Lords Sitting of 8 December 1994

Preamble
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers— Read by The Lord Bishop of Coventry.

Chemical Weapons Convention: Consultation Document
Lord Mayhew Lord Mayhew asked Her Majesty's Government:
When they propose to introduce legislation to ratify the Chemical Weapons Convention.
The Minister of State, Department of Trade and Industry (Earl Ferrers): My Lords, legislation to enable the United Kingdom to ratify the Chemical Weapons Convention will be introduced as soon as parliamentary time and other government legislative priorities permit. My right honourable friend the President of the Board of Trade announced today in a Written Answer that the Department of Trade and Industry will issue a discussion document early in the New Year to canvass the views of industry on the implementation of the Chemical Weapons Convention in the United Kingdom.
Lord Mayhew: My Lords, will the noble Earl agree that this country has done more than any other to bring about this admirable convention; and that 16 countries have now ratified but Britain has not? What is the reason for this delay? Presumably, it is a matter of a short Bill; both Opposition parties have made it clear that they will give it a fair wind; and it cannot be claimed that the legislative programme is overcrowded with important measures. What is the reason for this?
Earl Ferrers: My Lords, I agree with the noble Lord on a number of points: first, the United Kingdom has indeed played a major part over a period of 20 years in getting this convention agreed to, and Britain has signed it. The noble Lord said that 16 states had ratified. In fact, the number is 17. But he will also understand, I am sure, that when the convention comes into operation it will have quite an effect on industry. It is necessary to discuss with industry the best way of setting about this. I can assure the noble Lord that the legislation will be introduced as soon as it can be.
Lord Ennals: My Lords, can the Minister clarify one point? He said that there is to be a discussion paper. Will that paper be published before legislation, or will deal with how the measure will be implemented? Will he accept from me that there are many of us who feel that Britain ought to ratify this measure at the earliest possible moment and that, for the reasons already given by the noble Lord, Lord Mayhew, we ought to be taking the lead? Is there not a danger with a discussion paper that there will be a long delay before there is legislation?
Earl Ferrers: My Lords, I hope that there will not be a long delay before the legislation is brought forward. The noble Lord will be only too well aware of the
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pressures that are experienced by any government in respect of legislative timetables. I have given the assurance that we will introduce this measure as soon as is reasonable.
The consultation document will contain the outline of our proposals for the implementation of the Chemical Weapons Convention and it will seek the views of industry. It will cover issues that are important to industry such as declarations; the way in which industries will be inspected; and respecting commercial confidences.
Lord Jenkins of Putney: My Lords, does the Minister agree that it is in the nature of things that when legislation affects industry there are bound to be people who are opposed to it? As it has long been the Government's policy that this legislation should be put into effect, would it not be much more encouraging and satisfactory for the Government to complete their legislative programme, put this legislation through and then discuss it afterwards? They are often ready to do that on other occasions; why not do it now?
Earl Ferrers: My Lords, that is a most extraordinary suggestion from the noble Lord. He will recall that periodically the Government are blamed for not taking account of people's views before they introduce legislation. We are doing the sensible thing and taking account of people's views.
The Lord Bishop of Coventry: My Lords, can the noble Earl inform the House of steps that are being taken by Her Majesty's Government to achieve full international application of effective intrusive inspection and verification measures with regard to chemical and biological weapons?
Earl Ferrers: My Lords, I think I can give an assurance to the right reverend Prelate that the inspection and verification of the way in which countries operate is an essential part of the convention. It will first come into operation 180 days after 65 countries have ratified. The chemicals in which Britain is interested are not those in Schedule 1, which will come into operation immediately, but those listed in Schedule 2 which will be banned when the schedule comes into force three years later. Ensuring that countries behave fairly and properly is an essential part of the convention.
Lord Mackie of Benshie: My Lords, will the Minister tell the House what he meant by "consulting industry"? Does he mean that industry in this country is heavily involved in the export of chemical weapons or with the manufacture for the home market of chemical weapons?
Earl Ferrers: My Lords, as the noble Lord will know, there are certain chemical weapons which are deeply offensive. The constituent part of those weapons can also be a chemical which is used by industry. One example is phosgene, which as a gas is very offensive, but which is used perfectly correctly in the plastics industry. We want to make sure that industry is not

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affected adversely in relation to the activities that it is perfectly legitimate for it to undertake, but that it does not sell or use such materials for weaponry purposes.
Lord Kennet: My Lords, the noble Earl said that there must be time for consultation with industry, which is very comprehensible. But should we take it that among the 16 or 17 countries which have ratified there are not also industrial powers?
Earl Ferrers: My Lords, I can only answer for Her Majesty's Government. I do not know what happens in the countries which have ratified. They have their own methods of ratification and doubtless some of them have their own methods of consultation.
The Countess of Mar: My Lords, does the noble Earl recall that I asked a similar Question early in the summer? Is it not the case that, if we do not ratify the convention by next month, there could be some very harmful implications for British industry?
Earl Ferrers: My Lords, I am aware that the noble Countess asked a similar Question. I am not aware that if we do not ratify within a month there will be serious implications, for the reason that the chemicals that are in Schedule 1, as I explained earlier, are the ones which operate immediately the convention comes into force. We have no industries which use those Schedule 1 chemicals for weaponry purposes. Therefore, they will not be affected. Our industry is concerned in the main with Schedule 2 chemicals, which operate three years later.
Lord Williams of Elvel: My Lords, the Minister said that the Government wish to canvass industry's views to find out which industries, if any, are adversely affected—I hope that I quote his words accurately. If industry (whatever "industry" may be) comes back to the Government and says, "We are all adversely affected", do the Government intend to drop the ratification proposal?
Earl Ferrers: My Lords, if I may say so, that is also a very curious question from the noble Lord. I said that the Government intend to ratify, and they will ratify. What I said that we intend to do is to discuss with industry the methods by which the implementation will take place. There is nothing sinister and nothing wrong about that.

Cot Deaths
3.14 p.m.
Lord Ashley of Stoke Lord Ashley of Stoke asked Her Majesty's Government:
What further steps they are taking to avoid child cot deaths.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege): My Lords, responding on the 18th November to media speculation about the causes of cot death, the Chief Medical Officer issued a statement which reiterated the earlier advice given to health professionals and parents
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during the Back to Sleep campaign. On 30th November he announced the composition of an expert group which has been formed to steer further work on cot deaths by the department.
Lord Ashley of Stoke: My Lords, is the Minister aware that most people will welcome the Government's decision to set up that group to look again at the question of whether toxic gases from cot mattresses can in fact contribute to child death? Is she further aware that the anxieties of many parents would be allayed if they could have a specific undertaking that that committee would look into the levels of antimony in human tissues, especially as the original committee failed to do so adequately?
Baroness Cumberlege: My Lords, the original committee made a very thorough investigation. Its findings were that there was no causal link between the antimony found in cot mattresses and those babies who suffered sudden infant death syndrome. The terms of reference of the new group are to review the findings of the Turner Report—the report to which I referred—in 1991 and to see whether there are any subsequent data on the hypothesis linking antimony with unexplained deaths in infants. It is to advise the Chief Medical Officer on what further studies should be undertaken to investigate postulated causal relationships between chemicals and cot deaths. I hope that that covers the point.
Lord Molloy: My Lords, when Dr. Calman, the Government's Chief Medical Officer, has called together the new group of experts—I believe that the Government made the correct decision and that it will be a great satisfaction to many people—and it has reported, will that report be submitted for examination in the House?
Baroness Cumberlege: Yes, my Lords.
Baroness Jay of Paddington: My Lords, will the noble Baroness accept that there are many worried parents who probably need immediate counselling and advice on this subject? We welcome some of the terms of reference of the new committee of investigation; but is the Minister aware that the Royal College of Nursing has set up a helpline on this subject which has already received many hundreds of telephone calls? What other action will the Government take to support that kind of proposal, which offers practical help to worried parents at the very moment when they need it?
Baroness Cumberlege: My Lords, I am sure the noble Baroness knows that we have a very sophisticated system with health visitors and midwives advising young parents on the care of their babies. We have also issued posters to be displayed in GP surgeries and leaflets on this matter. I should like to commend the Royal College of Nursing on its helpline. It has received 3,000 calls and the Foundation for the Study of Infant Deaths had 4,000 calls. It was a great pity that that particular programme caused so much anxiety and unrest among young parents.
Lord Ashley of Stoke: My Lords, will the noble Baroness forgive me if I challenge an assertion that she

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made in her Answer? She said that the previous committee conducted a thorough investigation, and that means a comprehensive investigation. I am stating that that committee did not investigate thoroughly the antimony levels in human tissues. That is the issue before us today. That is what we want the expert group to inspect. Will the Minister therefore consider that specific request? It is very important to the outcome of the whole investigation, to the parents and to other people.
Baroness Cumberlege: My Lords, the new expert group will do a very thorough job. It will take into account all the points made in the two television programmes. The original group looked into the hypothesis that toxic gases evolved from chemicals in cot mattresses and cot mattress covers, and therefore could have been the cause of sudden infant death syndrome. However, this group will do an even more thorough job.

Iraq: Sanctions
3.20 p.m.
Lord Archer of Weston-Super-Mare Lord Archer of Weston-Super-Mare asked Her Majesty's Government:
Whether they remain unwilling to lift sanctions on Iraq until they are convinced that Saddam Hussein will respect the rights of the Kurds.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, yes. The United Nations has repeatedly made clear to the Iraqi regime that there can be no question of relaxing sanctions until they comply fully with the relevant UN Security Council resolutions.
Lord Archer of Weston-Super-Mare: My Lords, while thanking the Minister for that reply, is it her opinion that things have improved for the Kurds in the north of Iraq in the past year or is Saddam Hussein still ignoring Resolutions 688 and 712?
Baroness Chalker of Wallasey: No, my Lords. Things have not improved. In his latest report the UN Special Rapporteur commented that there had been no improvement in Iraq's human rights record. Indeed, the situation has deteriorated even further during the past year. But we are all mindful of what needs to be done and are working to try to ensure that it is done.
Lord Ennals: My Lords, several times the Minister expressed concern for the Kurds and confirmed again just now that their situation in northern Iraq is getting worse rather than better. Is it not possible to negotiate some arrangement whereby the Kurds are not doubly disadvantaged by the sanctions? What attempts have the Foreign Office made to seek some sort of exemption for people who are clearly suffering?
Baroness Chalker of Wallasey: My Lords, in seeking any sort of exemption, one must be extremely careful to stay within the limits that we have already set of humanitarian goods being able to reach people in the country. Help is already going to the Kurds and in the
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past month new help has been sent to the Iraqis in the south who have been so terribly treated by the Saddam regime. I shall look into the matter to see whether there is any more that we can do. But Britain cannot do it alone. It must be done by the whole international community. Britain is second to none in its efforts to get help to those people.
Lord Boyd-Carpenter: My Lords, is it not painfully clear that the position in this part of the world will not be satisfactory so long as Saddam Hussein is there?
Baroness Chalker of Wallasey: My Lords, my noble friend knows that I have agreed with him on this point many times in the past. It is an easier thing to say than it is to obtain. That is why we have done our best to help the Iraqi people to set up the Iraqi National Congress to give strength to those who are determined to fight. I share my noble friend's view that, as long as Saddam Hussein remains, there will not be an appreciable difference, though we can welcome the fact that there has now been at least the Iraqi recognition of Kuwait, which was long overdue. However, we must remain cautious. Only one month before the Iraqis signed up to recognise Kuwait they had been threatening troops on the Kuwaiti border.
Baroness Blackstone: My Lords, following the question of my noble friend Lord Ennals, does the Minister agree that, while it is right to continue sanctions against Saddam Hussein's regime, we owe it to the Kurds to do all we can to mitigate the effects of those sanctions? Can the Minister tell the House whether the aid that the British Government committed to the Kurds in northern Iraq—I understand that it amounts to £4.7 million mainly for medical assistance and village rehabilitation—is reaching those for whom it is destined?
Baroness Chalker of Wallasey: My Lords, it is certainly true that a high proportion of what is sent is reaching the Kurdish people in the north. Since April 1991 the United Kingdom has contributed over £66 million worth of aid and I have just set aside another £8 million of specific aid to help the plight of the Iraqi people, particularly the Kurds, and the Shia Moslems in the south who are also affected. Aid is getting through, though not 100 per cent. We know that soldiers of Saddam's regime make forages into Kurdish villages to obtain what they can. That does not mean that we shall stop operating and trying to get help to the Kurdish people and to the people from the marshes.
Lord Milverton: My Lords, does the Minister agree that, while we are remembering the Kurds in northern Iraq, some other Kurds also need to know that we are trying to help them? I refer to the Kurds in Turkey. Can my noble friend say that they are being remembered for assistance as well as those living under Saddam Hussein?
Baroness Chalker of Wallasey: My Lords, there is no specific programme of assistance to Kurdish people in Turkey. They live in a society where we constantly remind the government of the needs of all the people of Turkey. Turkey is not only a member of NATO, but

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also a member of other organisations. If there is deprivation, it must be handled with the Turkish Government, and that we shall seek to do.
Lord Kennet: My Lords, can the noble Baroness tell us which, in the Government's opinion, is worse in its handling of the Kurdish people—the Iraqi Government or the Turkish Government?
Baroness Chalker of Wallasey: My Lords, there is no comparison between the way in which Saddam Hussein treated innocent Iraqi people—Kurds and Shias—and others who are not Kurds or marsh people. There is no comparison. I am amazed that the noble Lord should ask such a question.
Lord Molloy: My Lords, the noble Baroness is correctly pointing out Saddam Hussein's attitude to anybody who is opposed to him. But is she prepared to accept that those of us who have visited that country and know that what she said is absolutely true also know that some Kurds are in the pay of Saddam Hussein and are willing to betray their fellow Kurds to any innocent western journalist with whom they may be in contact?
Baroness Chalker of Wallasey: My Lords, in some isolated circumstances the noble Lord may be right. But the majority of Kurds, particularly those who form the Iraqi National Congress, are fighting for their own people and trying to stabilise the Kurdish parts of Iraq.

Defence Cuts
3.28 p.m.
Lord Williams of Elvel Lord Williams of Elvel asked Her Majesty's Government:
On what basis they justify defence cuts of £2.5 billion (in constant prices) between 1993–94 and 1997–98 as announced in a "note to editors" accompanying the Budget Statement of 29th November.
The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Henley): My Lords, the 1994 settlement is sufficient to maintain in full the front-line force structures set out in the 1993 and 1994 Defence White Papers. The reductions in the defence budget over this period principally reflect implementation of the final stages of the Options for Change restructuring programme; expected savings from the implementation of Front Line First and the effects of efficiency improvements.
Lord Williams of Elvel: My Lords, I am grateful to the noble Lord, in so far as I can be, for that Answer. Can he confirm that comparing like with like there will be a cut of approximately one-tenth in the defence budget? In fact, in real terms it is slightly over one-tenth. It will go down by 3 per cent. next year, 6.5 per cent. the year after, 1.5 per cent. the year after that and so forth. Is that consistent with what the Secretary of State said to the Conservative Party Conference?
Lord Henley: Yes, my Lords, it is entirely consistent. As I made clear, those were not new announcements, as
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the noble Lord seems to be implying. They result from Options for Change, the Defence Costs Study and other such reviews. The new plans show a cost programme reducing in real terms by some 11 per cent. I can assure the noble Lord that last year's press release showed a very, very similar reduction. It is, in fact, nothing new.
Lord Ewing of Kirkford: My Lords, these figures contain the belief within the Government that the tender price offered by Devonport for the refitting of Trident submarines will be met. It now seems absolutely clear that there is no stability in the docking facilities at Devonport and that substantial sums of money, running into many millions of pounds, will have to be spent to stabilise the facilities. There are also other serious defects in the facilities at Devonport. Who will have to pay these additional sums of money? Would it not make more sense, even at this date, to transfer the refitting of the Trident submarine fleet from Devonport to where it should have been in the first place, Rosyth?
Lord Henley: My Lords, the noble Lord will understand if I do not allow myself to be drawn into quite such detail on the question of Rosyth. However, I can give him an assurance that my right honourable friend will be answering a question on that subject later today.
Lord Howell: My Lords, is it not the case that, when the Secretary of State for Defence and the Prime Minister made statements to the Conservative Party Conference that there would be no further cuts in defence, they must have known that these further cuts which had not been announced were in preparation for the Budget, one month later in November? Why did that take place? Does the Minister realise that the justification for the change on page 121 of the Red Book is that it is to meet military redundancies and to enhance our front line situation, both of which any normal person would think would require an increase in defence expenditure and not a reduction?
Lord Henley: My Lords, I can assure the noble Lord in no uncertain terms that I have not been misleading the House in saying that these were not new cuts. The reductions were announced in last year's Budget. In fact the 1994 settlement is worth around £220 million more in 1995–96 and £310 million more in 1996–97 than the previous plans allowed. The cash reductions for 1995–96 and 1996–97—some £300 million and £200 million—are more than compensated for by the fall in inflation, which no doubt the noble Lord welcomes. I can assure him that when my right honourable friend the Prime Minister and my right honourable friend the Secretary of State for Defence made their remarks about the need for a further period of stability they knew that we had sufficient resources in this settlement to sustain the range of front-line capabilities described in the recent statements on the Defence Estimates.
Lord Jenkins of Putney: My Lords, is the noble Lord aware that if the Government were to give up

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Trident they could save much more money than this? There need be no personnel discussions. They could even have more military bands.
Lord Henley: My Lords, we have no intention of giving up Trident. I do not know what the views of the party opposite are but I am very interested to hear the noble Lord's views.
Lord Williams of Elvel: My Lords, does the noble Lord recall that when we debated what was known as Front Line First your Lordships were assured that the savings coming from Front Line First through more efficient administration would go towards the procurement of weapons for the front line? We were assured by no less a person than the present Leader of the House. In the light of the figures which appear to have been slipped out in an appendix to an appendix to an appendix to the Budget Statement, can the noble Lord explain why they told us that the savings from Front Line First were to be used for front-line equipment?
Lord Henley: My Lords, I am sorry but I think that this is entirely unacceptable. The noble Lord is accusing us of what amounts to dishonesty by saying that we were announcing new cuts. We were not. We were repeating the same announcements that we had made in previous years. As my noble friend the Leader of the House said on the occasion of the announcement of the Defence Costs Study—Front Line First—the new plans will mark an end in the upheaval of defence, they will preserve all the front-line capabilities necessary and they will fund necessary enhancements in the equipment programme.

Christmas Recess
Lord Strathclyde: My Lords, it may be for the convenience of the House to know that, subject to the progress of Business, it is expected that the House will adjourn for the Christmas Recess on Friday 16th December. It is expected that the House will sit at 11 a.m. on that day. It may also be for the convenience of the House to know that it is expected that the House will return on Monday 9th January.
Business
Lord Strathclyde: At a convenient moment after 3.30 p.m., my noble friend Lord Henley will, with the leave of the House, repeat a Financial Statement that is to be made in another place.

Financial Statement
3.36 p.m.
Lord Henley: My Lords, with the leave of the House, I shall now repeat a Statement being made in another place by my right honourable friend the Chancellor of the Exchequer. The Statement is as follows:
"With permission, Madam Speaker, I should like to make a Statement. Following the vote on Tuesday night, I told the House that the Government remained committed to taking all the necessary measures to put
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the public finances on a sound footing. The reductions in the public sector borrowing requirement I announced in my Budget were welcomed at the time by the business community, by the financial markets and by this House. During the course of the Budget debate few right honourable and honourable Members questioned that judgment. To keep these borrowing plans intact, I said I would be bringing forward measures to make good the gap in the public finances from holding the rate of VAT on domestic fuel and power at 8 per cent.
"I can now tell the House what those measures will be. A press note filling out the details of my proposals will be available from the Vote Office as soon as I have sat down.
"Holding the rate of VAT at 8 per cent. will reduce revenue by about £1 billion in 1995–96 and, reflecting the quarterly profile of payments, £1.5 billion in subsequent years. These are the amounts that I have sought to recover.
"Since VAT on fuel will remain at 8 per cent., it would be quite wrong to increase social security expenditure by providing the full compensation package previously announced to help people with VAT at 17.5 per cent. We will adjust the amount that would have been paid if VAT on fuel had been increased, saving around £200 million in 1995–96 and subsequent years. We will of course keep in place the help already given for 8 per cent. VAT on domestic fuel and power. We will increase benefits fully in line with the relevant cost-of-living index, including the component reflecting the impact of last year's VAT increase.
"After these adjustments pensioner couples will receive help of at least £1.05 a week from next April. This will be more than the average weekly cost to pensioners of paying 8 per cent. VAT on fuel. I am also keeping unchanged the increases in cold weather payments and spending on the Home Energy Efficiency Scheme which I announced in the Budget and in last Tuesday's debate.
"This small change in the previously announced pension rates has a knock-on effect to the national insurance system, since the lower earnings limit is automatically linked to the single pension. National insurance contributions will therefore start at £58 rather than £59 a week from April 1995. The upper earnings limit will be unchanged. This will have the effect of raising receipts from national insurance contributions by some £50 million next year.
"The remaining gap for 1995–96 amounts to some £800 million. My first step was to look at public spending. In my last two Budgets I have been able to find savings of £43 billion in public spending over the four survey years. This is much larger than the increases in taxation that we have found it necessary to make to restore healthy public finances after the recession.
"We have managed to find these savings while increasing spending in real terms on key public services such as the National Health Service and the police. My objective remains to reduce government

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spending to below 40 per cent. of total national output. Both of my Budgets have made that objective much more achievable.
"The details of this year's extremely tight public spending settlement have already been announced by the relevant Secretaries of State. I do not consider it practicable or sensible to reopen those settlements today. At the time of my Budget, I struck a balance between spending and revenue designed to ensure that the economy remains on track for steady and sustainable growth. Nothing that has happened since then has led me to change that judgment for this year's settlement.
"The next area I considered to recover the shortfall in revenue was direct taxation. Since 1979, this Government have reduced the basic rate of taxation from 33 pence in the pound to 25 pence. and we also introduced the new lower rate of 20 pence. One-fifth of all taxpayers now pay tax only at this lower rate.
"When seeking to raise revenue in the 1993 Budgets my right honourable friend and I considered it necessary to freeze personal allowances and to reduce the married couple's allowance and the mortgage income relief allowance. I considered then that these increases in direct taxation were a sufficient and reasonable contribution to our revenue needs. That remains my view today. I do not intend to reverse my decisions to index the personal allowances and to over-index above inflation the elderly person's allowance and the 20 pence band.
"I also considered raising additional revenue from business taxation. In my Budget I provided as much help as I could for the business community. The reason was simple. Strong and thriving businesses are essential for a strong and thriving economy.
"I also listened during last week's debate to the Labour Party's proposals for closing loopholes and introducing a windfall tax on utilities and I have done some work on studying them. They are not serious options for revenue raising. This Government have never been a friend to the tax avoidance industry and Conservative Chancellors have changed loopholes year after year. The last two Budgets speak for themselves. I raised nearly £3.5 billion between 1994–95 and 1997–98 by closing loopholes. The honourable gentleman's proposals on loopholes are undesirable changes in taxation on legitimate business.
"I have looked many times at his proposal on executive share options. The policy behind tax relief for executive share options is geared to encouraging companies to motivate key employees and benefit all shareholders. Executives are liable to capital gains tax once they sell their shares. The right honourable gentleman exaggerates the cost of the scheme. He has claimed that I could raise £200 million by 'reforming' it. The actual total cost of this relief is estimated at around £50 million.
"The suggestion of a windfall tax is, by definition, a one-off tax. It could not replace permanent annual loss of a flow of revenue. In any event, it appears to be based on the suggestion of taxing profits on gains
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which, as the right honourable gentleman appears to have discovered in this morning's press, are already liable to taxation. A windfall tax would simply be another tax on a particular sector of industry. Like other taxes on business, it would inevitably have adverse effects on that business sector's investments and prices.
"My third and remaining option for 1995–96, therefore, has been to look at indirect taxation. As the House has rejected an increase in indirect taxation to which it had previously agreed, it is wholly consistent with my Budget strategy and it preserves the shape of the Budget to fill the hole with increases in indirect taxation. I have decided to bring forward certain increases in taxation in addition to those announced in my Budget to take effect from midnight, 31st December 1994.
"I propose that the duty on tobacco products, with the exception of hand-rolling tobacco, will increase by just under 4 per cent., equivalent to 6 pence on a packet of 20 cigarettes. This further increase in tobacco duty is consistent with our policy of increasing prices to discourage smoking.
"I also propose that the duties on road fuels will rise by a further 1 penny per litre. I have kept these increases to the minimum to limit the burden on business users and the rural motorist. Even after the increases, petrol will still be cheaper in real terms than a decade ago and cheaper than for our main European competitors. The increase will also play a part in our strategy for curbing the emission of CO2. We remain fully committed to the target of reducing CO2 emissions to 1990 levels by the year 2000.
"Finally, I propose that duties on alcohol will rise by around 4 per cent. This is equivalent to 1 penny on a pint of beer, 5 pence on a bottle of wine and 26 pence on a bottle of whisky. For the reasons set out in my Budget Statement, I had hoped to spare these industries any increase in duty this year. But in the present circumstances and as a result of my need to raise revenue from sources other than VAT on fuel, I have reluctantly judged it necessary to raise some additional revenue from them.
"Taken together, these increases will raise £180 million in the current year and nearly £800 million in 1995–96. In total this is sufficient to meet the shortfall next year. I expect the public sector borrowing requirement next year to be the same as I announced in my Budget Statement.
"Let me turn now to the following year, 1996–97. For that year I need to raise £1.5 billion. The tax measures that I have announced today will raise an additional £850 million.
"The impact of the higher duties that I have announced today on the RPI will not be as great as the impact would have been from the second stage of VAT on fuel. Inflation will therefore be very slightly lower than expected leading to further public spending savings on benefits of around £160 million in 1996–97 and later years. And there will be savings of around £200 million from the withdrawal of help to compensate for the second stage of VAT.

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"There will, however, remain a further gap of around £300 million to be filled in 1996–97. I propose to finance this gap by reducing the public expenditure control totals for those years. For the time being I will score that reduction through a reduction in the provision that I have made for the reserve. The eventual consequence for departmental programmes will be addressed in next year's spending round. I expect the public sector borrowing requirement to be as I announced in my Budget Statement in 1996–97 and in subsequent years.
"Resolutions under the Provisional Collection of Taxes Act to hold VAT on fuel at 8 per cent. with effect from 1st January 1995 will be tabled very shortly. My right honourable friend the Leader of the House will then be arranging a debate before the House rises for the Christmas Recess.
"I said in my Budget speech that the British economy was currently facing the most favourable set of economic circumstances it has seen for many years. Trade figures published only this morning show that exports are up 14 per cent. in the past year and once again at record levels. The trade deficit is the lowest it has been for almost 10 years. The outlook for jobs and future prosperity for men and women in this country is improving day by day.
"This House has an obligation to keep this healthy recovery on track. We have an obligation to act responsibly and not be tempted by short-term populist measures which would undermine confidence in the Government's commitment to sound public finances. The measures I have announced today ensure that that commitment is fulfilled."
My Lords, that concludes the Statement.
3.47 p.m.
Lord Peston: My Lords, I thank the noble Lord for repeating the Statement. I do so most sincerely. But I am bound to say that responding to a Statement, sight unseen, is an absurd way for me and the rest of your Lordships to go on. All of us will respond as best we can. But there is an overwhelming case for dealing with these matters in a different way.
There is certainly an overwhelming case for your Lordships to have some time, as I understand the other place will have, to debate these matters before Christmas. I know that we always say that this is a matter for the usual channels, who will take your Lordships' views into account. But too frequently they do not. Thus even on an important matter like this today, as I understand it, the Back-Benchers will be limited by our usual rule on Statements to 20 minutes after the Front-Benchers have had their say. That will not do. There are great events occurring in our country and your Lordships are placed on the sidelines as spectators. It is about time that we asserted ourselves a bit more and demanded the right to discuss problems like this when they occur and not when the relevant events are history.
We start from a different position from that,' of the Government because we believe that this policy was mistaken in the first place. What I have not heard from the noble Lord—and I must ask him this question among others—is this. Do the Government still believe
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that the tax on domestic fuel was a good thing? There has not been a word of withdrawal on that. Do the Government believe that they were right to have had the second tranche of that tax, which they have now had to withdraw, or can we at least be told that in future there will not be a further increase when they feel that they can get away with it? Is that the end of at least the second tranche? We need to have an answer to that.
Before turning to the detail, the other thing that I have to say, very unhappily, is that this is nothing to do with economics or finance; it is all to do with politics. It is all to do with the noble Lord's right honourable friend papering over the cracks in a totally split party. It is also to do with the Government desperately trying to think of a way of taking income away from the public by means of taxes and then giving people a bit back later in order to try to get a few people to vote Tory at the next election. The Government are taking with one hand and giving back with the other. I believe that neither of those political moves has any hope whatever of succeeding. I do not believe that the cracks have been papered over or that the Government can pull off that confidence trick yet again. The Chancellor would have been better advised throughout to stick to serious economic and financial policy-making.
Perhaps I may say en passant, since this is my only opportunity that, as I said yesterday, I believe that raising the short-term rate of interest was a mistake. It was a panic measure. It is disturbing to read in the newspapers today that at least some people believe that it is a preliminary to further such increases. To do that would be another example of misplaced policy. Indeed, the whole matter is puzzling because the noble Lord has said, and the Government have claimed, that the economy is doing very well. However, with respect to interest rate increases we have a paradox because the Government are saying, "Yes, we are doing well so we had better stop that and make sure that we do not do too well". To use an expression that we came across not too long ago, the Government are saying, "We can see some `green shoots' so we had better make sure that there is a bit of winter frost to destroy them".
I shall ask questions in a moment about the details—in so far as I can grasp them—but the other thing that puzzles me is that this whole matter is to do with very little or almost nothing. The way in which we approach the Budget in our country makes it a crisis if any attempt is made to amend it or to deviate from what the Treasury wants. Other countries manage these matters quite differently. Other countries do not regard it as a crisis or a catastrophe if the legislature endeavours to change fiscal proposals. They are discussed rationally and the legislature often get its own way. The Government seem to be placing themselves in peril. Indeed, they are in peril for a good many reasons, but it is absurd for the Government to place themselves at risk in this way.
I believe that if there could be a free vote in your Lordships' House on this matter, a similar view would result here as in another place, but we are not allowed to have such a vote because of our predecessors' misdemeanours in 1911. There is nothing that I can do about that. I cannot even blame any Member of your Lordships' House for what happened in 1911, but I

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would certainly like the opportunity to exercise that kind of power. However, unlike what happened in 1911, if I could exercise such power, I would then defer to the other place in due course. As I was saying, it is absurd that the Government should be placed in peril simply because, in my opinion, some sensible people rightly thought that it was a stupid tax.
I turn now to the detail, although it is immensely difficult to do so at the moment. Related to the question of whether the Government really still believe that what they were doing (until they failed to do it) was right is the question: Are the Government now telling us that they truly believe in what they are now doing? Or are the Government about to tell us that if they had the chance they would like to be able to impose the extra VAT on domestic fuel? Are they saying, "We are only doing these things because we can't do what we want"? What is the Government's position? Are they going to defend the tax increases because they believe that they are intrinsically correct or because they do not know what to do?
I ask that because I would certainly prefer one or two of the propositions to increasing the VAT on domestic fuel. Noble Lords opposite know my views on smoking. I believe that one of the best ways to reduce the incidence of smoking is to raise the excise duty on tobacco. I have no difficulty whatever with that. Indeed, I preferred that to what was proposed. My own view is that if we could have approached such matters sensibly, we would never have gone down the path of putting VAT on domestic fuel; instead, we would have done something about tobacco duty.
I know that the alcohol question is a little more difficult. On the one hand, I believe that the Treasury should raise as much revenue as it can from drinking but, on the other hand, I know that there is the problem of competition in a free market in Europe. It is a difficult technical problem. Does the increase in alcohol duty include the reduction in the duty that is being reversed on champagne and other sparkling wines? Perhaps the Minister can tell us about that very important matter.
Lord Stoddart of Swindon: My Lords, what about the champagne socialists?
Lord Peston: Exactly.
I turn to my next point. In taking £200 million away from pensioners, I take it that the noble Lord is saying that pensioners were to get that £200 million to offset the second tranche of the increase in VAT and that he is now saying that, because there is no increase in VAT, the Government are taking back whatever the sum is just to show how generous they are. I take it that it will amount to about 35p per pensioner. Are the Government saying, "Just to show what a caring government we are, we are taking that 35p away from you"? Can the noble Lord confirm that?
I have referred to sitting on the sidelines and I know only what I learn from sitting on the sidelines, but we are told that a great deal of extra money was found as part of a package to buy off the noble Lord's honourable friends who opposed the increase in the second tranche of VAT. I thought that the sum was £100 million. Can
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the noble Lord tell us what has happened to that £100 million? Has it just disappeared? Indeed, from where was it being found in the first place? It is not for me to advise the Government in their pathetic attempts to try to recapture some popularity, but having got the Treasury to agree to that £100 million, I should have thought that it would be sensible not to let the Treasury pinch it back again. I would have found a way of not taking that sum from the pensioners at least. But that is up to the Government.
Although I am keen to have a debate on this matter, I do not feel that this is the correct time to go through, as did the noble Lord, the main suggestions put forward by the Opposition. There is no hurry for me. Only the others will be made to hurry. The noble Lord did us the honour of telling us that he had considered seriously all the suggestions that had been made by the Labour Party. I must advise him that I am shocked by the Treasury's rejection that it wishes to rule out any intensification of the way in which we deal with loopholes. I am unhappy about that. If we have an opportunity to debate it, I shall explain to the noble Lord how we can deal much more seriously with loopholes than is the case at present.
I take a similar view of executive share options. I am amazed to discover that there is a new Treasury doctrine that we do not care for windfall taxes. I should like to know the date of that Treasury doctrine. The rule in the Treasury used to be, "We'll tax anything we can and keep what we can get away with. The fact that it was a windfall will not bother us at all". Perhaps the noble Lord could reflect on that and tell me whether he would like to consider the matter further.
I have nearly reached my final remarks. What really puzzles me as an economist is that we are heading towards a public sector borrowing requirement of £20 billion with a lower figure still to come. Speaking from memory, I recall that the margin of error in the public sector borrowing requirement is plus or minus £6 billion. That is in the nature of such economic figures. Is it not strange that within a number such as £6 billion we are footling around with £200 million which is of a totally lower order of magnitude? Why does not the Chancellor approach this matter rationally and say, "I wanted to do it, but the economy is doing pretty well, and I wanted it to carry on doing well", and let us forget the whole thing, apart from apologising to the pensioners?
I conclude by echoing the remarks of my right honourable friend the Leader of the Opposition in the other place. He offered to help the Government out of their difficulties in this matter. I should like to echo those remarks. I wish to be as helpful as I possibly can, because I am concerned about the future of our great nation, and my desire is that the economy should not be made worse than it otherwise would be. Will the Minister tell his right honourable friend the Chancellor of the Exchequer that if he feels that he needs my advice, which I feel strongly he does, he has merely to pick up the telephone and ask, and I shall respond as positively as I can?
Lord Ezra: My Lords, I too should like to thank the Minister for having repeated the Statement, and to

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support what the noble Lord, Lord Peston, has said, that, exceptionally on this occasion, we on this side of the House did not receive a copy of the Statement, something which I regard as rather rare in our proceedings on such an important issue. Furthermore, I hope that we can have time for a longer debate on this matter.
The whole issue raises the question of what is the strategy behind the Budget. The Chancellor has been knocked off course on a relatively small part of the Budget; but that calls into question whether the aim is to support our long-term economy or to build up a reserve to use for a short-term political purpose. If in the next Budget the benefits which have been derived from the improvement in the economy are used purely for short-term purposes, then I should have thought that the thinking was deficient. I should like to have an assurance from the Minister that the intention is to build up the economy; that as we derive greater benefit from the current improvements, they will be ploughed back into the business of Britain in the form of stimulating further investment; to improve our infrastructure; and to ensure that we can overcome the next downturn in the world economy more effectively than we have in the past. That is the first point that I should like to raise.
The second point is one that has already been referred to by the noble Lord, Lord Peston, and that is the interest rate increase. Was the motivation for that increase a feeling that the economy was overheating, and that it would have been imposed in any event, or was it a reaction to the Government's failure to get through their proposal for VAT on fuel? We need to know what led the Government so quickly to introduce an interest rate increase. If it is due to the overheating of the economy, are they concerned about that seriously, and can we expect further increases in interest rates in the near future?
As to the specific measures taken, I believe that most would agree that if additional revenue had to be found, then it would best be found in areas where we should have fiscal disincentives—disincentives on smoking and drinking, and to deal with the problem of pollution from transport. I must say that I concur with the last question posed by the noble Lord, Lord Peston, bearing in mind that this represented such a small proportion of the total revenues about which we are talking, was it necessary to consider raising additional taxes anyway?
Perhaps I may conclude by saying that this has been a most disturbing episode. We are not clear what is the Government's fiscal and financial strategy, and the way in which this has been dealt raises many further doubts.
Lord Henley: My Lords, I start by giving the noble Lord, Lord Ezra, a categoric assurance that obviously we intend to see the economy build up. That is what my right honourable friend the Chancellor of the Exchequer was making clear in his Statement. That is why he made the decisions that he did. I am somewhat surprised by the attitude of the two noble Lords, particularly, that of the noble Lord, Lord Peston, a distinguished economist. He seemed to imply that £200 million was a figure which was not worth bothering about. I have to explain to him that we are talking not about £200 million but
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about £1 billion. That is a fairly large sum, and I suspect that his attitude to those relatively insignificant sums—as he terms them—probably explains why my right honourable friend the Chancellor of the Exchequer is the Chancellor of the Exchequer and why it is exceedingly unlikely that he will be ringing up the noble Lord to seek his advice. It probably goes some way towards explaining why all Chancellors of the Exchequer for the past 15 years have been Conservatives.
I note the noble Lord's request for a debate. He makes such requests on many occasions. I can say only that I am sure that my noble friend the Leader of the House heard his request. I should remind him that we do not debate the Budget, and this is to some extent an offshoot of that. We recently had a debate on the economy during the debates on the Queen's Speech. We normally have an opportunity to have a debate on Second Reading of the Finance Bill.
Perhaps I may move on to the subject of VAT, and whether we thought that it was a good tax, and whether we shall be returning to it at some later stage. We believe in a broadly based tax system. We thought it was therefore sensible to go ahead with the second stage of VAT on fuel, not least because we provided considerable protection for pensioners, disabled people and other vulnerable groups. We should have preferred not to have increased excise duties, but we were left with no option. Obviously it is not without cost.
The most important thing is that we maintain healthy growth by sticking to the path mapped out for public borrowing. I can assure the noble Lord that we shall continue along that line. The noble Lord asked about the £100 million. As that was part of the compensation for the second stage of VAT on fuel and power, it is only right that it should have been withdrawn when the VAT vote was lost.
Both noble Lords asked about the rise in interest rates. Our monetary policy is based on the inflation outlook, and the half point rise yesterday was justified in those terms. We are committed, unlike noble Lords opposite, to avoiding the boom/bust cycle. It is important that we made that increase to maintain confidence in our finances. I do not wish to speculate on any future tax increases.
Perhaps I may deal with one or two small points. The noble Lord, with his Socialist interest in champagne, asked whether the increases announced would apply to it. I can assure him that the earlier reduction will still apply, because sparkling wine was taxed at a rate higher than similar products, including even stronger fortified wines, and that seemed wholly anomalous. Obviously the newly adjusted downwards rate will be adjusted upwards by the same percentage as other products and therefore the noble Lord will find a small increase of some 7 pence also on his bottle of champagne, but I dare say that he will manage to live with that.
Lastly, perhaps I may repeat that we are as committed as anyone to fighting genuine loopholes fully. We have done so on many occasions, and on occasions the party opposite has voted against those proposals. The Opposition's proposals put forward by the noble Lord's

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right honourable friend were not loopholes but taxes on business. I hope that that deals with most of the points put to me by the two noble Lords.
4.10 p.m.
Lord Boyd-Carpenter: My Lords, I warmly support the request of the noble Lord, Lord Peston, that your Lordships' House be given an opportunity to debate this Statement in full. It is slightly absurd that, while the two party spokesmen opposite have a reasonable allowance of time, the rest of us are confined within 20 minutes. Given the immense importance of the subject and the wide variety of expertise in this House, it is absurd that we should be so confined. I beg my noble friend seriously to consider arranging a full day's debate on the Statement in order that all Members of your Lordships' House can contribute.
There was little, if any, mention in this Statement of the Government being in the situation in which they were placed as a result of the decision of another place, reducing public expenditure. Surely that would have been the best method of adjusting the balance. I remind my noble friend that this year legal aid is being increased by £100 million. If we are so hard pressed and in such difficulties that we have to increase taxes in order to achieve a balance, surely thought should be given substantially to cutting back on legal aid.
Lord Henley: My Lords, as regard the first point that my noble friend made, I can only express a degree of sympathy. I recognise that there is considerable expertise in this House; we have as Members former Chancellors of the Exchequer, Chief Secretaries and writers of letters to The Times. I remember a great letter that was written some 15 years ago. I imagine that many people would care to debate these matters and my noble friend the Leader of the House heard what my noble friend Lord Boyd-Carpenter said. However, there are other occasions on which we can debate them.
My noble friend made a substantive point about reductions in public expenditure. My right honourable friend believed that after going through the public expenditure round it would be invidious to go back to departments to seek further reductions. The Government are committed to seeing a proportion of GNP that is taken up by public expenditure reduced over the years. That is what my right honourable friend the Chancellor of the Exchequer would like to see. I shall not comment on particular departments, although my noble friend raised the question of legal aid. The general point is that it would have been invidious to go back to departments after having achieved a settlement.
Lord Marsh: My Lords, does the Minister accept that many people will agree with the noble Lord, Lord Peston, that the measures that have been outlined are a preferable alternative to the Government's policy? That is not a unique discovery on my part because for some months almost everyone in the country has been saying that. The alternative measures that have been announced are preferable to what was taking place.
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Will the Minister accept that the worrying aspect is that £1 billion is a great deal of money as part of a Budget, because a Budget is made up of billions of pounds? The Government got into this situation as a result of their refusal to listen to anything that anyone said in this connection. They were prepared to sacrifice their majority and turn the issue into a major crisis. Does the Minister agree that that is a mixture of stupidity and, even more frightening, a growing level of crass arrogance?
Lord Henley: My Lords, I totally disagree with the noble Lord. He is incorrect in making such assertions. We believed that in a broadly-based taxed system it was right to go ahead with the second stage of VAT on fuel, not least because we were offering the appropriate protection to the various vulnerable groups. Obviously, others thought otherwise and therefore, having lost the vote, my right honourable friend said that he would not go ahead with the increase. However, unlike the noble Lord, Lord Peston, and, I suspect, the noble Lord, Lord Marsh, my right honourable friend considers £1 billion to be a fairly significant sum. That hole had to be plugged and that is why my right honourable friend came forward with the proposals that I announced in the Statement.
Lord Stoddart of Swindon: My Lords, my noble friend said that he wished to help the Government. I assure the Government that the only way in which I wish to help them is out of office, and the sooner that that happens the better things will be for this country and its taxpayers. I must say to my noble friend that if he expects the Government to listen to him, he is living in cloud cuckoo land. They do not even listen to the chairman and vice-chairman of the Tory Party. I understand that the chairman advised the Government that the introduction of the further 9.5 per cent. VAT on fuel would amount almost to political suicide. However, the Government went ahead which was, as the noble Lord, Lord Marsh, said, an act of sheer stupidity. Unfortunately, the country is having to reap the whirlwind of the seeds that the Government have sown.
Now the people are faced with a double whammy. First, their taxes are being increased and, secondly, perhaps as a matter of revenge, interest rates are being increased. Let us think about that and understand that, although the Government say that they are in favour of the family, the Budget has hit married couples. There has been a reduction in the married man's allowance and home buyers will be hit a second time by the increase in interest rates. It is all completely unnecessary.
Will the Minister confirm that this year taxation will increase by £26.4 million? Will he also confirm that, if the Chancellor increased the higher tax rate and adopted the measures that were put forward by my noble friend, he would not have to increase the cost of living and put burdens on those in our community who are already worse off?
Lord Henley: My Lords, I agree with the noble Lord in one small particular. He was correct in saying that his noble friend is living in cloud cuckoo land. I totally and utterly reject his allegation that interest rates were increased out of revenge against—I am not sure against

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whom it was supposed to be. Interest rates were increased for the reasons that I gave and not out of revenge.
I cannot confirm the noble Lord's figures about the increase in taxes. I am grateful to him for pointing to the right page in the Red Book. He knows perfectly well that taxes had to be increased in order to reduce the amount of borrowing. The noble Lord and, for all I know, his party are wedded to the idea of borrowing, borrowing, borrowing. However, that is not the way out. In the end, the gap had to be narrowed and there are two ways of doing that; the first is by having firm control of public expenditure, which we have; and the second is by increasing taxes.
Lord Aldington: My Lords, I too ask the Government—my noble friend the Leader of the House is in his place—to consider an early debate on this matter. I do so not necessarily for the reason given by my noble friend Lord Boyd-Carpenter but because some of us believe that the Government were right about the Budget, right about the interest rate and right about the proposals that they have brought forward today. One would not obtain that impression from listening to these questions.
Lord Henley: My Lords, I can only say that I am very, very grateful to my noble friend for making the point that the Government were right, although misguided people on the other side in the other place voted against certain parts of the Budget. I am sure that my noble friend the Leader of the House will have noted what my noble friend Lord Aldington said; namely, that it might be appropriate for us to have an early debate so that we can make the Government's case loud and clear and can demonstrate that this was a good Budget sadly led astray by others.
Lord Barnett: My Lords, I wonder whether the Minister has read the Government's Red Book. I am glad that he has it with him. Perhaps he will look at paragraph 4.32 of it. It is true that £1 billion is quite a lot of money, but to pretend that you can carry out a Budget with that degree of accuracy is, frankly, misleading.
As we see from the paragraph to which I have referred, the plain fact is that there is an estimated £10.5 billion margin of error in the public sector borrowing requirement. Therefore, is not the real mistake that the Government believed their own Whips and that they could get through the increase in VAT to 17.5 per cent.? They should have asked the Whips whether they can count properly because they obviously counted wrongly. For factual reasons, apart from how damaging it would be to ordinary people, as we have heard, they should not have proposed such an increase. Why on earth did they go ahead with that proposal, given the huge margin of error, when they did not need to?
Lord Henley: My Lords, I am reminded of the saying, "A billion here, a billion there and pretty soon you are spending serious money". I do not agree with the noble Lord. There was a gap there. I accept that there are margins of error; but if one takes out £1 billion, which in effect is what has happened as a result of the
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vote, it is quite right that the Chancellor should try to put it back and that is what he has tried to do in a manner which is the least damaging possible.
Lord Clark of Kempston: My Lords, does my noble friend not agree that it is essential in running a sound economy to keep control of the public sector borrowing requirement? I hope that my noble friend will agree that my right honourable friend could have increased the public sector borrowing requirement by £1 billion and that would probably have gone through unnoticed. On the other hand, he could have robbed the contingency reserve fund of £1 billion and not increased taxes. But in taking the decision that public sector borrowing is so essential, I believe that my right honourable friend has done the courageous thing and has increased taxation in order to make up that loss of £1 billion. Does my noble friend agree with me that that is a sounder way of running the economy rather than running into debt?
Lord Henley: My Lords, I agree totally with my noble friend. I am sure that he will understand when I say that it is unlikely that noble Lords opposite will agree with my noble friend and me on this matter. As he suggests, they would either have borrowed more or raided this fund or that fund. However, the sensible approach is that adopted by my right honourable friend the Chancellor of the Exchequer.
Lord Howell: My Lords, perhaps I may refer to the reference that was made in the Statement to public expenditure in the year 1996–97? Perhaps I may draw attention to the very serious situation which is affecting most local authorities, whatever their political complexion. They are now finding the greatest difficulty in financing education, housing and social services, which are the services that really affect people living in desperate conditions. Therefore, perhaps I may put in a plea in advance that if the Government are to look again at reducing the public sector borrowing requirement, which I understand, that they take into account the very real difficulties now affecting local authorities and therefore affecting many millions of deserving people in this country.
Lord Henley: My Lords, as my right honourable friend the Chancellor of the Exchequer made quite clear in the Statement, we are committed where possible to keeping down public expenditure. We have a very good record in that regard. But he made it quite clear also that we are committed to providing essential services. That is why he cited just two examples: there has been increased provision for both the police and the National Health Service. I am sure that my right honourable friend will note what the noble Lord has said about anxieties in relation to local authorities. But all parts of government, in one form or another, will be subject to some constraints while we remain committed to providing all essential services.
Lord Skidelsky: My Lords, does my noble friend agree with me that the Chancellor was committed to the VAT increase on fuel by his predecessor and had he not made an attempt to fulfil that commitment, the very same people who now condemn him for stupidity and arrogance would be the first to condemn him for

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weakness and breaking promises? Failure to attempt to fulfil that commitment would also have had a very damaging effect on the credibility of the Government.
Lord Henley: My Lords, my noble friend is quite correct. Another place had voted on that matter. That VAT increase had been voted through, I believe, on four occasions.
Lord Bruce of Donington: My Lords, many of your Lordships will be rather puzzled by the noble Lord's insistence that £200 million or £300 million are extremely important. I was very struck by that remark because it seems a little odd in view of the fact that the Government had a suicide pact on the necessity for increasing public expenditure to £3.5 billion per annum to be paid out to the European Community. A three-line Whip was put on that vote to increase public expenditure, and indeed it became a vote of confidence. Surely there must be a sense of proportion somewhere. Why do not the Government consider giving a complete rethink to this whole matter, rather than leaving it to a lot of technicians within the Treasury whose errors in the past have been so astronomical that even the Government themselves have found it necessary to reduce their number?
Lord Henley: My Lords, I am afraid that I cannot agree with the noble Lord. The noble Lord will have to accept that I think that the £200 million or £300 million to which the noble Lord referred is a significant sum, as is £1 billion. I shall be delighted if the noble Lord wishes to debate the issue of own resources. There will be ample opportunity to do that in due course. I believe that the decision made in Edinburgh was good. That has kept down the increases and the noble Lord should be grateful for that. Perhaps he will remember that the Commission was seeking something like £1.37 billion; but, as a result of the negotiations of my right honourable friend the Prime Minister, that was kept down to £1.27 billion. That was a decision which was generally welcomed by all sides of both Houses and, for all I know, by the noble Lord himself.
Lord Skelmersdale: My Lords, does my noble friend recall that yesterday my noble friend Lord Trefgarne introduced a debate in your Lordships' House on the subject of small and medium-sized businesses, with special reference to the manufacturing sector? In the course of that debate, my noble friend Lord Ferrers was asked to pass on to my right honourable friend the Chancellor of the Exchequer the view that it would be disastrous for the Government to take the easy option of increasing VAT by 0.5 per cent. across the board. Therefore, the Government are to be congratulated for not taking that easy option.
Secondly, does my noble friend recall that when VAT on domestic fuel and power was originally suggested and introduced at the rate of 8 per cent., part of the rationale for that was that it was a carbon tax? Does my noble friend consider that VAT on domestic fuel and
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power at 8 per cent. plus the additional taxes on road fuel will be a suitable equivalent to the proposed EC carbon tax?
Lord Henley: My Lords, with regard to the first point raised by my noble friend, I can confirm that my right honourable friend the Chancellor of the Exchequer always takes considerable note of what is said in debates in this House. I am sure that he noted the comments to which my noble friend referred in the debate introduced yesterday by my noble friend Lord Trefgarne.
In relation to his second point, even with the increases now of only 8 per cent. in VAT on fuel, prices for both electricity and gas have come down over the past few years in real terms, even after taking into account that 8 per cent.

Visas and Border Controls: ECC Report
4.30 p.m.
Lord Slynn of Hadley Lord Slynn of Hadley rose to move, That this House takes note of the Report of the European Communities Committee on Visas and Control of External Borders of the Member States (14th Report, HL Paper 78).
The noble and learned Lord said: My Lords, the report referred to in the Motion has one unusual feature. Your Lordships are well aware that the European Union now has what are appropriately, or otherwise, called three pillars. The first of those pillars consists of measures adopted by the Council and the Commission of the Community broadly as has been done until now. The second and third of those pillars are very different. They involve agreement by member states dealing with foreign affairs and security matters on the one hand and on the other hand home affairs and justice.
In the report we are concerned with a proposed draft regulation under the Community pillar dealing with visas and a proposal for a convention to be adopted by member states on persons who cross the external frontiers of the Community. That proposed convention is not made under the Community pillar but under Article K.3(2) (c) of the justice and home affairs pillar. This is the first time that the Select Committee has had to consider a proposal under the home affairs and justice pillar.
Our inquiry has shown that there can be difficulties in the overlap between proposals in a related area which comes under the two pillars. I am not sure whether "under" is the right word; there should perhaps be some other word as it is "pillar" and not "pillow". However, I shall use the phrase "under the pillar" in the hope that your Lordships will understand what I mean.
Our inquiry revealed even more a matter which the Select Committee has stressed throughout; namely, that the committee should be able to scrutinise a proposed draft text at an early stage rather than that the committee should be confined to considering proposals at a late stage when the United Kingdom is considering ratifying the conventions. To comment at that stage may well be to whistle in the wind or may lead to the whole process beginning again in a very unsatisfactory way.
Perhaps I may deal, first, with the draft external frontiers convention. It has had a somewhat curious history. Its negotiation began in 1991, but it ran into difficulties because Spain and the United Kingdom were not able to agree about the position of Gibraltar. After the Treaty of Union, it was realised that some of the matters in the proposed convention would have to be transferred to the regulation under the Community pillar.
The basic object of the convention is to lay down rules which will apply to persons who are not Union citizens and who are not, broadly speaking, nationals of a member state who want to cross the external frontiers of the Community. It is broadly agreed that there must be rules based on common criteria to cover such persons and rules which will involve close co-operation among the member states. The target is to strike a balance between eliminating threats to public security and public safety in the member states and at the same time preserving such openness for the rest of the world as is possible.
There are many detailed rules in the draft convention about the establishment of crossing points, the surveillance of frontiers, residence permits and visas. I propose to say nothing about them because I think that it would be wrong to detain your Lordships with a discussion of that kind of detail. Perhaps I may mention just four matters which seem to me to be issues of principle and issues of considerable importance.
One element of the convention, and an important part of it, is the preparation of a joint list for all member states of persons whom all the member states must refuse entry if they seek to come into the Community. That joint list is to consist of names which are notified by the member states and the decision as to whether a person shall be placed on the list is to be based on the threat which that person may represent to the public policy or national security of the member states. The decision to put forward a name is to be taken in accordance with national procedures on account of a number of factors, such as that the person in question has served a custodial sentence of more than one year.
It is obvious that, even now, before the convention is adopted, member states may under their own rules refuse entry to undesirable third-country persons who wish to come into their states. The difference in the new proposal is that, if someone is put on the list, he must be refused entry to all member states. If a businessman now wants to come to Paris and he is on the French exclusion list, he can presumably go to Brussels and his clients will go there to see him. Under the new proposed convention, he would not be able to go anywhere into the Community if he had got on to the list. There is no doubt that, in the view of the committee, the provision of a list is justified when the right people find themselves on the list.
However, the categories of persons who may be put on the list include two matters which gave us concern. The first is where there is information to the effect that the person concerned has committed a serious crime—that is, not a conviction but merely information to the effect that the person has committed a serious crime; and, perhaps even more general, where there are serious
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grounds for believing that a person is planning to commit a serious crime or that he represents a threat to the public security of a state.
It is idle to pretend that, in the process of people being nominated and their names then being notified to the central list, mistakes could not happen. It cannot be ruled out that names will be put forward by other individuals, even maliciously, with the result that someone may get on to the list who really should not be there at all. A number of our witnesses expressed very serious concern about that possibility. As a result, we think that it is essential that an effective remedy must be provided to give protection against unfair, improper exclusion from the Community and that, at the very least, a person should know which state has put him on the central list.
It is our view that there should also be a remedy in national courts against such wrongful inclusion on the list and against the withdrawal of a residence permit. We do not believe that that should be left to chance. We think that it should either be in the convention or that it should be included in measures adopted to give effect to the convention. It is our recommendation that one of those two courses should be followed.
The second item is very different. Article 6 of the convention provides that, where a passenger comes into Community territory by air from a third state and is going to transfer at the airport where he lands to an aeroplane to take him to another state, he should be subject to entry conditions and entry control at the airport where he first lands. Therefore, if someone comes to London who is going to Paris, the proposal is that he should be controlled in London and if someone is going to Paris and then on to Berlin he should be controlled in Paris.
That may work where infra-Community state flights are treated as domestic flights. It may not work in countries like the United Kingdom, Ireland or Denmark where they are not so treated. But it seems to the committee that this does not in any view take account of the special position of a hub airport like London where passengers frequently land from all parts of the world in order to transfer to other flights and where they are kept on the air side of immigration controls without any check on their immigration status, and where they are not treated as having entered the United Kingdom.
The committee considers that this proposal needs radical reconsideration by the Council. It ought to be looked at again in view of the special status of London Airport. It may not be unique, but it is the most striking example of this kind of problem. But even if the proposal is to be maintained, the committee recommends that adequate time should be given for the very substantial restructuring and changes in the infrastructure which may have to be adopted at the airport. The proposal at the moment gives far too little notice to the airport authorities.
Thirdly—I can take this more shortly—Article 14 of the convention deals with the responsibility of carriers who bring persons into the United Kingdom or into the Community when they do not have either the necessary travel documents or the necessary visas. The convention proposes to impose penalties upon such carriers even

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where there is not negligence, and penalties which go beyond the responsibility simply to take them back or to pay for their accommodation in the meantime. It seems to the committee that that is in conflict with Article 9 of the Chicago Convention which imposes liability only where the carrier has been negligent.
The committee takes the view that the same should be the position in this draft convention and, moreover, that it is particularly important that airport officials, airline officials and immigration officers should be aware of responsibilities under the European Convention on Human Rights and under the Geneva Convention relating to refugees to ensure that people are not sent back when they are quite genuinely asking to be admitted to a member state because of a well founded fear of persecution for political reasons. What we propose in this area, on the basis of very serious and impressive evidence given to us, was that the appropriate officials and administrators should be made very aware of the dangers which this kind of provision can open up.
Finally, as far as the convention is concerned, I come to a different topic and one of general importance. Because this is a treaty between the member states and not a Community measure, the European Court of Justice does not automatically have jurisdiction to deal with disputes about the interpretation of the convention or disputes which may arise out of its administration. However, there is provision in the treaty for the European Court to be given jurisdiction to interpret and to rule on disputes regarding the application. When this convention was first proposed, there was no proposal to include jurisdiction for the European Court, but the Commission has come to the view that it would be appropriate to provide for a limited jurisdiction; for the power of a national judge, who is dealing with a contention that the convention has been violated if the convention is part of domestic law, to refer that question of interpretation to the European Court, and for both the Commission and member states to take proceedings against other member states in the Community.
We of course understand that this is to be an international treaty and not a Community measure. We also recognise, because of the variety of views on our committee, that there can be different attitudes to this particular question. But after very considerable discussion, we came to the conclusion that this is the sort of measure in which the European Court of Justice could play a valuable role. All our witnesses took the view that it was desirable that the European Court should have this kind of jurisdiction. Their evidence, I suggest, is not to be disregarded. We were not persuaded—I certainly was not persuaded—by Home Office arguments that the convention is largely Executive and administrative in character and that disputes can be resolved by officials or by the Council of the member states.
As I see it, the European Court is the one way—the best possible way—in which this convention can be most effectively applied uniformly in the Community. This is not to be seen as a way of interfering here; it is to be seen, I submit, as a way of ensuring that all the
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member states carry out their obligations under the convention in the same way. Without some form of central ruling on interpretation or on disputes, I fail to see how that can happen. It was of notable interest that the witness from the European Parliament was wholly in favour of this proposal and thought it quite absurd that the member states should have to go to the International Court of Justice at the Hague if there was a dispute of that kind. We therefore recommend that the European Court of Justice should have jurisdiction as proposed by the Commission.
Finally, I turn to the regulation which I can deal with much more briefly. There are two important issues of competence and two short matters of practical application. Article 100c of the treaty deals with the approximation of laws, and it provides very specifically that the Council shall determine the third countries whose nationals must be in possession of a visa when they cross one of the external frontiers of the Community.
On the other hand Article K deals generally with asylum policy, the crossing of external borders and with policy dealing with nationals of third countries including conditions of entry and residence. Article 1(1) of the regulation clearly falls inside Article 100c. It provides a list of those third countries whose nationals must have a visa. There can be no challenge, I suspect, to that. Article 1(2), however, gives the Council power to list countries whose nationals are exempted from the need to have visas. In common sense it might be said that the second is a corollary of the first, and if the Council may make a list of those who need visas, it may make a list of those who do not need visas. However, we came to the conclusion that if this had been intended in Article 100c of the treaty, the article would have followed the draft provision in the pre-existing proposed convention where the words were,
"the arrangement shall determine whether or not"
a visa is required by the nationals of a particular member state.
Had that change not taken place, I, for my part, would have accepted that the one was the corollary of the other. But in the light of the change in the language from the earlier convention the committee came to the conclusion that this was a very specific provision and that if states are to be exempted, this must be put into the convention and not into the regulation.
The other point which I wish to make, and which I believe is of some importance, concerns Article 2. Article 2 provides that member states shall not be entitled to require a visa of a person who seeks to cross their external frontiers and who already holds a visa issued by another member state, if that visa is valid throughout the Community. Therefore, in the United Kingdom we could not refuse entry to someone who had a visa from Germany or Greece if that visa was valid throughout the Community.
We came to the conclusion that that does not fall within the limited words of Article 100c. That provision was itself a compromise between those who wanted these matters to be under the Community pillar and those who wanted it to be under the home affairs and justice pillar. We do not find it possible to construe

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Article 100c as allowing Article 2 of the regulation to stand. It may well be a desirable provision, but it should go into the convention.
On that basis, we have come to the view that both those provisions in Article 1(2) and in Article 2 of the proposed regulation are not within the competence of the Community and that they should be put into the convention.
The proposed regulation covers transit visas. We consider that to be wholly inappropriate. We think that the list which has been drawn up of countries whose nationals must have visas is inordinately long. Too much should not be attached to that. There is nothing sinister about it. It was a Commission proposal which was intended to initiate discussion, even though it is somewhat extensive. In the view of the committee there is no doubt that it should be shortened. There seems to be no justification for the inclusion of some Commonwealth countries on the list as countries whose nationals must have visas if they come to the Community, especially as other Commonwealth countries are not on the list.
I am sorry that I have taken some time. However, this is a matter of considerable importance in the Community. My colleagues in Sub-Committee E who conducted the inquiry and I are greatly indebted to our legal adviser, Mrs. Eileen Denza, for her work and guidance in preparing our report, and to our Clerk, Mr. Michael Pownall, and those who gave evidence to us. For many of them it involved considerable time and effort, on what are important questions. I beg to move.
Moved, That this House takes note of the report of the European Communities Committee on Visas and Control of External Borders of the Member States (14th Report, H.L. Paper 78).—(Lord Slynn of Hadley.)
4.52 p.m.
Baroness Park of Monmouth: My Lords, I have read the committee's admirable report with great interest. Members of the committee are best placed to make informed comment, and I feel rather shy about speaking so early in the debate. However, I wish to make two or three points.
First, I strongly support the last conclusion in paragraph 121 of the report on the question of the negative visa list. The inclusion of Commonwealth countries such as Barbados, Belize, India, Pakistan, the Solomons, Botswana and Zambia, to name only a few, among the countries requiring visas for entry would be deeply damaging to our interests and would be taken as further proof by the Commonwealth that our European dimension is paramount and our Commonwealth membership unimportant. It is also simply not sensible, since so many of our visitors are Commonwealth visitors.
I agree with many of the arguments put forward by the JCWI and the ILPA. The distinctions made between Commonwealth countries seem both invidious and mysterious. It is still more mysterious that, as they point out, no countries in Latin America appear on the list despite their drug culture in some cases (Colombia, for instance) and their abuse of human rights (Guatemala).
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In the debate on the European Communities (Amendment) Bill in June 1993 I warned that Article 100c and Articles K.1, K.3 and K.9 would have serious implications for our independence of action. I believe that I was right. I was concerned then about our Commonwealth relationships and about the threat to our national security which the greatly extended powers of the Commission to initiate further action under qualified majority voting after 1996 would pose. I still feel that Article 100c(5), which pays lip service to the need for member states to be able to safeguard internal security, is negated by Article 100c(6) which allows Article 100c to apply to other areas under Article K.9.
I also strongly support paragraphs 109 and 110 of the conclusions. I find it amazing that in the climate of today's Europe, with the spreading activity of, for instance, the Russian mafia and international drug rings, and given the porous and inadequately policed external frontiers in many cases, there should be any serious intention to abolish controls at internal borders, especially in the case of the UK which has no system of internal identity cards, and given the fact that even in 1991, as I said in the 1993 debate, there was and is a thriving trade in the forging of EC passports. Of 591 persons refused entry at one English port alone in 1991 because of forged documents, 524 had forged EC documents.
I agree with the committee that it will still be necessary to control the movement of people across internal frontiers where a member state deems it right to do so. I wish they all did. Equally, I strongly support the recommendation in paragraph 110 that the conventions recommended by the Council:
"should reflect the nature of these conventions as international agreements which individual Member States may choose whether to ratify or not".
Two tendencies have become manifest in the Commission's conduct of affairs, and indeed to some extent that of the Council of member states. The first has been a lack of transparency. For instance, as the committee says in paragraph 74, the inter-governmental negotiations leading to the political agreement of June 1991 on the external frontiers convention took place in secret and the text agreed, which was of obvious importance for European integration, was not laid before the UK Parliament for a further year. The other tendency is towards a creeping assumption of even more powers.
The proposals are now out in the open, and that is good, but we now need to have the political will and the good sense to say in good time whether we agree to what is proposed. Qualified majority voting does not make it easier, but we should retain unequivocally our right not to ratify if necessary. Moreover, we must allow no precedents to be set for this pillar which could have an adverse impact on the 1996 discussions on the defence, security and foreign affairs pillars. Reminding the Commission that we retain our right to ratify and to enter into inter-governmental treaties can only be beneficial. Also, we must not allow the aim of harmonisation to override the individual needs and

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duties of member countries and the propriety of inter-governmental rather than supragovernmental policies.
4.57 p.m.
Lord Archer of Sandwell: My Lords, I venture to intervene to emphasise one subject about which concern was expressed by the noble and learned Lord, Lord Slynn. I do so lest it be thought that, if no other member of Sub-Committee E were to intervene, we thought of the matter lightly. The fact that I do not echo all that the noble and learned Lord said about the other matters of concern does not entail that we thought lightly about those.
The matter about which I want to express concern and to echo the concern of the noble and learned Lord is the joint list. As I may have mentioned in your Lordships' House previously, I have supported closer integration in Europe for many years —since before the idea was as widely accepted as it is now. I can claim to have been a Christian before Constantine. Therefore, I have no difficulty in supporting the concept of the free movement of persons, although I fully take the point of the noble Baroness, Lady Park, that there are some matters about which we need to exercise control at internal frontiers. If we are to have the free movement of persons, I accept that a necessary consequence is that there should be co-ordination in the control of external borders. But it is simply stating the obvious to point out that the greater the area and the population over which an authority exercises control, the greater the power of that authority over individuals, and the greater the degree to which individuals are at its mercy. It is not simply that an authority exercises power over more individuals; its power over each individual is so much the greater.
We have an example of that. Article 7 of the draft convention provides that a person may be denied entry to the territories of member states if he represents a threat to the public policy, national security or international relations of member states. Article 10 provides for the making of a list of persons who are thought to pose such a threat. It is to be a joint list, and each member state may require that the names of specific persons shall be included in the list. The criteria for including a name on the list are set out in the draft article, Article 7, but the decision whether a particular person falls within those criteria is entirely within the judgment of each member state.
When Mr. de Lobkowicz, head of the unit dealing with the subject in the European Commission, gave evidence to the sub-committee—his evidence is set out at page 61 and the following pages of the minutes of evidence—he made it clear that such a decision was seen as falling within the principle of subsidiarity. Each state would provide such safeguards as it thinks fit against the wrongful inclusion of a person on the list, but if a state submits a name there is no further sieve, and there is no further safeguard.
In effect, the list will be an amalgam of all the national lists. It will represent the exercise of power over more individuals than any national list. But, more
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importantly, the consequences for any individual will be so much the greater. He will be precluded from entering any of the member states. If France requires an individual to be added to the list, not only will he be precluded from entering France, he will be precluded from entering the United Kingdom or any of the other member states.
Admittedly, there is a proposed exception in relation to visas, as the noble and learned Lord pointed out. If a specific country is persuaded that it is important that an individual on the list should visit its territory for one of the purposes specified, it may issue a visa limited to that territory. But the individual must find means to activate a specific exception, and it is clearly a narrow list of exceptions.
I was surprised to learn that the safeguards against the wrongful inclusion of someone's name are regarded as wholly a matter for the member state which submits the name. It was said to fall within the principle of subsidiarity. It seems a curious application of subsidiarity that France may preclude a United Kingdom national from entering Germany.
The effect of what is proposed is that the authority which exercises that wide power over so many individuals is not the Commission, nor the Council. It is not an authority of the Union at all. If it were, we could address the safeguards which may be required to ensure accountability. I make no secret of the fact that I should like to see the European institutions made more accountable. Because there are those who would like to see the nation states of Europe have more power, and the Union less power, we have arrived at a compromise which probably represents the worst of all worlds. We have institutions which exercise wide powers but have a reluctance to entrust the European Parliament and the European Court with the power to control them.
The question of the jurisdiction of the European Court was referred to by the noble and learned Lord, Lord Slynn. I respectfully agree with what he said. But that is not the problem in the case that we are discussing. The authority which exercises such wide power over so many individuals is in fact each nation state. I suspect that that may represent a pattern which we may find in the future in third pillar conventions.
In paragraph 83 of our report, we say that we are concerned at the imprecision of the grounds on which a member state may add a name to the list. I refer in particular to the two grounds mentioned by the noble and learned Lord, Lord Slynn. One ground is,
"information to the effect that the person concerned has committed a serious crime".
It does not even need to be reliable information. There is nothing in the draft convention to indicate that an individual whose name is on the list should be told that his name is on the list. If he applies for a visa, and is refused, he will know that he has been refused a visa. But he may not require a visa to make the journey that he has in mind. He may arrive at Heathrow at 8.30 for an important meeting in central London at 10.30 and either may be held for two hours while being interrogated or, more probably, simply sent back on the

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next aircraft. The potential unfairness is exacerbated if the individual is not told what is happening until it is too late to make alternative arrangements.
I understand, as we state in the report, that an individual will be protected by Article 20 of the Convention on the European Information System. However, that leaves him largely at the mercy of the member state, "before which he invokes" his right of access to the information. That may not even be his own state, because the right to be exercised is,
"in accordance with the law of the member state".
For the reasons set out in paragraph 85 of the report, I believe that there is a need for some safeguards within the convention or elsewhere. An individual refused entry because his name is on the list should have a right to be told which member state has required his inclusion and be accorded a right judicially to challenge his inclusion.
These are worrying matters for anyone who cares for civil liberties. But they are particularly worrying as an example of what I believe we may expect from third pillar conventions. There may be a need for co-ordination in a particular area of activity, but it cannot be addressed unless every nation state is carried along, and safeguards for individuals may be the negotiable trade off. What emerges may represent the lowest common denominator among the member states.
I hope that I may transpire to be unduly pessimistic. But so often, it is when I am most pessimistic that I transpire to be right.
5.8 p.m.
Lord Rennell: My Lords, I should like to speak on the issue of short stay visas for non-member nationals visiting the UK. At the moment, a citizen of Tashkent in Uzbekistan who wants to visit the United Kingdom has to apply to Moscow for his visa, with all the appropriate documents. In addition, he is then required to visit the British Embassy in Moscow for an interview. That is a round trip to a foreign country of more than 4,000 miles. It is expensive and time consuming. The United States, France, Germany, and Israel, and other major and minor trading companies have visa issuing facilities in Tashkent. UK companies are at a disadvantage, in particular at a time when trade with Uzbekistan and other Russian and CIS countries is growing quickly.
We have a reputation to uphold. Our embassies and consular offices are a haven for our citizens worldwide. I believe that our foreign friends also have their perception of help and friendliness when they visit our offices abroad. My reason for speaking today is to ask my noble and learned friend on the Front Bench for his consideration that, in addition to the report that we are discussing today, Her Majesty's Government will not forget the high reputation for fairness and efficiency which our diplomatic representatives have. I ask that the Government ensure that our consular visa services retain that reputation.
I should like to give an example of my concern. A British company with offices in Moscow and Tashkent wanted to bring a young Uzbek trainee employee to the UK for basic training and a short English course. Having
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submitted all the necessary application forms, he visited the consular section of the British Embassy in Moscow—a round trip, as I said before, of 4,000 miles—and was sent back without a visa because, although he had his Russian passport, he did not have his local internal passport. He was given a second appointment a month later. At that stage, three weeks before his next interview, a comprehensive letter was written to the consular section in Moscow by the sponsoring British company stating the full reasons for the visa application, giving the reference number of the application and enclosing a copy of a letter from the English school where the trainee would be studying.
When the unfortunate Mr. Khafizov, who spoke little or no English and had probably never been out of his country before, arrived for the second time in front of the firm but fair immigration officer, he must have had a very hard time. The report of the interview reads as follows:
"Your original application and invitation to the UK"—
this was for a one-month visa—
"was for a business visit, it was changed to short term studies only after you had been invited for a further interview. You state that you do not know why the sponsoring company has invited you to study English, the only reason you could give was that maybe the president of the company just liked you. Furthermore you can not explain why you need to study English or why you specifically need to study in the UK other than that you like English. There is no indication that English is necessary for your employment, in fact quite the contrary as you state that your employer is not sending you to the UK and not sponsoring the studies. I also have to take into account the fact that you have not yet applied for leave from your employment to cover the period of your studies. I note that you state that you have no plans for after these studies which indicates to me that you do not intend to return to your current employment, this is further indicated by your statement that you may work for the sponsoring company but you are unable to provide a written offer of employment. Taking account of all the above I am not satisfied that you are a genuine student who will leave the UK after the 1 month period stated.
I am therefore not satisfied that you are genuinely seeking entry for the purpose and for the period as stated by you.
I therefore refuse your application".
At the bottom the gentleman has signed the document, which states that the contents have also been explained to him in Russian.
I was rather shocked to read what seemed to me a rather bullying sort of interview. Here was a person who could not speak English; he was not accompanied by a friend or by his own interpreter; and he was probably unaware of the interpretations of the questions that were put to him. One can also only presume that the explanatory letter from the sponsoring company had been mislaid and that it was certainly not read by the interviewing officer.
I am of course aware that it is all too easy to find faults. There is no doubt that the visa office in Moscow is under great pressure. It may be no great consolation to know that we are not alone in this problem. The United States Ambassador in Moscow recently defended his embassy against Russian accusations of rudeness. Nonetheless, he promised to increase personnel and space in order to speed up the visa issuing process. In the Soviet era, the US embassy dealt with 3,000 to 4,000 visa applications a year. Today, more than 130,000

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applications are filed annually. I have no doubt that our Moscow embassy is faced with a similar huge explosion of applications.
I was very pleased to read in a Written Answer from my noble friend Lady Chalker of Wallasey that there are plans to commence visa services in Uzebekistan soon—indeed, it is hoped no later than the first quarter of 1995. Those plans, together with further visa issuing facilities in Belarus and other CIS countries, will help enormously in relieving the strain on Moscow's resources.
Finally, I ask my noble and learned friend Lord Rodger of Earlsferry to ensure that during the careful study of the report that is in front of us today we do not lose sight of the importance of the United Kingdom's good reputation for providing an expanding, efficient and friendly visa issuing facility.
5.15 p.m.
Lord Dubs: My Lords, this report is very useful, and it throws light on an area of policy which is not generally all that well understood. It incidentally also throws light on European decision-making processes. I have long argued that some areas of policy that have hitherto been very much within the national domain are increasingly being determined by Brussels. I refer, for example, to policy on asylum seekers and refugees.
Perhaps I may turn to a number of concerns that are highlighted by this report, and first, the secrecy with which these decisions are made or approached in Brussels. Although today we have a chance to talk about the convention, had it not been for the issue of Gibraltar which gave rise to its delay, it might well have been implemented, signed, sealed and settled before we had had a chance to consider some of the details. The secrecy that surrounds some decision-making by the Council of Ministers is undesirable. It lacks accountability and is essentially undemocratic. We ought to encourage more openness and transparency. Even if we look at measures which I have found undesirable, such as the Asylum and Immigration Appeals Act, at least that had the benefit of procedures which were open, which could be understood and on which every individual citizen of this country could Make his or her views known to politicians.
In contrast, the lack of transparency that emanates from Brussels precludes this type of approach. In the past we have had interesting leaks. The Guardian occasionally carries very interesting stories about matters which are being kept secret. But surely we should not have to rely on leaks in order to keep ourselves informed as to what is under discussion.
I know that the official answer is that the Government never reveal the details of negotiations concerning international treaties. But I would argue that when we deal with matters which have large elements of human rights in them and which are in effect being dealt with in Brussels instead of being initiated here, then the argument that international treaties should not be, as it were, open to scrutiny, falls down. I suggest that it should not be applied in instances such as this.
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Not only is there secrecy and a lack of openness and transparency; the report also makes it clear that some of the procedures are complicated and that indeed there is uncertainty in respect of some of the procedures. Some of the witnesses disagreed with each other about their interpretation of some procedures—they disagreed, for example, on whether it was a treaty or a convention. The report makes clear that there must be doubts about the links between the Dublin Convention, the Schengen Agreement, to which Britain is not a party, the new convention which may or may not be implemented, depending upon the Gibraltar issue, and indeed other matters of policy which European countries have decided, some of which have been implemented through national parliaments.
I would argue that, even if the future course is for the Council of Ministers to play the same part that it does now—whether that should be the case is a subject for a different debate—I would urge that the Council of Ministers should make itself more open to scrutiny and that it should make its proceedings known to a wider public. I believe that when Denmark took the presidency after the United Kingdom, the Danish Government were quite sympathetic to the idea of more openness, but other countries did not like that idea too much.
I now turn to two specific issues which have already been mentioned in the course of this debate. The first is the joint list. I very much agree with the criticisms that were made of it by my noble and learned friend Lord Archer. Perhaps I may raise one or two further issues in relation to that list. I welcome the fact that the report says that if a person is on the list, he or she will be entitled to speedy judicial remedy in the state which put him or her on the list. It follows that it must be made known to that person which was the state which did so.
But let us consider the United Kingdom. We do not have any remedy. Other countries may be better than we are. My understanding is that we do not have any remedy at all. The last remedy that existed was appeal against a refusal of a visa for visitors or students. That was taken away by the Asylum and Immigration Appeals Act. So we do not have any remedy. The undertaking is rather hollow so far as this country is concerned, even if it is a valid undertaking with regard to other countries of the European Union.
But the criticism goes further than that. If an individual is refused—the previous speaker gave a dramatic instance of such a refusal—he may be refused even if he is not on the stop list but simply because immigration officials have decided that it is not appropriate for him to come to this country. So there is a wider list of people who are refused than the stop list itself. Does such a refusal mean that an individual will automatically be put on the Europe-wide stop list? There is a certain logic which says that that should be the case, but I hope that the answer is otherwise.
In any case, we know very little about our own stop list. I tried to find out about it. I visited Heathrow Airport years ago and was shown round by immigration officials. I saw the black book but I was not allowed to get within three or four feet of it or even allowed to know how many names it contained. But someone told me—I picked it up somewhere —that there are about

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6,000 names on our stop list. No doubt the Minister will neither confirm nor deny it. It is a difficult area and one which I believe poses a threat to civil liberties.
I turn to the carriers' liability Act and fines on passengers who arrive without proper documentation. The report says—I welcome it—that primacy should be given to the European Convention on Human Rights and to the refugee convention. But that might be difficult to achieve in practice. I am rather more familiar with the refugee convention. If an individual is living in a country where the government is persecuting him, it is extremely difficult for him to apply for a passport from that government. One only has to think of an Iraqi Kurd applying for a visa to the regime in Baghdad. It is absurd. Many people who are persecuted simply cannot get passports. Even if they happen to have a passport in the first place, it is very difficult when facing persecution or in fear for one's safety to hang about waiting for some other country to issue a visa.
In that situation, individuals do what any Member of this House would do. Let us be honest—if our lives were in peril, we would get forged documents, would we not? Yet, preventing the owner of such a document boarding a plane is precisely what the carriers' liability Act is meant to do. So there is the paradoxical situation that the only way of escape for an individual may be a forged document or a forged visa; but here is legislation intended to stop anyone boarding a plane with such a document. I suggest that there is a Catch-22 situation, and it is hard to argue for the primacy of the refugee convention. I fear that this type of legislation makes it very difficult for people in countries where there is a great deal of persecution to escape and find safety elsewhere.
I conclude by welcoming the Select Committee's proposals with regard to the European Court of Justice. It seems to me that if there is to be secrecy, lack of openness and lack of transparency, then at the very least there should be certain safeguards. There may be other models for safeguards, but I believe that the European Court of Justice represents, in the arguments of the Select Committee, a welcome safeguard. I hope that that is a message that will go from this House to the Government. It is a desirable step forward.
5.26 p.m.
Lord Lester of Herne Hill: My Lords, the Select Committee deserves our gratitude for having produced such a cogent and compelling report. It raises a number of important issues which merit careful consideration. They have been fairly and carefully considered in this concise and well focused debate. There seems to be a wide consensus of view, to which I shall add in my remarks.
The noble and learned Lord, Lord Slynn of Hadley, observed at the outset that this is the first time that the Select Committee has examined a proposal for an international convention under negotiation within the justice and home affairs pillar of the Europeart, Union. Previous negotiations regarding external frontiers took place in secret. By contrast, these proposals of the Commission are open to scrutiny by national parliaments and anyone else who is interested. I am sure
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that all noble Lords will agree that that is a most welcome development—a more open approach to democratic parliamentary scrutiny of the decision-making process. It originated with the Commission and is a much more open approach than has traditionally been permitted to citizens of this country by successive governments when negotiating treaties in the exercise of their prerogative powers.
The problem of secrecy, to which the noble Lord, Lord Dubs, referred, is surely important. But it is not the fault of the Brussels Commission. It is the responsibility of governments. I am slightly torn on this issue. Much as I press for greater parliamentary scrutiny of the treaty-making power of government, I am reminded that it was Senator Bricker of the United States, whose notorious amendment has led to an extremely insular and reactionary approach in which Congress frequently overscrutinises what the Executive branch does in that area, in a way that liberals like myself deplore. Having said that, I am undoubtedly on the side of those who wish for effective parliamentary scrutiny.
There are obviously many hurdles to clear before either of the measures under discussion comes into force. But the Select Committee's report makes a real and significant contribution to the development of Community policy in an area which affects the basic rights and freedoms of third country nationals seeking to enter the European Union.
The closer integration of Europe will inevitably lead to much greater movement across borders and it will become necessary to have co-ordinated control of the external borders of the member states, as the noble Baroness, Lady Park, emphasised. The Maastricht Treaty created new opportunities for making progress in this area but it is important to ensure that progress is made in the right direction, with adequate safeguards against the misuse of necessary powers exercised by the public authorities of the member states.
Like the noble and learned Lord, Lord Slynn, I want quickly to refer to four of the important issues raised in the report and in this debate: the proposals for a joint list of undesirable immigrants; carriers' liability; the jurisdiction of the European Court of Justice in this area; and the negative list. I shall not comment on the individual case mentioned by the noble Lord, Lord Rennell, about the issuing of student visas in Moscow for Uzbek applicants.
Let me speak first about the joint list. As the noble and learned Lord, Lord Archer of Sandwell, pointed out, the proposed joint list is an amalgam of 12 national lists of undesirable immigrants seeking entry from third states. An individual who has the great misfortune to be on the joint list will be excluded from all 12 member states. A placing on the list is to be based on a decision taken purely in accordance with the national laws of the member states, in accordance with a curious use of the principle of subsidiarity.
The committee expressed concerns about the proposal for a joint list, concerns which I, like the noble and learned Lord, Lord Archer of Sandwell, and the noble Lord, Lord Dubs, entirely share. Some of the grounds set out in Article 10 for a national decision to place a

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person on the joint list are vague and imprecise. There is a real and substantial risk that entries may be made by mistake, or through spite or ill will.
To relieve the possibility of error and serious injustice there must be effective safeguards and affordable remedies for those excluded because their names wrongly appear on the joint list. As suggested by the committee, some protection may be provided by the draft convention on the European information system. But that does not amount to sufficient protection. Under the draft convention, the individual's right of access to personal data held on the European information system is to be exercised in accordance with the law of the member state before which the individual invokes that right. For example, at present the protection of personal privacy in the United Kingdom is mainly contained in the Data Protection Act 1984.
The 1984 Act provides a legal framework for the processing of personal data. But the Act is concerned only with computerised or computer-usable information. It gives no right of access to paper files contained in manual systems. Therefore, any paper records relating to a placing on the joint list will be inaccessible and the denial of such information will severely hamper any appeal which may be made against the decision, if any appeal were allowed. As the noble Lord, Lord Dubs, pointed out, the judicial and other remedies in this country are otherwise extremely limited.
I agree with the committee that there is a need for a separate resolution or amendment to the European information system convention to ensure that member states have in place effective data protection mechanisms which will enable individuals placed on the joint list to access all data relevant to the decision to place them on the list, whether computerised or otherwise. In particular, the committee recommends—and I agree—that the individual refused entry in consequence of inclusion on the joint list should be told which member state placed him on the list and the nature of any allegation said to justify exclusion. The convention should include the requirement of appeals at national level against the decision to place a person on the joint list. Such appeals should take place as quickly as possible. It goes without saying that the list should be regularly updated to remove names no longer relevant or which were placed on the list in error.
I turn briefly to carriers' liability. The imposition of "appropriate penalties" on carriers, as the noble Lord, Lord Dubs, emphasised, is capable of interfering with the ability of asylum seekers to escape from countries where they had a fear of persecution. It would be a grave mistake if carriers were to refuse to carry asylum seekers for fear of penalty under the national legislation. I agree with the committee's recommendation that Article 14 of the draft convention should be modified to conform with Annex 9 to the Chicago Convention and permit the imposition of fines on carriers only where a carrier is negligent. There is also a need for legislation to make clear to carriers their overriding duty not to frustrate the right to seek asylum.
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In an effort to avoid penalty, airlines will undoubtedly tighten their procedures. Decisions on immigration control will be delegated to airline staff who are obviously not qualified to take into account the human rights obligations of the member states, both under the Geneva Convention relating to the status of refugees (and protocol) and under the European Convention on Human Rights. As the committee recommends, it would be beneficial if immigration officers and airline staff received instruction so as to ensure full compliance with the UK's obligations under the European convention and the refugee convention, even though, as the noble Lord, Lord Dubs, explained, the safeguards provided by those conventions in that area are only of limited value.
I turn to the jurisdiction of the European Court of Justice. Again, I agree with the committee which supports the European Commission's proposal to confer on the European Court of Justice jurisdiction to give preliminary rulings concerning the interpretation of the convention and jurisdiction in disputes concerning the implementation of the convention. In my view it involves no violation of pure jurisprudential doctrine that that should be done, even though, as we heard, the convention is an international treaty.
As the committee rightly stated, the European court would ensure broad uniformity of standards of control and help to give effect to obligations under the European Convention on Human Rights. There would be great benefit in drawing upon the experience of the European court and its power to interpret and apply general principles of law, not yet fully recognised by the courts of this country, such as the principle of proportionality, so as to ensure, for example, that the penalties required by the external frontiers convention are not disproportionate and do not vary dramatically between member states and so distort control of the external frontiers.
Finally, I come to the negative list. It is a list of countries whose nationals would require visas to enter the territory of the member states. It would impose a visa requirement on a further 45 countries in addition to those the UK requires at present. The noble Baroness, Lady Park of Monmouth, gave powerful reinforcement to the committee's conclusion that the list is inordinately long and would be damaging to the interests of the UK and its visitors. The list should be shortened to remove a number of Commonwealth countries and the 12 member states should seek to formulate coherent criteria common to all.
The Refugee Council was right to point out in the Select Committee hearings that most people fleeing from persecution find it almost impossible to obtain a visa. By imposing the visa requirement so widely, the European Union would be shutting out potential asylum seekers from a large number of countries.
It gives me great pleasure to support the Motion of the noble and learned Lord, Lord Slynn of Hadley, to take note of this admirable report. It is a particular personal pleasure because I have long sat at the noble and learned Lord's feet. When I was an undergraduate at Cambridge I learnt the history of the law of assumpsit from him sitting, as I recall, with Sir Leon Brittan on the end of Queen Victoria's bed in the judges' lodgings

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at Trinity College, Cambridge. And I have been learning from him ever since. We are fortunate indeed to have such a distinguished former member of the European Court of Justice and serving Law Lord as a main architect of this admirable document.
5.37 p.m.
Lord McIntosh of Haringey: My Lords, I am happy to join with all other noble Lords who expressed their gratitude to the noble and learned Lord, Lord Slynn, and his colleagues for this report on a most important subject. I confess that as a non-lawyer I found a good deal of the argument difficult to follow. I tried to leave aside those parts of the legal argument which did not seem to me to be important or essential for the political and social decisions which arise from the issues. Noble Lords who are legally qualified will therefore forgive me if some of my comments appear to be somewhat simplistic.
The most important thing about the report is the extent to which it is an innovation in the consideration of European draft legislation and conventions. The ability given under Article K for us to consider these conventions in draft and the way in which Article K, and in particular Article K.3, enables them to be dealt with by proposals from the Commission to the Council and by consideration then by the Council, and for the views of the European Parliament to be taken into account, are clearly important for the future of national scrutiny of European directives and legislation. If the advantage which the sub-committee had in dealing with the matter before the text and details are finalised is to be followed in the future, the work of our European Communities Committee will be immensely strengthened.
In this case, however, we obtain little advantage from it because the convention which we are considering this afternoon and which the sub-committee considered is in itself a recycling of a 1991 convention which was arrived at in accordance with the old secretive rules which my noble friend Lord Dubs rightly criticised. It is only before us because of the outstanding disagreement between Spain and the United Kingdom about Gibraltar. Otherwise, as my noble friend said, it would already have been enacted and we would not have been able to say anything at all about it. But the implication that it is a recycled convention, using the new ability of the Commission to raise matters itself when they appear to be in deadlock, means that there has been a self-denying ordinance on the part of almost everybody except the European Parliament and your Lordships' sub-committee to proposing significant changes to the convention. The likelihood is that significant changes will not be made to the conventions. In theory, the way in which we have been able to consider the conventions is hopeful for the future; in practice, the limitations on these particular conventions are rather severe.
I should like to make my comments in the order in which the summary and conclusions in paragraphs 109 to 121 have been presented by the sub-committee. That does not mean that I need comment on all of them but I want to comment on the most important ones. Paragraph 109 refers to internal border controls and
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expresses the view of the sub-committee, as of previous sub-committees, that it should not be obligatory on the United Kingdom to demolish internal border controls between the United Kingdom and other member states. I do not have very much sympathy with that view, but I do not think it is a matter on which we should excite ourselves too much as the European Court of Justice will be issuing a ruling in the fairly early part of next year. The implications of that ruling, particularly if it is ruled that inter-member state movements cannot be subject to border controls, are very significant indeed.
Paragraph 110 deals with the status of the conventions and brings out the difference between the Home Office view, which is that this is an international agreement which members may sign or not, and the view of the Commission, the wording of which I do not pretend to understand in detail. It may not matter very much except for the fact that the Commission's view—the Article K procedure to which I have already referred—involves a degree of consultation between the Commission, the Council and the European Parliament before a text is finalised. My noble friend Lord Dubs drew attention to the value of that process which would not be available from an international agreement, which needs to be ratified by individual states, produced in the older way.
A further consideration which leads me to greater sympathy with the Commission's view than the sub-committee had is that essentially an agreement of this kind has to be implemented with unanimity. One cannot have an agreement which is ratified by a number of member states but perhaps by not all of them and implemented in different ways. I appreciate that the status of the regulations is quite powerful. Even so, I believe that we have to go into this with a degree of unanimity about both what the conventions contain and the way in which they are to be implemented, even if that means, as was pointed out in evidence to the sub-committee, that very often the result is a compromise which satisfies no one completely.
Paragraph 111 refers to airports. Here I think a little common sense rather than legal argument is called for. It seems to me common sense that the British provision for transit passengers to be treated as airside—in other words, not to go through procedures as they arrive at, in particular, London Airport, but also other airports within the European Union—should be preserved. Noble Lords may know of the procedures facing anyone who enters the United States and wishes to move onto a connecting flight. One goes through immigration procedures in, for example, Seattle before catching a flight to San Francisco, or even worse, one undergoes immigration procedures in San Francisco, where one can wait for two hours before catching a connecting flight to somewhere else. The airside provision for transit passengers, whereby one knows what one's minimum connect time is and that one can catch one's flight and that it is only at one's last destination where one is not catching another flight that one has to go through immigration procedures of perhaps unpredictable length, will recognise that our system is much better. I hope that all effort will he made by the Government to support that view.

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On the other issue of the difference between domestic and international flights, with the extension of domestic flights to include inter-European flights, I think that the airports and the airlines are going a little over the top. After all, Heathrow Airport already has two terminals—Terminal 1 and Terminal 2—which are largely for domestic and European flights and two terminals—Terminal 3 and Terminal 4—which are largely for international flights. Given enough time, I agree, it is not a great problem to redefine domestic flights to include European flights and to make provision for immigration and Customs facilities accordingly. It may be awkward for individual airlines to do both, but it is not a problem of the greatest significance. The worst solution would be if the nine Schengen states were to go ahead with abolishing internal controls and the UK, Ireland and Denmark were to be left on one side. Then we really would be pariahs in Europe.
The most important issue of the joint list has been dealt with by many noble Lords and for very good reason. Inherently, a joint list which is created by bringing together the names of those whom any member state wants to put on but yet which requires the agreement of a large number of member states to get them off will be the lowest common denominator of common sense. It will be the easiest list to get on to and the most difficult list to get off. It does not seem to me that the remedies proposed are adequate for the purpose. The sub-committee uses the phrase "judicial remedy in that state". As has been pointed out, after the Asylum and Immigration Appeals Act 1993, the United Kingdom does not have adequate remedies because we have deliberately abolished them. But I am sure that that is true in other states as well. Surely what we need is not judicial remedy in individual states but common measures accepted throughout the European Union to resolve disputes and appeals.
Exactly the same goes for paragraph 113, which deals with residence permits. The problem is that if a single member state removes the residence permit of an individual the individual cannot get into any of the 12, soon to be 15, member states. That seems to be going over the top. Again, the same principles of common measures to resolve disputes apply.
Paragraph 114 is wholly welcome. It deals with the need for an explicit link with the European information system. This is linked very much into the ability of individuals to appeal against their inclusion on a joint list. I would suggest that it would be desirable to include reference to the European Convention on Data Protection, which deals with the quite sensitive issues of the need to inform individuals about what information is on a list—it will, after all, be a computerised list—without at the same time making information about them available to those who might wish to damage their interests, in particular those in other countries who would wish to persecute them.
The issue of carriers' liability has been a matter of concern to your Lordships over many years. I know that there have been heated debates on the subject. That has been true because the United Kingdom takes perhaps a more extreme view about carriers' liability than almost
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anyone else. We insist not only on repatriation at the carrier's expense but also on very severe financial penalties, many of which some airlines are still not paying. A considerable amount of money is still outstanding.
We do not make any provision for the recommendations of the sub-committee made by a number of noble Lords that carriers should be liable only if it can be shown that they have been negligent in their procedures. The implications of carriers' liability go far beyond the interests of the individual airlines. They extend to the core of the issue of refugees and asylum seekers, as the noble Lord, Lord Dubs, and others have rightly said. If we are to act in accordance with Article 9 of the Chicago Convention, we shall have to do something about the problem that refugees and asylum seekers have rights only when they are in the country. But they cannot get into the country at all in order to claim those rights if the regulations about carriers' liability go over the top and exclude all those who may, for perfectly understandable and good reasons, be fleeing from persecution in their own country.
I shall deal very briefly with paragraph 116 on the jurisdiction of the European Court of Justice. Without in any way suggesting to the noble Lord, Lord Lester, that I agree with his views about the incorporation of the jurisdiction of the European Court of Justice in United Kingdom law, in general I certainly agree with all that has been said about the jurisdiction of that court as regards the matters concerned with these conventions.
Paragraph 117, 118 and 121 have been very adequately dealt with. They concern visas and the positive and negative lists of countries. I do not remember which film musical it was, but I believe the line is "Accentuate the positive and eliminate the negative".
Baroness Trumpington: My Lords, it continues, I believe, "Latch on to the affirmative".
Lord McIntosh of Haringey: I have no doubt that the noble Baroness is better informed on these matters than I am. I am sure that she can correct me afterwards if I get it wrong.
Lord Graham of Edmonton: And "Don't mess with Mr. In-Between".
Lord McIntosh of Haringey: My Lords, it is important to minimise in particular the grey list which is going to cause confusion for everybody. As the noble Baroness, Lady Park, said, it is true that the actual lists are crazy. That has implications for asylum and for conformity with the Geneva Convention of 1951.
Finally, and very briefly, I agree very much with what has been said, particularly by the noble Lord, Lord Rennell, about short-term visas. It seems to me that a three-month period for a short-term visa is quite inadequate for the United Kingdom for two reasons—the educational reason which he cites and because as an ex-colonial power we have a very large number of people in this country with families in other parts of the Commonwealth and the former Empire. It is entirely proper that they should wish to be reunited with their

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families for a period longer than six months. It should not be a complicated matter of getting a European uniform visa and getting a national visa afterwards. We are asking for trouble if we get into that kind of complication. I cannot see what possible damage it can do to the other countries in the European Union if we insist on that point.
I apologise for racing through. The issues raised by this report are of considerable importance. The committee, the chairman and the advisers to the committee are to be congratulated on the way in which they have brought these matters forward, even if they have been unable to penetrate my thick, non-lawyer's skull in many respects.
5.54 p.m.
The Lord Advocate (Lord Rodger of Earlsferry): My Lords, in common with almost everyone who has spoken, I begin by thanking the committee for the work which it has done. I add my thanks to the noble and learned Lord, Lord Slynn, for instigating the debate which we have had this afternoon. I believe that everyone will agree that it has been extremely enlightening. It is one of the hallmarks of a report of this kind that it sheds light on something which can appear to be extremely complex. Sometimes it is very difficult to see the realities which lie behind it. The sub-committee's report and the evidence which was taken by it have done very much to inform your Lordships' House and many beyond it, of the important issues which are involved.
Many of your Lordships have drawn attention to the importance of this report as giving a chance to this House and Parliament to comment on the possible European legislation before it comes into effect. I believe that the noble and learned Lord, Lord Slynn, pointed out that this was in fact the first time that a question of a draft convention of this kind has been subject to a report by the sub-committee. The value of it has been proved.
I noted what was said not only by the noble and learned Lord, Lord Slynn, but by a number of other noble Lords, about the perhaps rather late stage in the proceedings at which this particular remedy of examination by the committee took place. I accept that to some extent it was the hazard of the failure to agree about Gibraltar which allowed that to happen in this case. I believe that the Government will have noted the points which were made in that connection.
Perhaps in addressing some of the topics which have been raised, I can to some extent give your Lordships some information about the events which have happened since the report of the committee in July. Before doing so, I mention one particular matter raised by my noble friend Lord Rennell in connection with visas. Of course I accept that it is a very important function of the Foreign Office that the visa service should be satisfactory. The consular section of the embassy in Moscow has recently been strengthened.
My noble friend drew attention to a particular problem. At present there are no plans to extend consular representation throughout the former Soviet Union. Nonetheless, in the case of Tashkent it is
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intended that a consular office will be opened there sometime next year as soon as suitable accommodation can be found. My noble friend made an important point and I shall pass it on to Foreign Office Ministers.
Like the noble Lord, Lord McIntosh, I cannot think of a more logical way of dealing with the matter than by going through some of the paragraphs in the same order as they occur in the report. I welcome paragraph 109 where the committee returns to Article 7a which it had dealt with before. It reaffirms its view that no legal obligation is imposed by that article on member states to abolish controls on people at internal community borders. As many noble Lords will know, that has long been the view of the United Kingdom Government. In that connection, as the noble Lord, Lord McIntosh, indicated, it may be—although not necessarily the case—the subject of a ruling by the European Court in connection with the action which the European Parliament has brought against the European Commission for its alleged failure to ensure the complete abolition of frontier controls. The United Kingdom has taken the opportunity of intervening in the case to set out its interpretation of Article 7a. Contrary to what the noble Lord, Lord McIntosh, indicated, our latest information is that the case is unlikely to be heard until the middle of 1995 at the earliest.
In paragraph 110 the committee made a recommendation in connection with the form of the convention. Although it seems a technicality in some ways, this is a matter to which the Government have attached great importance for the kinds of reasons to which the committee referred. I am pleased to be able to tell your Lordships that earlier this year the Council agreed that a final Act drawing up a convention under Title VI should recommend its adoption by member states in accordance with their respective constitutional requirements. Therefore, the convention will be signed by representatives of the heads of government of member states as is consistent with the principles of international law, with the signatures taking place on the same day as that on which the text is formally drawn up. The Government are participating in negotiations on the draft convention with the aim of arriving at a text which has the full character of an international agreement.
From that somewhat esoteric matter, I turn to the reconfiguration of the airport and to the position under the recommendation in paragraph 111. This is a matter of considerable importance. We are all aware of the role of Heathrow and Gatwick airports as hub airports. It is apparent that any change in the present arrangements for routeing airside transit passengers raises important questions about the necessary infrastructure changes and the inconvenience to both carriers and passengers. As your Lordships will appreciate, this matter has been the subject of negotiation. Most of your Lordships do not find the provisions particularly attractive. My understanding is that there is no current intention that those provisions in the convention should be amended. Nonetheless, it is correct to have regard to the cost consequences of the changes. Our understanding is that if those convention provisions were to go through, the cost of the necessary adjustments to the infrastructure of

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the airports would amount to up to £450 million, so it is no small matter. Obviously, if that is to happen, it is important that adequate time should be allowed for the implementation of the changes. The Government will bear that matter fully in mind when negotiating a date for the implementation of the convention. At the moment, officials are liaising with representatives of the industry to arrive at a solution that will, as far as possible, minimise any possible disruption to the airports and their passengers.
It is fair to say that paragraph 112 was of concern to almost all noble Lords who have spoken. It was plainly of great concern to the committee. As I understand it, everybody accepted the basic principle behind the idea of an external frontiers convention and its consequence, having a common list. However, I believe that all noble Lords had apprehensions about the way in which the criteria had been laid down and on the question of appeals.
On the question of exactly what the criteria will be and how they will be put into legislation, the Government cannot at this stage give any indication of our final view. That is because of the provision in Article 10. As some of your Lordships mentioned, although the criteria are set out, the detailed rules have to be determined by measures that are provided for in order to give effect to the convention. Those measures might well require legislation in this country. The final details have not yet been worked out.
In that connection, it is the Government's view at this stage—this goes along with much that has been said by your Lordships—that once a person learns that his name is on the list, he should be informed which country put his name on the list. That is for the obvious reason that unless he is told that, he will have no access to a system whereby he might have some form of redress. As to the form of that redress, the Government do not anticipate that this country will provide for an appeal if somebody's name has been included on the list. Noble Lords may not care for it, but it corresponds to the position that was taken in the 1993 Act. However, that does not mean that those whose names are included on the list are without all judicial remedy because if the inclusion of a name is for some reason unlawful, the person concerned would have a right of judicial review, as in other cases.
On the matter of the European information systems convention, like the committee, the Government fully accept that it would be proper to make a formal link between the convention and the information systems convention.
Lord Lester of Herne Hill: My Lords, I am grateful to the Minister for allowing me to ask a question on that point before he moves on to the next subject. So that I can understand the way in which a judicial review would work, can we assume, so as not to offend any existing member state, that a state called Ruritania becomes a member state of the Union and considers that there are serious grounds for thinking that someone from outside is a threat to Ruritania's public policy on national security? The person is told that it is Ruritania
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that has put him on the black list. If Ruritania has the kind of limited judicial review that we have in this country, the person concerned will have very little opportunity of obtaining redress in either that country or this country. I wonder, therefore, whether the Minister can indicate a way in which judicial protection can be real rather than symbolic in this area.
Lord Rodger of Earlsferry: My Lords, if Ruritania had the same kind of judicial review as we do, presumably the person would have the same access to remedy in Ruritania as in this country. I am thinking, for example, of a case where the decision to include a person's name on the list was unreasonable, based on a mistake or made on the basis of insufficient evidence. The noble Lord is familiar with such categories. The person concerned would have that kind of remedy. He would not have the remedy of an appeal, as I have made clear.
The matter of carriers' liability has occupied your Lordships on previous occasions also, and some of the points that have been made today can be made in respect of carriers' liability in any context. In this context, we have made it clear that we have invoked the provisions of Annex 9 of the Chicago Convention which allows governments to register a difference between their legislation and that provided for by the convention. We see no conflict with the convention. Indeed, I do not think that such a conflict was suggested.
The carriers' liability legislation is a form of legislation which has been introduced by many countries to meet what is perceived as being a problem with forged and other unsatisfactory documents. The Government have done a great deal to train people at home and abroad in all aspects of the legislation and in detecting forgeries. As I understand it, over 320 training visits have been made to locations in 79 different countries. The programme is continuing. In addition, the Immigration Service is available to give advice on a 24-hour basis. In that way, we hope that the staff involved will have a full understanding of the legislation which they have to implement.
As the noble and learned Lord Lord Slynn recognised, the role of the European Court of Justice is a matter upon which views may be divided. Most noble Lords who spoke were in favour of the ECJ having a role. Despite that recommendation, the Government are opposed to the court having jurisdiction over the interpretation and implementation of this convention. As your Lordships know, Title VI of the treaty does not confer jurisdiction unless the member states agree. In this case the Government consider that jurisdiction should be a matter for national courts.
Much evidence on that matter was laid before the committee. While the Government take the view that it is inappropriate, as this is a third pillar subject, it is fair to say that even some of the witnesses who were broadly in favour of the ECJ could see practical difficulties which, to some extent, are reflected in the committee's recommendations regarding the ECJ's role in taking references on this matter.

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Perhaps I may cover the last provisions quickly. We accept fully what the committee said on the competency issues raised under recommendations 117 and 118. They correspond fully with our view.
Finally, the common visa list raises an issue which, again, is of importance to many noble Lords who have noted the extent of the positive list. It is a strange positive list, because it has a negative effect. None the less, your Lordships have noticed that it seems to be extremely long. The Government's position is that it is too long, and that it contains many countries from whose nationals we do not require visas. The system works well without them. We hope that the list can be cut down during the course of negotiations. Of course we are in favour of having a common visa list, because it seems to be a way of minimising variations in national practice and is therefore something which, in general terms, the Community feels is desirable. While, as I say, we are in favour of the idea, we are not happy with the extent of the list at present and hope that when it is finalised it will be shorter.
I have been able to touch on only some of the issues. The debate has raised issues of great importance. It has been a worthwhile debate. I have no doubt that it will be the precursor of many future similar debates.
6.15 p.m.
Lord Slynn of Hadley: My Lords, I thank the Minister for his comprehensive consideration of the most important topics which arise in the report. I thank also other noble Lords who have taken part in the debate. I thank, in particular, the noble Lord, Lord Lester, for his kind personal words. I hope that he remembers more of the history of assumpsit than I do.
This has been an important debate. Your Lordships have made clear how much importance should be attached to the review not just of Community measures but of proposals being discussed by member states under the second and third pillars. Your Lordships made clear too how important it is to protect those who seek asylum and those who may find their names wrongly on a list. I hope that the Government will continue to consider whether there should not be some unified appeal system throughout the Community, if, with experience, they find that persons are being put on the list and are not obtaining an adequate remedy. It is plain that there should be some form of sufficient protection for people who find their names on the list.
I attach great importance to the points made by the noble Baroness, Lady Park of Monmouth, about the difficulty of ensuring that there are to be controls at the external frontiers, even though the committee, as the Minister said, considers that internal border controls do not have to be abolished as a result of the Single European Act.
I have to say—your Lordships will not be surprised about this—that I am disappointed by the Minister's answer as to the role of the ECJ. He will not be offended if I say that I hope that that will not be the Government's standard reaction to proposals under the second and third pillars. We had a witness from a government department on another inquiry last week. We asked, "Should there not here be a role for the European
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Court?". "No, no, no", came the answer, "The Government do not like this sort of thing going to the European Court of Justice". I ask the Minister to bear in mind that all our witnesses were in favour; the European Parliament is in favour; and all noble Lords who have spoken tonight were in favour.
I am grateful to noble Lords for the attention given to this important topic. Once the regulation and convention are in force, that will lead to some interesting problems.
On Question, Motion agreed to.

Defence Research Agency: Select Committee Report
6.17 p.m.
The Earl of Selborne The Earl of Selborne rose to move, That this House takes note of the Report of the Science and Technology Committee on the Defence Research Agency (3rd Report, HL Paper 24).
The noble Earl said: My Lords, perhaps I may say at the outset how grateful was the sub-committee to be able to benefit from the co-option of two noble Lords with considerable knowledge of the Defence Research Agency—my noble friend Lord Trefgarne, who was in the Ministry of Defence at the time of its inception and the noble and gallant Lord, Lord Craig of Radley, from whose expertise we benefited enormously. We were helped greatly by our two specialist advisers, Professor Frank Hartley and Professor Philip Gummett. I must pay tribute also to our Clerk, David Batt, for his crucial contribution.
It was true in my case (and it was possibly true in the case of some other members of the committee) that we were not all familiar with the DRA and its role. Let me say immediately that we were all impressed by the quality of its science and its management. The DRA, as at present constituted, is one of the largest employers of science in the country with 5,000 scientists and a turnover of £795 million. All but 9 per cent. of its work is conducted by the Ministry of Defence. It is a wholly owned agency of the Ministry.
Our report was published in July before the Government produced Front Line First, a report on the outcome of the defence cost studies; and as the Government's response to our report states, the report has major implications for the future structure of the agency.
As an outcome of those proposals, it is likely that the DRA will be brought together into a single executive agency with all the other MoD non-nuclear science and technology organisations. That has happened since the publication of our report and I shall deal with it no more.
The DRA was formed in 1991 by amalgamating four research establishments which had formidable reputations. The agency acquired trading fund status in 1993. Our report draws attention to the record of achievement of those defence research establishments and how important it has been for the agency to maintain the reputation and momentum in order to retain battle-winning technological advantage. That has been against the background of reducing cost and changing unpredictable risks.
This advantage gained in the past by the provision of technological excellence must now be achieved on greatly reduced funds. The DRA is undergoing a programmed fall in work from the Ministry of Defence of 15 per cent. between 1993 and 1996. That involves the closing of sites, the restructuring of support activities and other cost-cutting measures. At the same time, in common with much other publicly funded work, a market testing programme is being implemented in phases whereby all the work which the DRA carries out for the Defence Procurement Executive of the Ministry will be market tested by 1997. That puts the management of the agency under considerable pressure.
Against these constraints, the DRA has initiated a number of what we describe as positive thrusts into the commercial world by developing closer links with industry through its Pathfinder programme, strategic alignment and dual use technology centres. We recognise that, in spite of its name, research is only one of the agency's two main functions. Sir Ronald Oxburgh pointed out that perhaps its more important role is to be able to offer technical advice to the Ministry. To that end, it engages in strategic and applied research and project support. Its raison d'etre—its justification—is that it must acquire and retain an expertise to be able to offer expert advice to the Ministry.
The opportunity to contribute to wealth creation by supporting industry or by expanding its own intellectual property base must not be allowed to detract from its central role by providing a core of technical advice, however important this role might appear to be to industry or, indeed, to other parts of Government. That draws attention to a second serious constraint if the first constraint is funding. Much as the DRA might like to maximise its income, and under its trading fund status it is expected to act commercially, this must always be done in a way that is compatible with the Ministry's requirements. After all, the Ministry is the owner of the agency.
As a wholly owned subsidiary with no mandate to spend money on areas which do not benefit the defence of the country, there are real difficulties in fulfilling the more commercial role that is expected of the agency. To make a difficult situation worse, funding from the DTI is declining. Our report draws attention to the near elimination of DTI grants to Malvern, for example. This puts the DRA into a difficult situation. It is required to meet some very precise targets, yet does not benefit from an equally strong obligation on its shareholder and regulator, the Ministry of Defence.
However, we greatly welcome the increased funding that is to be channelled through the deputy chief scientific adviser. We believe that that will lead to a greater element of stability. If we were critical of the efforts made by the Ministry of Defence to develop its relationship with the DRA it was because we were anxious about the short-term nature of some of the appointments that fulfil the role of customer. That leads to a lack of continuity. That is not true of the deputy chief scientific adviser and his group, who provide a
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welcome element of stability. In so far as the proportion of funding to the DRA will be increased through this route, we welcome it.
We also drew attention to the concept of the Fraser figure, which we explain in the report, and we believe that the concept needs further development within the Ministry. The DRA needs guidance on the Ministry's long-term requirements. In so far as the Ministry, for reasons which I have acknowledged, is unable to assist adequately in the promotion of wealth creation projects, it must consider closer collaboration with the Office of Science and Technology so that the opportunities to support our industry and to contribute to wealth creation are more effectively exploited. We acknowledge the role of the Office of Science and Technology in the area of defence research in the Technology Foresight programme, which it supervises, and in Forward Look.
In a report published last year on priorities for the science base, we made a recommendation that the chief scientific adviser be empowered to expose any inconsistencies in the science plans of departments. We believe that is an obvious example. For reasons of accountability, it is understandable that the Ministry of Defence cannot put as much into wealth creation as perhaps last year's White Paper suggested. We believe that the Office of Science and Technology has a greater input to make in the agency and we recognise that the Ministry of Defence is bound to be protective of its territory.
We looked with interest at the examples of the United States, France and elsewhere where interdepartmental difficulties do not inhibit the development of wealth creating enterprises in defence research establishments—at least not to the same extent. I am sure that the level of parliamentary accountability is different and that it is no good expecting systems that work in one country to be transplanted to another. The concept of economic security is one that the Americans have been able to use to justify the greater flexibility of funding within Ministry of Defence research establishments.
I have dealt at some length with the difficulties and point out that an opportunity to review this delicate relationship within government will occur when the framework document for the DRA is reviewed in 1998. Of course, the Office of Science and Technology will be involved in that review. However, that seems rather a long time to wait.
Having dealt with some of the difficulties encountered by the DRA in fostering industrial links, we were nevertheless impressed by the Pathfinder programme and the concept of dual use technology centres. Since the publication of our report two more such centres have been funded and we greatly welcome that. Both dual use technology centres and Pathfinder programmes will, no doubt, evolve as a track record is established. In particular, we should like to see the Pathfinder programme made more accessible to small manufacturing enterprises.
I have been able to refer only in outline to a few of the recommendations in our report. I wish to emphasise that we believe that before yet more scientists are made redundant and, above all, before unique facilities are

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lost, we should think carefully about the contribution that these facilities and scientists could make to underpin future economic security.
We believe that the quality of science within the DRA is too high to put at risk and requires some equally high quality solutions from government in order to ensure that we make the best possible use of this expertise. I beg to move.
Moved, That this House takes note of the Report of the Science and Technology Committee on the Defence Research Agency (3rd Report, HL Paper 24).—(The Earl of Selborne.)
6.28 p.m.
Lord Carver: My Lords, I should make clear from the start the fact that I am no longer a member of the Science and Technology Committee and am therefore in no way associated with the report. I congratulate the noble Earl and his committee on having produced an interesting and valuable report which illuminates the problems that the Defence Research Agency faces and those that have been created by its formation. The report does not attempt to gloss over the fact that there are unsatisfactory elements in the anomalous situation in which the agency has been placed: its dependence on and tight control by the Ministry of Defence; its remit to contribute as much as possible to fields other than defence, in particular, those considered to be in the national interest; and the demand that it should earn revenue by doing so, affecting its relations with other government departments, with industry, with which in some cases it is competing, and with other research organisations. There is also a delicate problem concerned with relations with similar organisations in allied countries.
The Government's response, published three days ago, underlines those problems. Their defensive arguments, complacently protesting that all the conflicting demands and loyalties can be, are being and will be reconciled in a satisfactory way, illustrate in a repetitive fashion the anomalies inherent in the attempt to make the defence research and development establishments fulfil a number of conflicting purposes.
It would seem to me that the committee had some difficulty in finding solutions to these problems. I doubt whether the noble Earl, its chairman, would claim that its recommendations go very far towards solving them, although they may do something to alleviate them. I believe that that is so because they are not radical enough, and do not go to the heart of the matter. The committee has perhaps been constrained by its acceptance that, as the report states:
"the various structural reorganisations to which the DRA has been subjected in the past few years call for a period of consolidation and stability".
'The heart of the matter is that the requirement for re-equipment of our Armed Forces over the foreseeable future does not justify the maintenance of defence research and development establishments of the size and nature of those now left in the DRA. They were built up and endowed with many of their valuable assets in the Second World War. Although much reduced since then, they are out of proportion to the future
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requirement, certainly in terms of the quantity of equipment which would be produced in this country; and it is not acceptable to justify their existence on the basis of their contribution to the arms export industry.
Because that is the case, the pressure, clearly recognised in the report and in the Government's response, is that greater emphasis should be given to their potential contribution to other fields of national life, particularly to industry, and to their cost to the taxpayer being offset by sale of their services. That produces conflicting demands and loyalties and many other problems, some of which I have already mentioned. The report clearly acknowledges them. Although its recommendations edge in the direction of loosening the Ministry of Defence's tight control and of associating other government departments with the agency, notably the Department of Trade and Industry and the Office of Science and Technology, it treads warily and in my view does not go far enough. The report, in paragraphs 2.34 and 5.14, to which the noble Earl referred, recommends a close study of French and American defence research as examples of directing it towards wider national interests than just the support of a national defence equipment programme. I would urge a study of the German method. As I understand it, the Germans have no defence research establishments as such, controlled by their defence ministry. Their armed forces depend upon a combination of research carried out by their prestigious civil scientific institutes, such as the Max Planck, which also serve industry and other national objectives, and development carried out by the armament firms themselves. One must of course make allowance for all the differences which exist between how science is organised, supported and financed in this country and how it is done in Germany. Nevertheless I believe that a close study of the German solution, which is no less successful than the French and American both in developing military equipment and in supporting broad national objectives, would repay a very careful study.
If we were to move in that direction, my proposal would be to split up the Defence Research Agency into its former four establishments—the Royal Signals and Radar Establishment, the Admiralty Research Establishment, the Royal Aircraft Establishment and the Royal Armament Research and Development Establishment—and detach them, with the probable exception of RARDE, from the Ministry of Defence. The agency, as it now is and as the Ministry of Defence plans it to be, is an uneasy amalgam of establishments of different natures and objectives. I would then convert RSRE at Malvern into a National Electronics Institute, RAE at Farnborough into a National Aerospace Institute and most of ARE into a National Maritime Institute, some elements of it perhaps being absorbed by the Electronics and Aerospace Institutes. In my view, those institutes should have close links with a specific university: perhaps Cambridge for electronics; London, particularly Imperial College, for aerospace; and Southampton for maritime. They should also offer shared use on a commercial basis of some of their assets with other research organisations, as has recently been agreed in the case of the ship testing tanks at Haslar

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between the former Admiralty Research Establishment and British Maritime Technology Ltd. I would envisage those three institutes coming under the aegis of the Engineering and Physical Sciences Research Council.
Parts of RARDE might be amalgamated with other institutes: the former Fighting Vehicle Research and Development Establishment perhaps with what is now the Transport Research Agency; but the weapons and ammunition side, formerly Fort Halstead, should probably remain a Ministry of Defence establishment.
I believe that such a fundamental reorganisation would provide a solution to the problems to which the recommendations of the report, in my view, offer only palliative alleviations. It is unrealistic today, and will be more so in the future, to think of a defence procurement programme based on national research and development and national production. The quantities are too small, the cost too high and the industrial base too narrow. We need to seek a European procurement programme, backed by high quality national science, supporting a thriving British electronic, aerospace, maritime and general engineering industry, working in a European context.
That was the message that the Minister for Defence Procurement gave forcefully yesterday in his address to the Defence Manufacturers Association. I suggest that he should try to persuade his right honourable friend the Defence Secretary to apply it to the Defence Research Agency.
6.37 p.m.
Lord Trefgarne: My Lords, I had the honour to serve on the committee whose report your Lordships are now considering. I wish to start by paying tribute to our chairman, my noble friend Lord Selborne, for the wise and effective way in which he guided our deliberations and which I believe is reflected in the report which we have produced.
I have listened with interest to the speech of the noble and gallant Lord, Lord Carver. I wish that we had had an opportunity, during the course of our deliberations, to know the noble and gallant Lord's views so that they could perhaps have been tested, examined and considered more than they were.
I am wholly supportive of the report which your Lordships are considering. However, there is one matter which is not wholly removed from what the noble and gallant Lord has been talking about today to which I should like to refer; that is, the possibility in due course, of moving the Defence Research Agency into the private sector.
We were not charged with considering that proposition. There was no particular support for it among the members of the committee and, indeed, when the Minister, my right honourable friend Mr. Aitken, came to speak to us, he made it clear that there were no government plans for such a move. I am told that the Government's response to our report—and I am sorry to say that my copy arrived only today and I have not yet had an opportunity to study it—refers also to the fact that there are no present government plans for that particular course of action. But I believe that some of
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the difficulties to which the noble and gallant Lord, Lord Carver, has just referred, which are real and which were identified in our report, would be overcome by moving the Defence Research Agency into the private sector.
Having said that, I agree also with the conclusion which the committee reached to the effect that the DRA has been subjected to all sorts of reorganisations and changes in recent years and now would not be the time for a move into the private sector. The agency deserves and is entitled to a period of consolidation. I recognise the fact that the noble and gallant Lord did not think that that was wholly desirable. However, I certainly believe that to be desirable as, indeed, did the committee.
However, when that period is over in, say, two, three or even four years from now, I believe that it would be right to revisit the question of whether or not the DRA should be privatised. As the noble and gallant Lord said, the fact is that the capacity of the DRA at present exceeds that which can usefully be fully employed by the Ministry of Defence. I am very much attached to the thought that the excellent resources and facilities available within the DRA ought to be more widely available to our national effort in terms of generating more and better technologies for use not only for military purposes, but also for civil purposes, to a much greater extent than they are at present.
As I said, the committee was not charged with examining whether or not the DRA should be privatised; nor, therefore, did we reach any particular, immediate conclusions on that point. But I should like to see the question of the ownership of the DRA revisited after a period of consolidation. I hope that the Government will find it possible to do so.
6.41 p.m.
Lord Craig of Radley: My Lords, this was my first experience of a Select Committee, at least of sitting at the round end of a Select Committee table. I am most grateful for the friendly support that I received from the chairman, the noble Earl, Lord Selborne and from the rest of the committee. As the noble Earl mentioned, the topic of our investigation was not unfamiliar to me. I had some involvement with the work done in the Ministry of Defence which led Ministers to amalgamate the research establishments into the DRA, and the subsequent introduction of a trading fund in 1993. Following the collapse of the Soviet threat, it was also clear that the MoD's research requirements would need to be scrutinised most thoroughly against the background of the post cold war world.
Change in any large and complex organisation is never easy. Those involved in the formation of the DRA faced a double whammy: the amalgamations and restructuring of the former research establishments and the downward pressures on their future budgets. Some argue that in periods of peace and retrenchment, expenditure on the strategic research programme should not be curtailed. Indeed, the Statement on the Defence Estimates 1994 (CM2550 at page 64) said:
"The need to retain battle winning technological advantage is as pressing now as it has ever been in the context of changing unpredictable risks".

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If such aspirations are to be realised, it is not only a matter of money but of staff with the right background and motivation to deliver on good ideas. With that in mind, and the unprecedented changes which had already taken place in forming the DRA with its trading fund, our committee called for a period of consolidation and stability. Indeed, several of our witnesses stressed that need.
It was, therefore, with no little surprise that I read in the Defence Costs Study report, Front Line First, issued in July 1994 after our review had been completed, that savings estimated at £12 million a year could be expected, subject to further work (I note the reservation implicit in that phrase) if the DRA principles were applied as widely as possible to other MoD organisations which provide scientific and technological services.
It is a fundamental precept of scientific experiment that to get a proper evaluation the introduction of too many variables at the same time will almost certainly distort the conclusions. Fifteen months' experience of the DRA with its trading fund seems perilously short to conclude that it is not only a goer in its present form but that it will be able to absorb new resources and organisations immediately with cost savings and no adverse effects. It was an unfortunate matter of timing that our committee could be given no hint in MoD evidence of such further major changes. Time will tell whether the MoD has got that right or has fallen once more into the trap of piling change upon change to such an extent that quality of output cannot be sustained.
There is just one other aspect of our report that I should like to touch on. We concluded from evidence that Treasury rules place an unnecessarily high burden upon the DRA. I understand that the 6 per cent. risk-free target rate of return set by the Secretary of State for Defence is the same as applied across other government trading funds. They say that it provides a necessary commercial discipline. At the same time, the DRA is said to be free to charge what it deems appropriate for its facilities, provided that it does not disadvantage the MoD. Is there not some inconsistency in those approaches? Why should the DRA be grouped with every other trading fund? Should it not be treated on its own merits? We are told that the DRA is free, but only so long as it charges—at least—what the MoD says it must. Treasury and MoD rules seem to be inflexible, and not always in the best commercial and wealth-creating interests that we would all like to see from the DRA.
The DRA enterprise fund should be developed to give both the encouragement and the wherewithal to exploit the considerable financial potential of the DRA. While the MoD as sole owner of the DRA must be given priority, and every effort made to meet the MoD's legitimate requirements, it should also be possible for the chief executive and his team to seek to enhance the national wealth-creating potential which lies within the DRA. That may be difficult to achieve in a meaningful way if the MoD insists that any capacity surplus to defence needs must be removed. The DRA seems to be between a rock and the hard place.
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Finally, the DRA and its predecessor research establishments have been through a period of unprecedented change, financially, organisationally and functionally. I hope that no "Johnny come lately" will feel that the DRA needs to be reviewed yet again in the near future; for example—and I note what the noble Lord, Lord Trefgarne, said—with a view to privatisation or further restructuring. The agency needs stability to set itself on its new course, to allow time to assess properly the success of the new arrangements and, above all, to allow the scientists and others who have been so personally affected by so much upheaval to plan ahead for their families and themselves. If not, morale and quality of output could be badly hit.
6.48 p.m.
Lord Redesdale: My Lords, I welcome the opportunity to make a few brief comments about the report. I should also like to say that I welcome the Government's reply; indeed, it is extremely comprehensive. However, the area that I most welcome about the Government's reply can be found at the end of paragraph 3. I know that the noble Lord, Lord Trefgarne, will not agree with me in that respect, but I think that those words are most important. They read:
"There continue to be no plans for privatisation".
Like many members of the committee, I believe that privatisation of the Defence Research Agency will not be in the best interests of the country.
When I was considering my speech, I realised that many noble Lords would speak in great detail. As many speakers were members of the committee and know a great deal about the subject, I should like to discuss a few areas that concerned the committee over all.
While thinking about the speech I would make in this debate I received the Defence Research Agency's annual report 1993–94. It is quite an exciting document. The first section of it reads very much like an episode of "Tomorrow's World". I say that with no disrespect at all. The document shows how the Defence Research Agency is at the cutting edge of advanced technologies. I was particularly interested in the work being done on light emission from silicon.
The document almost states why the reforms we are discussing were undertaken. The Defence Research Agency carries out exciting research. The 10 per cent. of it which is directly outside the MoD's control can be used for wealth creation and for the benefit of the country. The report describes the vast areas of expertise that are covered by the Defence Research Agency and many areas which are not limited just to defence.
The second section of the report lists the enormous changes that have taken place within the Defence Research Agency. I believe that these changes are mostly for the good. However, I have one or two points to add on this matter. I believe that one of the driving forces behind the changes is efficiency. But there is a slight dichotomy as regards pushing for efficiency in research. On the one hand one is trying to limit the money being spent and on the other one is trying to achieve as much with the research as possible.

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I have talked with the noble Baroness, Lady Hilton of Eggardon, about the role of efficiency within the DRA. I believe we share the view that one area that has been particularly discussed is that of blue sky research. While there is a strong push for efficiency, that will cut down on the eventual returns from blue sky research. Also, as the research becomes more specialised, that could lead to short-termism. Although I realise that often few benefits are to be gained from pouring vast amounts of money into research without a direct aim in mind, I believe that one area that has to be carefully monitored is that short-termism might become an in-built factor in all the research undertaken by the Defence Research Agency.
I also wish to discuss intellectual property rights. I believe strongly that there is no reason why the country should not benefit from any revenue that may accrue from this work and that intellectual property rights should fund other areas of the Defence Research Agency. However, I disagree with the Government's response in one respect. I believe that, if at all possible, intellectual property rights should be sold to British companies below the rate of return that would normally be expected if they can show that such a course would create jobs in this country and add to the manufacturing base. I believe that that is an important point. One may forget that a small loss of a few million pounds in intellectual property rights could be compensated for if a factory could be established in this country to produce goods as a result of acquiring the intellectual property rights.
I also wish to mention the Treasury rules, as did the noble and gallant Lord, Lord Craig of Radley. They can be inflexible. It seems to be a case of taking from one pocket and putting into another. The Treasury can push for more stringent controls of the Defence Research Agency. However, it is a publicly funded company, and if it can be shown that reducing the Treasury rate of return would benefit the country, I do not believe that one should necessarily have to stick to the 6 per cent. figure, which is an artificial creation.
I wish to end by considering the role of stability. I shall quote from the Defence Research Agency report and the statement of the chief executive, Mr. John Chisholm:
"After two years of preparation, 1993/94 saw the Defence Research Agency launched as a fully trading organisation. It has proved a daunting but so far successful task. The mechanics of making an enterprise of more than 10,000 highly skilled individuals into a disciplined trading entity were sufficiently challenging in themselves; to achieve that transformation while retaining the focus4 and innovation from DRA's staff has been a rare and important task. Despite many difficulties, some of them relatively major, that task has been by and large accomplished".
There have been massive changes in the Defence Research Agency. I wish to mirror some of the views that have been expressed already by stating that I believe a period of time needs to be set aside to see what effect those changes have had. It would seem to me to be short-sighted to try to attempt major changes in the short term. I believe that a period of stability of perhaps more than two or four years —perhaps six or eight years—should be instituted so that the effects of these
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changes can be seen. Then, if any further changes are necessary, they can be implemented with the benefit of wisdom.
6.57 p.m.
Lord Graham of Edmonton: My Lords, I begin by extending the apologies of my noble friend Lord Williams, who, as the Minister will know, takes a keen interest in these matters but is unfortunately unable to be here. However, that provided me with the opportunity —in fact the necessity—to do a bit more reading than I might otherwise have done. I must confess that I am an ex-Royal Marine, corporal PLY X112 105, 1943. Ever since then I have taken an interest in defence matters and, on behalf of my party, I have spoken on defence matters from time to time in the past. Therefore it was a pleasure for me to have to do the necessary reading to equip myself for this debate.
I share the commendations of all of us not only to the noble Earl, Lord Selborne, but also to members of his Committee. The Minister normally expresses his gratitude to those colleagues in the House who have served him and the House. He will want to say how grateful we all are to the Committee not merely because it has done a thoroughly worthwhile job but also because it has given the Minister an opportunity to comment on this matter.
The noble Lord, Lord Redesdale, referred to the Ministry's response. There is no need for me to go over the report when the Minister will no doubt do that. If what we have in the report is the response from the Government, that will be the response that we are given from the Government Minister. The debate provides us with an opportunity to state our views before we hear the Minister's response. I certainly hope that he can give a more encouraging response than some previous responses have been. What we have here is an impressive document which has been painstakingly—but I believe expertly and dispassionately—assembled. One hears a great deal about interests, for example Members' interests and declarable interests. "Vested interest" are certainly not dirty words to me.
There has been an impressive investigation into a national asset. Those of us who have been in the House and in politics for a long time, and indeed those individuals whose careers are at stake, recognise that there has been a revolution both in the management and the structure of many hitherto well-established public services. Therefore, I do not believe that there will be any argument about the need for a review.
I listened carefully to the noble and gallant Lord, Lord Carver. He not only told us what is right with the report. He impressed me with the fact that not only had he read the report but he had analysed it, and he presented his ideas on how it could be improved. I am sure that the noble Earl, Lord Selborne, and his committee, will be grateful for that, because it is all grist to the mill.
However, I wish to emphasise immediately a view contrary to that expressed by the noble Lord, Lord Trefgarne. The Government and the Minister have stated repeatedly that they have no plans at present to privatise the industry. The noble Lord nevertheless took the opportunity to say that while he accepted that for the

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moment, perhaps in two, three or four years' time the question should be revisited. I hesitate to believe that an organisation which has been in turmoil and suffered trauma over the past few years will welcome the fact that, as it is getting to grips with a new role, it can look forward to its entrails being examined yet again in two, three or four years' time. Therefore, I hope that the Minister will be a little more kind to those whose careers are affected and will say that, in the context of the changes, he and his colleagues fully expect the new arrangements to be a success. If they are not successful, then of course the Minister and his colleagues will consider alternatives.
I was very impressed to learn that the DRA is not merely defence oriented or an organisation with a defence capability. There are a number of ways in which an organisation which is established for a limited purpose may develop expertise and then may become a competitor. I understand the delicacy of that situation. There may be resentment. However, I see nothing wrong in a mix of civil and public resources and businesses if it produces a good match. I am very encouraged by that aspect of the report.
Recommendation 4.24 on page 32 states:
"We consider that Treasury rules place an unnecessarily high burden upon DRA. The current target rates of return appear unrealistic, and we consider that DRA should be able to charge customers at marginal costs where appropriate; to do otherwise would place the future of many unique and vital facilities in the United Kingdom in jeopardy".
The committee has had the benefit of hearing the witnesses and questioning them. They have used their great expertise, and their political nous. If it is their view that the present rules could place many unique and vital facilities in the United Kingdom in jeopardy, I should like the Minister either to put that in context or to reassure those who are affected. It would be a nonsense if that were to happen in pursuit of dogma. The noble Lord, Lord Redesdale, also mentioned that point.
It would be in the national interest if there were an understanding or some flexibility in these matters. The noble Earl, Lord Selborne, said that before many more scientists are made redundant and before there is a loss of more unique facilities, one ought to pause and reflect on whether that is necessary. He also said that one must tecognise that in the context of the defence of the realm we do not want to find ourselves in a few years' time in a position in which either those facilities have to be recreated or we have to obtain the facilities from other agencies, not only in this country but from abroad.
One of my complaints about this Government is that far too often, in a cavalier fashion, they will sell facilities of this kind in order to boost the Exchequer and provide opportunities for tax cuts. I come from the Enfield and Edmonton area. I believe that the noble Lord, Lord Trefgarne, was the Minister at the time of the sale of the ordnance factories. I find it astounding that the Government keep so few of their eggs in the basket of public ownership. I believe that selling our assets in that way is completely wrong.
Therefore I should be grateful if the Minister could give some reassurance in respect of stability.
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In paragraph 5.6 on page 33 the committee recommends that the Government's Chief Scientific Adviser should be:
"specifically empowered to expose any practices which impede closer links between civil and military science and technology".
Perhaps the Minister or the noble Earl, Lord Selborne, can tell us what they have in mind which may cause them to worry about practices which impede such closer links. Are we talking in terms of civil servants and those who guide them resisting the possibility of moving into the civil field? Are we talking in terms of a fight to the last ditch? The noble and gallant Lord, Lord Carver, impressed me with the need to be flexible in these matters. Therefore, I should be grateful if the Minister or the noble Earl, Lord Selborne, could reassure me. I believe that we need a mix of establishments and expertise linking civil and military science.
I was very impressed by the remark in the government report dealing with the need for the DRA to
"seek work from other government departments, some of which have research budgets significantly greater than the MoD's, as well as from the private sector".
Will the Minister indicate to what extent there is co-ordination at government level to ensure that initiatives are not inhibited due to vested interests in other departments?
Perhaps I may give an example from my own experience. A colleague of mine worked for the Coal Board. He was in charge of a body called Minestone Executive, whose function was to sell colliery spoil. That was useful for aggregate. It was not first-class aggregate but second-class aggregate which could be used in, for example, road building. An organisation which was nationally owned had difficulty in selling its product because contracts existed between other departments and other contractors which were not owned by the nation. There was clearly a commercial nexus.
Therefore, I should like the Minister, when he replies, to pay particular attention to paragraph 9 on page 2 of the government report and assure us that the facilities and expertise which rest in the agency are capable of being used by others without too much difficulty.
I was reassured by the words of the noble Earl, Lord Selborne. I noted the reference in the report to the decline in DTI funding. The noble Earl seemed to lay great store on an alternative, secondary source of funding. Perhaps he may say when he replies how he is assured that money is available from that other source.
Reference has been made to short termism, a subject of which the Minister is well aware. We are talking about a vital public interest in every sense of the word. The Minister and I will differ on our attitudes in general to the public and private sectors. However, I believe that the DRA needs to be protected. The agency must not disintegrate for short-term reasons, with parts of it sold off. Five thousand scientists and many other employees who serve the nation well are involved.

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I had intended to say how useful the report is for people such as myself. I read it with a great deal of interest. However, perhaps I may say to the noble Earl, Lord Selborne, and others that paragraph 2.22 on page 17 almost put me off. It states:
"DRA already seeks European (EC and non-EC) collaboration, involving itself in EC Framework Programme projects and in EUCLID, BRITE/EURAM, ESPRIT, SCIENCE, and MAST".
We are supposed to understand that. It seems gobbledegook. The report is full of initials. This report clearly has a great value to those people who prepared it; they will use it. But it could be improved if so many initials were not used. However, the House is indebted to the noble Earl, Lord Selborne, and to those who contributed to the report. On this side of the Chamber, we pay a warm tribute to their work and look forward to the continuation of the valuable national service given by those men and women.
7.12 p.m.
Lord Henley: My Lords, the noble Lord the Opposition Chief Whip says that we often differ, and he is certainly right. However, there is one matter on which I am in full agreement with him: it is regarding the problems with and frequency of acronyms. As one who has only recently come to the Ministry of Defence, I am having great difficulties in getting to know and understand the vast number of acronyms which proliferate in that department.
I had also hoped on this occasion to be able to agree with the noble Lord on one other matter. He, like me, always welcomes brevity in speeches. I had thought for the first time ever that I would be able to congratulate every speaker in an untimed debate on keeping their speeches to within 10 minutes. However, the noble Lord himself broke that rule. I shall seek to keep within 10 minutes myself; but I do not know whether I can. I shall certainly not respond at the same length as our response which was published last week, to which other noble Lords have referred.
I start by extending my thanks to the noble Earl, Lord Selborne, for calling this debate on the Select Committee's report and offering my thanks to him, the members of the committee and its staff for their work in producing the report. I wish to say how grateful I am for the tribute that he paid to the Defence Research Agency and the excellence of its work.
As the House is aware, the publication of the committee's report coincided with the publication of our own report, Front Line First, which included a proposal to enlarge the DRA. We have been engaged in considering that proposal. As I have already mentioned, our response to the Select Committee's report was published this week.
I think that I would reject the allegations from the noble and gallant Lord, Lord Carver—for whom I have the greatest respect—that the report was complacent. I rest to some extent on the remarks of the noble Lord, Lord Redesdale, who welcomed the report. I hope that he will offer a similar welcome to other announcements that my department may make from time to time.
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We value the scrutiny given by the Select Committee to the DRA's role in the relationship between the agency and the department. We are pleased that the committee speaks highly of the DRA management and staff to the extent that it considers achievable the DRA's aim for international pre-eminence. We were disappointed, however, that similar acknowledgement was not given to the efforts made within my department to develop that relationship. The DRA is our principal scientific and technical knowledge base, and as its principle customer my department uses the trading fund regime to derive the best value for money from that knowledge base for the taxpayer's benefit. This will be even more the case when the trading fund is enlarged, and new streamlined procedures governing our relationship will help the DRA to plan ahead and improve the cost-effectiveness of the research programme.
The relationship between the DRA and its MoD customers is one of a trusted partnership in which the DRA has substantial knowledge of our future equipment needs and joins with us in planning the research programme. The Front Line First proposals on the restructuring of the MoD research programme into corporate research and contract research will allow us and the DRA to build a more coherent research programme to the benefit of my department and the wider economy.
Obviously I understand the committee's call—it was referred to by my noble friend Lord Selborne and the noble and gallant Lord, Lord Craig of Radley—for a period of consolidation and stability in the DRA's affairs. I have to say that there was no case to exempt the DRA from the rigours of the Defence Costs Study which looked at all aspects of support to the front line. We are determined to drive down costs to the taxpayer. The broad framework of the DRA structure and operating processes will remain in place.
The proposal in Front Line First, as my noble friend Lord Selborne, made clear, is to bring together the DRA, the Chemical and Biological Defence Establishment, the Defence Operational Analysis Centre, the Director of Test and Evaluation, and other MoD scientific staff into a single, enlarged executive agency. This will enhance the ability of those organisations to meet, through the existing trading fund, the demands placed on them by my department. The proposal in principle has been the subject of consultation with the trade unions and nothing in the comments received on the consultative document leads us to believe that it is not right to go ahead and prepare to launch the enlarged agency on 1st April next year. Nor do I believe that that will affect the stability of the DRA.
No evidence has been presented in favour of privatising the DRA—a matter to which my noble friend Lord Trefgarne referred. The Front Line First report—I believe that my noble friend mentioned it—specifically recommended that it should not be a candidate for privatisation. Indeed, in his evidence to the committee, the then Minister for Defence Procurement, my right honourable friend Mr. Jonathan Aitken urged caution in the light of our international commitments. However, I can assure my noble friend Lord Trefgarne that those are matters which should be and will be kept under review.

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Should it be a suitable candidate for privatisation in the future, that is certainly a matter that we can look to. However, I must express the caution that my right honourable friend expressed in his evidence to the committee: that it is certainly not a matter for the immediate or foreseeable future.
We welcome the importance that the committee attaches to the wealth-creating activity of the DRA. Last year's White Paper on science, engineering and technology, Realising Our Potential, emphasised the Government's commitment to harnessing all publicly funded science and technology more effectively to support wealth creation and improve the quality of life. The DRA has an important role in delivering our increased efforts to realise the wealth creation potential of its research and development activities. I can give an assurance to the House that the DRA is working closely with both the Office of Science and Technology and the DTI to take forward its wealth creation initiatives. The exchange of information with the civil sector is an important part of that process.
We rejected the idea that was advocated in the report and repeated both by my noble friend and by the noble and gallant Lord, Lord Carver. Lord Carver went on to suggest looking at the German solution to these problems. Certainly, again, as someone who is new to the department that is something—without making any commitments—that I would be more than willing to do. As I said, we rejected the idea in the report that the Office of Science and Technology and the DTI should share in ownership of the DRA, as that would undermine ministerial accountability without creating any clear benefits.
However, my department will invite the Government's Chief Scientific Adviser, Sir William Stewart, to become an external member of the Defence Research Agency Council.
Perhaps I may say a word or two about the Treasury rules that were referred to by the noble and gallant Lord, Lord Craig, the noble Lord, Lord Graham, and, I believe, the noble Lord, Lord Redesdale. We reject the contention that such rules place an unnecessarily high burden on the DRA. The present 6 per cent. target rate of return set by the Secretary of State as owner of the DRA is the same risk-free rate that applies across similar Government trading funds and provides the necessary commercial discipline. The DRA is free to charge what it considers appropriate for its facilities provided that it does not disadvantage the Ministry of Defence. It is merely constrained by the willingness and ability of its customers collectively to pay the full cost. I do not accept the noble and gallant Lord's arguments that those are contradictory. Nor do I accept the argument that those impose excessive constraints.
We also consider that the—
Lord Trefgarne: My Lords, I wonder if I may intervene. I hope my noble friend understands that the views to which he just referred and rejected so firmly were held almost universally throughout the committee, not just by my noble and gallant friend Lord Craig.
Lord Henley: Obviously, my Lords, I take note particularly of what the noble and gallant Lord, Lord
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Craig, said, and also of what the committee said. If my noble friend—a former colleague on this Front Bench—also forcefully makes those remarks, I will take even greater note of them. I am afraid, however, that I do not accept the arguments that have been put forward. I hope that my noble friend will therefore bear with me in that respect.
We also consider that the present arrangements provide sufficient commercial freedom for the DRA to contribute to the activities of British industry more widely. The important issue is for the DRA to use these effectively without affecting its capacity to meet the needs of the Ministry of Defence and the Armed Forces. The "trusted partnership" allows the agency to identify how the research programme might be modified to meet its wider remit while still meeting the MoD's needs.
In conclusion, perhaps I may remind the House that the Ministry of Defence is concerned first with defence objectives. That is our prime role. We require that the DRA should support that objective. However, such a mutually beneficial relationship does not rule out a wider remit for the agency, and we believe that within the overall defence framework it is possible for the DRA to operate flexibly and to make a very real contribution to the wider role of wealth creation. These are objectives that this Government support, and we shall continue to encourage in what has undoubtedly become a flagship among agencies for service delivery and efficiency.
7.23 p.m.
The Earl of Selborne: My Lords, I thank all those who have contributed to what I have found to be a very interesting debate, and I thank particularly my noble friend the Minister for his contribution and for the government response to our report.
Perhaps I may very briefly—because indeed the brevity of the speeches throughout this debate has been exemplary—make two or three points. In his stimulating contribution, the noble and gallant Lord, Lord Carver, referred to the German model. I think the committee would have had a lot of sympathy with that had we produced the report in 1991 or thereabouts. Instead, we are looking at the DRA four years into its existence, and that is very different. If the radical solution of which the noble and gallant Lord urges at least consideration and which he feels we should have looked at more carefully had been the answer, it should have been an answer four years ago, not now. We looked very carefully at the quality of the science and the need to try to ensure that that science delivers relevant research, particularly for its own purposes and the Ministry of Defence. We were not sure that yet another uprooting would be helpful.
My noble friend Lord Trefgarne referred to the issue of privatisation and seemed to imply that there was a self-denying ordinance on the committee not to look at this issue. That is far from the case. A number of people gave evidence on the ownership of the agency, and that was mainly in terms of whether it should remain in the ownership of the Ministry of Defence. Our terms of reference were as wide as you like: we were simply conducting an inquiry into the Defence Research Agency. This is very much a case of the dog that did not bark. Very few people referred to privatisation—

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although it is true that the Minister himself did so. And Sir Peter Kemp in his written evidence reminded us that at the time when the DRA was created privatisation had been quite a live issue. However, throughout all the written evidence that we received—and it was a large amount—there simply was no request for privatisation. That is why we did not take that line of inquiry very far.
Lastly, a very forceful and valid point was made by the noble Lord, Lord Graham of Edmonton, when he referred politely to the "Alphabet soup" throughout this report. I refer the noble Lord to page 41 where, I am horrified to count, the number of acronyms comes to 60. I am afraid that that is the culture in which the Ministry of Defence lives. The noble Lord will remember from his days in the services just how widespread initials were, and they remain so. All I can say is that he read out to great effect one particularly awful paragraph. However, if he looks, for instance, at what SCIENCE (which you would think was a perfectly good word) really means—it is referred to on page 41—he will
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realise that in real life it is even worse than as an acronym, so perhaps we were wise to keep to the acronym in that respect.
The noble Lord asked me to refer to another point, and perhaps with your Lordships' indulgence I may briefly do so. If the DTI is not funding the research establishments within the Defence Research Agency as much as we would wish—and it is not—we look then to the Office of Science and Technology. The problem with the Office of Science and Technology is that it does not have the money. Nevertheless, it was set up two (or is it three?) years ago with the remit to try to co-ordinate research throughout government. We believe that there is a job to be done. I listened with great interest to what my noble friend the Minister said. I still believe that perhaps his ministry and the Office of Science and Technology could look carefully at this point. I therefore obviously welcome the appointment of Sir William Stewart to which my noble friend referred.
On Question, Motion agreed to.
House adjourned at twenty-seven minutes past seven o'clock.