer for land to rent. The capital cost of stocking a hill farm would be out of reach of many of those seeking to start up or expand.
I should like to ask one question about the Scottish system, about which a note has been written by the Scottish Landowners Federation. It relates to bounded and hefted sheep stocks. On many tenanted hill farms, that hefted stock is also a "bound-sheep stock". The tenancy agreement will require the tenant to take over, at a bound-stock valuation, the sheep on that farm. At the end of the tenancy, he will be obliged to sell back to the landlord a fixed number of sheep. The valuation at which those stock are acquired and sold by the tenant is defined under the Hill Farming Acts and reflects, in addition to prevailing market prices, a premium for the hefting and acclimatisation.
The quota legislation does not address the issue of those bound stocks, allowing quota to be removed from the unit by a tenant without recompense to the landlord who is then obliged to purchase back the stock from the tenant at an above average price. I shall be interested to hear what proposals, if any, my noble friend has to deal with the hefted sheep stock system. Without the introduction of measures, either in the form of compensation or the guarantee mentioned by a number of noble Lords, I believe that it will lead to a further decline in the landlord and tenant system and to a continuing reduction in the supply of farms available to let, to the detriment of the agriculture industry as a whole. Indeed, landowners are now being advised by the organisation representing their interests in Scotland not to let land in view of the adverse effects that would be caused by the tenant transferring quota from his holding.
We must consider carefully the serious implications of failure to address the problems of quota transfer. Surely it cannot have been the Government's intention to create a situation in which landlords cannot let their land because of the impact of quotas. Therefore, I urge the Minister to implement the additional measures to remedy the adverse consequences, and I strongly support my noble friend's Motion.
6.50 p.m.
Lord Stanley of Alderley: My Lords, as opposed to most noble Lords who have spoken I do not have to declare an interest. I and my wife are owner-occupiers and therefore whether the quota is attached to the land or to the shepherd makes no difference to us. However, between us we possess 1,008 sheep quotas. I have a suspicion that my comments will not exactly endear me to my noble friends and therefore I cannot thank my noble friend Lord Hamilton for tabling the Motion.
I sympathise with landlords over the thought of the possibility of losing capital value or rental income but I am doubtful whether such a loss will occur as a direct result of quota being sold off the holding by the flock owner. The rental and capital value of a sheep farm, in particular in the Highlands, will be determined by the profitability of sheep farming and any quota sold is and will be ring-fenced.
I was somewhat surprised to hear some noble Lords take the view that quotas should remain in upland areas. Many is the time I have heard noble Lords who live in such areas state that they are overgrazed. However, if stocking rates are reduced by the European Community, which is most certainly on the cards, more land will be needed for the existing sheep and rents could well increase. Certainly agistment rents in Wales have regularly increased and often average more than £100 per acre. Therefore, I believe that it will be extremely difficult to prove that a reduction in rental and capital value will take place because quota has been sold by the flock owner. In any event, I shudder at the thought of the possible litigation and work for valuers, and so, I believe, does my noble friend Lord Mountgarret.
As I understand the Motion, it does not necessarily suggest that further measures mean that the flock owner and the shepherd should compensate the landlord if he sells his quota. I must make it clear that as a shepherd I should object violently if that happened. I should do so for two reasons. The first is that the sheep are the flock owner's or shepherd's—usually the same person. That is the case as regards my wife and myself. The fact that there are any sheep on the holding at all is due to his or her care and attention. Indeed, many shepherds—myself included—foresaw the coming of quotas and deliberately overstocked. I hope that this foresight and hard work is not now being coveted by the landlord. The second reason—and I feel most strongly about it—is that if we must have quotas of any kind (and I do not like them) they must be freely traded in order to allow the younger producer and the more efficient producer to expand. That view was expressed many times during my membership of sub-committee D and since and also by many of your Lordships.
I wish to deal with a matter raised by no fewer than six noble Lords; that is the question of money leaving agriculture. One cannot stop quota having a value. It makes no difference whatever if the incomer pays his landlord or the outgoing tenant. All quotas, in particular milk it can be argued, mean a loss of money to the industry. In milk, as your Lordships and I know only too well, the main beneficiary is the landlord. In this case it

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happens to be the shepherd. That is what quotas do and for better or worse—in my opinion worse—they are with us. We cannot get away from that.
Yes, as was said by my noble friends Lord Swinton and Lord Middleton, the flock owner has had a windfall. I fully accept that. However, landlords have also had a few—development rights and so forth—and often at the expense of the tenant. We are all avaricious in the end. It therefore follows that the only party against whom the landlord can make a claim is the Government. Well, good luck to him—I gather that the Government are a little short of money. As I have explained, I am extremely doubtful about whether any loss will be able to be proved.
I suggest that the constructive way forward to help a newcomer coming into a holding is to allocate him quota from the national reserve. That was mentioned by the noble Baroness, Lady Masham. That reserve, which is set at the highest permissive rate of 15 per cent. of sales, might be increased by taking, say, 1 or 2 per cent. off existing quota holders such as myself. I am feeling particularly charitable today because I have been to church—but it is only temporary. Will my noble friend Lord Howe say whether that is a possibility.
I fully appreciate the anxieties of the CLA expressed by all noble Lords. But I believe they are unfounded and for the reasons that I have mentioned unworkable. Furthermore, since 1984 most tenancy agreements have—perhaps I should say more honestly "could have"—included a clause reserving quota for the landlord. That point was made by my noble friend Lord Burton. I am in total agreement with the CLA, my noble friend Lord Hamilton and other noble Lords that the whole question of quotas and set-aside possesses horrific problems. Therefore, I welcome my noble friend's Motion to discuss a particular quota this evening. I hope that it will lead to continuing dialogue between all the farming organisations and government.
However, likewise, I hope that my noble friend will not press his Motion because, as I see it, that will only put the four contestants—I use that word incorrectly—the CLA, the Government, the NFU and the Tenant Farmers Association, in opposite corners fighting each other and I fear that I shall be in the middle, which is worse. It will make further constructive discussions more difficult, including tenancy reform. I fully accept that that needs addressing, not least to resolve the inevitable problems that have been raised tonight caused by necessary agricultural cutbacks to satisfy the GATT negotiations. That matter was alluded to by the noble Duke.
It would be dishonest of me to say that I do not sometimes disagree with the Government and ask your Lordships for an opinion against them. I recently disagreed with my noble friend on the Front Bench about potatoes. But—and it is a very big but—I do so only if such an action will achieve something. A Division this evening cannot reverse the order and, as I have said, will only make matters worse. I beg my noble friend not to divide the House. Certainly I could not support him were he to do so.
Earl Peel: My Lords, before my noble friend sits down, perhaps I may pose a question. My noble friend welcomed the concept of a windfall for the tenant through the quota system and he described that tenant, in most cases quite rightly, as the flock owner. I ask my noble friend how he feels that that would be overcome where the landlord owns the flock and it is part of the landlord's capital.
Lord Stanley of Alderley: My Lords, I am not sure that I said that I welcomed the tenant having a windfall. I merely said that that has happened. I am not sure that I quite understand the question. Your Lordships may remember that I was not too happy when the landlord received the larger share as regards milk quotas. If my noble friend is asking me whether the landlord can own the quota, he can, provided that he has 10 ewes. I do not know whether that answers the question.
Earl Peel: My Lords, my noble friend has not understood the point that I was making. I was referring to a case in which certain hefted flock were part of the landlord's capital and owned by the landlord. My noble friend referred to the windfall profit, whether or not that is welcome. I wonder what his position is as regards the case in which the landlord owns the sheep as part of his capital.
Lord Stanley of Alderley: My Lords, I live in a sensible country and I do not believe that we have hefted flock. Therefore, I cannot answer that question. However, as the law stands at present, it would come back to who owns the sheep.
7.2 p.m.
Viscount Devonport: My Lords, there are few things that remain to be said at this late stage of the debate. I merely wish to make and underscore one or two points. I support my noble friend Lord Lytton in his views about the problems of evaluation and the decoupling of the product stock from the land on which it is reared.
I wish to underline also the remark made by my noble friend Lord Palmer which is extremely relevant; namely, that under the proposed and existing regulations tenant producers can and will obtain a windfall gain on transferring quota away from poor land which they farm. That must diminish the value of let land at the owner's expense. I fear that that inequity will cause great problems, as my noble friend said.
On the hills there is no economically viable alternative to sheep and suckler cow rearing. Once the quota is transferred, farming ceases to be viable, as other noble Lords have said. No new tenancies can be given. The land becomes derelict and reverts to scrub. Communities diminish and producers who are attracted towards leaving farming will sell up their quota premium.
Perhaps I may mention a concrete example of that in relation to my interest as a hill farmer in England and Scotland. It summarises the issues. I hope that the noble Lord, Lord Stanley, is right in what he says about future values of hill land, but I am not optimistic.

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On the hills in Northumberland, about 1,000 to 2,000 acres are needed decently to support one family. I own and farm one farm of 836 acres and I own and let another nearby farm. That is a better farm but of the same size and one on which I wanted to expand production when it became vacant. The tenant there, who farms two other better farms on lower ground, offered this year to give up my farm. In 1991 I could have purchased his stock at market value and received a working return of about 5 per cent. Because of what I believe is the careless design by our Government of the regulations as applied in this country, I shall have to pay the outgoer an extra £85,000, which brings my return on that farm to about 1 per cent. Is that worth my while? I do not believe that it is worth my while or that of anyone else.
That underscores one of the basic problems. In cases where forestry is not an alternative for land use—perhaps there is no heather—which has some sporting value—that land will sink in value from about £300 to £15 per acre. There are already thousands of people in that situation. I wonder whether that treatment is just, especially when the Government had the opportunity under the 1992 CAP reform to avoid that not only, as the noble Lord said, by operating a national pool, but earlier this year the opportunity arose to support Germany to regionalise quota along the lines of the existing beef special provisions.
For my part, I await with interest the outcome of the judicial review. I conclude by asking the Minister, in support of the Motion, to assure not just the House but the country that effective measures will be introduced to correct that inequity in the regulations. I ask them to safeguard the future of marginal livestock rearing areas. To that end I press the Minister to explain why a national quota pool is not the most effective and fairest method for all concerned. I ask the Minister to do that, even though it is very late in the day. Failure to ensure that effective measures are taken to return quota in some way to the unit, whether by quota guarantee from the national reserve or by funding quota acquisitions, will most certainly lead to significant hill land clearances. I find it difficult to believe that that is the intention of either the Government or the Minister.
I conclude on a poetic but perhaps pertinent note with a quote by Peter Levy, made, I admit, in a different context:
"The sense of a crisis is universal: the landscape everywhere in Britain feels like a survival but no one is sure of the future".
My Lords, I feel the same.
7.9 p.m.
Lord Dormer: My Lords, at this late hour I do not wish to detain your Lordships for very long but as a result of strong opinions expressed to me by members of the farming community, I should like to say a few words.
At the outset I must declare an interest as a landowner of some farms which may be affected by the issue. The present situation is causing widespread anxiety among tenant farmers, landowners, upland farmers and especially among younger farmers who may wish to enter the profession. Unless the quota remains on the
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farms, there will be insufficient capital. That has been extremely well put by my noble friend Lord Swinton and other noble Lords.
The question arises where farmers have been tempted to sell off a quota. That cannot be in the interests of the farm, the incoming tenant or in the interests of hill farmers in general or the agricultural industry. As a trader in an agricultural area said to me recently, "When farming does well, everything does well; when it suffers, we all suffer".
The question of the environment also arises when upland farms may cease to be let due to the removal of the quota, with the resulting removal of the subsidy—a factor well expounded by the noble Baroness, Lady Masham.
From every point of view, the matter is deserving of the most urgent consideration by the Government and I implore the Minister to do all that he can to assist the farming community and all connected with agriculture in this country, as a result of the speeches made in the Chamber this evening.
7.9 p.m.
Baroness Elliot of Harwood: My Lords, I do not intend to make a long speech, but want to say only a few words about the quota and to emphasise the importance of hill farming, sheep and cattle to a great deal of the hill land farms of Scotland and Wales. I hope that the Government will realise their importance. Although that has not been obvious from what they have said so far, we await with interest the speech of my noble friend Lord Howe. When considering this debate and discussions on this matter, I hope he will realise that hill farming and sheep and cattle in hill areas are of vital importance to agriculture in this country and must be supported.
7.10 p.m.
Lord Hooson: My Lords, the noble Lord, Lord Hamilton of Dalzell, has initiated a fascinating debate in which we have heard, particularly from the landlord's point of view, the great problems which could arise—I say "could" advisedly—with regard to farms which are suitable only for sheep rearing and which are deprived of quota. We have heard about what might happen if there is a systematic denuding of the quota in those areas of the country where only sheep rearing can take place.
Unfortunately, we have heard from only one tenant farmer, the noble Baroness, Lady Masham, who I understand has a particularly sympathetic and benevolent landlord with whom she has a cosy relationship. That was the only expression of the tenant's viewpoint.
Much of the criticism that has been expressed in this debate has been aimed at Common Market regulations rather than at the regulations which the Government have introduced. No doubt the noble Earl, Lord Howe, will tell us whether the Government have taken advice with regard to the suggestion of compensation and on the question of whether it is possible for the Government to order a tenant to pay compensation to a landlord if he sells the quota. I should have thought that that was not possible legally for this reason: a Common Market regulation introduced the quota and, like any

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other form of subsidy, quotas inevitably distort relationships. We anticipate certain distortions which do not happen, but other distortions occur which we never anticipated. Am I not right in thinking that the Common Market allocated the quota entirely to the producer? If there is to be compensation, I should have thought that it should be paid by the Government and certainly not by the tenant. I do not think that the Government have a legal right to order a tenant to mitigate what might be described as the landlord's loss.
I am told that the Country Landowners' Association has obtained the right to a judicial review of whether the Government have interpreted the Common Market regulations correctly in a certain matter. If there was an order to the effect that tenants had to provide the compensation, I would advise them immediately to seek a judicial review because I do not think that it is open to the Government legally to order that to be done.
We must look at the purpose of the quota. Surely it was introduced as a result of a change in EC agricultural policy. It was introduced to facilitate a freer market in agricultural goods. It sought to discourage additional livestock from being kept in this country. Surely the purpose of the premium, of granting it to the producer in the first place and then of allocating the quota to the producer was to compensate for the loss of income which came formerly from support prices for the stock that he was selling in the market. The quota was compensation for the producer.
I doubt the proposition which has been made both in the House this evening and in the papers that I read this weekend which were produced by all the farming organisations in this country that the value of the quota has been created out of the land. I do not believe that that stands up to examination, because the quota, with its concomitant sheep subsidy and payment for ewes, is surely a means whereby the paternalistic Common Market is trying to safeguard the agricultural community's inevitable loss of income as a result of moving to a freer market.
All sides of the House have supported the GATT negotiations and the move to a freer market. I am possibly alone on these Benches in having grave doubts about the success of those negotiations. I foresee that by the turn of the century not only will agriculture in Europe be suffering greatly, but industry in Europe will also suffer. We are now seeing enormous developments, such as the cosy relationship that is now developing between the United States and Japan and the Pacific Rim. But let that be by the way.
Like the ewe headage payments and subsidies, the quota is surely a temporary expedient while Europe's agriculture is wound down. It is compensation for producers. If that is so, it seems to me that, as the noble Earl, Lord Peel, wisely suggested, we should try to find a way out of the present dilemma without setting all the agricultural organisations at each other's throats. This is a dilemma which the Government must tackle.
I have an interest to declare because I have farmed for almost all my adult life and am an owner-occupier in a land largely of owner-occupiers. I have the same impression as the noble Lord, Lord Stanley, that there is
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far more quota available in my area than there is land to meet it, because farmers have maximised their claims for headage. My view on that is reflected in the fact that enormous sums have been paid for agistment and grazing tenancies—well over £100 in some areas—because farmers have more quota than they have land to accommodate the sheep which are part of the quota.
The September newsletter of Smiths Gore, chartered surveyors, raises the question of consensus, stating:
"A consensus quickly seemed to emerge"—
in relation to sheep and suckler cow quotas—
"that any units bereft of quota would be depreciated in the eyes of the market-place".
The newsletter then states that in Smiths Gore's experience that has not happened. It continues:
"Two factors seem to be at work. First, in Scotland at least, there still appears to be considerable interest in farming properties from commuters and non-agricultural buyers … Secondly, there are signs that some livestock farmers are keen to get their hands on additional grazing land to overcome headage limits in the wake of the CAP reforms".
The newsletter goes on to point out that farmers in Scotland have paid up to £150 per acre for grass lets. Therefore the consequence that we foresee may not happen but other consequences which we have not foreseen may well happen.
I believe the Government ought to direct their mind to the following matter. There are certain farms surely that can only be used, agriculturally, for rearing sheep or suckler cows. If these farms were to be permanently denuded of quota I envisage that there could be a real problem. It may well be, as the noble Lord, Lord Stanley, suggested, that the market might sort all this out. But what if it does not? That is the real problem which I believe the Government should consider.
My own suggestion is that the landlord should have the first option to buy. A provision could be introduced whereby the landlord was given the option to buy and to hold over in trust for an incoming tenant. That should not be subject to the 15 per cent. siphon. Perhaps the noble Earl, Lord Howe, will correct me if I am wrong. I believe the 15 per cent. siphoning off is the maximum that was allowed under the Common Market regulations. Personally I would have increased it to 20 or 25 per cent. and that would have added to the reserve in the Government's hands. Then the Government could have dealt with the problem. Is there not a means of providing that the landlord has the first refusal so he can guarantee that the holding will have a quota? The means of valuing that quota at that stage without the siphon would be a matter the Government would have to consider and make provision for. However, that is certainly a matter that is worthy of investigation.
I do not believe I can add anything more to the matter except to advance the following reflection. It seems to me that the quota is intended to mitigate the loss to the farming community generally. I can well believe that it could be argued in farm arbitrations that the farming income in the future which partly derives from the quota must be considered in fixing rentals. I would be surprised if that were not the case, although I can see immediately as a barrister what the argument would be the other way. The whole system of quotas, like set-aside and other such matters, is a temporary matter. Within a decade the picture will be very different. It may

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be markedly more difficult for landlords, tenants and farmers alike if the developments that I can foresee occur. In the meantime the Government should give their attention to the issue of how one guarantees that the farms which are not viable unless they can be used as rearing farms have the headage available for stocking by the incoming tenant.
7.23 p.m.
Lord Carter: My Lords, like other noble Lords, I wish to thank Lord Hamilton of Dalzell for tabling this Motion which has obviously roused a remarkable degree of interest, particularly on the other side of the House. The Motion draws attention to a very real problem which has been created partly by the Government, partly by the European Commission, but mainly by the absurdity of quotas.
Unlike other noble Lords, I do not have to declare a direct financial interest in either sheep quotas or suckler cow quotas, although I have for nearly 40 years been involved in the detailed accounting of a large number of sheep flocks. From the figures I have seen over that period, I can assure your Lordships that the sale or the lease of quota will make much more money for sheep farmers than anything they may do in terms of actually farming sheep.
The debate has underlined the many disadvantages of quotas: for example, their inflexibility, their attendant bureaucracy and the perceived advantage or disadvantage by one party or another. However, as a number of speakers have said, we are not talking about a quota in the sense of production control as on milk, potatoes and sugar beet. We are talking about a licence to receive a given amount of premium, and such licence as attaching to the ownership of livestock and not to the ownership of land. If the quotas we are discussing had been attached to land, that would have created an interest in the quotas on the part of landlords. A landlord's consent would have been required for the transfer of quota, and obviously there would have been an implied value to the landowner. Will the Minister explain why these quotas were not attached to land? What was the argument that was developed in the Council of Ministers and in the Commission? If it was decided not to attach the quotas to land, why did the Government not choose to operate the national pool for transfer of quotas that has been mentioned by a number of speakers? However, I suspect that it would be too late to do that now. Such a national pool would certainly be no more bureaucratic or cumbersome than the system we are now to have.
It is clear that the Motion contains two separate but related aspects. There is the argument regarding the loss of value to the landowner. I understand it is argued that the loss of value should be compensated by the taxpayer by the Government having to buy up quota and/or the tenant. There is also and to my mind the more compelling argument regarding what has been described as the vulnerable areas. It is a pity in some ways that the Motion had to combine those two separate but related aspects because, as I have said, the argument regarding the vulnerable areas is much more compelling than the argument regarding the loss of value in the lowlands.
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So far as I am aware, there is no evidence so far of an effect on the value of land or on rental values. But perhaps, to be fair, it is too early to decide that. The Government have said they will monitor the effect of these quotas. I wish to quote from a letter written by Mrs. Gillian Shephard to Dr. Gavin Strang. She wrote:
"You will, I am sure, appreciate that it is difficult to predict the impact which quotas will have on landlords and tenants. However, I believe that the steps which we are taking will significantly diminish the effects which you and others fear may occur. I have also undertaken to monitor the operation of quotas carefully, and if it appears that distortions are occurring—such as a shortage of quota in one ring-fenced area when there is an excess in another—I shall, of course, consider any appropriate action to correct them".
It is significant that the only example the Minister gives is of the possible distortions resulting from transfers inside the ring-fenced areas. She has not mentioned the potential loss in value to landowners. Is this an oversight on her part or is the only area that is to be monitored the effect on the vulnerable areas and not the effect on land values and rental values?
I wish to make a general point which has been touched upon by a number of speakers, and that concerns the nature of tenancy agreements between landowners and tenants. These differ widely, but almost all of them contain a quota clause. I accept that most of the quota clauses refer to quotas which are attached to holdings. The NFU sent me an example of a tenancy agreement which stated that,
"the tenant shall before quitting the Holding nominate as his Successor the Landlord or incoming Tenant in respect of any basic quota of which he has the right of nomination and that he shall not allow any quotas allocated to the Holding or any agricultural marketing scheme or otherwise to lapse by his default and that he shall use his best endeavours to obtain for the Holding suitable quotas under any new scheme and maintain those already attached to the Holding".
It would be interesting to know whether in the case of that tenancy agreement the tenant would be able to transfer the quota without the consent of the landlord. I discussed this matter only this morning with a leading land lawyer. As I understand the position, there is nothing to stop the drafting of new agreements to deal with the problem that has been mentioned. This is not an area where European law prevails. We have already heard a quotation from a letter from the European Commissioner. I am sure your Lordships are aware of the CLA brief and the reply that was given in the European Parliament on 21st April which stated:
"Community regulations do not affect relations between landowners and farmers, national legislation being applicable in this area".
As I understand it, this means that our own landlord and tenant law is superior in this case and it would be possible for all new agreements—I understand that this does not apply to existing agreements—both tenancy agreements and share-farming agreements, to be drafted in future to deal with the problem which has been mentioned by a number of speakers.
It seems to me that there are two points where the situation will bite. Unless a new form of 'valuation mechanism is introduced, the situation will bite not when the transfer of quota takes place but either at the next rent review or on the termination of the tenancy. Can the Minister say whether an arbitrator will be able to take into account, under normal arbitration rules, any

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change in value affecting the rental value or the value of the land? Is it in fact correct that further measures are required? Also, is there an argument in equity for such further measures if a loss of value results, and is proved, from the transfer of quota?
We have been here before. I am indebted to my noble friend Lord Gallacher, who reminded me of the excellent report which was produced by the Select Committee on the European Communities on the milk production outgoers scheme. The report was produced by a joint committee of Sub-committee E (which deals with law) and Sub-committee D (which deals with agriculture). It makes extremely interesting reading, because all these matters affecting the rights of the landlord were examined and dealt with in that report. Many of the arguments are similar to those adduced today. There is reference to the possibility of the disposal of an interest in the property of the landlord without the landlord's consent being invalid because it conflicts with an article in the Treaty of Rome and also Article 1 of the first protocol to the European Convention on Human Rights.
I mention that report because in that case the committee tended to argue that in the case of that scheme insufficient regard was paid to the interests of the landlord. This is again perhaps a suitable case for examination by a joint committee of the law and agriculture sub-committees of the Select Committee. That would obviously have to await the outcome of the judicial review, but that might be a way of throwing some light on this very difficult point.
As I have said, there are two separate but related aspects. The second is the effect on the vulnerable areas. Here there is a very real anxiety, which was expressed so well by many speakers. In my view it is a much more pressing problem than the problem of the possible loss of value in land or rental values in the lowlands. It could have severe effects on the upland communities. The point has been mentioned, and is worth repeating, that some tenancies on hill farms require the farmer to keep a specified number of sheep. Reference has been made to hefted flocks on the hills. It is important that when he replies the Minister deals with this point because there is a real area of anxiety here which I share.
Do the Government agree that there is a real problem in the LFAs? Will they give those areas any priority in the allocation of the national reserve? Can the Government give us an estimate of the likely size of the national reserve and say whether they believe that it will be sufficient to deal with all the problems that have been raised?
Another point was raised with me by my noble friend Lady Nicol, who would have taken part in the debate today but had another engagement. It concerns the rights of commoners. A commoner who does not presently exercise his grazing rights could be allocated a quota, which might then be sold. Would that not have serious implications for total grazing numbers and the rights of future commoners? I shall be interested to hear the Minister's reply.
We have had an interesting debate, and obviously I cannot deal with all the points that have been raised.
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However, I should like to comment on just a few. When he opened the debate the noble Lord, Lord Hamilton, said that the value of the quota arises from a combination of assets. That point was mentioned by other noble Lords. In fact, it does not. The value of quota arises from the political decision to introduce quotas and bureaucratic decisions regarding the method of implementation. That is not merely semantics. The source of value goes to the heart of the problem.
The noble Lord, Lord Hamilton, also said that the transfer of quota represents the capitalisation of quota rights. That is the CLA argument. The NFU and Tenant Farmers Association say, on the other hand, that it is the capitalisation of the future income stream from keeping sheep. I ask the Minister which side of the argument he comes down on—the CLA point of view or the NFU point of view?
A number of references were also made to the uncertainty that will be created over the letting of land in future. In my view the present uncertainty is due to the Government's proposals for tenancy reform in relation to the freedom of contract. Are we really to believe that landowners are queuing up at present to create new secure, lifetime lettings before they know the details of the new legislation which is promised, one hopes, for the 1995–96 Session? That uncertainty will stop the creation of new tenancies much more than the problems relating to sheep quotas.
The noble Lord, Lord Stanley, mentioned the fact that windfall gains arise in land ownership and land occupation. An example is the windfall gain in land values resulting from the granting of planning permission for development. That again is a value created by bureaucratic decision. Under landlord and tenant law, the tenancy can then be terminated and the compensation which has to be paid to the tenant is a few years' rent, which bears little relationship to the increase in value accruing to the landowner. I am not aware of many cases where the landowner has offered to share the windfall surplus value equitably with the tenant.
Some speakers said that there should be a nil value for the quota. I cannot help wondering whether that argument would have been adduced so strongly if the sheep quota had been attached to the land, thereby creating an interest in the quota for the landlord. Again, the noble Lord, Lord Stanley of Alderley—as always—expressed extremely well the difference of opinion which now exists between tenants and the Conservative Government on one side of the argument and substantial landowners on the other. To coin a phrase, it's a funny old world.
As I said, very real anxieties have been expressed, especially with regard to the way in which the regulations affect the vulnerable upland areas. We shall all listen to the Minister's reply with interest. I hope that he can assuage the considerable doubts that have been expressed. I understand from a number of observations that if he cannot do so, noble Lords opposite are wondering what they might do if the Motion is pushed to a vote. I would entirely understand those noble Lords opposite who wish to show their displeasure by voting

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for the Motion and against the Government. I can assure them that it is not in the least difficult. On this side of the House we do it all the time.
I should like to conclude by thanking the noble Lord, Lord Hamilton of Dalzell, for putting down the Motion. Like the rest of the House, I await the Minister's reply with great interest.
7.37 p.m.
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe): My Lords, every so often in your Lordships' House we debate an issue which arouses strong, if not passionate, feelings. One such is the subject of my noble friend's Motion this afternoon. I am grateful to all noble Lords who have spoken, because this debate has served to present me with a very clear idea of the anxieties which your Lordships feel most keenly. I shall therefore now seek to respond to those anxieties, to explain the Government's stance in these matters; and to set out the measures which we have taken to alleviate—I hope substantially—some of the problems which have been identified. At the end, I hope very much that my noble friend will find it possible to withdraw his Motion without a Division, both in the light of what I am about to say and in the knowledge that points raised in the debate will be studied closely by Ministers.
I recognise the anxiety which has been expressed about the impact which quotas may have on the land and on those who have an interest in the land. Let me therefore make clear from the outset the Government's approach to quotas. During the discussions leading up to the reform of the CAP in the livestock sector last year, the UK repeatedly stated its opposition to the introduction of quotas. We resisted their introduction for some time during the Community negotiations precisely because we believed that they would introduce distortions within the sector and so inhibit necessary adjustments, and create new and unwelcome bureaucracy for all. The Community as a whole did not share our view—in fact the UK was in a minority of one—and quotas were adopted last year as a means of constraining the future cost of the livestock regimes.
The Council of Ministers, however, sought to avoid some of the difficulties to which quotas can give rise. In particular, it decided that the quotas should be allocated to producers, and should not be attached to the land. In that decision lies the origins of this debate. A number of noble Lords have said today that their concerns would be resolved if quota were tied to land. But the Council recognised that, because quotas inevitably introduce rigidities into the farming industry by making it more difficult for producers to develop their enterprises in line with the needs of the market, those rigidities are reduced if producers are able freely to buy or lease-in quota as their businesses expand, and to sell or lease-out quota if they choose to diversify into other sectors. That freedom can only be achieved in its fullest sense if quota is not tied to the land. The Council was also mindful of the administrative, legal and other difficulties which have emerged in the dairy sector from the attachment of milk quota to land. Again, this decision on the ownership of quotas rested with the Council as a whole; had we
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chosen to argue the opposite case, there is no doubt that we would have failed. That explains why quotas are not attached to land and I must make it clear that it is an issue over which member states have no discretion.
My noble friend Lord Hamilton asked why there should be no discretion, and why subsidiarity should not apply. If there is to be a common organisation of the market for livestock production, the EC regulations on livestock quotas must be adopted in every member state in a way which does not distort competition between producers in the Community as a whole. That common organisation of the market is fundamental to the CAP; and I am sure that noble Lords who insist on a level playing field in other areas of the single market will recognise that it is just as important in this area.
The Government recognise, however, that although a system of freely tradable quotas mitigates some of the problems which arise with any quota system, it also creates other potential problems. My noble friend's Motion identifies that when it refers to the problems which arise from the transferability of quotas away from particular holdings and the need to "protect vulnerable livestock rearing areas and the communities that depend on them". Those are concerns which the Government share. We have accepted from the outset that the transfer of quota by producers away from the land on which it was initially exercised could lead to certain areas becoming unattractive for sheep and suckler cow production. On land where no alternative profitable enterprises are possible, this could, in some cases, lead to some environmental and economic problems. The Motion suggests that the Government have not taken sufficient measures to address those potential problems, and calls upon the Government to introduce further measures. Let us first, however, examine the steps which the Government have taken.
First, I refer to the protection of vulnerable livestock rearing areas. The Community rules require member states to take the necessary measures to avoid quota being moved away from sensitive zones or regions where sheep or suckler cow production is especially important for the local economy. The Government have defined seven such sensitive areas, out of which ewe premium and suckler cow premium quota may not be transferred except under very limited exceptional circumstances. These areas are: the lowlands of Great Britain, the English less-favoured areas, the Welsh less-favoured areas, the less-favoured areas of the Scottish Highlands and islands, the remainder of the Scottish less-favoured areas, the Northern Ireland less-favoured areas and the Northern Ireland lowlands. This approach reflects both the Government's policy of retaining extensive livestock product ion in the less-favoured areas, and the need to retain a balance between the livestock sectors in the hills and in the lowlands.
The aim of ring-fencing quota in this way is to ensure that large differences in the demand for quota between areas do not result in quota draining from one area, to the detriment of its environment and its local economy. The ring-fences are real protective barriers. However, in creating ring-fences we had to be mindful of the need not to introduce so many of them that they have the

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effect of freezing the structure of the industry. Some noble Lords have suggested today that more ring-fences should be created. The risk, however, is that that would simply introduce new and artificial rigidities into the sector, without providing any real additional protection for the environment or the industry. That would be in nobody's interest. The Government consulted widely on their proposals for ring-fencing earlier this year. Those proposals were widely welcomed as likely to meet the objective of protecting vulnerable areas without introducing unnecessary strains into the industry. I say to my noble friends on the Benches behind me in particular that there is no evidence that this approach is failing in its objectives, nor that it is likely to fail in the future. It is premature to say that ring-fencing of quota needs to be tighter. Moreover, my right honourable friend the Minister of Agriculture, Fisheries and Food has given a clear and firm undertaking to monitor the operation of our ring-fencing policy carefully. She has also given an undertaking that, if any distortions do emerge, the Government will look, where possible, to introduce amendments so as to mitigate those effects. I hope that that undertaking helps to meet a part of the concern which has been expressed in the House today.
Turning to the concerns of those who have an interest in the land, the Government recognise the desirability of discouraging speculative transfers of quota from a holding, as well as the predicament of landowners whose land may be affected thereby. We have therefore taken measures by means of the national quota reserve. The Community regulations require member states to operate national quota reserves for both sheep and suckler cow premium and to allocate quota as may be necessary to help alleviate distortions. In the first year of operation of those reserves—in other words for the 1993 schemes—priority for receiving allocations must go to a number of clearly defined hardship and exceptional cases: in essence producers who, for one reason or another, have not received an automatic allocation of quota matching their production in the reference periods, but who nonetheless remain genuine producers.
For subsequent years, however, different priorities can, and will, apply. Under the Community rules, the reserve itself is to be re-stocked with quota by means of a "siphon" on quota transfers, as many noble Lords have mentioned. The siphon applies only in cases where quota is transferred by a producer without a simultaneous transfer of the holding. Again the Government accept that where quota is transferred away from its initial holding, this may, in some cases have some adverse environmental or social consequences. That might, for example, be the case where a landlord finds it difficult on marginal land to attract a new tenant who either already holds his own quota, or is prepared to acquire new quota.
To address that risk, the Government have set the siphon, on quota transfers which take place without transfer of the holding, at the maximum level—and I emphasise "maximum"—permitted under the Community rules; that is to say at 15 per cent. of any quota transferred. We have two objectives in setting the siphon at this level. First, we intend that it should
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discourage speculative transfers of quota by producers. And a siphon, or "tax", of 15 per cent. on such transfers should go a considerable way towards achieving that. Secondly, we want to ensure that, where such transfers take place, we maximise the quota that is made available as a consequence to the national reserve. Building on that, we intend from the 1994 schemes onwards to give a very high priority, when allocating quota from the reserves, to producers who take over land from which quota has been removed by the previous, outgoing tenant. Landowners themselves would be eligible to apply. Again, that undertaking should, I hope, bring a measure of comfort to those who have expressed concerns on that matter.
Perhaps I may say this to my noble friend Lord Swinton. The siphon is avoidable. If tenants wish to leave farming they have a direct incentive to sell the quota to a successor tenant and so avoid the siphon. In answer to my noble friend Lord Lyell, the siphon does not operate where the tenant transfers his sheep farming operation to another holding.
The noble Baroness, Lady Masham, expressed worries arising out of her own difficulties in obtaining quota. My honourable friend the Minister of State wrote to the noble Baroness in the summer. The advice given in that letter still stands. Allocations of sheep quota were made automatically to producers who received payments under the 1991 sheep annual premium scheme and who also submitted a claim for premium in 1992. There are, however, special provisions for those who, like the noble Baroness, claimed premium for the first time in 1992. We hope to be able to invite applications to a pool of quota for 1992 first-time claimants and to the national reserve later in the year.
Baroness Masham of Ilton: My Lords, perhaps I may say to the Minister that that answer to the farmers who did not receive the quota, "later in the year", has been the answer all along. May I ask the noble Earl how late is "later"?
Earl Howe: My Lords, it should not be long now.
My noble friend Lord Peel asked about the quota rules for management agreements supervised by English Nature. We have negotiated with the Commission an arrangement under which producers taking part in an environmental scheme notified as a state aid to the Commission may lease quota for the life of the environmental scheme, rather than for a maximum of three years, which is the normal rule. I am, therefore, glad to say that the relaxation of the leasing rules would apply to any English Nature management agreement which has been notified as a state aid. It is for English Nature itself to arrange for notification of those arrangements.
The priority categories in the national reserve will be set out in a statutory instrument which we hope will be laid within the next few weeks. The quota available in the national reserve will be limited and it is therefore necessary to draw the categories fairly tightly. However, we propose to have a category covering producers who need extra quota as a result of reversion from arable to grazing. English Nature schemes will be eligible under that category.

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The noble Lord, Lord Carter, asked whether the less favoured areas would be given priority when quota is allocated from the national reserve. The siphon on quota transfers and allocations from the national reserve will observe the ring-fencing rules which apply more generally to the movement of quota. In simple terms, there are separate compartments of the national reserve corresponding to each ring fence. Therefore, except in very limited exceptional circumstances, quota siphoned from a producer within a ring fence will be reallocated to another producer within that ring fence.
The noble Lord, Lord Carter, also asked this question: if a commoner is currently not exercising his rights, what is his position in relation to acquiring quota? A producer will only receive quota automatically at the outset if he was a producer in the relevant reference years. A commoner not exercising his rights in the quota reference period will not, therefore, have received an initial allocation of quota unless he was a producer on other land. If he chooses to exercise his common land rights in the future, he may purchase or lease quota from other producers. He may also qualify for one of the categories eligible to receive quota from the national reserve, although I should emphasise that that will depend on his individual circumstances. There is no specific priority category for commoners seeking to use their rights. For completeness, I should mention that he would also be free to graze the land without quota, although I accept that that is unlikely to be an economically viable option for many producers.
I understand the desire of some noble Lords, in particular my noble friend Lord Middleton and the noble Duke, the Duke of Somerset, to secure an assurance from the Government that the amount of quota available in the reserves will be sufficient to cover all holdings where quota has been removed by an outgoing tenant. Let me explain why I cannot give such an assurance, much as I should like to. We do not yet know the extent to which transfers of quota will take place without transfers of the holding. We do not know whether these transfers will predominantly involve producers farming tenanted land. And we do not know how many of these transfers will affect "vulnerable" land where it would otherwise be difficult to retain livestock production. We cannot therefore know precisely the likely future supply of quota to the reserve, nor the likely demand for quota from it.
While it is therefore impossible to give the type of assurance which some noble Lords are seeking, I can assure the House that these three measures—the ring-fences, the siphon and priority from the national reserve—are all the steps the Government are permitted to take under the Community legal framework. There are no other measures which we are legally able to adopt. I should, however, like to make one additional point. The environmental, social or economic problems to which a number of noble Lords have referred are, as yet, theoretical problems. I do not wish in any way to belittle the concerns that have been voiced but there is no evidence yet that these problems are, in practice, emerging in marginal or sensitive areas.
My noble friends Lord Swinton and Lady Elliot and others have expressed particular concern about the
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uplands. These are important concerns, but I do not think that we should ignore the possibility that quotas may exert pressures on rents and land values in the opposite direction from that which landlords fear. As the noble Lord, Lord Hooson, pointed out, already we are seeing a greater confidence and buoyancy in the livestock sector, reflected in market prices, in exactly the same way as the fortunes of the dairy sector improved after the introduction of milk quotas. Other factors, such as the structure of HLCAs, may very well influence the extent to which severely disadvantaged areas remain tenanted.
My point is that there are factors which work in the landlord's interests and we simply do not know at this stage whether some of the problems identified with quotas are more apparent than real.
My noble friend Lord Hamilton raised an argument that I believe is a red herring. It is that the regulations will result in a drain of capital from the industry I believe that that concern is misplaced. It is traditionally the case that when producers retire they pass on their assets, whether those be land, livestock or other equipment, to their successors. Or they sell them to other producers. Where they choose to sell those assets, other producers wishing to enter the sector or to expand their businesses buy them. Thus, although an outgoing producer may choose to retire on the proceeds of selling his assets, he can only do so to the extent that others are prepared to bring new proceeds into the industry to acquire those assets.
My noble friend also raised his doubts about vulnerable areas ceasing to be viable if quota is transferred away from holdings. While I am sure that we should be alive to those concerns, the environmental consequences of quota transfers should not be exaggerated. The total sheep and suckler cow quota in the UK is based on recent stocking numbers. 'Therefore, the introduction of quotas will not by itself lead to a reduction in livestock production. Despite any effect which quotas may have on land values, a similar amount of land is likely to be required for livestock production now to that required before quotas were introduced. Moreover, it will surely be the case that, where tenants leave their holdings, others who already have quota or who are willing to acquire quota will be prepared to bid for that land.
I wish now to turn to the second aim of the Motion: that of seeking measures,
"sufficient to provide full redress",
for the adverse effects which derive from,
"the transferability of quotas away from particular holdings".
The introduction of quotas in the agricultural sector can have some significant and complicated economic effects within and across the sector. It can, for example, affect the value of various assets, including breeding livestock, farm machinery and land. The economists will tell us that, in general, as quotas acquire a value the value of other assets will fall to a greater or lesser degree. There can even be knock-on effects outside the livestock sector. In the light of that, it is abundantly clear that it would be impossible, so long as the quota system is in place, to devise a mechanism which would be,
"sufficient to provide full redress",

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for all those individuals who are adversely affected, one way or another, by the introduction of quotas. It is a practical impossibility.
Having emphasised that point, I accept that my noble friends Lord Hamilton and Lord Middleton are concerned in particular about the effect which the introduction of quotas may have on the value of land. Let me say at once that I understand that concern. The Government have acknowledged from the outset that, all other things being equal, one consequence of introducing a system of freely tradable quotas will be to increase the value of assets held by producers, who gain a new asset in the quota itself, while reducing the value of assets held by landowners, because land values may fall. The economic explanation of this effect is rather complicated and I do not propose to give a detailed exposition of it today. However, the theoretical effect itself can be expressed quite simply as a windfall gain to producers generally at the expense of owners of land.
During the Community negotiations on quotas, the Government explored fully the possibility of securing provisions in the Community legislation which would have allowed this transfer of asset value to be addressed. Most other member states, and the European Commission, were, however, extremely reluctant to include provisions to this effect because they considered that the quota should be allocated unequivocally to the producer and that landowners should not have any claim on it whatsoever. What we therefore got from the Commission were only limited powers whose wording is clear. They are powers requiring member states, where necessary, to take the appropriate transitional measures,
"to find just solutions to problems which may arise in existing contractual arrangements",
in the event of a transfer of quota by a tenant or other actions having the same effect. The crucial point here is that the provision identifies the problem to be addressed as occurring at the point of a quota transfer.
The wording of the Motion before the House today explains precisely why the provision we were granted cannot be used to introduce the type of compensation measures which are being sought for landlords. As the Motion clearly states, any "adverse economic effects" for landlords arise from the "transferability" of quotas. In other words, any loss in the value of land is a consequence not of actual transfers of quota away from the holding but of the introduction of transferable quotas and their attachment to producers. If there is a loss in the value of land, it affects all land capable of sheep or suckler cow production, regardless of whether, in the case of tenanted land, any quota is subsequently transferred or removed by the tenant. The Government have taken detailed professional advice on this matter. The advice is clear that any loss to landlords in terms of a fall in actual rents is likely to take place at the first rent review following allocation of the quota; not when the quota is subsequently transferred or removed by the tenant. My noble friend quoted Commissioner Steichen's remarks in this context. But member states
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are required to act on their legal interpretation of EC legislation and not on the view of any Commission official.
In the light of that, I hope that it is easy to explain the Government's firm legal view that we simply do not have the powers to implement a scheme whereby all tenants with quota would compensate their landlords. The Community legislation provides only for member states to address problems arising from actual and particular quota transfers. Given that any losses which landlords may see in the value of their land derive instead from the introduction of the quota system, the Government believe very firmly indeed that they have neither the power nor the obligation to introduce a compensation scheme for landlords.
I think that there is something else I should say. I would not wish the House to be left with any mistaken impression that if the legal powers were available a compensation scheme could be devised which would be straightforward to operate and which would satisfy all parties. That would simply not be possible. Indeed, there is a real risk that any scheme would not only be costly to operate but would give rise to new inequities, arbitrary treatment and discrimination between producers. Let me illustrate that very briefly.
I have already explained that if there is to be a fall in actual rents this is most likely to occur at the first rent review following allocation of the quota. Even if legal powers were available to address this loss, it would give rise to very serious practical difficulties and problems of equity. For example, if compensation were to be made payable at this time (at the time quota is allocated), tenants would be required to pay compensation to their landlords even though they remained producers and may not have sold or leased out their quota. This could be both highly disruptive and unfair. If on the other hand compensation were delayed until some later date, there would similarly be formidable problems in assessing the precise extent of losses which could have taken place years, or perhaps even decades, earlier. There is a particular further difficulty over short-term letting arrangements. It would be very difficult, if not impossible, to devise practicable compensation mechanisms in respect of producers who hold their land under short-term lets. The prospect of some producers paying compensation while others avoided the burden entirely would create further, damaging inequities. For these and other reasons the Government believe, and have stated firmly, that a compensation scheme would not any way be in the best interests of the sector as a whole.
With your Lordships' permission, I should like to summarise what I have said. We have taken all the appropriate steps which are available to us under the Community legislation to address the concerns which have given rise to this debate. To those who have said that these steps are inadequate and have pressed us to go further, I must emphasise that there are no other steps which it is desirable for us to take or which we can legally take. If there was anything else we could do, we would have already done it. I would, however, also emphasise that the problems which we are addressing are at this stage still theoretical: there is as yet no real evidence that economic or environmental problems are

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emerging from the introduction of quotas in the hills or elsewhere. Let us not therefore decide that the Government's actions are inadequate before we have any evidence that that is the case.
On the issue of compensation, I have explained why it is not realistic to suggest that a mechanism could be devised to provide full redress for all those—whether they be producers or others—who may be adversely affected by the introduction of quotas.
There is, however, a further consideration which I would ask my noble friend Lord Hamilton to reflect upon most particularly. Noble Lords will be aware that the Country Landowners' Association has challenged the Government's position over a compensation scheme for landlords by seeking a judicial review. That is the CLA's privilege and it goes without saying that the Government will abide by the decision of the courts, whatever that may be. However, it is now a matter for the courts to resolve; and no resolution of your Lordships' House can inform or be of benefit to that process of law. Furthermore, the challenge to the Government in the courts in no way affects the legal position as we must now take it to be and as I have outlined it to your Lordships; and I would ask my noble friend to consider whether it is desirable for your Lordships' House to instruct the Government to take action which it would not be legal for the Government to take. I believe it is not; and I very much hope that my noble friend, whatever his feelings about the substantive points at issue, will see the importance of these wider considerations when he comes to decide what to do with his Motion.
8.8 p.m.
Lord Hamilton of Dalzell: My Lords, I thank all my noble friends and all those noble Lords who have given us the experience of their enormously wide knowledge of the countryside; of farming in the hills, the lowlands and everywhere, and the terrible damage that will be done. Only the Government—and also, I have to say, my noble friend Lord Stanley and the noble Lord, Lord Hooson—take the complacent view that in spite of the additional costs put on tenant farmers, they will continue to farm happily and pay hundreds of pounds an acre in order to continue in their business. All I can say is that if that were the case, the compensation mechanism which I propose would then offer no compensation because there would be no compensation to offer. But to have no such mechanism in place would simply mean that one would have to have a major disaster before the Government finally decided that something ought to be done. I believe that that is very unsafe.
My noble friend Lord Mountgarret said that he thought that the cost of having a compensation scheme would be very high, and vast figures were bandied about. That is a nonsense. We do not claim that compensation arrangements should come into force until the quota rights are sold away. Therefore the matter would have to be settled then. If the Government were right and it becomes an issue as to when the quota is issued, there will still be rent reviews and all the mechanics will be gone through for deciding the value
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and effect on the tenancy year by year. Therefore at some stage or another those costs will be incurred willy-nilly. Therefore I discount the argument that costs destroy these things.
Without keeping your Lordships for much longer, I must turn to the Government's case on their legal position. The Government's case depends on saying that they are legally incapable of doing anything about the matter. It would be extraordinary were we in this country to have a different system from that reigning in the rest of Europe, where tenant farmers are not a problem. This, my noble friend says. despite the assurances that I read out earlier from M. Steichen, what the commissioners have said and what appears to be the general interpretation of Article 13, put in specifically by the Government, with the Community's agreement, to solve problems which are particular to this country because of its tenant farmer relations.
I am not prepared to watch this Government destroy the tenant farmer relationship. Many noble Lords have expressed their great concern about what will happen to their tenants. This is not an issue between landlords and tenants. We are friends with our tenants, we work in co-operation with them and their affairs are our affairs. It is our business to make sure that our tenants survive happily.
I cannot sit down without asking your Lordships to give me their opinion on this matter.
8.12 p.m.
On Question, Whether the Motion shall be agreed to?
Their Lordships divided: Contents, 69; Not-Contents, 52.

Division No. 1

CONTENTS

Airedale, L.

Kinloss, Ly.

Aldenham, L.

Kinnoull, E.

Barber of Tewkesbury, L.

Kintore, E.

Barnard, L.

Kitchener, E.

Beaumont of Whitley, L.

Knutsford, V.

Boardman, L.

Lawrence, L.

Bridges, L.

Lindsey and Abingdon, E.

Buccleuch and Queensberry, D.

Lytton, E.

Burton, L.

Malmesbury, E.

Carnarvon, E.

Manton, L.

Chorley, L.

Masham of Ilton, B.

Clinton, L.

Middleton, L.

Cornwallis, L.

Monson, L.

Craigavon, V.

Moran, L.

Crawshaw, L.

Mountgarret, V.

Cross, V.

Mulley, L.

Daventry, V.

Napier and Ettrick, L.

De L'lsle, V.

Norrie, L.

De Ramsey, L.

Onslow, E.

Denham, L.

Palmer, L.

Devonport, V.

Peel, E.

Donegall, M.

Ridley, V.

Dormer, L.

Roxburghe, D.

Downshire, M.

Saint Oswald, L.

Gray, L.

Salisbury, M.

Halifax, E.

Saltoun of Abernethy, Ly.

Halsbury, E.

Somerset, D.

Hamilton of Dalzell, L. [Teller.]

Swinton, E.

Harrowby, E.

Walpole, L.

Hastings, L.

Westbury, L.

Hertford, M.

Wharton, B.

Holderness, L.

Willoughby de Broke, L.

Hothfield, L.

Winchilsea and Nottingham, E.

Hylton-Foster, B.

Yarborough, E.

Iddesleigh, E.

495

NOT-CONTENTS

Archer of Weston-Super-Mare, L.

Gray of Contin, L.

Arran, E.

Hacking, L.

Astor, V.

Hayhoe, L.

Blatch, B.

Hemphill, L.

Blyth, L.

Henley, L.

Braine of Wheatley, L.

Hives, L.

Caithness, E.

HolmPatrick, L.

Carnock, L.

Howe, E.

Chalker of Wallasey, B.

Jenkin of Roding, L.

Cranborne, V.

Long, V.

Cumberlege, B.

Lonsdale, E.

Dean of Harptree, L.

Lyell, L.

Elton, L.

Mackay of Ardbrecknish, L.

Faithfull, B.

Marlesford, L.

Ferrers, E.

Melville, V.

Fraser of Carmyllie, L.

Reay, L.

Gardner of Parkes, B.

Rodger of Earlsferry, L.

Goschen, V.

St. Davids, V.

496

Seccombe, B.

Suffield, L.

Sharples, B.

Thomas of Gwydir, L.

Skelmersdale, L.

Trumpington, B.

Stanley of Alderley, L.

Ullswater, V. [Teller.]

Stewartby, L.

Vinson, L.

Strathcarron, L.

Wakeham, L.

Strathclyde, L.

[Lord Privy Seal.]

Strathmore and Kinghorne, E.

Wise, L.

[Teller.]

Young, B.

Resolved in the affirmative, and Motion agreed to accordingly.

Malvern Hills Bill [H.L.]
Reported from the Select Committee with amendments and recommitted to an Unopposed Bill Committee.
House adjourned at twenty minutes past eight o'clock.