Lords Sitting of 9 February 1994

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

Sarajevo
Lord Mackie of Benshie Lord Mackie of Benshie asked Her Majesty's Government:
How many people were killed or wounded by Serb shelling or sniper fire in Sarajevo during the past week.
The Parliamentary Under-Secretary of State, Department of Employment (Lord Henley): My Lords, we do not yet have the United Nations figures for the whole of last week. The House will be aware that at least 65 people were killed in one incident in Sarajevo's central market on 5th February. We unreservedly condemn that callous and brutal act.
Lord Mackie of Benshie: My Lords, I thank the Minister for that reply and welcome the moves being made to do something about the situation. Is the Minister aware that the efforts of Europe and of NATO are held in contempt in many places, and that they arouse feelings of shame in many citizens of Europe, including in this country? This is the last opportunity to restore credibility to both the United Nations and the European Union.
Lord Henley: My Lords, I am sorry that even in this country the efforts of Europe, NATO and this country are, as the noble Lord puts it, held in contempt. I am not sure that I agree with the noble Lord. I believe that we have contributed a great deal and our soldiers and our civilians have put themselves at considerable risk in providing help to the people of former Yugoslavia. Ultimately, as I am sure the noble Lord will appreciate, peace will only come at the negotiating table but, as my right honourable friend the Prime Minister said yesterday, the North Atlantic Council will today consider on the advice of military commanders what pressure can most effectively be applied and how. He went on to say further that if we use air power we must be clear about the objectives of that action.
Lord Mackie of Benshie: My Lords, I was not referring to the volunteers or our troops serving there. I was referring to the Governments of Europe.
Lord Henley: My Lords, I simply do not accept that. I think the Government have put in a great deal and I further repeat the fact that our soldiers and our civilians have put themselves at considerable risk.
The Earl of Lauderdale: My Lords, will my noble friend assure the House that the Government will do everything possible and take great care not to be drawn into one side in a three-sided civil war?
Lord Henley: My Lords, in the end, as my noble friend said, it is a civil war and therefore it has to be a matter for the various parties to resolve these matters. We will do what we can to provide help and succour, particularly to the people in Sarajevo, and to provide aid but in the end we cannot impose a peace on the three parties.
Lord Stoddart of Swindon: My Lords—
The Lord Privy Seal (Lord Wakeham): My Lords, I believe it is the turn of the noble Lord, Lord Merlyn-Rees.
Lord Merlyn-Rees: My Lords, if close support aircraft are to be authorised—as is stated in the newspapers, I presume as a result of briefing—against guns and mortars around Sarajevo, can we be assured that they will be used properly and that they will be controlled by ground controllers in sight of the target? I ask that question because there has been talk of radar-controlled aircraft flying from north-eastern Italy. However, that will lead to casualties not only among our air crews but among people on the ground. We were horrified at the events of last week, but if these radar-controlled aircraft are used we will suffer casualties among our air crews.
Lord Henley: My Lords, the noble Lord is right to draw attention to the dangers of the use of air power and that is why I made perfectly clear—and my right honourable friend in another place made perfectly clear —that we will only use air support on the advice of the military commanders on the ground.
Lord Craig of Radley: My Lords, in the event that air power is used, would it be the Government's intention to continue to make air power available until such time as a peaceful outcome has been negotiated? If so, how long do the Government estimate that period might be?
Lord Henley: My Lords, the noble and gallant Lord brings great expertise to these matters but I think he would not expect me to be drawn on them. We have made quite clear that, if necessary, we will use air support on the advice of military commanders on the ground.
Lord Campbell of Croy: My Lords, further to my question last Monday about the United Nations' capacity impartially to identify distant weapons, is my noble friend aware that 50 years ago units in the British Army could have pinpointed the offending mortar of last Saturday within minutes of its being fired? Examination of shell holes and craters can only provide a very rough indication of direction. Clearly that is not good enough when the faction forces are occupying miscellaneous areas.
Lord Henley: My Lords, my noble friend made that point when I repeated the Statement on Monday. Certainly we can take into consideration whether it would be possible by the use of modern technology to bring greater certainty to our knowledge as to where any mortars or shells come from.
Lord Stoddart of Swindon: My Lords, will the noble Lord answer two questions? First, has it been confirmed without any shadow of doubt that the shelling came from Serb guns? Secondly, since Mr. Hurd criticised the "must do something" tendency at the end of last year and again last weekend when he firmly disavowed such sentiments, what has happened for him to change his mind and for the Government to change their mind?
Lord Henley: My Lords, first, as I made clear on Monday, it is fairly certain that the shell involved in the atrocity at the weekend came from Serb positions, but I cannot say that without any shadow of a doubt. One can only say that that seems to be the case but not that one is 100 per cent. certain.
The noble Lord went on to suggest that my right honourable friend had changed his mind. I do not accept that. We have never believed that external intervention could simply settle the conflict and we do not believe it now. We do believe that the United Nations faces a deteriorating situation and may have to use more muscle to achieve its objectives of providing relief to civilians, deterring attacks on civilians and convincing the parties that a lasting settlement can only be achieved at the negotiating table.
Lord Cledwyn of Penrhos: My Lords, can the noble Lord say whether the agreement of the United Nations is necessary before air support commences?
Lord Henley: My Lords, we believe that it will be possible to make use of air support under the existing United Nations mandate.
Lord Chalfont: My Lords, can the Minister give the House an assurance that the Government will not be drawn into the "something must be done" school of foreign policy which hounds the whole of the agenda of foreign policy projected by television cameras and producers? Can he also assure us that if we take part in any military action in Yugoslavia we will know how it is going to end and not just how it is going to begin?
Lord Henley: My Lords, the noble Lord is absolutely right to draw attention to the dangers of any unwise intervention and the consequent escalation that might result. However, I cannot speculate further on exactly what might be decided at the North Atlantic Council this afternoon and what the council might decide we should do on the advice of our military commanders.
Lord Beloff: My Lords, does my noble friend agree that the atrocity last Saturday which has caused people to rethink is only one in a series of horrifying massacres perpetrated largely, though not exclusively, by the Serbs? Does he further agree that the Government are now facing the problem created by their own and their allies' intervention in preventing the Bosnian Moslems from defending themselves through the ill-advised and foolish arms embargo?
Lord Henley: My Lords, I do not accept what my noble friend said about the embargo. Further, we have never ruled out lifting that embargo if all else fails. But
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one ought to stress that that might easily do more harm than good and might easily further escalate the fighting and seriously jeopardise the relief effort mounted by this country and many others.
Baroness Blackstone: My Lords, if there is to be an ultimatum to the Bosnian Serbs in the near future, as has been reported, can the Minister assure the House that it will be for real and not another empty gesture? Assuming that the Bosnian Serbs accept such an ultimatum, can he also tell the House what plans there are for ensuring that Sarajevo then becomes a demilitarised area?
Lord Henley: My Lords, these matters are being considered by the North Atlantic Council today. I am confident that that meeting will take decisions but I do not think that it would be wise at this moment to speculate as to exactly what those decisions might be.
Lord Gisborough: My Lords, in view of the great interest taken by the Russians in their compatriots the Serbs and the obvious dangers for the Balkans, can my noble friend assure the House that the Russians will be thoroughly consulted so that we do not fall into something much bigger than we expect?
Lord Henley: My Lords, my noble friend makes a very valid point and I take that on board.
Lord Molloy: My Lords—
Lord Wakeham: My Lords, perhaps we ought to move on.

EC Budget
2.47 p.m.
Lord Stoddart of Swindon Lord Stoddart of Swindon asked Her Majesty's Government:
What was the amount of the European Community budget in 1990 and 1993.
Lord Henley: My Lords, the outturn figures for the 1990 European Community budget are 45,808 million ecus in commitments and 43,324 million ecus in payments; the 1993 amended budget totalled 70,408 million ecus in commitments and 66,858 million ecus in payments.
Lord Stoddart of Swindon: My Lords, is that not an astonishing increase, amounting to about 20 per cent. compound increase every year, bearing in mind that our own Government are putting restrictions on public spending? Is it not a fact that most of that expenditure is on the common agricultural policy, which goes on growing and growing like Topsy, in spite of the fact that the Government have promised from time to time to prevent additional spending? Is he further aware that every British family is now paying £28 per week more than they need because of the common agricultural policy? When will the Government press the EC to stop this awful squander mania by the institutions of that organisation?
Lord Henley: My Lords, I accept that expenditure is high, and I accept in particular that expenditure on the CAP is high. It is by far the biggest component of EC expenditure. It is though constrained by the agricultural guideline—a legally binding ceiling negotiated by my noble friend Lady Thatcher. Further, it is fair to say that all of us agree—well, the noble Lord probably does not agree—that we gain considerable benefits from our membership of the Community. Having said that, it is important that we pay our fair share. That is why my noble friend Lady Thatcher negotiated the abatement. That abatement cannot be changed or cancelled without our agreement. That is why we continue to be at the forefront of the fight against fraud in the Community —I do not think that I can repeat that yet again —despite the fact that the noble Lord accuses us of complacency. That is why at the Edinburgh Summit we negotiated a freeze in our own resources ceiling of 1.2 per cent. of GNP to 1994, rising to 1.27 per cent. in 1999, which is less than half of what the Commission proposed.
Lord Tebbit: My Lords, would it be fair to say that the policy of Her Majesty's Government appears to be to hold down spending at home but to allow substantial increases in spending of British taxpayers' money through Brussels? Does that not lead to the premise that Her Majesty's Government have concluded that the Commissioners in Brussels obtain better value for taxpayers' money than we do out of our own Government in this country?
Lord Henley: My Lords, with the greatest respect to my noble friend, I do not think that he listened to my answer to the first supplementary question. I stressed that at Edinburgh we negotiated a ceiling on our own resources of 1.2 per cent., rising to 1.27 per cent., which was less than half of what the Commission originally proposed.
Lord Bruce of Donington: My Lords, is the noble Lord aware that in the four-year span covered by the period referred to in the Question on the Order Paper a sum of no less than £7 billion net after all receipts was transferred to the European Community out of the Consolidated Fund? Is he further aware that, as freely acknowledged, a good deal of the expenditure was fraudulent and irregular? If the Government are misguided enough to believe that they can get the Bill through Parliament which provides for increased expenditure under the new own-resources decision made at Edinburgh, there will be a further burden per annum on the British taxpayer, net again, of some £200 million a year. What does the noble Lord propose to do about that?
Lord Henley: My Lords, I propose to continue appearing at the Dispatch Box answering Questions that noble Lords will continue to put down. I do not think that I can repeat this enough. This country has been very much at the forefront of the fight against fraud. We accept that there has been fraud. However, we shall continue to fight against fraud. We consider that there are considerable benefits to be gained from the money that we have expended on membership of the Community. I acknowledge that the noble Lord does not
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accept that. However, I believe that virtually everyone else agrees that it would be unthinkable that we should withdraw from the Community. As I have said, there have been and are now considerable benefits from staying in.
Lord Carr of Hadley: My Lords, does my noble friend agree that the great majority of British businesses, large and small, believe that they would be much worse off if we were not in the Common Market? They believe that they would make lower profits and employ fewer people. Might that not put the British taxpayer under even greater strain?
Lord Henley: My Lords, my noble friend makes a perfectly valid point. I hope that the noble Lord, Lord Bruce, listens to it. Obviously the well-being of British industry and the jobs dependent on it are not of concern to the noble Lord.
Lord Eatwell: My Lords, in their attempts to curb the growth of the Community budget, will the Government adopt the proposal advanced yesterday evening by the noble Lord, Lord Tebbit, in his customarily modest way, to campaign at the European elections for the abolition of the common agricultural policy?
Lord Henley: My Lords, I shall not speculate as to what will or will not be in our manifesto for the European elections.
Lord Stoddart of Swindon: My Lords, the Minister said that we obtain a great deal of benefit from the EC. I challenge him to mention one benefit that we could not receive if we were outside the EC. With regard to his noble friend's question, is the Minister aware that our overall deficit of £100,000 million in trade with the EC since we joined represents a loss rather than a gain in jobs?
Lord Henley: My Lords, over 60 per cent. of our trade is with the EC. We now receive something of the order of 40 per cent. of Japanese and 40 per cent. of American inward investment into the EC. All the inward investment which we have received over the years comes about largely because we are members of the EC. It would not have materialised without that. Further, the single market will bring further considerable and untold opportunities to British business and enterprise throughout the Community.

Turkey
2.55 p.m.
Lord Avebury Lord Avebury asked Her Majesty's Government:
What subjects were discussed with the Foreign Minister of Turkey by the Foreign Secretary during his recent visit to Ankara.
Lord Henley: My Lords, my right honourable friend the Foreign Secretary discussed regional and other issues of joint interest including Turkey's relations with the European Union, the problem of the PKK and human rights.
Lord Avebury: My Lords, did the Foreign Secretary re-emphasise the need for Turkey to comply with her obligations under the CSCE Declaration at Copenhagen in November 1990? In particular, did he express concern about the conditions under which local elections are due to be held on 27th March? I refer to the bombardment of civilian areas which resulted in the displacement of tens of thousands of voters who would thereby be disfranchised and the systematic intimidation and harassment of candidates and activists of the Democracy Party.
Lord Henley: My Lords, on behalf of the European Community, the United Kingdom delivered the statement on freedom of expression and free media which included a reference to Turkey as one of the participating states whose performance gave cause for concern. We certainly remain concerned at allegations of human rights violations by Turkish authorities during the evacuation of villages in the South East, in particular, if, as the noble Lord suggests, this is done to impede the democratic process.
Lord Stallard: My Lords, is the noble Lord able to say whether the Foreign Secretary took advantage of the situation to discuss what is happening in Cyprus at present? Did he ask the Foreign Secretary of Turkey what pressure he may be able to exert on his colleagues to bring some solution to the Cyprus problem?
Lord Henley: My Lords, as I made clear only the other day when I answered a Question on the subject of Cyprus, my right honourable friend took the opportunity to raise our concerns, as I stated them, on the question of Cyprus.
Lord Hylton: My Lords, I am glad to hear that human rights were discussed. Will the Government take all opportunities not only of raising the situation of the Kurdish minorities but also of the very small Syriac Orthodox Christian community in the Mardin Province?
Lord Henley: My Lords, there has been widespread international concern about human rights violations in Turkey, in particular, as I have been stressing, those in the South East. I note what my noble friend says. We share those concerns.
Lord Rea: My Lords, will the Government make representations to the Turkish Government about the persecution of the editorial staff of the legally published Kurdish language newspaper, Ozgur Gundem? Is he aware that in the past year or two more than 20 of the journalists and editorial staff of that newspaper as well as news boys who distribute the paper, have been killed by unnamed assassins, and that none of them has been brought to justice? Is he aware that a number of editorial staff are still in detention, having been arrested on 10th December? They still await trial.
Lord Henley: My Lords, I was not aware of the particular instance to which the noble Lord refers. My right honourable friend spoke in Ankara of our concerns about the free expression of political opinion. I am sure that he would have been aware of the particular anxieties that the noble Lord expressed.
Baroness Blackstone: My Lords, in the light of the Turkish Government's deplorable human rights record, will the Minister tell the House what position the Secretary of State took in his recent discussions with that government on its wish to join the European Union?
Lord Henley: My Lords, the Council of Ministers endorsed the Commission's opinion in 1989 which concluded that Turkey's application was premature. It noted that respect for human rights fell below EC standards. Turkish authorities are aware of our legitimate Community interests in its human rights record. The Council will continue to take into account all relevant factors including obviously, as the noble Baroness puts it, Turkey's record on human rights.
The Earl of Shannon: My Lords, can the Minister tell the House whether the meeting discussed the action of Turkey, in total defiance of its obligations under the Helsinki Treaty, by blockading another neighbouring country, Armenia, also a signatory to that treaty?
Lord Henley: My Lords, I am not aware whether that specific subject came up. My right honourable friend discussed regional matters. I therefore imagine that that particular concern was voiced.
Lord Avebury: My Lords, is the Minister aware that the Foreign Secretary's expressions of concern are most welcome? Will the Minister go further and say whether it is possible that the European Union or the CSCE might be able to send a mission to the South East of Turkey to observe the conditions under which the elections are due to be held on 27th March?
Lord Henley: My Lords, we have no plans to monitor the municipal elections in March. We would certainly consider any request from the Turkish Government.
As regards non-official monitors, we believe that they should inform the British Embassy in Ankara and the Foreign and Commonwealth Office of their movements. The Foreign Office travel advice warns against going to South East Turkey.

Car Theft Prevention
3 p.m.
Lord Campbell of Croy Lord Campbell of Croy asked Her Majesty's Government:
Whether they have appraised recent results since tracking devices were installed in motor vehicles to locate them quickly when stolen.
The Parliamentary Under-Secretary of State, Department of Transport (Lord Mackay of Ardbrecknish): No, my Lords. Such appraisal will be a matter for the police service.
Lord Campbell of Croy: My Lords, I thank my noble friend for that reply. However, I hope that he and his department noted that among other successful recoveries there was one last month when a vehicle was tracked and retrieved and about 20 other stolen vehicles

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were found with it in a secret hideaway. Is progress at last in sight against the excess of car crimes which is the cause of constant worry and nuisance to many people in this country?
Lord Mackay of Ardbrecknish: My Lords, in response to my noble friend, I did indeed notice that one of the tracking devices led the police to a veritable Aladdin's cave of stolen vehicles. That is obviously an important aspect of tracking devices and it ought to encourage more people to fit them to their cars.
The Viscountof Falkland: My Lords, is the noble Lord aware that recently a British product in this technology has been developed and is now on the market? It not only tracks vehicles, but is able, through the vehicle control systems of the tracked car, to limit the car's power output. That is surely bad news for opportunist crooks known as "joyriders".
Lord Mackay of Ardbrecknish: My Lords, I am aware that there are four systems currently on the market but I was not aware of quite the refinement which the noble Viscount points out to me. Clearly, if by electronic means the power can be removed from the engine of the car, that would have to be bad news for the thief.
Lord Montagu of Beaulieu: My Lords, will my noble friend agree that, effective as these devices may be for tracking cars, the most important objective is to stop the car being stolen in the first place? Therefore, appraisal of immobilisers is much more important.
Lord Mackay of Ardbrecknish: My Lords, in response to my noble friend, I think that the motorist ought to take a number of steps to prevent his or her car being stolen. That includes, dare I say it, making sure that they lock their cars. I believe that immobilisers are one aspect, alarms are another and a further one is undoubtedly the tracking devices, the subject of my noble friend's Question today.
Lord McIntosh of Haringey: My Lords, following the question from the noble Lord, Lord Montagu, will the Minister agree that, in seeking to prevent motor theft, one of the most effective ways has been shown to be motor projects whereby young people are encouraged to work legally with motors? What action are the Government taking to increase expenditure and activity on motor projects?
Lord Mackay of Ardbrecknish: My Lords, as I explained to the noble Lord last time we discussed the matter, in 1992–93 the Home Office spent something like £450,000 on projects of that kind. We have commissioned research in order to evaluate the effectiveness of such projects and we look forward to the results of that research.
Lord Chalfont: My Lords, will the Minister accept from me that some of us are extraordinarily encouraged to find that the noble Lord, Lord Henley, is not the only Minister from the Government Front Benches to answer questions?
Lord Mackay of Ardbrecknish: My Lords, perhaps I may tell the noble Lord that my noble friend shares that sentiment!

The Dependent Territories
3.3 p.m.
Baroness Hooper Baroness Hooper rose to call attention to the current status of the United Kingdom's dependent territories and plans for their long-term future; and to move for Papers.
The noble Baroness said: My Lords, in spite of the fact that a number of our dependent territories have become independent or opted for some other political status over the last few decades, a surprising number remain. The purpose of the debate is to remind ourselves and, we hope, a wider audience, of their continuing existence; to draw attention to some particular issues and to hear from the Government what plans they may have for these tiny territories in the changing world order.
In preparing what I should say in the limited time today, it occurred to me that a study of the dependent territories could well form an entire subject of the national curriculum in our schools, since one has to focus on geography, history, social needs, cultural and religious diversity, trade and economic development and constitutional law in order to comprehend all the issues.
We currently remain responsible for the peoples of some 13 or 15—depending on how we count them—dependencies, ranging from big bustling up-front Hong Kong through to Gibraltar and the Falkland Islands, to Bermuda and the five Caribbean dependencies, to St. Helena and the Pitcairn Islands with its population of 58 people. In addition, we have the uninhabited British Antarctic territory and British Indian Ocean territory.
Common factors are that they are virtually all island communities, English-speaking and essentially they have the same legal systems and democratic processes. However, from then on their needs and aspirations are diverse. There can be no blanket answer, I realise, to all their needs, but there are points of similarity and common interest between them.
I know that other speakers in this debate intend to talk in depth about individual territories, with the possible exception of Hong Kong. That is in part because we already know the Government's plans for that territory, but also because it has been well debated in the past and I understand that there is due to be another major debate about Hong Kong shortly. But even St. Helena and its associated territories were by coincidence the subject of an Unstarred Question only last week. I know, too, that my noble friend Lady Young very much regrets that she cannot be here to speak about the Caribbean dependencies today, some of which she visited very recently. I feel sure that my noble friend Lord Waddington will be listening carefully over there in Bermuda to what we have to say today about that dependency.
There are general questions which arise and which will, 1 feel sure, be developed and illustrated by others

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in the course of the debate. But given the rapidly changing world scene—and yesterday's statement by the President of Argentina is evidence of that—I hope that my noble friend the Minister will be able to give us some answers and reassurance, for example, as regards the economic development and investment needs of the territories. Are the Government satisfied, for example, that funding of projects in less viable economies, such as that of Montserrat, is adequate and properly applied? The Cayman Islands, Bermuda and the British Virgin Islands have buoyant economies built on financial services, but that is certainly not the case in all dependencies where financial aid and support are required.
What about the enforcement of law and order? Again, the Caribbean has particular difficulties in dealing with drugs cartels since they lie on the major drug routes from Latin America. Given the review of the Caribbean independent territories initiated by Foreign Office Ministers in late 1991, what developments have taken place to promote a closer working relationship between the elected governments of the territories and between them and HMG? What is the relationship between the dependent territories and the European Community? We all know that France solves the problem by making its overseas territories part of metropolitan France. But apart from Gibraltar, which is part of the European Community, do our independent territories have any preferential status vis-à-vis the European Community?
Conversely, what would be the Government's attitude to a dependent territory linking into a regional association in another part of the world—a West Indian federation, for example, or the groupings of the Pacific rim countries? Furthermore, are any changes envisaged relating to employment rights, to nationality issues, to residents' rights? Those are all questions that arise in the dependent territories themselves.
Finally, how do the United Kingdom Government take into account the needs of the dependent territories in relation to global environment issues and establishing educational links? I was interested, in that respect, to learn that there is a special dependent territories input to the World Conservation Monitoring Centre in Cambridge.
From those general questions, I wish to turn specifically to Gibraltar. Indeed, it was my interest in Gibraltar which prompted me to table this Motion and inaugurate today's wider debate. Each of the dependent territories is special in its own way. Gibraltar is special because it is the only one of our dependencies which is situated in Europe. It is special also because mere mention of the Rock of Gibraltar evokes memories of safe harbour and refuge for so many sailors, soldiers and individuals who had wartime and service experience there. It is also a place in the sun for holiday-makers, whether they descend on main street shops from their cruise liners or see it as a holiday centre in itself. Increasingly, it is fighting for recognition as a centre for financial services. Furthermore, like the people of the Falkland Islands, the people of Gibraltar have entitlement to British citizenship.
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It is a well-known historical fact that we became responsible for Gibraltar following the Treaty of Utrecht in 1713. That makes 281 years of allegiance. In the old days Gibraltar's strategic significance was all important. Nowadays, however, there are many issues which affect Gibraltar and its relationship with the United Kingdom and the rest of the world.
The case for Gibraltar was very eloquently made by the chief Minister, Joe Bassano, at the recent dependent territories conference which was held in London and co-hosted by Gibraltar and the Falkland Islands. I recommend to anyone who wishes to delve further and wider the synopsis of Mr. Bassano's spontaneous speech on that occasion.
I shall now focus particularly on European Community issues, since my involvement and interest in Gibraltar stem in part from the fact that after I was elected to the European Parliament in the first direct elections held in 1979 I was one of the six British MEPs (three Conservative and three Labour) to be asked by the Gibraltar Government to look to Gibraltar's interests.
Gibraltarians, although themselves members of the European Community, could not vote in those direct elections—and they still cannot vote in European parliamentary elections in spite of further rights which have now been conferred on British non-residents enabling them to vote from abroad. I know that were my noble friend Lord Bethell here, he would reiterate this point.
To give some of the background, Gibraltar entered the European Community on 1st January 1973, at the time of the United Kingdom's accession. There is specific reference in the Treaty of Accession. It is the only European territory for whose external relations a member state is responsible under Article 227(4) of the European Communities Treaty. Article 28 of the Act of Accession provides that there shall be certain exceptions from Community measures with respect to Gibraltar. For example, because of Gibraltar's size and territory, the common agricultural policy does not apply; neither does the common Community tariff system. But subject to those explicit exceptions, all legislation adopted by the Community since 1973 has been applicable to Gibraltar. All the treaty provisions on the free movement of capital, services and persons therefore apply fully. The fourth freedom on movement of goods is restricted by Gibraltar's position outside the customs territory, although in effect that is mitigated by the application of the generalised system of preferences.
Under the 1969 Gibraltar constitution, the United Kingdom Government have responsibility for Gibraltar's defence, internal security and external affairs, while the Gibraltar Government have, both by definition and convention, responsibility for all domestic matters. Because of that constitutional relationship with the United Kingdom the application of Community law in Gibraltar is legislated by Gibraltar's parliament, the House of Assembly. Between 1973 and 1985 Gibraltar's position within the European Community was not questioned. That changed with the advent of the single market and the accession of Spain. As the United Kingdom has become more integrated within the European Community, the constitutional

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relationship between the United Kingdom and Gibraltar has been distorted. Community measures increasingly impinge on domestic matters which have normally been the exclusive competence of the Gibraltar Government but are now entering the domain of the United Kingdom Government as the member state ultimately responsible for Gibraltar's compliance with EC obligations. The distortion is unfortunately compounded by the line taken by Spain against Gibraltar whenever new Community measures are produced or proposed. In addition, there are problems over banking and financial services in the single market and similar difficulties over insurance. In 1989 a major insurance company established itself and was licensed in Gibraltar to sell its products into Spain. Spain blocked that on the basis that the licence had been issued by an authority in Gibraltar and it was therefore not a competent authority of the member state, the United Kingdom. More recently, a major Spanish insurance company was not allowed to undertake business from Spain into Gibraltar because the Spanish authorities considered that there is no competent authority in Gibraltar and that the relevant supervisory authority is the DTI in the United Kingdom.
In all these matters the relationship with Spain is all important. Clearly, during the period of Franco's undemocratic leadership of Spain there could be no question of the British Government making concessions. It must be said that Franco used the Gibraltar issue literally as a red rag to a bull, as a distraction whenever home affairs were going through a difficult phase. Many of my Spanish friends admit that Franco made a mistake when he closed the frontier; it led to a hardening of attitudes on both sides as well as a separation of interests which could otherwise have naturally grown together. But we cannot ignore history and its consequences—although I would point out that many Spanish people do not agree with the Spanish Government's approach either; particularly the Catalans who, incidentally, also see aspects of their different identity as being safeguarded by the Treaty of Utrecht. The question is therefore: do the British Government intend to leave things to drift, or will they commit themselves to unblocking this futile impasse? No one wants to rock the boat so far as relationships with one of our European partners is concerned, but when the boat is being rocked in so one-sided a fashion what is needed is not a soothing lullaby but a firm hand.
I should like to make one further point. Since 1988 Gibraltar has invested heavily, without any development aid from the United Kingdom, in diversifying its economy to create a new base largely aimed at the development of an international finance centre. That strategy was geared to offsetting the impact of continuing defence cuts. The Ministry of Defence now accounts for around 10 per cent. of GDP in Gibraltar, compared to around 75 per cent. in the late 1970s. Only a week or so ago news was leaked of further cuts which, if confirmed, will have a disastrous impact, with the loss over three years of over 1,000 civilian jobs in an economy where employment levels total 13,000 jobs and are falling. In addition to Spanish pressure, Her Majesty's Government are perceived to be preventing Gibraltar from developing its new markets. On banking
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and financial services Gibraltar is excluded, unlike the Channel Islands, the Isle of Man and even Liechtenstein, from having its credit institutions passporting into the United Kingdom.
There are therefore concrete examples of where United Kingdom policy impinges to the very great disadvantage of the people of Gibraltar. Although my enthusiasm for the theme outstrips the time available, I hope that we shall hear from my noble friend the Minister some concrete responses to those issues. I beg to move for Papers.
3.20 p.m.
Lord Pitt of Hampstead: My Lords, I should like to thank the noble Baroness for giving us this opportunity to discuss the dependent territories. I shall concentrate on the Caribbean because that is the part of the world that I know best. I feel that I know something about what is going on there and have ideas for dealing with it.
We ought to be encouraging the Caribbean territories to be part of the Caribbean community. There is in existence already a Caribbean community. Admittedly, it is not very effective but it shows a movement in the right direction. The Caribbean is a difficult area. There are many colonies but also many small, independent states. For example, I believe that Bermuda is better equipped to be an independent state than is my native Grenada. But my native Grenada has been an independent state for 20 years. That area can only be safe—I use the word "safe" advisedly—if it is united economically and politically.
This country has governed most of those territories as colonies. It should be using some of the influence that it must still have to encourage a union of those territories. One of the levers that this country could use is the fact that those dependent territories need a home. We should be helping to provide such a home.
A dependent territory has more or less internal self-government but Britain is responsible for its foreign policy, defence and judicial system and has some control of its finances. All those things can be provided effectively in a union. If those states are part of a united Caribbean, then that united Caribbean can provide an effective foreign policy for the area. I cannot say that it would provide an effective defence. Even now the defence of many so-called independent countries depends on support from this country and the United States. So the defence requirement will still be the same.
There has been a long-standing proposal—one hopes that one day it will come to fruition—for a Caribbean court of justice which should become the Caribbean Court of Appeal dealing with issues concerning the territories and their relationships with each other. That would provide the judicial requirement for the dependent territories. An overall influence should enable the financial services to be properly controlled. Therefore the services that are now provided by Britain sending a governor to those territories can be provided more effectively through those territories being a part of the bigger union.
I can hear noble Lords who know something about the Caribbean asking me, "What union?" I accept that

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that is a nice question. I left Grenada in 1933 to study medicine in Edinburgh. When I left Grenada, I was quite certain that there would soon be a federated West Indies because at that time there was a conference taking place in Roseau, Dominica to consider closer union of the islands. That was 60 years ago and we still do not have that closer union.
There is much worse. In 1992 I attended a conference in Grenada which tried to form a new Windward Islands Union. What is strange is that when I left Grenada in 1933 there was a Windward Islands Government. There was a governor in Grenada and all the other islands had administrators. So 60 years ago the Windward Islands was one government and today they are finding it difficult to become a government. So I accept any kind of criticism levelled along those lines.
However, I should like to point out that real efforts are being made to create a union. As noble Lords will know, the area was federated between 1958 and 1962. Then the federation broke up. It has never been able to get a proper union going since. But there is the Caribbean community. Recently, a commission chaired by Sir Shridath Ramphal, who is a former Secretary General of the Commonwealth, went into the question of increasing the integration of those territories. The commission made recommendations, some of which would be quite useful for our purpose because what I have just said about those small dependent territories forming part of a bigger union fits into them.
For example, the commission recommended that there should be a Caribbean Assembly and that in that assembly there should be members from the dependent territories. It even suggests that there may be members from the French and Dutch territories. That is not so peculiar. When I was a young man and we spoke about federation, the federal state that we envisaged always included Martinique and Guadeloupe. At that time they were all colonies, so it did not matter. Now Martinique and Guadeloupe are departments of France, which must make it much more difficult. So if there is to be any kind of deepening relationship between Martinique and Guadeloupe and the other states, there has to be a lot of negotiation at international level.
I merely brought that example in to illustrate the extent of current thinking. What is now recognised by all the thinkers in the Caribbean is that the Caribbean needs economic and political union in order to survive. As a result of the free trade area negotiated between Canada, the United States and Mexico, there is right above the Caribbean a big area which, as usual, will be supportive of the central American and southern American states. The little states in the Caribbean can easily be ignored and find themselves in difficulties. For example, the noble Baroness did not mention the problem of the area in its relationship with drug trafficking and crime.
Unless there is real union, a government which can deal with the problems of the area as a whole, that area may prove to be a problem to the world. Therefore in my contribution to the debate I ask the United Kingdom Government to concentrate their activities on helping the integration process; in other words, to support the
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territories in the area to enable them to form one political and economic union. I ask the Government to use their lever of having dependent territories in the area for that purpose.
My view is that can be done. Perhaps I can illustrate what I mean. Nearly every year the Canadian Prime Minister attends conferences to meet the Caribbean Prime Ministers. A conference is usually held with representatives from all the states plus representatives from the United States. We do not hold similar get-togethers in Britain. That is where we are falling down. The UK Government ought to be regularly co-operating with the territories in that area and in so doing provide a home for their dependent territories.
3.31 p.m.
Lord Braine of Wheatley: My Lords, perhaps I may say at the outset that we must be grateful to my noble friend Lady Hooper for making this debate possible and for introducing it with such a wide ranging but sensitive, well-informed speech. I am grateful also to the noble Lord, Lord Pitt, who speaks with special knowledge of a part of the world that I love very much.
Our dependencies can be found in every quarter of the globe. They vary greatly in size, population and resources. It is interesting to note that they are all democratically governed and generally value their membership of the Commonwealth, and in particular the Commonwealth Parliamentary Association. By now independence has been obtained by the larger dependencies, and those that remain continue to need aid of one kind or another. As president of the Falkland Islands Association, I wish to address myself to the problems and prospects of a relatively small and vulnerable but distinctly British territory in the South Atlantic and one which we all now know has considerable potential.
Certain facts in regard to the Falklands must be recognised from the start. The islanders are British almost to a man and have never had any desire to be anything else. They have been British for a long time. We live in an uncertain world; but we need never doubt that the Falkland Islanders want to be anything but British. However, there is now a new element in the situation. They have the prospect of significant development of resources in their territorial waters—immensely rich fisheries and significant oil resources.
I rely on what I read in the newspapers, of course, but I understand that the oil resources in the Falkland waters are believed to be 50 per cent. larger than those discovered in the North Sea. At the end of last year the British Geological Survey felt able to state that the 200-mile exploration zone around the islands has "enormous oil potentialities". The area surveyed is 50 per cent. larger than the British sector in the North Sea. We can therefore look forward to highly promising development some years ahead.
This then is the time to reflect on what that will mean for the islands and their people. It is not too early to start reflecting on that aspect of the matter because development requires people—managers, skilled workers—and special skills. It is plainly time to start considering—now, not at some vague date in the future

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—how we can encourage the building up of the islands' small population. It is encouraging that Argentina, the islands' nearest neighbour, possesses similar substantial resources in its own waters. Therefore the scene is set, if common sense prevails—another word for statesmanship—for co-operation; not rivalry and the continuance of the threats of the past.
Last week we debated the dependent territory of St. Helena and its associated island, Ascension. I hope the Government took the message that some of us who, for a long time, have taken an interest in the Atlantic dependencies, are highly critical of the restraints on immigration to this country of the loyal, hardworking St. Helenians. The first St. Helenians were refugees from the Great Fire of London. The population only developed from the latter part of the 17th century. Wherever those people go to work in the Atlantic and the Indian Ocean, importance is attached to the high quality of their work; for example, by our American friends. Here also in this country they have a good reputation.
It is not too early to see what role the St. Helenians might play in building up the workforce in the Falklands. As economic activity quickens in the Falklands, as undoubtedly it will, they will need reliable workers. Because of their British connections they should look for some of them in St. Helena—to a people who are proud to call themselves British.
My message to this House is that we in this country should cease to think of the dependent territories as a problem, or even an irritation. We should see them wherever possible—it is certainly possible in the cases I mentioned—as an asset in developing new resources not merely for themselves and this country but for the whole world. I respectfully suggest that the Government should set up an expert inquiry into the possibility of developing the undoubted resources of the Falklands, and to see what can be done to develop the manpower resources of St. Helena and possibly some of the smaller islands in the West Indies.
The presence of the noble Lord, Lord Pitt, reminds me of the great worth of the Caribbean peoples and the opportunity may well exist for some of them to take part in the massive developments that I foresee in the Falklands. We must not neglect the opportunity which the development in the Falklands will make possible in the relatively near future.
3.40 p.m.
Lord Boyd-Carpenter: My Lords, it is conventional in your Lordships' House to say how grateful one is to the noble Lord—the noble Baroness in this case—who initiates a debate. But I think that there are very special reasons for saying that this afternoon. It is extremely important from two separate points of view that your Lordships' House should concern itself with the future and with the well-being of these territories. First, it is very easy in the controversy of English politics to forget the interests and concerns of these, in many cases quite small, territories for which we are ultimately responsible and which look to us for guidance and for help. At the same time, if we do not show an interest in them and in their future, it increases the risk, to which
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one or two of them are exposed, of aggression from those who would seek to take them over, if necessary by force. I shall mention two such places in a moment. Therefore, I think that your Lordships' House is doing a very good public service by debating the future of these territories this afternoon.
It is impossible in the course of a short speech in a short debate to cover the very wide variety of territories involved, but I hope that the fact that your Lordships think it right to devote time and energy to discussing the future of dependent territories generally will be observed outside, will be observed in the territories concerned and will also be observed in the case of those countries—and there are some—who have designs upon them.
For my part, I want to take two cases only. The Falklands have been so well dealt with by my noble friend Lord Braine. Perhaps I may say how nice it was, having heard him speak for years in the House of Commons, to hear him make that delightful speech here this afternoon. I am sure that we all greatly enjoyed it. I should like to add just a little in respect of the Falklands. They are, as my noble friend said, geographically very vulnerable, at the far end of the world. The fact that they are today a British territory is of course due, among other things, to the courage and determination of our former Prime Minister, my noble friend Lady Thatcher, who took very considerable risks and faced very considerable dangers and difficulties in using very proper military force to repel Argentine aggression.
One must remember, when we are discussing the 12 years of the Thatcher regime, that very conspicuous act of courage. Not everyone would have had the courage to face a military conflict at the far end of the world with another country closely located at the scene of the activities. It was a remarkable achievement, not only for the Prime Minister and the Government, but for the Armed Forces of the Crown, that we were able, at the cost of some lives, to subdue the Argentine aggression. I should like to hear from my noble friend the Minister what now are the relations with the Argentine over this matter.
Recently there have certainly been one or two speeches in that country which have not looked altogether friendly and which have not altogether created the impression that the Argentine has abandoned its ambitions. Yet if the Falklands are really to develop —my noble friend Lord Braine suggested that they have enormous possibilities of development—it must be made plain to all concerned, including those who are being asked to invest in them, that if necessary we shall protect again these islands from aggression and that their British character is one which the British people and British Government are pledged to preserve and will preserve whatever events may happen.
I know that in these diplomatic matters Ministers have to exercise delicate diplomacy and I know that in this case my noble friend the Minister will always do that. But it is a fact that if the islands are to be developed, if their very great resources of oil and fish are to be developed and if we are to attract the massive investment that is needed, it must be made absolutely

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clear that the whole strength, power and force of this country are behind them and that we are determined to preserve their British character.
The only other territory that I should like to say a word about is Gibraltar. I have, as it were, an old family connection there. Your Lordships may not be too bored to know that I had a forebear who was Lieutenant-Governor during the great four-year siege and who later succeeded as Governor of Gibraltar. In those happy days when no ages of retirement were imposed he continued as governor until a very mature age. He died there and is buried there. I have seen his grave. Therefore, I have an old family connection with the Rock and indeed with the defence of the Rock.
We discovered as recently as the last war how important that defence could be. Gibraltar and its naval establishment and defences were of crucial importance to our access to the Mediterranean during that time. I myself recall how, when we were going through the Straits in a troop ship, we were trailed out from the Spanish coast by a German reconnaissance boat which had been accommodated, thanks to Spanish friendship with Germany, and which tried to trace us. There was a certain feeling of security when we came within the reach of the cover of the guns of the Fortress of Gibraltar. The convoy, though it was later attacked, passed through the Straits effectively. Gibraltar therefore has great military significance. Even though, perhaps regrettably, the dockyard has been closed, Gibraltar is still part of our defence system and is in a crucially important position.
The Gibraltarians are firmly pro-British. They are an admirable set of people. I should again like to hear from my noble friend the Minister what are the relations in this connection with Spain. It is, I believe, the fact that the Spanish Government, for no very obvious or respectable reason, have refused to allow what used to be the very useful ferry service between Gibraltar and Algeciras to operate. I do not know whether that was due to antagonism to Gibraltar or simply economic obscurantism. But I should be glad to hear from my noble friend whether this ban has now been raised and whether it will now be possible to take the boat between Algeciras and Gibraltar. It seems a great pity that Gibraltar should be deprived of this facility and indeed that Algeciras should be so deprived, since one of the pleasanter holidays in the delightful climate of those parts is perhaps to stay at Algeciras and go over on the boat regularly to Gibraltar.
Gibraltar has a tremendous historic tradition. Government House—the Convent—is a splendid historic house. Gibraltar has had the good fortune to have a series of excellent governors, many of them soldiers of great distinction, who have governed extremely well and who have helped the Gibraltar Government with the many tasks that face them.
I understand that there are still complications as regards relations with Europe. Some of them seem to me to be unnecessarily created, perhaps as a by-product of Spanish ambitions. But here again, I should be grateful if my noble friend the Minister would bring us up to date on Spanish relations with Gibraltar and in particular in
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connection with the very important Gibraltar airport. As my noble friend the Minister knows only too well, great difficulty arose over the opening of the airport as regards relations with the Spanish authorities. I shall be glad to know whether these have now been cleared up.
I have dealt with only two of our dependent territories because that is all that is possible within the time limit. I am sure that it is extremely useful that this House should discuss in detail the problems, dangers, difficulties and tremendous opportunities of the British dependent territories.
3.51 p.m.
Viscount Torrington: My Lords, when my noble friend Lady Hooper told me that she was going to introduce this debate today, which I know we all consider to be a great service, I found myself being informed by my noble friend Lord Ironside at almost precisely the same moment that I had been selected as part of a team of your Lordships to go down to the Falklands next month to talk to the military personnel and the islanders.
I suppose that as a lover of wild places I have always wanted to go to the Falkland Islands. It is a desire which goes back long before the South Atlantic conflict. It has been slightly heightened by the fact that in the past couple of years I have come to know Argentina a little.
I appreciate that the Falklanders suffered a very unpleasant experience some 12 years ago. Their peaceful little island was the subject of unprovoked aggression and an unpleasant little war in which a large number of British servicemen lost their lives in order to restore the position. As my noble friend Lord Braine said, the Falklanders are British through and through.
But I feel that the time has come when realism says that there has to be more contact with Argentina. Argentina today is a very different country under Dr. Carlos Menem, with very different preoccupations and interests, compared with the Argentina that existed under Galtieri and the Junta. Argentine democracy shows every prospect of being reasonably firmly rooted and, as between Britain and Argentina, the vexed question of sovereignty of the Falklands has been put on one side, it would seem, by mutual consent notwithstanding the remarks which one speaker made earlier.
Ties between Britain and Argentina have warmed to such a degree that in Autumn 1992 the Union flag appeared "undefaced" all over Buenos Aires, advertising British Week. I myself had the privilege of standing on a platform with the British ambassador and Dr. Menem to open British Week. I do not suppose anybody will be opening Argentina Week in Port Stanley in the near future, but I believe it is important that relations should be normalised as much as possible.
My noble friend Lord Braine touched on the oil prospects of the Falklands. If we are to have a major oil province one-and-a-half times the size of the North Sea, it is completely impractical to consider that that can be developed using the islands as the only base, shipping in labour from this country, St. Helena or wherever. The environmental damage would be absolutely appalling.

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After the development of an oil province, the Falklands would resemble some kind of ghastly construction yard if we were not careful.
At the same time it appears as though Argentina will also have a major oil province near the median line. So it will be ridiculous to duplicate all the facilities. I have no doubt that there will be some facilities which will be better handled in the Falklands and some better handled on the mainland. There must be an effective opening of the frontier for legal reasons as well, if the oil province is to happen.
When I go down there I have no desire to say to the Falklanders that they should be friends with Argentina against their will, but I believe that simple logic says that they will have to talk more to the Argentinians and at least normalise relations to the extent of normal commercial relationships which exist between any two adjacent, or almost adjacent, states.
I hope that the Government will also be encouraging the islanders to think along these lines. I very much look forward to the Government's response. I look forward next month to talking to the islanders, their leaders and the military personnel who guarantee their security.
3.55 p.m.
Lord Beaumont of Whitley: My Lords, we are indeed grateful to the noble Baroness, Lady Hooper, for her initiative in tabling this Motion and also for very kindly arranging for some of us to receive briefing papers in this matter.
The populated countries which are still formally dependent on the United Kingdom can be counted on our fingers and toes. As I said when I asked an Unstarred Question on St. Helena last week, and which has already been referred to, we can no longer treat them just as a class. It is convenient to have a subject for debate framed in this way, but when it comes to discussion and, above all, to the answers that the Government will give, every case has to be treated separately. It has been one of the encouraging factors about this debate so far that we have had treatment in depth of some of the particular problems.
Very crudely speaking, the attitude of the party on these Benches is that the UK should act like good parents with grown up children. The children should be encouraged to set up in jobs and flats of their own, and the right to make up their own minds as to what they do does not, for their own sake and that of their parents, include the right to stay at home indefinitely except in special circumstances.
Hong Kong is in a case of its own which we are rightly constantly considering. The only thing I say here is that the tragedy of Hong Kong is not that we are abandoning it but that we are abandoning it to a totalitarian state. Here I underline what previous speakers have said about the democratic nature of the dependent territories.
The implication of the model of parents and grown children is that we encourage independence where it is viable; and I believe that it is going to be viable for smaller and smaller countries in future, just as today we are seeing independence working in countries which, 30 years ago, were regarded as too small to be viable.
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Where independence is rejected we encourage marriage or possibly even settlement in a commune, with partners a great deal nearer to them than is the UK. That last pattern would be the one to which the noble Lord, Lord Pitt, referred in his very interesting speech.
The dependent territories are, I repeat, all special cases —every single one of them. But the Falkland Islands is extra special. Suffice it for me to say that many of us who supported our Government in the recent war did so because we thought it important to resist international piracy by dictators and not because we thought that the Falklands should continue to belong to Britain indefinitely. I believe it is quite clear that the future of the Falklands eventually (I underline "eventually") and particularly today, is either in some kind of liaison with a democratic and law-abiding Argentina—here I was very interested in what the noble Viscount, Lord Torrington, had to say about the future oil province—or independence with appropriate defence provisions.
Gibraltar is now incorporated in the European Union. Many of us who believe in the growing importance of that institution look forward to the day when any dispute between us and Spain is settled in that arena, although I admit that I was a little depressed by what the noble Baroness, Lady Hooper, said on that particular subject. Similarly, as some of us have been saying for some time, it is possible that we may be able to find in that framework of Europe an eventual solution to the problem of Northern Ireland.
We dealt with St. Helena fully last week and I should like to thank those of your Lordships who took part in that debate and the Government for their reply. St. Helena and its dependencies are possibly the special cases which we must continue to look after for a considerable while, for reasons that I outlined last week, bearing in mind that as we manage to make arrangements for the other territories the case for giving the inhabitants of St. Helena full British citizenship (which should never have been taken away from them) increases.
That leaves us, more or less, with the Caribbean territories. In a neat and tidy world, we should still be striving, in spite of all setbacks, for a confederation. I was heartened by what the noble Lord, Lord Pitt of Hampstead, said on that matter and I hope that headway can be made. But we do not live in a neat and tidy world —the noble Lord has already pointed out the problems caused by the fact that two of the Caribbean islands are now departements of France—and the solutions may be messy. Nevertheless, that is the area in which we should press further.
In dealing with those separate problems (and I repeat that they are all separate and distinct), we must work within a framework of support and encouragement of democracy—how deeply we must regret not having embarked on a democratic programme in Hong Kong 30 years ago—and of self-determination within limits; the limits being that any possible partner, such as the United Kingdom, also has its own rights of self-determination.
Penultimately, I cannot close without paying tribute to the governors and expatriate administrators of the territories. I am not one who denigrates our empire.

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Although we often acquired and administered it in the belief that it enriched us (which in the short term it did, although the economic chickens are now coming home to roost) we brought some vital gifts in the shape of good, uncorrupt and selfless administration to a large part of the world. The present governors and administrators of the dependent territories are worthy heirs to that tradition. Like many parents, as we nudge our fledglings out of the nest we can do so in the knowledge that at least we gave them a good upbringing.
Finally, it would be good—and I think necessary if we are to do our duty by these many thousands of people for whom we are responsible—if we were to have a similar debate every year. I think that we, the authorities of the House and the Government should consider such a commitment. It cannot be right that we have to depend entirely on fortune and on the individual admirable initiatives of those such as the noble Baroness, Lady Hooper, to make it certain that we consider the fate of these people for whom we are ultimately responsible. I hope that the Government will take that on board.
4.3 p.m.
Lord Newall: My Lords, I, too, am grateful to my noble friend Lady Hooper for introducing this important but often neglected subject. There are many different dependent territories and they are in many different stages of economic development. We can cover only a few of them today. I hope to visit the Falklands next month and shall reserve judgment on that area until I have been there.
I intervene briefly to refer specifically to Bermuda which, as we all know, is an island not in the Caribbean but stuck out in the middle of the Atlantic. It is now governed by my noble friend Lord Waddington who I believe is not only having an enjoyable time there but is extremely popular and successful. I have been very lucky to have visited Bermuda many times. It is a lovely island. It is peaceful; almost sleepy at times. It is slightly old fashioned. There is no unemployment. It is very British in many ways: they drive on the left.
However, Bermuda has very superior financial institutions and traditions, which is evidenced by a large reinsurance market. I believe that 3 billion American dollars have gone into Bermuda's reinsurance market since June 1993. Bermuda has the second oldest Parliament in the Commonwealth. I did not know that until I started to look into this subject. Most of Bermuda's income comes from tourism and offshore company businesses, both of which are thriving. Its main trading partner is the United States, which also provides about 63 per cent. of the tourists. However, British influence is very strong and there is good co-operation between Bermuda and this country. Bermuda has flourished over many years to become a very successful island. In fact, its per capita income is in the world's top 10 at about £15,500 per year. Relations with the United Kingdom are excellent, with high level visits both ways over recent years.
However, two problems face Bermuda today, and they are the principal reasons why I wish to concentrate
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on the island. The first problem relates to potential independence. Bermuda is quite capable of becoming independent. On 4th February this year the issue was discussed in the Parliament in Bermuda. Since that date the Premier, Sir John Swan, has announced his intention to produce a Bill for a referendum on the subject of independence, which I understand will be debated in nine days' time on 18th February. The Bill will have to go through both Houses of Parliament there. It is also proposed to set up a commission of inquiry to look into all the issues surrounding the possibility of independence. I know that Her Majesty's Government will be neutral in this, but I hope that they will ensure that all the advantages of remaining alongside the United Kingdom will be spelled out in detail. This is a very important problem to solve.
The second problem is that the naval bases on the island are going to close. Bermuda's civil airport is a United States military facility, operated by the United States Navy. The Americans have maintained bases in Bermuda since 1941 on a 99-year lease. In 1989, the US naval air station contributed 88 million dollars to the economy and provides air traffic control, emergency services, airfield maintenance, meteorological services and all the things that go with running an airfield. It also has responsibility for search and rescue at sea. Last year the Americans said that they would withdraw their naval station and all their forces from Bermuda by the end of 1995. Canada closed its base in May 1993 and it was decided that the United Kingdom's naval base is also of no further strategic significance.
As noble Lords will appreciate, that will put some strain on the economy of Bermuda. In the short term, it will cause some unemployment and costs for operating the civil airport and doing all the jobs that the naval bases have been doing over the years. No doubt the United Kingdom and the United States will assist greatly in the transition, but initially it will be difficult for Bermuda. On the other hand, Bermuda is a small island and land is in short supply. The release of the bases will undoubtedly release some land, which could be beneficial to the island.
I therefore hope that my noble friend Lord Cranborne can assure the House that as far as Bermuda is concerned Her Majesty's Government will pay very close attention to helping the government there to overcome these two problems, particularly by providing the very best help and advice, and that they will assist Bermuda to continue on its successful road to increased profitability and continued tranquillity, whether or not it decides to go independent.
4.10 p.m.
Lord Merrivale: My Lords, while being grateful to my noble friend Lady Hooper, I should like to refer to Gibraltar, a metropolitan power and the only British dependent territory within the European Union. It is "a particular case", to quote the Foreign Secretary's recent words in respect of self-determination.
On this same issue, my noble friend Lady Chalker said on 18th October and 1st December that Her Majesty's Government took into account the Treaty of Utrecht and particularly the rights and responsibilities in

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Chapter XI of the UN Charter. Article 73 recognises that the interests of the inhabitants of such territories are paramount and that "due account" shall be taken of the political aspirations of the peoples. So would my noble friend agree that the United Nations Charter, with its rights and responsibilities, should take precedence over the Treaty of Utrecht?
I turn to the problem of Spain, which presently does not recognise the laws and competence of Gibraltar, and I refer to the Financial Services Act 1986, in particular to Section 208. Gibraltar is specified as though it were a separate member state. On Monday 31st January my noble friend Lady Chalker mentioned "primary legislation" in relation to banking. Am I therefore correct in saying, as I have been advised, that if subsection (2) of the section is incorporated into the Banking Act 1987 Gibraltar's licensed banks will be able to passport into the United Kingdom and the 11 other member states? If that is correct, can this process be expedited?
On that same Monday my noble friend Lady Chalker said:
"We are seeking to ensure that there is proper regulation of financial services in Gibraltar".—[Official Report, 31/1/94; col. 1110.1
Will the Minister therefore agree that the supervision from London and in Gibraltar has been considerably tightened since the Barlow-Clowes affair? Bearing that in mind, does the Minister also agree that it is some time since the first commissioner, Bill Penman Brown, was appointed by the governor? Three weeks after Penman Brown's departure, an acting commissioner, Michael Constantine, took over and he still seems to be doing an excellent job.
Recently, on 20th January, under the chairmanship of Sir Joshua Hassan, QC, the General Council of the Bar came out strongly against the delay in appointing a commissioner. Taking into account the Foreign Secretary's words on 24th November, which were:
"We no longer believe in the idea of a colonial office which simply issues instructions",
should not the commissioner be under Gibraltar's control?
I turn from banking to insurance. I understand that since 1989 there have been two cases of Spain's refusal to allow business to be carried out in a neighbouring Community territory. A major insurance company, which was established and licensed in Gibraltar to sell its products in Spain, was blocked by the Spanish Government and a major Spanish insurance company was not allowed to do business with Gibraltar.
I mention Section 31, which deals with authorisation in other member states, and Part II of the Financial Services Act 1986, which deals with insurance business, with a view to seeking information as to whether amendment of the Insurance Companies Act 1982, in line with an amendment to the Banking Act 1987, will rectify the present situation brought about by Spain's attitude towards the laws of Gibraltar while recognising the UK's laws and competence.
4.15 p.m.
Baroness Strange: My Lords, we are all not only conventionally grateful to my noble friend Lady Hooper for raising this interesting question of the British dependent territories, but also grateful to her for her excellent and comprehensive speech. Miss Sukey Cameron, the Falkland Islands' representative, has asked me to speak about the Falklands. I do so rather reluctantly, in view of the splendid, amusing and comprehensive speeches of my noble friends Lord Braine and Lord Boyd-Carpenter and other noble Lords. As your Lordships will be well aware, I shall speak only briefly.
To some extent I have connections with the Falklands in that my son served in the campaign there, which was so gallantly fought by all our forces. Furthermore, I was lucky enough to visit the islands four years ago with the All-Party Parliamentary Defence Group.
Before the Falklands War the main income of the islanders came from wool from the islands' sheep. It is very good wool, too—my husband has a pair of socks knitted from it. However, with the 200-mile exclusion zone a new source of income arose from granting fishing licences. When I was in Port Stanley four years ago I saw the splendid new hospital which had been built from some of this income. It not only treated patients from the 2,000 Falkland Islanders, but also foreign seamen from the fishing fleets. I noticed an injured Chinese when I was there. I also saw the hydroponic farm where in a vast greenhouse lettuces, tomatoes and cucumbers were grown. For us, buying fresh vegetables like that is only a walk to the corner shop. If almost every item of food has to be flown in by a Tristar, fresh lettuces are not such a priority and are therefore much appreciated.
Since then, the new secondary school has been built and the new swimming pool. Roads are being improved. These are all projects done by the Falkland Islanders themselves from their own income. We have constructed the massive new airport at Mount Pleasant, with all its hangars and other facilities, where upland geese stalk importantly past the windows.
Now there is the exciting possibility that oil may be harvested. This would of course be of great financial benefit to the islanders, but they are concerned that they should have as much control over the operations as possible with special reference to the environmental concerns. Their islands are no bigger than the Principality of Wales, their population is far less, but they are just as British. I remember sitting in the council chamber at Port Stanley and looking out of the window at the Union Jack flying outside while an albatross glided past in the wind. The Falklands, while seeking hands-on control of their own affairs, are very much and very proudly British dependent territories.
4.18 p.m.
Lord Morris: My Lords, I too am grateful to my noble friend Lady Hooper for initiating the debate on this very important subject. She rightly alluded to the dependent territories conference which was held in London some weeks ago and which I am glad I attended.

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The points of similarity rather than the disparities appealed to me and were mentioned by my noble friend. Some were mentioned and some were not. One of the most striking is that except for the few territories such as Hong Kong and Antarctica, they are all islands. That similarity is very important because it predicates a need for the protecting territory—I prefer the term "protectorate" rather than "dependency", although it too has its disadvantages—to keep up to strength a proper strategic Royal Naval reserve. I shall return to that.
The other point is that the cultural, jurisprudential and linguistic ties are the similarities which are of vital importance. That brings me straight to my noble friend Lord Torrington. I was delighted to learn that he is to visit the Falkland Islands with my noble friend Lord Newall. I assure my noble friend Lord Torrington that if he states what he believes to be the very strong case for the Argentinian view with regard to the future of the Falkland Islands, he will be assured of a very warm welcome there.
The point is that the wishes of the Falkland Islanders are the only wishes that are important with regard to their future. That is found in a very important principle, the one important principle that has flowed since the formation of the United Nations after the last war—that is, the principle of self-determination. That is absolutely key. It is not for Her Majesty's Government, still less for the people of the United Kingdom and still less for my noble friend, to suggest to the Falkland Islanders what should be their future. That is why that point, raised by so many noble Lords, is so important. Her Majesty's Government must continue to consult those people—and, God knows!, it is easy enough with small territories —with regard to their future.
For the second time in a fortnight, my fox has been most elegantly shot by my noble friend Lord Braine and other noble Lords. I do not hold that against him at all because it is always a delight to go hunting with him at any time. But he has been a great help to me because I can restrict my remarks to only one or two aspects with regard to the Falkland Islands.
One issue worries me considerably—that is, the recent news that the Government of Argentina have acquired from the United States of America some 36 Skyhawk fighter bombers. I can quite understand that Her Majesty's Government have been unable to deduce the purpose seen by the Argentine Government for acquiring those military weapons. Even if they have not been able to find that out, do the Government have a view as to why Argentina should need those weapons? I should be extremely interested to know also what is the view of Argentina's neighbours with regard to the acquisition of those weapons.
My noble friend Lord Torrington suggested that democracy is reasonably firmly rooted in Argentina. Democracy is a very, very tender plant. It must be rooted for century upon century until it grows into a massive and immovable oak. That must be understood. It is vitally important that we should treat our duties as the protecting power for all our dependent territories
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with great responsibility and care. I know that we do. For that reason, I am extremely grateful to my noble friend Lady Hooper for initiating the debate.
4.25 p.m.
Baroness Blackstone: My Lords, I too am grateful to the noble Baroness for introducing a debate on the dependent territories. I suspect that most people are unaware of them as a group, although everyone will know something about Hong Kong, Gibraltar and the Falklands. But how many people know anything about Anguilla or Pitcairn or Ascension?
When Churchill was Colonial Secretary, he was asked in a debate in another place,
"if the honourable Member could tell the House where the Virgin Islands are"
Not having a clue, he replied:
"I can assure the House that they are a long way from the Isle of Man".
To generalise about those far flung territories in the Caribbean, the Atlantic, the Pacific and the Indian Ocean is difficult. Leaving out Hong Kong, as most noble Lords have done in the debate—in any event it will cease to be dependent territory in three years' time —the one thing which the remaining territories have in common is their very small populations. Indeed, the combined populations of the rest is less than 150,000. With the possible exception of Bermuda, few of them would really be viable as independent countries. Therefore, they are likely to retain their existing status for the foreseeable future. I have no doubt that when the noble Viscount replies he will tell the House whether he sees any likely change in the status of the dependent territories. I hope that he will reply in particular to the point raised by my noble friend Lord Pitt.
Because of the remoteness of some of them and their small size, the per capita costs of maintaining them can be high, although the absolute cost is of course small. Noble Lords will recall that at the time of the Falklands war it was claimed by some commentators that if each inhabitant were to be given £0.5 million and transferred to a Commonwealth country of his or her choice, it would be much cheaper than continuing to maintain the islands as a dependent territory. That is true, but it is not a very practical or desirable proposition in the circumstances.
As well as being directly responsible for their defence and external affairs, in some cases we are also responsible for their policing and their systems of justice. The UK also provides capital aid and technical assistance.
The Labour Party recognises the close historical links between the UK and its dependencies, but believes that relations with them need to develop according to changing circumstances. Meanwhile, we accept that we have a continuing responsibility to them, and believe that the aid programme should promote their sustainable development. Perhaps the Minister could outline the objectives and priorities of our aid programme in the territories and tell the House what the total level of our aid to them is in 1993–94 and what it is expected to be in 1994–95?

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I understand that the constitutions of several of the dependent territories have been reviewed over the past 10 years. I believe that the constitution of the British Virgin Islands is currently being reviewed. It is important that the political development of each dependency should be based on democracy and respect for human rights. One aspect of human rights that is of concern to us on these Benches is the continuing use of the death penalty in Bermuda. Can the Minister confirm that in spite of a decision to abolish capital punishment in the dependent territories, it has been retained in Bermuda? If so, can he explain why, what offences are still punishable by death in Bermuda and what plans there are, if any, to abolish the death sentence? I understand that a debate in the Bermuda Parliament on this matter has been pending for some time.
Having made some general points, I should now like to raise some questions concerning individual territories. Like the noble Lord, Lord Morris, and others, I begin with the Falklands. As has already been mentioned, since the change in government in Argentina in 1989, relations have improved and by 1990 all the remaining obstacles to the establishment of normal diplomatic relations have been removed. Equally important, a new security system for the South Atlantic has been established which is now firmly in place. That new framework has allowed the lifting of the Falkland Islands protection zone and has, I am glad to say, taken the tension out of the area. Like the noble Lord, Lord Torrington, we greatly welcome that. We welcome also the improvement in our relations with Argentina and the recent agreements on the conservation of fish stocks. The more intensive system of data exchange with Argentina, monitoring fish populations, and agreements on permits for foreign vessels are also helpful, as is the agreed establishment of a conservation zone where fishing is banned. Perhaps the Minister could comment on projections of fishing revenue, and say how much of the revenues, if any, are received by the UK.
Building on such agreements we hope that talks on the future of the Falklands can take place, without prejudging the outcome, in order to try to find a solution acceptable to both governments, though I recognise that the gap between us on the sovereignty question is still large. I also accept that any such settlement must protect the interests of the Falkland Islanders—as other speakers have already said—and that they should be represented in any such negotiations.
There is still a large garrison of British troops in the Falklands. Can the Minister tell the House what the future plans are for the garrison and whether, in the light of our better relations with Argentina, there are any plans to reduce it? Can he also tell the House what is the current annual cost of maintaining it? The Falkland Islands economy must continue to be developed. The major question on the economic future of the Falklands concerns oil. Surveys round the islands suggest there may be substantial reserves, capable of producing perhaps as many as 500,000 barrels a day. Can the Minister tell the House what plans there are to start
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drilling and what the revenue position for the UK would be were there to be substantial oil finds, given the UK's considerable defence expenditure on the Falklands?
I shall now turn to Gibraltar which, again, a number of other noble Lords have already mentioned. Indeed, the noble Baroness, Lady Hooper, focused on Gibraltar in her speech. While supporting the 1969 constitution which was drawn up after 96 per cent. of Gibraltarians voted to stay British, the Labour Party favours continuing negotiations with Spain. We therefore support the Brussels agreement which enables the three governments to meet to discuss a range of issues. It was rightly accepted that sovereignty would also be discussed. I regret that the Prime Minister of Gibraltar has not accepted this agreement and that since he came to power he and his government have not participated in any of these meetings. I hope, however, the Minister will be able to confirm that they will continue.
After many years of dispute with Spain over the airport and over ferry services to Algeciras, progress was made with an agreement in 1987 but unfortunately opposition from the Gibraltar Government to implementation of the airport agreement has blocked progress, leading the Spanish Government to retaliate by suspending the ferry service. Can the Minister tell the House what pressures are being brought on the Gibraltar Government to reconsider their position on the airport?
Although I have no particular wish to visit British Antarctica—it is a little too cold for me—a tour of many of our dependent territories would be an enticing prospect. I would particularly like to call on the Pitcairn Islands, which have a population of 58—descendants of the mutineers on the "Bounty". According to an article in the Guardian the islands,
"are kissed by unwavering trade winds and bathed by warm seas of translucent blue. The sunshine gives way every few days to brief periods of dramatic winds and downpours of sweet-smelling rain … Tropical fruits … grow in wild abundance, and are free for the taking".
Unfortunately—or perhaps fortunately depending on your perspective—tourism is not on as the Pitcairns are 1400 miles from Tahiti and there is no airstrip. Much of the revenue of the Pitcairns has derived, I understand, from stamp collectors and from selling curios to passing ships. But ships seem to pass less frequently and in the Guardian's words,
"philately is a dying pastime".
Apparently, as a result the islanders are feeling neglected and when the governor last visited—he is otherwise our High Commissioner in Wellington—they presented a petition raising the possibility of transferring their allegiance to France. Can the Minister confirm that story and say what has happened since?
Unlike the Pitcairns, tourism is central to the economies of all the Caribbean dependent territories, with the possible exception of Anguilla. There is, however, a further important and growing source of economic development in the shape of offshore banking. The Cayman Islands are well established as a tax haven and now boast the fifth largest banking business in the world. Offshore finance will soon overtake tourism in the Virgins and in the Turks and

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Caicos Islands. While this may contribute to the wealth of these islands, it raises serious questions which I hope the Minister will address in his reply.
There is a desperate need for proper regulatory procedures to cover not just banks but also insurance, trusts and company managers. I hope it will be tackled as a matter of urgency. Can the Minister tell the House what the timetable is for enforcing guidelines for the licensing of offshore banks? Further, there is a serious problem as regards money laundering, particularly in the Caymans. Although standards may now be higher, are they high enough? Further, there is an associated problem surrounding the confiscation of the proceeds of drug trafficking. If they are not resisted, in the medium term powerful drug interests will serve only to destabilise the countries concerned.
The Secretary of State for Foreign Affairs is reported to have told a conference on the dependent territories last autumn that Britain seeks an equal partnership with its dependencies through what he called "qualified nationhood". I cannot dispute that. Clearly they must have as much self-government as possible. At the same time, this requires a responsible approach by the local governments, including a willingness to react reasonably to proposals made by their neighbours—for example, for improved communications—in spite of the territorial claims that these neighbours may be making.
The dependent territories themselves must recognise that compared with many rather larger former colonies which are independent, they are in an enviable position. As the world grows smaller some of the remoter islands such as St. Helena or Tristan da Cunha, and even the Pitcairns may be able to follow the Caribbean dependencies into tourism. They will, however, understandably want to protect their special environments from being spoilt by unthinking and unplanned development. We, too, have a responsibility to try to help them achieve that. If we succeed, future generations will be grateful to us.
4.37 p.m.
The Parliamentary Under-Secretary of State, Ministry of Defence (Viscount Cranborne): My Lords, like everyone else I have found this debate particularly interesting if only because it strays somewhat outside my usual patrolling range in your Lordships' House. I must say that it makes a most agreeable change—a busman's holiday—from the usual defence matters which I attempt to answer for your Lordships.
I am all too conscious of a difficulty which I believe faces me this afternoon. It is the following. This is a short debate—a two-and-a-half hour debate—and your Lordships have this afternoon raised a great many questions. I must endeavour, with your Lordships' permission, to steer a difficult course as regards attempting to answer all the questions that your Lordships have asked, given that I have a little under an hour, theoretically, in which to do so subject to what my noble friend Lady Hooper would wish, and given the proper strictures which many of your Lordships have already delivered to me saying how disgraceful it is if
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anyone speaks for more than a quarter of an hour in your Lordships' House. I will expect the usual grumbles from your Lordships if I stray too much into the realm of detail in my attempts to answer the questions that your Lordships have asked me.
First, I agreed with my noble friends Lady Hooper and Lord Braine when they commented on the broad range of subjects encapsulated in any debate on the dependent territories. To cover the subjects raised one would have to be something of a polymath. However, encouraged by my noble friend Lady Hooper, I shall leave out the subject of Hong Kong, particularly as I understand that the Third Reading of the British Nationality (Hong Kong) Bill will take place in your Lordships' House on 14th February next.
It is a truism to say that Her Majesty's Government maintain considerable interest in the dependent territories. As my noble friend Lady Hooper herself pointed out, that was confirmed by our strong support for the dependent territories conference, which was rather catchily entitled "Progress Through Partnership", held in London last November. I hope that the very title will encourage the noble Lord, Lord Beaumont, in the light of the remarks that he made in the course of his speech. The conference was highly successful. As I am sure your Lordships know, it was organised jointly by the governments of the Falkland Islands and Gibraltar. It gave publicity to the dependent territories as a group and showed their place in today's world as responsible communities which, as many of your Lordships pointed out—and I shall deal with some of the particular instances in a moment—offer many opportunities for trade, investment, tourism and, I agree with the noble Baroness, Lady Blackstone, financial services.
I also say to the noble Baroness, Lady Blackstone, in answer to her question, that demands on this country's aid programme are very high. Nevertheless, ODA support for the Caribbean dependent territories has increased from just over £16 million in the 1991–92 financial year to nearly £22 million in the current financial year. I gathered from the sentiments expressed during the course of the debate that our aims are consistent with the aims that your Lordships would like us to pursue. Those aims are to promote sustainable economic and social development through the provision of appropriate public infrastructure and technical assistance and trying to increase the supply of skilled manpower, which was a theme which ran through much of what your Lordships had to say this afternoon. It is particularly important that we should endeavour to increase the supply of skilled manpower in the fields of education, health, physical planning and financial management and to improve the efficiency of the public service.
Much has also rightly been made by your Lordships of the democratic nature of the dependent territories. I was particularly struck by the remarks of my noble friend Lord Braine and the noble Lord, Lord Beaumont, in that regard. That almost seems a contradiction in terms in view of the colonial past. I should like to emphasise that all our dependent territories enjoy that status by choice. Our relationship with them is, as far as possible, one of equal partners. We aim to provide for

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economic independence. Should they wish to assume political independence, economic independence is clearly a helpful prerequisite, to say the least. Whatever the United Nations may say to us, that political independence is only available if any particular territory should wish it. As the noble Baroness, Lady Blackstone, pointed out, not all of them are necessarily suited to it. Apart from the case of Bermuda, to which I should like to return in a moment, I do not know of any specific proposal for that to happen in the dependent territories.
My right honourable friend the Secretary of State for Foreign and Commonwealth Affairs gave the keynote address at the November conference to which I referred. During the course of his remarks he said that the assumption current in the 1950s and 1960s that granting independence was the only way to make progress had evaporated. In the context of what I am saying that is important. Perhaps it would be fair to say that independence is a different concept now from that at the time when independence was overwhelmingly fashionable. All of our dependent territories, therefore, remain dependent by choice. Hong Kong is a special case, for reasons of which your Lordships are well aware, and the existence of the Treaty of Utrecht—in particular Article 10 (my history is a little rusty on this point, but I seem to remember that it is Article 10)—makes Gibraltar unique. Our relationship with those territories is one of equal partners. It is worth emphasising that point because it sets the environment in which we approach the various specific questions which your Lordships raised in this debate and which I should now like to try to answer.
I was impressed by and listened with considerable care to the noble Lord, Lord Pitt, who spoke from the depths of his experience in matters Caribbean. I can tell the noble Lord that we already encourage a great deal of co-operation and exchange among British Caribbean dependent territories and between them and the independent Caribbean states. Of course we welcome and encourage such forms of practical co-operation as seem appropriate and as are proposed from within those states themselves. There has been renewed interest in the concept of Caribbean integration. There is a proposal to form an association of Caribbean states which would include some of the central and south American countries. The noble Lord is already aware of that and he referred to it in the course of his remarks. A technical meeting to look further at establishing such an association is due to take place next March in Barbados. I know that the noble Lord, Lord Pitt, will take a keen interest in its proceedings.
More generally, I was struck by the particular interest shown by your Lordships in the question of the Caribbean. My noble friend Lady Hooper and the noble Lord, Lord Beaumont, referred to it. We have established a United Kingdom ministerial group to oversee the question of the relationship between the United Kingdom and the dependent territories in the Caribbean generally, and a regional office has been established in the Caribbean known as the Dependent Territories Regional Secretariat. This was set up to
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administer United Kingdom aid programmes in the dependent territories and to take forward the continuing dialogue with the dependent territory governments.
My noble friend Lady Hooper also rightly drew our attention to the importance of investment in Caribbean countries. Investment by British companies has, I regret to say, been rather limited. However, there have been some gratifying examples. Cable and Wireless operates sophisticated communications systems in the islands and Barclays Bank has a substantial presence in the region. However, companies from North America have taken advantage of the offshore financial structures in the territories, to which the noble Baroness, Lady Blackstone, alluded. That has been so particularly in the Cayman Islands, Bermuda and the British Virgin Islands and has served to promote their business structure, thereby contributing to the income of the islands' administrations.
It is worth drawing your Lordships' attention to another example. In the Turks and Caicos Islands the local government have recently announced the formation of an inward investment agency to act as a focal point for attracting foreign investment into the territory. If that pattern proves to be successful it can be extended to other territories. The experiment can be imitated and other territories can profit from the lessons learnt from it.
My noble friend Lady Hooper also drew attention to the relationship of the dependent territories with the European Community. As she knows—probably far better than I do with her European experience—the dependent territories are associated with the Community by Part IV of the Treaty of Rome as "Overseas Countries and Territories". As a result of that status they were allocated some money from the European Development Fund. They were eligible for European Investment Bank loans and enjoyed similar but slightly better trade preferences to those offered to the ACP countries.
Naturally enough, Her Majesty's Government welcomed the aid and trade provisions of the 1991 OCT decision. I am particularly glad that we were able to maintain the 18 per cent. share of the benefits of EDF money which goes to the British OCTs. The EDF will make grants worth about £16 million to our OCTs over the next five years. About £40 million in EIB loans is also available for all OCTs.
It is right that those grants should be focused on the poorest territories. We are encouraging our territories to liaise closely with the Caribbean regional representatives of the European Commission, and our own officials in the region, to produce good project proposals. Of course the Community wishes to promote regional co-operation but it is not always ready to agree allocations for regional projects. I hope that our territories, working alongside those of the Netherlands and France—I come back to the point made by the noble Lord, Lord Fitt—can work up good project proposals.
It is worth emphasising that the trade regime is the most liberal granted to any non-Community territories. I refer to free access for any OCT goods. Indeed, I am pleased to see that there are special arrangements for rum. in some cases there is free circulation for third

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country goods. We shall keep in close touch with our territories to help them exploit that important opportunity.
I have promised that I would refer to the question asked by the noble Baroness, Lady Blackstone, about financial regulation. It is important. As I have already made clear, we do not want to undermine the economic development of the Caribbean dependent territories. However, we need to ensure that the development of offshore finance is carried out responsibly and in a way which will attract high quality companies and products and will offer a sustainable contribution to economic development.
We all know how difficult it is to control the activities of tax havens. Therefore in the wake of the BCCI and other financial scandals, standards of financial regulation are naturally being raised world wide. It is important that the dependent territories raise their standards accordingly. In that I am wholly in agreement with the noble Baroness. It is important because we must prevent bad money, driven out of other jurisdictions, ending up in their offshore sectors and, as a result, the territories acquiring a tarnished reputation, resulting from weak regulation, which can take years to restore.
My honourable friend the Economic Secretary, Mr. Nelson, visited the Turks and Caicos Islands from 24th to 27th September 1993 and the British Virgin Islands from 29th to 30th September last year, too. I am sure that the noble Baroness will be pleased to hear that in both jurisdictions he stressed the need to make proper financial regulation a priority.
It is perhaps worth adding in this context that in his report into the supervision of BCCI, Lord Justice Bingham took the view that the single most important lesson arising from BCCI was that banking group structures which deny supervisors a clear view of how business was conducted should be outlawed. The Caribbean dependent territories have now revised their bank licensing guidelines to address the issue and are considering the issue of international regulatory co-operation.
I am conscious of the march of time. However, if your Lordships are still feeling patient with me I should like to address myself to a couple of other matters. Many noble Lords have quite rightly been concerned with the question of the Falkland Islands. A number of points were raised during the course of your Lordships' remarks. I was particularly interested in the remarks of my noble friend Lord Braine about what he seemed to think would be an Atlantic labour free market. He mentioned the great qualifications of the St. Helenans and the Caribbean populations to help with the development of the Falklands. That is an interesting idea. I am sure that my noble friend's suggestion will be noted in places where it can do most good.
Underlining the question of the Falklands is the subject of sovereignty. Perhaps I may stress, as one who in another place enthusiastically supported my noble friend Lady Thatcher in her commitment to recovering the islands, that the British Government have no doubt whatever about their sovereignty over the islands. Her
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Majesty's Government are committed to defending the islanders' rights to determine their own future. I can certainly reassure my noble friends Lord Boyd-Carpenter and Lord Morris in that respect. With regard to the inquiry of the noble Baroness, Lady Blackstone, I refer her to what I am told is the salesman's answer to a question about the power of a Rolls-Royce: "What is its horse power?"—"Enough". The commitment that we will make to defend the islands and what resources we shall commit to it are just that. We keep the matter under continuous review. We do not wish to spend more defence pounds in the South Atlantic than we have to. But we shall certainly do what we have to do to counter any threat that arises.
In that respect it is important that I make our position clear with regard to the sale by the Americans of A4 Skyhawks. The issue was raised by my noble friend Lord Morris. The United States is committed to consulting us over sales of major equipment to Argentina. The most recent discussions have centred on the sale of 36 second-hand A4 Skyhawks equipped with an advanced radar. It is the advanced radar which has been the subject of most British worries. There has been a number of high level exchanges. In the end, the United States has decided to offer the aeroplanes to the Argentinians. However, they will be equipped with a less advanced radar than in other models of the aeroplane sold around the world. We have told the Americans that we are content with their proposal to sell the Skyhawks to Argentina equipped with a radar with a specification which does not cause us concern. There remain question-marks, of course, over future upgrades to the equipment, but those are not in prospect at present and will be subject to further discussion with the Americans as and when necessary. In that context it is important that we should not be seen merely to be waving an aggressive stick at the Argentines. A number of your Lordships have made that point; and I wholly agree with it.
The noble Baroness, Lady Blackstone, referred to the question of oil and fisheries. My noble friends Lord Torrington and Lady Strange also referred to fisheries. My noble friend Lord Braine waxed eloquent on the subject of oil and fisheries too. It will be several years before we know whether there is oil around the Falklands. However, as my noble friend Lord Braine pointed out, seismic data that has so far been analysed is extremely encouraging. We have given no undertaking to co-operate with Argentina over the exploration or exploitation of such oil if indeed it is present. However, it is important for us to emphasise that we understand the advantages of that co-operation, and for me to repeat our undertaking that the door to co-operation remains open. We should like to think that that was a realistic and attractive possibility.
In terms of fisheries, co-operation with Argentina is to the point. We co-operate with the Argentinian authorities in the South Atlantic Fisheries Commission on measures to ensure conservation of marine resources of the South West Atlantic. Conservation is essential to the sustained development of the fishery industry. The agreement which we reached in November 1993 is good for the islands. The SAFC meeting in October 1993

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agreed to increase the number of foreign flagged vessels which can fish under licence in Argentine waters in the area below 45 degrees south, and at the same time it set a total catch limit for illex squid. The number of licences which Argentina may issue in 1994 has been increased from 45 to 80. The catch limit in Argentine waters has been set at 220,000 metric tonnes and in Falklands waters at 150,000 metric tonnes. There is, however, no limit to the number of licences that may be offered in Falkland waters. Perhaps I may quickly turn to two other questions.
Baroness Blackstone: My Lords, before the Minister leaves the Falklands' oil and fish, perhaps he could answer my question on what the UK share might be in existing revenues from fishing licences and potential future revenues from oil.
Viscount Cranborne: My Lords, I am afraid that I am not able to give the noble Baroness a specific answer; I shall make further investigations. It is not an easy question to answer, as she will readily understand and if I can reach something near an appropriate estimate, then, of course, I shall write to the noble Baroness and put the answer in the Library. Perhaps she will allow me to leave it like that.
There are two other questions which noble Lords raised appertaining to Bermuda and Gibraltar. The noble Baroness, Lady Blackstone, asked me about capital punishment in Bermuda. As she is well aware, Bermuda retains capital punishment for premeditated murder, although there have been no executions since 1977 and sentences are, I believe, normally commuted to life imprisonment.
The noble Baroness will also know that a national referendum was held in August 1990. The voter turn out was, perhaps surprisingly, only 33 per cent. There were 8,536 votes in favour of retention of the death penalty and 2,237 in favour of abolition. We have expressed our hope that Bermuda will come into line with the Caribbean dependent territories and introduce and enact legislation to abolish capital punishment. However, I feel bound to ask noble Lords what they think the result of a similar referendum would be in this country.
On the question of Bermuda airport which my noble friend Lord Newall raised, I can assure him that Her Majesty's Government have already offered Bermuda help and advice on assuming responsibility from the United States of America for the running of the international airport. We realise that the withdrawal of that facility by the United States authorities is something of a shock—both financial and organisational—to the Bermudan authorities. Therefore, we remain determined to keep in close touch with the Bermudan Government on the issue. Their Minister of Transport visited the United Kingdom at Her Majesty's Government's invitation in January this year to talk, among other things, about the airport's future. I hope that my noble friend will take some comfort from that.
My noble friend Lord Newall also referred to the closure of HMS "Malabar" in that context. As concerns the Bermudan economy, it is a much smaller question, as I am sure he will know. It is important in this context
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to emphasise only that anyone who tries to use the fact of that closure as signifying a weakening of the tie between Bermuda and the United Kingdom is mistaken.
My noble friend also raised the question of independence. I merely wish to say in answer to his remarks that it would be entirely for the Bermudan Government to demonstrate that the wishes of the population had been clearly expressed after a campaign in which the issues had been fully aired. Indeed, the preferred course may be a referendum with a stipulated minimum participation, but that is a matter entirely for the people of Bermuda.
Perhaps I may turn now to Gibraltar. My noble friend Lord Boyd-Carpenter and the noble Baroness, Lady Blackstone, asked me about the Gibraltar-Algeciras ferry. The Government believe that an operator willing to run a service between Gibraltar and Algeciras should be allowed to do so, particularly as both points lie within the borders of the European Community. All I can say to my noble friend is that we regularly raise the matter with the Spanish Government and we hope that the question will be able to be resolved fairly shortly. There is little that I can add to that, but I share my noble friend's hope that we will be able to restore a ferry service which, as he pointed out, is greatly for the convenience of everyone who frequents that part of the world.
Lord Boyd-Carpenter: My Lords, perhaps my noble friend will allow me to intervene. Have the Spanish Government given any reason for their action?
Viscount Cranborne: My Lords, not that I am aware of. Noble Lords made a number of points about Gibraltar. The matter is complicated and I am already conscious of having trespassed for far too long on your Lordships' patience. However, I wish to refer to the speech of the Premier of Gibraltar at the dependent territories conference on 24th November last and a question raised by my noble friend Lady Hooper. As she and a number of other noble Lords pointed out, Gibraltarians' right to self determination has to take into account the provisions of the Treaty of Utrecht which give Spain the right of first refusal. I am afraid that I cannot agree with noble Lords who feel that we should override that provision. It means that independence is not feasible without Spanish consent. We should remember that Gibraltar has a high degree of self government already and the United Kingdom fulfils its obligations to dependent territories under Chapter X1 of the UN charter.
I should like to emphasise yet again that Her Majesty's Government adhere to their commitment to the people of Gibraltar, a commitment inherent in the 1969 constitution, that they will not be allowed to pass under the sovereignty of another state against their freely and democratically expressed wishes.
As my noble friend Lady Hooper mentioned, Gibraltar is part of the European Union by virtue of the United Kingdom's membership. Specific exemptions on accession were made at Gibraltar's request so, for example, Gibraltar is not in the European Union for the purposes of common Customs, VAT, agriculture and fisheries. As my noble friend pointed out, it does not

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enjoy separate representation in the European Parliament. All we can do is to rely on people like my noble friend, who are knowledgeable in the European Parliament, to look after the interests of Gibraltar assiduously in that assembly and for the United Kingdom to look after its interests in Brussels.
The noble Baroness, Lady Blackstone, also raised the question of the airport agreement. Her Majesty's Government support the agreement which they believe to be in the best interests of Gibraltar and her neighbours. We are, however, aware of Gibraltar's reservations and we have given an assurance that we will not force the agreement on Gibraltar. We will continue to work towards a solution which is acceptable to all parties through negotiations based on the mandate from my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs and his Spanish counterpart on 1st March last year.
My noble friend Lord Merrivale also raised the question of insurance. We are in discussion with the Government of Gibraltar about the necessary steps to implement these third insurance directives and to allow Gibraltar-authorised insurers the benefit of this passport.
The long-term political future of our dependent territories is very much in their own hands. They will remain UK dependencies for as long as, and only for as long as, they wish to. Nonetheless, they and Her Majesty's Government recognise that their long-term future lies both within the context of their geographical region—a point very much emphasised by the noble Lord, Lord Pitt—and on their historical ties with the United Kingdom. We therefore welcome and encourage the territories to seek to diversify their relations with external nations and donor organisations, particularly regional ones.
However, we have to recognise the problem for some dependent territories of unwelcome claims on their territory from larger neighbours. Such claims seem to most of us out-of-date, but they continue and they are one reason for the continuance also of dependence. It is, and I believe should be, a prime aim of British foreign policy to enhance the security and prosperity of the dependent territories. I assure your Lordships that we take both those aspects extremely seriously.
As to future dependent territories conferences, I understand that the organisers have canvassed those territories that were represented at the November conference on their views about a follow-up to the conference. I understand that the organisers are considering the possibility of a secretariat in London to enable territories' representatives to exchange ideas and practices. I believe that to be an interesting proposal, and I look forward to hearing more about it.
It has been an interesting debate. I apologise for taking so much of your Lordships' time in attempting to answer it. With your Lordships' permission, I close with a reassurance in answer to the question by the noble Baroness, Lady Blackstone. Perhaps my chauvinist heart is beginning to show, but I must say that I am rather horrified by the suggestion she made about Pitcairn Island. I can reassure noble Lords that we are not aware of any request by the residents of Pitcairn to
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transfer to France. No such request was put to the governor on his last visit. I am wholly confident that such a request will not be presented to him on his next one.
5.11 p.m.
Baroness Hooper: My Lords, I am most grateful to everyone who has participated in the debate. We have heard views based on personal knowledge and interest which have given us and, I hope, the Government specific insights into, and ideas about how to deal with, the needs of these territories. My special thanks go to the noble Baroness, Lady Blackstone, for underlining the allure of Pitcairn Island. I am almost convinced that I should become a regular reader of the Guardian.
I am particularly grateful to my noble friend the Minister for responding so fully and carefully to the questions raised. I am glad that he was not too much constrained by time on this occasion. His remarks will bring reassurance to people who, although they are spread throughout the world, are united by a traditional allegiance to the United Kingdom and through their participation in Commonwealth affairs. I feel sure that they will be reassured that the Government continue to respect the wishes of the peoples of the territories in respect of any change of status or moves to independence. That will be especially welcomed by the peoples of Gibraltar and the Falkland Islands. They also doubtless look forward to continuing consultation with the Government and to further progress through partnership.
I hope, as my noble friend Lord Boyd-Carpenter, put it, that not only the discussion itself but the fact that the discussion has taken place will be observed in the territories concerned and by those with designs upon them. In saying that, I do not wish in any way to exacerbate feelings or the development of our good relations with Spain and Argentina. I hope that a reasoned and reasonable discussion such as the one that we have had will be seen as helpful in resolving particular problems in relation to Gibraltar and the Falkland Islands.
Finally, I rather like the suggestion made by the noble Lord, Lord Beaumont, that this sort of debate should become something of an annual review. I hope that the usual channels here represented will take note. I beg leave to withdraw the Motion for Papers.
Motion for Papers, by leave, withdrawn.

National Health Service: Administrative Change
5.14 p.m.
Lord Dean of Beswick Lord Dean of Beswick rose to call attention to the case for proper evaluation of the costs and benefits of administrative changes in the National Health Service; and to move for Papers.
The noble Lord said: My Lords, I shall give a reason for raising this particular topic. Only two or three weeks ago a health debate was initiated by the noble Lord, Lord McColl, in which he referred to whingeing against

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the National Health Service and the publication of sensational information which was misleading, wrong, and harmful to patients. I accept those criticisms if and when people misrepresent the real situation. But my role is not to criticise the health service. I am a great admirer of the health service. I want to put on record my personal thanks for the treatment I have received in the past couple of years for serious eye problems. I pay tribute also to the doctors at Tameside General Hospital, Greater Manchester, who helped my wife recover from her recent serious illness and to the_ surgeons who performed the operation at the Wythenshawe hospital, Manchester.
I am not taking part in a witch hunt against the health service. I am among its greatest admirers—from the consultants down to the people doing the more mundane jobs on the wards. I do not believe that the noble Lord, Lord McColl, is justified in saying that those who dare to criticise are whingers. As recently as in the last two weeks two eminent consultants in the Manchester area, Dr. Tweedie, at Withington, who, I believe, is an orthopaedic surgeon, and Dr. Gough, a paediatric neurologist and consultant at the Duke of York children's hospital, are both on record as asking for more resources. If top medical men who ask for more resources in order to deal with their problems are classed as whingers, then let us have a bit more whingeing. The wording of my Motion relates to making information available to patients at the right time so that they know what is going on.
The most recent attempt to benefit the health service —the big stride into the future—has been the introduction of computers. I must, however, point out events that should not have happened and should have been prevented. Some of what went on in Wessex should certainly have been avoided. The matter should have been dealt with; it should not have been kept under wraps. It may well be a question of the rapidity with which Secretaries of State for Health have moved on. We have had six Secretaries of State for Health in 12 years. To claim that someone, however bright, can master in two years a service such as the National Health Service, cross all the t's, dot all the i's and find out what is going on, is absolute nonsense. No international or multinational employer would run a company in that way. It may well be that that is one of the weaknesses of the system and of government in general, not only this Government. I am sure that two years is not sufficient time to get to grips with matters. In that time Ministers are merely serving an apprenticeship; they are only starting to learn what the job is all about. That may be one of the reasons why such events occurred.
I was alerted to what happened in Wessex by a four-line report in the stop press of the Manchester Evening News. One may ask: why Manchester, which is 200 miles away? I read the report as we broke for the main Recess in 1992. It said simply that Wessex Regional Health Authority would not proceed any further to recover £43 million that had been lost in computer deals. I put down a Question for answer when the House returned. I wish to make clear that I am not attacking the present Minister, the noble Baroness, Lady
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Cumberlege. She was not involved in any of this. She is a more recent acquisition. Nevertheless, she knows what I am talking about. The Answer that I was given was that the Government knew that something was wrong in 1988, so they changed the chairman, who quickly appointed a new manager. I accepted that as "game, set and match". But somebody from down south had seen the shots of me asking the question in the House. I was sent a copy of the press release by the Wessex Regional Health Authority, which indicated that it did not intend to pursue the matter and retrieve any more money because there was doubt as to whether the sum recovered would be worth it.
A district auditor's report was referred to, and after numerous phone calls I obtained a copy. It was critical of the new chairman's actions. I want to make clear that the chairman of whom I speak, the chairman from 1988, in some respects had a bad deal from the press, which spoke as though he was responsible for the original £63 million mis-spent. He was not. By the time he got there the overwhelming majority of that sum had been wasted by the previous chairman, Sir Bryan Thwaites. The discipline that he received was a going away gift of £10,000 when he stood down.
The report showed that the new chairman had acted in a rather cavalier manner. In fact two years elapsed before a new manager was appointed—Mr. Ken Jarrold —and they started to rumble what was happening. The report showed, for instance, that under the auspices of the new chairman a new computer had been purchased for £3 million when it could have been bought for less than £1 million. No fail-safe clauses were instructed to be placed in the contract. According to the report, he was responsible for not inserting the fail-safe clauses.
Moreover, one of the sections—I believe it was the computer section of Wessex—was moved sideways as a private company. What was called a soft landing was agreed for the staff under which 104 salaries were to be paid for a period to people who had moved to the company. Those salaries continued although, in fact, when heads were counted, the number turned out to be only 64. That was the type of situation that went on after 1988.
Your Lordships' House has no way of dealing with such a situation. I made sure that the Public Accounts Committee would be kept informed. Strangely enough, without any collusion or co-ordination, the new Member for Southampton, Itchen, which is in Wessex, took part in a debate in the other place and for 10 minutes spoke in detail about nothing but what had happened in Wessex because he had been briefed by Computer Weekly. The Minister in another place, Dr. Brian Mawhinney, thought that the matter of all that money going missing was so important that he did not even refer to it.
However, when the Public Accounts Committee finally sent for the people from Wessex on the first occasion, it was suddenly alerted that there was another auditor's report, which the department, the Secretary of State and the chief official, Sir Duncan Nichol, were not prepared to make public. It resulted in the then chairman, Sir Robin Buchanan, the new manager, Ken

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Jarrold, and Sir Duncan Nichol having to appear before the committee. I sat for over four hours listening to the evidence. It was absolutely mind boggling.
Mr. Bob Sheldon, the chairman of the Public Accounts Committee, who has done a superb job on behalf of the taxpayers of this country and public authorities, opened the meeting by saying that it had been requested that the evidence given that day should be heard in camera. Mr. Sheldon said that in no way should that be the case. It would be public.
It was like listening to a horror story. It went back to 1982. Four companies, which I shall not name, were bidding for the computer system. Company A won it. But an intervention by a consultant based in Westminster—I go no closer than that; all the evidence is in the two reports of the Public Accounts Committee —resulted in the contract being taken away from Company A and being switched to another company. When it was decided to give the second company the contract, the committee dealing with the matter was not quorate. Not only that, an employee who was in the pay of the computer company to which the contract had been switched was an appointed member of the regional health authority dealing with it. When some of the junior officers of the authority pointed to the impropriety, they were brushed to one side. All that is in the evidence. It resulted in a huge sum of money being lost. Much of it was returned, but I believe that there is still over £20 million adrift.
Some of the actions taken under the new chairman worried me. For instance, I should have thought that the services of the person responsible—the main brain behind the loss of £60 million—would be terminated forthwith. But, no; a retirement agreement was reached. The man who was totally responsible for pushing the matter, the regional manager, was rewarded with a going away present of £111,000.
In another case, a young woman who had worked for two years at the regional health authority was given £78,000 as a going away present. If noble Lords believe that I am stretching the elastic a little far, they have only to read the report. I have not named any names but they are all there.
That money, denied to the people of the area, could have been very well used. In the past I have asked how we look into the matter of probity in the public services. I have switched my attention to the National Health Service and what I believe is called the Supplies Authority. I made the point that the then chairman of Wessex was also the chairman of the National Health Service Supplies Authority. He had been appointed on a two-year contract which commenced in October 1991 and finished last year. I do not accuse anyone of trying to mislead but last week the noble Baroness, Lady Robson, on questioning why that person was appointed in view of the Wessex situation, was told that the appointment was made before all the facts were known.
He was originally appointed in October 1991 for two years. He was re-appointed last October when the views of the Public Accounts Committee were made known. I have great respect for people across the political divide in regard to probity. I do not defend a lack of probity
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anywhere, whether it is in local Labour authorities, Conservative authorities or public bodies. But I have not had the support of any one Member from the other side. No one has stood up to be counted. That is very sad. They know all about the matter because I have made sure that they know, but no one has bothered.
In the few minutes left to me I wish to talk about the National Health Service Purchasing Authority. I raised the point that four out of five non-executive directors were already employed in the National Health Service in other appointed capacities. I said that it seemed strange that here was a situation where the buyer will be the seller and the seller will be the buyer. I asked about the audit provisions, if any. I was told that an internal audit would be carried out by Peat Marwick. I emphasise that that is an internal audit. I suggested that the final audit should be done externally. We are talking in the near future of a turnover of about £3 billion a year, which is not peanuts. I then questioned who the members would be. The noble Baroness, Lady Cumberlege, was forthcoming and straightforward in answering the questions I asked. She said that they would form an audit committee of non-executive members, but that the chairman would not be on it.
In one of my supplementary questions I made the point that we had a situation where the Government had introduced legislation to stop people in local authorities twin-tracking; but that we now had three people who were treble-tracking. They are not only the buyers in their capacity of serving the health service, perhaps as chairmen in an area; they are also the seller as a member of the purchasing corporation. How do we deal with that situation in a legal sense? How does one take oneself to court? There must be a precedent for that.
Those people should not form the nucleus of an audit committee. They are too close to the problem. It would not stand the test of time in the private sector. I do not cast any aspersions on people as individuals—I do not know any of them. All I am saying is that it is not right that people should be checking up on themselves.
There are no sanctions to deal with those people who are appointed. I shall not be sidetracked into talking about people at Wessex who are before the court and who were paid servants and officers and not appointed members. They are before the court at present and are being dealt with, and I do not wish to refer to that matter. Local councillors, if they do wrong, can be surcharged. Those who serve a health authority, if they do wrong, cannot be surcharged. Last week I made a strong plea —I say this in a general sense and not just for the health service—for the Government to consider seriously the question of surcharging health authorities as they do local authorities.
I pay tribute to Mr. Bob Sheldon, the chairman of the Public Accounts Committee, for his work in this matter. The Department of Health recently circulated a code of conduct in regard to what it intends to do in the future, which indicates that it obviously has not been doing much in the past. However, before it is finalised—the replies must be in by 1st April—perhaps the department will look at the one produced by the Public Accounts Committee which was published last month and which indicates how probity and straight dealing can be made

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to work in the public sector. If that is studied it may be found that the department does not need to produce its own. That could be used for any spending department under the control of the Government.
I am grateful for the opportunity to put forward my case—perhaps not as lucidly expressed as your Lordships will read it in the Official Report. I do not believe that anyone involved in tendering for any type of contract would want to be faced by the jiggery-pokery that went on in Wessex in the awarding of the first contract. I am grateful for the time to express my serious anxieties about those matters. I beg to move my Motion for Papers.
5.34 p.m.
Baroness Miller of Hendon: My Lords, it was Oscar Wilde who defined a cynic as someone,
"who knows the price of everything and the value of nothing".
That is why I was glad that the noble Lord, Lord Dean of Beswick, asked for details of benefits as well as costs in this useful debate that he initiated. I am glad also to hear of the good attention that he received recently in a National Health Service Hospital when he was ill.
I am by no means certain that the changes in the National Health Service can be compartmentalised into administrative and non-administrative. I am not certain if an unarguable meaning of the term "administrative costs" can be found. I also do not believe, though I fear that it sometimes seems so, that administrative changes are solely for the benefit of the administrators. And who is an administrator? These days we have even given up the time-honoured name of "matron" and now call them "managers".
I am certain that in responding to the debate my noble friend the Minister will be able to satisfy the most curious among us about the purely administrative costs that can be separately identified. I should therefore like to speak about the benefits. I do so as the chairman of a family health services authority. My authority is one which is coterminous with both the district and the borough in which it is situated. I am responsible for the primary health care of upwards of 300,000 people with a budget of some £40 million. Even ahead of legislation to amalgamate family health service authorities and districts, my authority and the district began working together as a single agency to improve our efficiency and service.
There has been a major cultural change in the philosophy of the National Health Service. In the past, most patients' sole contact with the doctor was when they were ill. We were more concerned with treating those who had fallen sick rather than keeping them well. It is now realised that what we really had was more of a "national sickness service" than a National Health Service. That is why there is now a greater emphasis on the promotion of good health and the prevention of disease as well as looking after and curing the sick. That is why there is an emphasis on reaching targets for immunising children; why GPs are encouraged to vaccinate vulnerable patients against 'flu and why they are given targets for cervical smear tests. Cervical cancer deaths are falling rapidly. The HIB campaign for the prevention of meningitis in children has had an
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enormous take-up in the 12 months it has been available. Previously, less than 5 per cent. of the target group received breast screening; now it is over 75 per cent.
Developing health care in that way and evaluating its effectiveness needs to be managed. I have no doubt that some book-keeper could work out the cost, but I doubt that it is possible to fill in the other side of the balance sheet and say how much is saved in people not becoming ill or not dying. GPs are encouraged to train for and carry out minor surgery, for which they receive special payment. That has now reached levels in the cities that were only previously achieved in rural areas. I am not sure how your Lordships define "minor surgery"; my understanding is that a minor operation is one that someone else has!
Whatever the cost, it certainly saves patients from cluttering up the waiting list with things like warts and cysts, or using their local hospital emergency room as a glorified doctor's surgery. GPs are encouraged to upgrade their own surgeries; to computerise their patients' records and prescription regimes, and to employ qualified practice nurses who can in turn give professional help to the doctor in running, for example, hypertension clinics or doing blood tests. All that work is done with financial help from the family health service authorities, which also provide training for primary health care teams, group practice managers and receptionists.
All of that can be called administration. The benefit to patients in improved and personal service is hard to measure in a ledger. Heart, hypertension, diet and smoking clinics are another obvious major benefit to those patients who have the good sense to use them. Apart from showing some patients that smoking is the cause of their problem, the benefit of regular check-ups has been to pick up numerous previously unidentified diabetics, asthmatics or blood pressure cases.
Family doctors are also able to arrange for physiotherapists to attend at their surgeries to deal with groups of patients by appointment. That is an obvious benefit to those who, by the very nature of the treatment that they need, welcome not having to travel to their local hospital once or twice a week to receive it. Some enterprising GPs are even organising visits by specialists to their surgeries instead of the patients going to the hospital. Of course, that costs much more to arrange and to administer, but I doubt that one will find any patient complaining.
The administrative changes have enabled individual FHSAs to exercise their own initiative in matters of health care. My own authority, for example, introduced the concept of "High Street Health". We paid for local pharmacists to be trained in elementary diagnostic and health promotion techniques. This means that a patient who comes in asking for some non-prescriptive medicine can be checked to see whether he is really asking for the right medicine, and more importantly perhaps, whether he really should see his doctor instead of trying to treat himself. My colleagues in Lambeth have produced the very imaginative scheme of a mobile minor surgery to provide help for local GPs. Fund-holding practices, which by definition are the

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larger group practices, are providing numerous services for their patients in their surgeries and in their clinics, and in the process are substantially reducing hospital waiting lists.
The National Health Service is spending money on the training of paramedics on the basis that more lives will be saved by treating accident victims on the way to a specialised unit rather than simply carting them off to the nearest emergency room, which may be all right to treat a broken arm, but which simply may not have the trained staff and equipment on hand 24 hours a day to deal with a major complex trauma. This technique has been pioneered not only, as one might expect, in the United States but in the Royal Belfast Hospital.
Of course we must have proper oversight, as the noble Lord, Lord Dean, desires. We must eliminate extravagance and waste. We must ensure that the taxpayer gets value for the vast sums we spend on the National Health Service. But what we do not need is constant shroud waving. I only hope that the enlightenment that your Lordships will derive from this debate will be one step along the road of stopping treating the National Health Service as a sort of political football, instead of being the standard that so many countries try to attain. I hope there will be recognition of the major benefits that are now starting to flow from the administrative changes; changes, my Lords, for the benefit of patients.
5.42 p.m.
Lord Rea: My Lords, the noble Baroness, Lady Miller, gives an upbeat picture of what is going on now, particularly in primary healthcare. Some things that she says are true and are welcome; but she ascribes what has happened to the recent administrative changes in the National Health Service. As a general practitioner who has been working in the National Health Service for most of my professional life, I can say that most of the things she described and most of the examples she gave as following on the changes that have taken place, were taking place in my practice long before any of the recent reforms were introduced. In fact the operation of the new contract is being found extremely difficult by many doctors, who were not fully prepared for it. Those doctors in poor areas who do not have good practices have been falling very much behind in their achievement of the targets set and have been finding life very difficult.
But that takes me away from my main theme, which is to look at the overall changes that have taken place since the National Health Service and Community Care Act came into operation in 1991. Those of us who took part in the many hours of debate on the National Health Service and Community Care Bill as it passed through the House will remember an amendment, which had support from all sides of the House, moved by the noble Baroness, Lady Cox. This had the backing of all the Royal Colleges of the health professions. It did not oppose the main thrust of the Bill but proposed that it should be introduced first in one regional health authority —East Anglia was suggested—and the results carefully and scientifically evaluated there for several
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years so that lessons could be learnt and modifications made before being introduced generally. But of course the Government could not accept the amendment.
As a result, the whole country is now being used as a guinea-pig for a scheme which is based more on market oriented dogma—I could use the word "philosophy" but I think "dogma" is more appropriate —than any evidence that it might be of benefit to patients; or for that matter be any cheaper or more cost efficient. In fact, long before the Bill was brought in there was evidence from the other side of the Atlantic of the exact opposite: that administrative costs would rise and that costing every treatment was fraught with difficulty and caused more problems than it solved. Professor Alain Enthoven of Stamford University, whose study of the NHS gave birth to the internal market, was surprised and quite shocked that no pre-testing of his ideas was undertaken.
That is the background to the discussion we are having today. The Government make no bones of the fact that more administrators are now working at all levels of the health service, saying that the largest enterprise in Europe—the NHS—needed better management. Their answer to the argument that the real problem of the NHS was underfunding was that it was no use just throwing money at the problems; fundamental changes were needed, ignoring the fact that the United Kingdom spent a lower proportion of its GDP on health than almost any other developed country and had health statistics which were better than many, especially the United States, the highest spender of them all.
Since the Bill became an Act it is worth looking at how overall spending on the NHS has developed. In the 1980s funding increased in real terms by about 1 per cent. per annum. Since 1990 it has increased by 3.5 per cent. per annum. The trend of increasing numbers of patients treated has been more steady and has not increased as rapidly as the recent rise in spending. In fact, in parenthesis, I should say that hospital community health service activity, as it is given to us, may be a doubtful measure since, as my noble friend Lady Jay pointed out in our last debate on the National Health Service, it is based on "completed consultant episodes", so that one hospital admission may be counted as several different episodes if several specialists are involved. In addition—this has long been a criticism —these episodes may involve the same patient being admitted repeatedly because rapid turn-round times mean that patients are discharged before their condition is fully stabilised. I am not necessarily against this if the community care services are really adequate; but, unfortunately, they are not, and this in itself is another reason for readmissions and an apparent increase in health service activity.
The increase in funding for the NHS is welcome; but where has the money gone—on patient care or on managers? The percentage of National Health Service expenditure on administration has increased from 6 per cent. in the early 1980s to 11 per cent. of the total now (not up to the 22 per cent. which is spent in the United States, but high enough) and costs of senior managers have increased from £150 million in 1990 to nearly

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£500 million in 1993—a three-fold increase—which I assume also includes the cars and drivers to take them from meeting to meeting. Some noble Lords will remember the Evening Standard headline a couple of months ago, which was based on the answer to Dawn Primarolo's question in another place, that there are now nearly 3,000 more managers but 5,000 fewer nurses in London than three years ago. A sub-headline stated:
"Nurses replaced by men in grey suits".
The answer to that in part at least was that many senior nurses are now classified as managers; but even if that explains some of the reduction, there remained a heavy net deficit of nurses. Sadly, the 3,000 managers almost certainly cost more than the 5,000 nurses lost to the London health service. One has to ask whether, if NHS funding had increased as it has in the past three years but had been spent under the old system, a higher proportion would have been spent on patient care. It is clear to me that it would.
To recap on this point, National Health Service funding has been at a higher level than it was before 1991, but only a fraction of that increase has gone into patient care. I suggest that that extra money has been found to prevent a politically unacceptable breakdown of the service which the changes would have precipitated at previous levels of funding.
In London, the situation since Tomlinson remains very uncertain. I have most direct experience of the situation in Islington. Under the pressures of the internal market, last year the director of purchasing for the district health authority threatened to withdraw funding for the accident and emergency departments for the University College and Middlesex Hospital which would virtually have meant the end of all acute services in those hospitals. She asked general practitioners to refer their patients to the Royal Free Hospital or the Whittington Hospital Trusts, which are less accessible and less popular than UCH/Middlesex. But their unit costs were lower. That was despite the specific recommendation in Tomlinson and in the specialty review, that UCH/Middlesex should be preserved as a centre of scientific and clinical excellence.
That met with such a barrage of opposition from local residents, GPs, hospital workers and many others, that the Government have agreed to provide an additional tranche of about £10 million of central funding to allow work to continue. The manager concerned has said that she knew all the time that this bailing out operation would occur, but was using the threat to force economies on the hospital. Whether that is true or not, it seems a crude, blunderbuss way of managing a much valued service with high international, scientific prestige.
Local residents still feel that the University College Hospital has closed. The familiar, ugly but much loved Victorian cruciform building, where many thousands of nurses and doctors have been trained—including myself —is now an empty shell. I do not particularly regret that. It was an inconvenient building in which to work, and it had really served its purpose over the past century. But routine admissions of eight specialties are now in abeyance since this year's contracted work had been done by some departments as early as last September.
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So no work is going on in those departments despite the fact that patients are wanting to be treated and the waiting lists are increasing.
One might ask: what has happened to the concept that more popular and efficient hospitals would be rewarded with more work and that money would follow the patient? Sadly, cost rather than quality seems to be the criterion. Not enough allowance has been made for the higher cost of running hospitals with a high teaching and research commitment such as UCH/Middlesex. SIFTR (special increment for teaching research) is a relatively crude measure. It should be made more sensitive to actual costs in teaching hospitals. I very much hope that the noble Baroness can report some progress on the discussions which I know are going on on this matter.
I see that my time has come to an end. In conclusion then: the health service does not need managers who are going to be in one place for a short time and who then move on, furthering their career. It needs dedicated people who will spend a major part of their career getting to know the district and its problems in order to function effectively. Luckily, there are hundreds of thousands of health workers working beyond the hours for which they are paid, seeing that most patients get the care that they need despite, rather than because of, the flurry of expensive administrative activities which surround them.
5.55 p.m.
The Lord Bishop of Chester: My Lords, I suppose that the Church is essentially neutral in the arguments about the reorganisation of the National Health Service. All of us who work in this field are well aware of the fact that the situation varies very considerably. Even across the thousand square miles of my diocese, there are some areas and NHS trust hospitals, for instance, which are applauded and others severely criticised.
But I do not believe that the Church can be neutral about benefits and care. We, and the Christian ethic, would certainly support action against waste, but it is also concern for treatment and efficiency not to be at the expense of the patient's full humanity. Many of us work with and alongside those engaged in the National Health Service; namely, doctors, surgeons and nurses. We admire the care and the enormous goodwill and concern for patients, yet also have to experience the stress, strain and frustration, particularly for nurses, in many situations.
However, although acknowledging the increasing expectations of patients for tests, treatments and drugs, the cost factor often seems to outweigh the need or benefit factor. In turn that leads into a significant suspicion that the purchaser-supplier system is not delivering fairly or efficiently. There is a clergy-wife in my diocese at this moment with severe back trouble. Her local trust hospital, which is some distance from Chester but within my diocese, buys in a given number of scans each year from the part of the hospital which runs the CAT scanner. For the rest of the time the scanner is available to the private sector, including the private hospital next door. When the allotted number of scans for the year is taken up, patients like the

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clergy-wife cannot have a scan unless either her fundholding GP (it is not an option open to non-fundholders) pleads to the family practitioner committee or the like for money so that the GP can go to the private sector to buy in a slot on the scan from that hospital or another or, as has happened in this particular clergy-wife case, a consultant had to plead for an emergency scan from the hospital.
Surely this extraordinary situation should not happen. Buying in a set number of scins assumes an accuracy in the prediction of need not possible to mankind. Who can prophesy how many heart attacks there will be in this House over the next 12 months? In a revision of trust funding, I suggest that could be met by compulsory reserve funds to meet genuine needs without the unseemly and dehumanising requirement to beg for treatment. Acting in good faith, senior members of the medical profession encouraged their colleagues to take part in an experimental programme entitled Resource Management Initiative which ran from about 1987. Six pilot sites were identified, one in my diocese.
The evaluation which followed was considered by many doctors in my area to be rushed and inadequate; that resource management was rolled out to many other sites before its efficacy had been proved on the ground. A steam roller took over. Pleading by members of the medical profession for a proper experimental trial of the purchaser-provider system seemed to have been swept aside. If it had been heeded, the present problems of that aspect might have been avoided. Surely now is the time for an overhaul.
The evaluation of costs is fairly easy, but the evaluation of benefits is not easy. A stronger effort to evaluate benefits would avoid bizarre situations like that of the clergy-wife whom I have mentioned. It would strengthen the many good improvements in healthcare that have come from NHS reorganisation.
5.59 p.m.
Baroness Fisher of Retinal: My Lords, my noble friend Lord Dean of Beswick referred to Wessex Regional Health Authority. I have just finished reading the Public Accounts Committee report about West Midlands Regional Health Authority. It tells the same story that my noble friend told: with one hospital being £12 million short and the region as a whole £20 million short. It is fortunate for those who are named in the report that all received nice little presents on leaving the National Health Service, including the chairman. What worries me is that both cases relate to computer systems mismanagement. One wonders whether it would have been better if the authorities had gone to a car boot sale. They could not have done worse than the systems that they got, which never worked from the day that the experiments started.
However, what worried me even more was that we have a man called Duncan Nichol who does not seem to know what is going on. I understand from reading the West Midlands report that he is at the top of the tree—
Lord Dean of Beswick: My Lords, he was.
Baroness Fisher of Rednal: My Lords, I see—he was. He did not know what was going on. In fact, he said of the West Midlands affair, "Yes, it is a shambles". We in the West Midlands knew that seven or eight years ago. We could have told him. The affair just ran on and on and on. Do not the Government have a "grapevine" to tell them what is going on in the health service? They seem to have grapevines about a lot of other things. Why do they not have one for the National Health Service?
I should like to emphasise what my noble friend Lord Dean said about public sector accountability, integrity and probity. They are a "must" when Ministers are making appointments. We have come to realise that, in its financial dealings, the private sector operates in exactly the opposite way to what we expect as regards public expenditure from taxpayers' money. When Ministers are considering appointing staff to regional hospital boards, district health authorities and trusts, it is important that those involved clearly understand the way in which they must deal with the finances. It should be laid down specifically. As my noble friend said, those involved should be subject to the same conditions as local authority representatives.
There are now no elected members on NHS district health authorities. Key powers and resources are increasingly passing to the NHS trusts, the membership of which is again determined on an appointment basis. I had nothing else to do on Sunday so I switched on the television and, lo and behold, the President of the Board of Trade was in front of me. I thought that I would listen to what he had to say. I became really stirred up by his message which was "Push the power back to the people. Give people a bigger stake in society". But of course, we give those opportunities only to some of the people.
One must look at the new commercial attitudes in the health service. We must ensure that it is recognised that long-term care beds are as important to the chronically sick as the marvellous and famous operations that hospitals can carry out these days. We cannot easily push aside those people who will need good care, good nursing and, every now and again, the medical treatment that applies to their chronic health problems.
However, the duty of care which is specified in the Act of Parliament is interpreted by the NHS to mean, "Only within the resources available". That means that if a health authority cannot provide that care, says that it cannot, closes the beds and pushes the patients out, somebody else will have to pick up the burden. Normally, it falls to the local authorities, who are likewise short of cash. However, even if they wanted to, they cannot overspend because they would then become rate-capped. What is going to happen when the NHS trusts say, "We want only the people we can help quickly so that we can get rid of them quickly and keep all our beds full 24 hours a day and twice a day if possible"? That happens in some private hospitals. I live next to one in Birmingham so I know how that one operates. It tries to have a through-put of three patients per bed per day.
As the balance of care shifts from hospitals to the community, I advise the Minister that that change must be handled sensitively. We must accept that the

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proposals are long term. We need a real and constructive debate regarding funding and provision for what we call the chronic cases.
We have seen mental hospitals being closed and we all know that most of those closures have been unsatisfactory. Many noble Lords of all parties have spoken in this House about the difficulties caused by the speeded-up closures of mental hospitals. Patients are not receiving the care that they should. We must ensure that the indifferent care that some of those who have left mental hospitals have received is not experienced by those who need chronic health care. Care in the community needs an input from the National Health Service. The buildings, personnel and hospitals must be planned with the local authorities, charities and voluntary organisations. They all need to be brought together to ensure that they become partners in what we call community medicine. Care in the community cannot mean being looked after by a neighbour or relation who can come only once a week or by a designated nurse who can call in for only one hour on one day with somebody else coming in the next day.
I turn now to Birmingham, an area which I know much better than London or any other area. Birmingham has deprived area status. The statistics show that the rates of perinatal and infant death there are well above the national average. We must ask ourselves why. There are relatively high levels of asthma in that city. We used to think that asthma was caused by factories belching out smoke, but the factories are not there any more. They have been replaced by other buildings and a lot of unemployment. Statistics from the East Birmingham Hospital show that the incidence of childhood accidents there is twice the national average. The incidence of diabetes is also high in the Birmingham area, although I understand that with proper control it is possible to reduce the mortality rate.
What are we doing? What is the hospital service doing? Birmingham has had a lot of bother with all the changes that have taken place in the past eight years. Things have been changed and rechanged and are still not yet settled. Is it possible for the Minister to set up a health audit so that we can see, year on year, the incidence of those illnesses that occur because of deprivation, poverty, unemployment and bad housing?
I turn now to the problem that we have seen on our television screens of people lying in hospital corridors as they wait for service. Three weeks ago a large public meeting was held in Birmingham. Over 1,000 people went to the town hall to hear medical officers answer the public's worries and concerns about Birmingham's hospitals. One of the questions related to the shortage of casualty officers in emergency wards. One surgeon stood up and stated publicly at that meeting, "I am concerned about the service to the public". I feel sure that the Minister will want to ensure that that matter is taken up. I repeat that somebody who was named stood up at a public meeting to express his concern about what is going on at the sharp end.
I understand that if applications are accepted in April, 27 hospitals and other units in the West Midlands region will become NHS trusts. Only one hospital has not made an application for trust status. I am worried because that
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is an acute hospital. I have a question which is difficult to ask. Can a general practitioner who is not a fund holder get his patients into NHS trust hospitals or will he and all such practitioners have to send their patients to that one acute hospital? I do not know the answer, but I was asked to raise the question.
What of the future for the NHS? I say loud and clear tonight that it needs to be in safer hands than those of this Government.
6.11 p.m.
Baroness Seccombe: My Lords, debates on the National Health Service have become a regular feature of this House. They have begun to take place on a monthly basis; indeed, to my noble friend the Minister, who has the privilege of replying to them, they must seem even more frequent than that.
But such debates do provide us with an opportunity to assess the effects of the reforms on the National Health Service in what is to be hoped a rather more calm and measured manner than is sometimes the case outside this House. If we are to evaluate the effect of the NHS reforms we must first agree upon our terms of reference.
Many measurements of the success or otherwise of the reforms have been used during the course of this debate and elsewhere. But I am sure that noble Lords on this side of the House would agree that the most important measurement should not be the change in the number of beds or hospitals; nor should it relate to the number of staff employed, nor even the number of managers; and it should not be concerned with the size of the budget. Important though some of these measurements may be, the efficiency and effectiveness of the National Health Service should be judged primarily by the quantity and quality of the patient care that it delivers. This fundamental point should be obvious to all. Indeed, it was once the stated opinion of the spokesmen of both the main political parties. But all too often it has been obscured in the recent debates on this issue.
The NHS reforms have now been in operation for almost three years. They have progressed far. By April, for example, NHS trusts will be responsible for more than 90 per cent. of the hospital and community health services budget, and one in three patients will be covered by fund-holding GPs. The impact of the reforms on the quality and quantity of patient care seems clear.
In particular, the primary concern of the public when asked about the NHS is not that they may suffer poor quality treatment—far from it. Those who use it praise it, as we heard from the noble Lord, Lord Dean. But they may have to endure a lengthy wait for treatment. As my noble friend Lord McColl put it so clearly in his opening speech on 12th January, it is this length of time which patients have to wait for treatment which matters most to them—not the total number on the waiting list.
Since the health service reforms were introduced in April 1991 the number of patients waiting over a year for treatment has fallen by nearly 100,000. And over the

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past five years the average waiting time for treatment has fallen by four months. Clearly these are very substantial improvements.
Meanwhile, hospitals are treating more patients—about 1 million more each year than they were before the reforms were introduced and about 3 million more a year than when this Government took office.
Clearly such improvements may be due in part to the generous financial settlements which successive Secretaries of State for Health have achieved for the NHS in recent years. The Opposition quote frequently their figure of £1.2 billion, which supposedly has been the cost of implementing the Government's NHS reforms. Quite apart from the fact that they include in this figure, for example, the cost of employing 100 extra consultants to provide care directly to patients they ignore the point that there has been an overall increase in health spending of some £9 billion since the reforms were introduced.
Clearly this is a substantial sum. But if we are to judge the success of health policy itself we must try to isolate the effect of this increase in funding. Since 1979 the number of patients treated in hospital has increased by nearly three times as fast as spending, when spending has been adjusted for inflation in the health service. Since the introduction of the reforms, efficiency has increased even more quickly.
In addition, although the needs of the staff who work for the NHS are important, the health service is now orientated more towards the needs of the patients themselves. Even more fundamentally, the health of the nation has improved in recent years. This is a sign not only of a more health-conscious and prosperous society but of a more health-orientated health service. The health reforms provided a basis on which both the Patient's Charter and the Health of the Nation initiative could build.
Clearly, we have a substantial amount of evidence on which to evaluate the effect of the reforms. I am sure it is the hope of those on this side of the House that all noble Lords will feel able to acknowledge it.
Lord Chappell: My Lords, before the noble Baroness sits down, I should like to ask her this. Will she say what she thinks the Government should do to recover the public money that has been wasted in Wessex?
Baroness Seccombe: My Lords, we should wait to hear what the Minister has to say in reply.
6.16 p.m.
Baroness Dean of Thornton-le-Fylde: My Lords, I am obliged to my noble friend Lord Dean for putting forward this Motion for debate. The costs and benefits of administration need to be evaluated. I agree with the noble Baroness, Lady Miller of Hendon, that we should speak out in support of the health service. The criticisms are put forward in a constructive way that is concerned with the health service that we dearly love, dearly need and dearly support. That is the case across all parties; this is not a party-political issue.
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The integrity and commitment of the staff who work in the health service and the care that they give is not challenged or criticised by me or, I am sure, by any Member on this side of the House. It is against that background that this kind of debate needs to take place. I say to the noble Baroness, Lady Seccombe, that the issue will be debated time after time because it goes to the heart of the kind of nation that we have and the health provision that we need to make for the people.
The UK spends approximately £580 per capita per annum on health provision. Germany and France spend more than £1,000 and Italy spends in excess of £700. So the fact that we are spending less makes it even more important to ensure that what we spend is spent properly and has a direct impact on patient care. We should not spend on administration £1 more than we need to ensure the efficient running of the organisation.
Ministers are fond of trotting out figures about the reductions in waiting lists and in the unit costs of the number of patients treated. But I question whether that is totally related to the introduction of the internal market. Could not that have been done without the major changes which are being driven through the health service? Could not targets have been set for waiting lists? After all, the Citizen's Charter was brought about by a central initiative by the Secretary of State for Health. Furthermore, the waiting list initiative is not directed to the internal market but was brought about by a central initiative.
The National Health Service reforms are the most fundamental since it was founded. And yet, it is quite incredible to believe that an organisation which is the largest employer in Britain, with a million employees, faced those fundamental reforms without having in place before they started any mechanism with which to evaluate the changes as they were being driven through. I suggest that those changes were introduced for ideological reasons and they were put in place without those measurement provisions going alongside them.
Before I deal with the evaluation, perhaps I may deal with the reports in the media and the Public Accounts Committee and the surveys the health service unionUNISON—and the Royal College of Nursing with regard to waste in the health service.
I gather that it cost something like £1.2 billion to introduce the changes which we are facing. That is a lot of money. Whether that is too high or too low an estimate, a lot of money was certainly spent on the introduction of the changes. I wish to highlight certain areas in which instances of waste have occurred. I know that the Secretary of State visits hospitals, and I welcome that. But I wonder whether the reported £15,000 spent by Charing Cross to clean the hospital before she visited it was absolutely necessary.
Nottingham Health Authority has been criticised by the district health auditor for reaching an agreement with a private company called Regency Park to set up and to run a drug and alcohol unit which the district auditor said spent £1.8 million unlawfully. I wonder whether that could have happened before the changes to the internal market.
St. Thomas's lost £370,000 when the Belmont Ambulance Service went into liquidation. I am

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concerned, as I am sure are other noble Lords, about press reports that Guy's is letting out hospital apartments because it must get money from somewhere and it is to be moved to St. Thomas's. It was reported yesterday that senior consultants are resigning because of the changes which are taking place. When the London Ambulance Service's computer-aided dispatch system failed, it cost the health service £1.5 million, which could have been spent on patient care.
My noble friend Lord Dean referred to the evaluation of the benefits and I agree that there must be an objective evaluation of the costs and the benefits. I wonder where those benefits are. We were told that the money would follow the patient; but does it? Certainly local purchasers decide where they will award the contracts, but the patient has no say in that. I should mention fund-holding GPs. It is said that there is now a two-tier system and that is denied by the Department of Health. However, we read reports of a two-tier system whereby GP fund-holders are receiving preferential treatment for their patients in hospitals because those hospitals are desperate for the funds which they receive for the treatment.
Indeed, I was interested to note that Dr. David Todd, who is president of the Association of Fund-Holding Practices, said that he would not take any more patients who have learning disabilities because they are expensive to look after. I wonder whether we shall begin to read reports—and I hope we do not—about doctors refusing to treat patients who have expensive health requirements.
We read reports about increased bureaucracy. Civil servants will know how easy it is to castigate people for that. However, there has been an increase of something like 246 per cent. in senior managers between 1989 and 1992. I wonder whether that was a good use of National Health Service budget money.
I do not criticise managers as a group. By and large, their integrity, commitment and professional ability is to be admired. But if you set up an internal market which requires the creation of a team of people to negotiate with the hospitals from which they will purchase contracts and which requires the hospitals, in turn, to set up a team of high calibre managers to negotiate the costs of those contracts, of course it will be necessary to increase bureaucracy. I wonder what benefits we receive from that.
I do not believe that the changes have helped staff. Many on low wages have even received pay cuts. There is job insecurity and there are redundancies and casualisation. I hope that the Government's acceptance of the Pay Review Body's report last week does not mean that the hospitals will have to fund that increase without any additional resources, because that may well stretch the line to breaking point.
I gather that a closed conference of insurance companies is taking place today which deals with the cost to them and their clients of stress among the workforce. The levels of stress of health service staff should be taken into account when evaluating the changes which the health service faces.
When the Minister replies, will she tell us what evaluation is to be put in place? I have the document
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from the Secretary of State relating to codes of conduct and accountability, to which responses must be in by April. That has come almost three years after the first wave of trusts. In it the Secretary of State refers to the implications of the Cadbury corporate governance report. If one is talking about the private sector and company reports, it is important to note that the private sector must take into account its responsibilities to its stake holders. I agree with the noble Baroness, Lady Seccombe, that the main stakeholders in the health service are the patients and it is with them that the accountability must lie.
Of course, companies have a shareholders' meeting once a year. At that once-a-year shareholders' meeting not only are the accounts presented—as will be required, rightly so, under the new accountability provisions—but a board of directors is also elected. There is no election of directors for trust hospitals. It may be that that should be looked at and, indeed, I urge the Government to do so. The requirement to have one meeting per year does not really provide a benefit from the changes for the local community.
Another area which exercises my mind is that GP fund-holders are upgrading their surgeries, and rightly so, especially in London. They are all introducing computer systems. Why does not the Minister look at the pilot scheme which is taking place in north-east Westminster where Kensington, Chelsea and Westminster GPs are, as a group, looking at computer provision? That would save money.
6.28 p.m.
Lord Kilmarnock: My Lords, I am grateful, as I am sure we all are, to the noble Lord, Lord Dean of Beswick, for giving us the opportunity of this debate. I am not going to follow him into the labyrinth of the Wessex saga although, of course, I deplore it and I share the noble Lord's high opinion of the work of the Public Accounts Committee in another place. I wish to pursue the wording of the Motion on a wider front.
I am a supporter of the reforms, not because I wish to see the National Health Service destroyed but because I want it to survive and be effective within the cost constraints which will confront any government in the future.
Recently, there was considerable controversy over the additional management costs occasioned by the Government's reforms. Those have been unfavourably contrasted with the slower growth in funds for clinical services. I have with me a sheaf of a couple of dozen press articles from the past three months or so, virtually all of which are critical of the new management arrangements.
I have been persuaded that the National Health Service was previously undermanaged. That has been accepted, even on the Left; for example, in an article in the Guardian on 10th January by Will Hutton. In the Independent on 24th November of last year a journalist wrote:
"The sham accountability typical of the service's management until Margaret Thatcher set her sights on it was hardly appropriate to run a school tuck shop let alone a state service with an annual expenditure of £26 billion".

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I presume that figure referred to England because, of course, it is higher for the United Kingdom.
Under the present structure it seems obvious that if health authorities are to act as purchasers, and trusts and other bodies as providers, there will be a need for additional management on both sides of the transaction. However, as regards actual costs, we seem to be in a slippery area. It may be that much of the uncertainty derives from a confusion over definitions, as I believe has already been suggested. Who is a manager? Who is an administrator and who is not? Have some people who were previously classified as medical staff, such as senior nursing officers, been moved into the administrative category, as I believe is the case, and if so how many? We need to know these things.
I do not believe it is good enough for the Government to hide behind the twin formulas that this information is not available centrally or could only be collected at disproportionate cost, because there is public concern on this whole question of managerial costs. Whether or not that concern is misplaced remains to be seen. This is a field in which Parliament has a legitimate interest.
Basically there are three sets of figures which have attracted my attention and have, I suggest, contributed to the general confusion. The first is that general and senior managers now make up about 2 per cent. of the workforce and their salaries account for about 1.3 per cent. of the total budget. This information was kindly given to me by the noble Baroness Lady Cumberlege in a Written Answer on 7th December last. If you add in the overheads associated with these jobs, this presumably squares with the Prime Minister's recent reply to Mr. John Smith that,
"administrative costs in the health service are about 2 per cent. of total costs".
He went on to add that few companies can match that.
However, on the previous day, in a Written Answer in another place, Dr. Mawhinney listed,
"administrative costs as a percentage of total revenue expenditure for the NHS in England"
in a table running from 3.7 per cent. in 1986–87 up to 4.6 per cent. in 1990–91 and falling back to 3.4 per cent. in 1992–93.
Shortly afterwards, on 16th December, Mr. Blunkett, the Opposition health spokesman in another place, issued a press release accusing the Prime Minister of having misled Mr. Smith and estimating,
"administration as a percentage of the budget"
for the NHS in England in the year 1992–93 at 10.8 per cent. I believe that was probably the figure to which the noble Lord, Lord Rea, was approximating.
Somewhat confused by now, I turned to the Annual Abstract of Statistics for the United Kingdom 1994, table 3.3 on page 45, where I found that figures for administration of,
"hospitals and community health services and family health services"
have only increased modestly in real terms over the past eight years. In 1985–86 the relevant sum, in round figures, was £475 million for administration out of a total of £16 billion, while last year the comparable figures were £1,250 million and £32 billion respectively. This is, of course, a rise in real terms but not a
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dramatic one. In the earlier of those two years the administrative proportion was about 3 per cent. of the total and in the latter—that is, last year—about 4 per cent. These percentages are not far out of line with those given by Doctor Mawhinney on 6th December for England only.
Moving one's eye down this table one finds that the item called "departmental administration"—which presumably covers the Department of Health and its outposts—was little more in real terms last year than it was in 1985–86 and stands in still at about 1 per cent. of total expenditure. However, the rather cryptic item described as "other central services" shows a sharp rise from £283 million in 1985–86 to £71 1 million last year, which represents a significant climb in real terms. I hope the noble Baroness can throw some light on that, because I am afraid I have failed to identify its component parts.
If these three items are taken together—hospital and community health and family health services; departmental administration; and other central services, whatever they may be—they account for approximately 7.5 per cent. of total National Health Service expenditure in the UK last year, which falls almost exactly halfway between what I shall call the Mawhinney and the Blunkett estimates.
My central estimate of 7.5 per cent. might be thought not unsatisfactory for such a large and complex organisation, particularly as it subsumes administrative costs, which were always there and which will therefore reduce any increase that may be attributed to recent reforms. Mr. Blunkett's estimate may seem too high for comfort, though perhaps not grounds for panic, in view of the uncertainty over reclassification. But, either way, it is obviously unsatisfactory that we do not really know whose figures are correct.
I understand the argument for devolution, for allowing devolved bodies to hire the staff they believe they need and to pay them rates that reflect local labour market conditions. I applaud that. But devolution needs to be accompanied by accountability and by openness as to both costs and benefits. Not many people are going to have the time or the determination to pick their way through regional or trust accounts. I believe the Government owe it to the public—and to themselves if they wish their reforms to succeed—to help the public understand what is going on and why. If they do not, they are in grave danger of losing the argument. The Mawhinney-Blunkett gap needs to be bridged.
If costs are difficult to measure, so are benefits, as the right reverend Prelate said. The Government will be able to claim better bed usage, more patients treated, a greater proportion of day patients, shorter waiting lists in some specialties, and so forth. But we need to ask ourselves to what extent this higher turnover of patients is beneficial and I will come back to that shortly.
I now wish to make two suggestions. First, if it is truly too difficult or too expensive for the Government to collect the information I am trying to tease out, they should in my view commission some research into management costs from a competent body. The agency that springs to mind is the Audit Commission. Mr. Foster, the controller, is reported to have told a

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conference at the end of last year that there was a strong case for an overall study; what he called a "total piece of work". He added that such a study would inevitably be highly politically charged, I do not know that that necessarily rules it out. As I have said before, the NHS is not suddenly going to bow out of the political arena, and therefore politicians should have the proper tools for their discourse. If a large study would take too long or cost too much, some comparative studies of a number of sample districts could be the best way ahead.
If the Economist of all papers could express a fear that management may be diverting resources away from patients—as it did on 9th October last year—there is obviously a case for sharp scrutiny. I understand that the Secretary of State commissioned an inquiry into this allegation and it was carried out by Kate Jenkins, formerly of the Government's Efficiency Unit. Has that ever been published? I am bound to say I have not seen a copy and I do not know whether it is in the public domain.
There is a second piece of research, perhaps more important in the long run, which I believe should also be commissioned. This should scrutinise the outcomes and value to patients of hospital admissions and it should include medical practice variation, which causes hospitalisation to vary so widely up and down the country. I should have thought that would be a proper task for the director of research and development whose department was set up—largely at the instance of your Lordships' House—with the precise aim of providing the NHS with a tool for investigating its own practices and procedures.
The research should seriously investigate whether real benefits are being derived from increased admissions and also look at the performance-related bonuses received by managers in relation to their targets. Are the targets the right ones? Should we perhaps reward fewer admissions rather than more? We do not know at present, but after such a piece of research we might conclude that we should continue to reduce beds—that of course has been the trend for many years —and that we should aim for fewer admissions and more community treatment. Of course, attitudes play a large part here. Some glamorise hospitals as temples of healing while others regard them as places of inconvenience and suffering. If the latter view came, over time, to prevail the government of the day would no longer have to fight an endless political war over ward closures and would be able to put more money into public health and preventive medicine with the strong probability of a better outcome in terms of the health of the nation.
Before noble Lords start throwing up their hands and protesting "Not more research. Not more statistics", they should pause to reflect that we are a measuring society. We guide ourselves by every conceivable kind of measurement. You have only to look at Social Trends —which would hardly have been published by the ancient Greeks—to see what I mean. I therefore believe that the Government have a duty to provide us with as much and as accurate information as they possibly can in the field we are discussing this evening, or to commission it from someone else if they cannot do so.
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It is in their interest to do so because it is also the information that they require to assess the success of their policies and to secure public approval for them.
6.39 p.m.
Baroness Gould of Potternewton: My Lords, I too am grateful to my noble friend Lord Dean of Beswick for initiating this debate. As the noble Baroness, Lady Miller of Hendon, said, we have seen a basic philosophical change in the National Health Service. However, we would fundamentally disagree on the consequences and form of that change.
I wish to concentrate my brief remarks on one of the consequences of that change in relation to provision for the long-term sick, as mentioned by my noble friend Lady Fisher of Rednal. It is now the established policy of the NHS not to provide long-term nursing care for seriously dependent patients but instead to discharge them into private nursing homes at the patient's expense. I never envisaged that the NHS would resort to that. It is done in the name of good financial administration—or the cost factor, as it was referred to by the right reverend Prelate the Bishop of Chester. I make no apology for not dealing with financial details, as some other noble Lords have. Rather, I wish to concentrate my remarks on a specific case which we heard of recently and the effect on patients.
I felt a great sense of outrage when I read the report of the ombudsman on that particular case, not only because of the effect of the events on that particular patient and his family but also because the case involved a great hospital like the Leeds General Infirmary. In his damning report the Health Service Commissioner, Mr. William Reid, found Leeds Healthcare and Leeds General Infirmary guilty of a "failure in service", which was caused by the financial decisions taken as a result of the reforms of the health service.
The tragic case which was investigated by the ombudsman involved a man who had spent 18 months in a neurosurgical ward at the LGI (which is now managed by an NHS trust). His family were told by the hospital that he was to be discharged as his condition was no longer "life threatening". This man needed full nursing care, being doubly incontinent, with no mobility, and unable either to communicate or to feed himself. He also had a kidney tumour, cataracts in both eyes and was subject to occasional epileptic fits.
Against the wishes of his wife (which is a breach of the regulations) this patient was discharged to a private nursing home. His wife was told that she would have to pay £16,000 a year for private treatment, the Leeds health authority interpreting Department of Health guidelines to mean that it did not have to pay nursing bills once the patient had left the NHS ward. After some help from the DSS, the woman ended up paying treatment fees of some £6,000 a year—£336 a week.
We are told that the purpose of neurosurgical wards is to provide only active treatment and that the policy of Leeds Healthcare and of other trusts is to make no provision for the continuing care of such patients. Health chiefs in Leeds have admitted that regardless of who is responsible for the patient there are no NHS beds anywhere in Leeds for people who have suffered from

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brain damage. Of course patients should not be placed in inappropriate wards and may well have to be removed to be cared for elsewhere, but there has to be a clear understanding—by the patient, the patient's family and the staff—of the procedures for discharging such patients, and who is responsible for paying for their future care.
Leeds Healthcare has now apologised to the patient's wife who, with the help of the Leeds Community Health Council, reported the plight of her husband to the ombudsman, and is making her an ex-gratia payment for the nursing home costs she has incurred over the past three and a half years. It will pay the costs in future. It has also agreed to consider other similar cases where patients have been forced to pay for care after being asked to leave NHS beds. The question is: why did it not pay it in the first place?
It is a tragedy that it was necessary for the man's wife, at a time of great stress, to have to take her case to the ombudsman to get free care for her husband. She took that action only after discussions with the health authority had broken down. But without her action other patients would have continued to be denied that care, care that is theirs by right.
However, Leeds acted no differently from other health authorities. Two years ago, following a case involving the Cambridge health authority and as a result of other similar cases, the health ombudsman called on the NHS to provide long term health care for patients with chronic conditions —a call that was ignored. The NHS Chief Executive stated that there was a duty on the health service to provide care without charge but "within the resources available", and Ministers declined to review the position. I hope that today the Minister will be able to indicate to us the number of other patients in this country who are similarly having to pay themselves for their long-term care and whether a study is being made to review their cases.
The majority of people assume that as long as they pay their taxes and their national insurance contributions, they will receive the care that they need when they need it. That is what they think they are paying for. They have no knowledge of the various pieces of complex legislation brought in by the Government and the effect that they will have on their lives. People suffer a terrible shock when they discover that the help that they expected is no longer available to them. In the words of Philip Hunt, director of the National Association of Health Authorities and Trusts, most people are not aware of what the NHS rules are.
The need for clarity has become greater with the implementation last year of the National Health Service and Community Care Act. Thousands of patients have fallen into the gap between the health and social services, resulting in people, many of whom are themselves elderly and in poor health, being forced into poverty and into selling their homes and personal belongings in order to find nursing home fees for elderly relatives.
The statement by the Minister—the noble Baroness, Lady Cumberlege—that there is a clear obligation on health authorities to pay for the continuing healthcare of
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seriously ill patients is therefore welcome. We hope that the reality of that statement will mean that there will be an open debate on long-term care, clarification of the boundaries of the responsibilities of the NHS and a clear definition of the term "seriously ill". Appreciating that the ombudsman's ruling will have severe cost implications for the service, there must also be an understanding of where the resources are to come from to provide the care which the Minister so rightly says is the obligation of the NHS.
I must stress that this is not a question of the nature of the care provided but of the availability of that care on the NHS. It is a question of a commercial health service which is profit driven and of providing care when people most need it. The Government have an absolute responsibility to provide that care. Urgent action is required to ensure that there is a reversal of the slow but steady drift away from providing care and services under the NHS.
The so-called reforms in the health service have created waste on a massive scale, as we have heard from so many noble Lords today. A total of £1.8 billion has been wasted on extra bureaucracy, computer scandals and a luxurious new management centre. That £1.8 billion could have been spent on better services for patients, better equipment for hospitals and the financing of long-term care.
6.48 p.m.
Baroness Robson of Kiddington: My Lords, I should also like to thank the noble Lord, Lord Dean of Beswick, for introducing the debate. On behalf of all the noble Baronesses who are taking part in this debate, I should also like to thank the two noble Lords who have been courageous enough to join us in the debate.
Much has been said this afternoon by various Members of your Lordships' House with which I agree. A noble Baroness opposite mentioned that we seem to have these debates fairly frequently. We have them because we are all concerned. We want to know the real answers. We have them, too, because we know that the people we meet around the country are deeply anxious about what is happening to the NHS under the new purchaser/provider system. They are anxious because they do not know who to believe. They do not know whether the information available from the statements by the Secretary of State is true or whether they should believe the numerous letters to the press written by doctors based on their personal experience. They read that a third of NHS beds have closed since 1981 and are still being closed in England at the rate of about 10,000 a year. However, they are then told by the Secretary of State that those beds are no longer needed. I am aware that there is a change in medical care. I accept that perhaps not all the beds were needed, but I claim that we run the risk of going too far.
Noble Lords may have read the letter in the Guardian of 14th January from Professor John Ward of Central Sheffield University Hospital Trust who has been forced to close 48 medical beds. As a result, GPs can only obtain a bed in the hospital by sending their patients to casualty. We complain that such patients fill up the casualty wards. In the Guardian of 25th January, two

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GPs from Sheffield wrote that that was the only way in which they could get their patients into the hospital. Before they resorted to that action, they had spent between half an hour and an hour telephoning everywhere seeking a bed for their patients. That is time that they could have used looking after some of their other patients. There is doubt about whether we have the required number of beds.
The noble Baroness, Lady Masham of Mon, asked a Question on 2nd February relating to the Chelsea and Westminster Hospital. At col. 1264 of the Official Report, the noble Baroness replied that,
"163 beds have not been brought into use pending the review of services at Hammersmith and Charing Cross Hospitals".
That may be so, but those hospitals were built at enormous expense. There must have been some plan relating to those 163 beds which suddenly are not required. Perhaps the Minister will clarify that point.
Other noble Baronesses have referred to statistics on hospital activity published in November. The total number of finished consultant episodes rose by 3.6 per cent. There is serious doubt in all our minds about what the term "finished consultant episodes" means. We all know that a finished consultant episode does not necessarily mean that the patient is leaving hospital. Are we comparing those statistics with previous numbers of patients in the hospital? That is not a fair comparison. More patients are not necessarily treated, because a single illness can lead to a number of so-called finished consultant episodes.
The noble Baroness, Lady Dean of Thornton-le-Fylde, referred to accountability. There are two forms of accountability. There is the accountability of the health service to the Secretary of State in Parliament. That enables MPs to ask Questions in the House; it enables us to ask Questions in the House. But how often do we receive the reply that such figures are not held centrally. That answer is not sufficient. I believe that accountability to the people is desperately important. All the new health service trusts should have public meetings and should involve the community that they look after instead of sitting behind closed doors. Above all, the trusts should give proper access to community health councils which do not have an automatic right to enter trust premises. Prior to creation of the NHS trusts, they had a right to enter those premises. Those are important points.
Finally, all chairmen and some members of RHAs, and all chairmen and some members of DHS trusts, are appointed by the Secretary of State or the Department of Health. When we hear the history of events related by the noble Lord, Lord Dean of Beswick, it raises serious questions about the judgment of and criteria used by the Secretary of State and her predecessors when they appointed those involved. I call on the Secretary of State to account for the principle of selection used. I ask her to dispel the suspicion, if she can (the suspicion is there) that pliability and political correctness, rather than independence of mind and a willingness to confront both managers and Ministers, are the main qualifications required.
Reference has been made to the increased cost of managers in the health service. In London the number
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has grown by 109 per cent. in four years. In the South West Thames Region —it is my old region and was also that of the Minister—I am told that the number has grown by 187 per cent. When challenged, the Minister often replies that those are not all new roles: they consist of both doctors and nurses who now undertake managerial roles. It does not matter who they are. The point is that, if they are doing managerial tasks, they are not engaged in hands on care. They are working as managers. Are their salaries included in the increased cost of management, or are they still taken from the medical and nursing salaries?
Only two weeks ago we had a debate on quangos initiated by my noble friend Lord Bonham-Carter. I have always suspected that the Department of Health was in the forefront of creating quangos as a means of pretending to deal with problems instead of taking decisions. Since becoming Secretary of State Virginia Bottomley has created 20 of these quangos, one for every month that she has been in office. She calls them task forces. Each sometimes has as many as 14 members, a chairman and representatives from government ministries. The cost of those quangos is conservatively estimated to run into millions. Those task forces usually become established as a result of some disquiet about tragedies or mismanagement in the NHS. One of the task forces was established in July last year, I suspect as a result of the scandal over the Wessex computer and the West Midlands scandal.
The task force reported in January under the title Public Enterprise Governance in the NHS. The report was published for consultation until 8th February. It is a good document, but I do not believe that work by a large number of people over a period of six months was necessary to produce it. I wish to quote some basic facts from the document, which says that the principles are: accountability, probity and openness. Under "Integrity", the report says:
"As a result, the task force calls for the NHS to adopt explicitly and formally, at a national level, a commitment to traditional public service values. It believes the sanction of dismissal should be used against anyone—chairman, director or employee—who fails to abide by those values".
The report states, under the heading "Making Boards Effective" that they should meet regularly, retain full and effective control and monitor executive management. You, I or anyone could have sat down and written that prescription for how to run the various trusts and DHAs. The recommendations are all important, but they are hardly new. Yet it took 14 people six months. I hope that we can avoid such things in the future.
7 p.m.
Baroness Jay of Paddington: My Lords, I am very grateful indeed to my noble friend Lord Dean of Beswick for introducing this debate. As several noble Lords have mentioned, we have discussed the health service quite often in your Lordships' House recently. However, the question my noble friend has raised today really goes to the centre of all our discussions. It is: are we or are we not getting a better health service as a result of the extraordinarily expensive upheaval which has gone on in the last few years?

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Of course, there is need for a proper evaluation, both at the local level—as my noble friend Lady Fisher suggested —and at the national level. The new system is, after all, now in its third year. There was discussion, before it was introduced, about the potential need for pilot programmes. I think that many of us who were not able to take part in debates in your Lordships' House at that time would have supported that suggestion.
Today, however, we are faced with a system which is up and running and which, I think it is widely agreed, has been expensive. The noble Baroness, Lady Cumberlege, and some of the noble Baronesses sitting behind her, persist in doggedly asserting that the costs of the introduction of the new system are greatly outweighed by the benefits. It is up to them, as the noble Lord, Lord Kilmarnock, suggested, to prove to those of us who are perhaps more sceptical that the benefits—particularly those to patients—are as clear and obvious as the costs certainly are.
Unfortunately, one of the major problems about the administrative changes is that it is difficult to obtain accurate and comparative information about what is going on. Noble Lords have mentioned the interesting debate last month in your Lordships' House, initiated by the noble Lord, Lord McColl of Dulwich, about the need for improved public information systems in the NHS. Several speakers referred then, as they have done today, to the secrecy of independent trusts which prevents both local and national data being easily available.
As the noble Lord, Lord Kilmarnock, said, on other occasions noble Lords have been frustrated by ministerial replies which so often state that the facts requested are not centrally available or are not gathered in the form requested. I must say that in addition to that particular problem, I was unpleasantly surprised to hear the Secretary of State for Health just last week in another place query the cost of parliamentary Questions on health. It almost seemed as though she was denying the right of Members of both Houses to seek information which I feel should automatically be in the public domain.
The internal market systems are themselves making it extremely difficult to assess those systems. We were told yesterday by the noble Baroness, Lady Cumberlege, that Professor Alan Maynard of York University, a leading health economist, is now looking at some of the complicated questions of funding and capitation. Professor Maynard wrote recently that,
"the effects of the reforms are unknown due to the Government's decision not to evaluate them".
I do not know whether that decision reflects complacency or fear of what a proper evaluation might discover. Luckily, we have other sources of information and other means of evaluation. The National Audit Commission, now led by Mr. Andrew Foster, who was previously deputy chief executive of the National Health Service, seems to be leading the way on this. Mr. Foster is clearly becoming what I suppose one might describe as an effective gamekeeper turned poacher. He publicly stated a few months ago that there are legitimate questions to be asked about whether we are getting value for money from the administrative
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changes. The National Audit Commission has set up a series of inquiries to investigate trust hospitals and healthcare quality. They should produce interesting, hard evidence of precisely what is going on by the end of this year.
In the meantime, what do we know and how do we evaluate it? Noble Lords, particularly my noble friend Lord Dean of Beswick, in introducing the debate, and my noble friend Lady Fisher of Rednal, have rightly drawn attention to the appalling examples of scandals among certain health authorities which have now become a national disgrace, nationally noticed and recognised. It is important that we do not ignore those facts which have been revealed—the facts to which noble Lords have drawn attention in Wessex and the West Midlands. We must try to put those facts in the context of the national picture.
Perhaps we should, again, go back to some of the more mundane facts and put on the record once more some of the more practical examples of the enormous costs of the administrative introductions and changes to which the Motion draws attention. We know that it cost £40 million of health service money to set up the first wave of trusts. We know that £73 million was spent on advertisements and on establishing the so-called "corporate identity" of the trusts. Noble Lords have referred to the enormous explosion in people employed at senior levels in the National Health Service. My noble friend Lord Rea talked about the figure increasing by an astounding 230 per cent., as did my noble friend Lady Dean. We are told that some of that substantial increase is because nurses have been regraded as managers. If that is true, it is the most extraordinary own goal by those people who seek to tell us that the reforms are producing more benefits than they are producing costs.
The costs of the senior managers rose from £30 million in 1988 to £494 million in 1993. However many nurses were regarded as being part of the senior management echelon I cannot believe that they were instrumental in pushing up the costs in that way. The national pay norms for nurses were 1.5 per cent. but managers' salaries increased by approximately 9 per cent.
It is unfair to suggest that the increase in managers is largely reflected in regradings. My suspicion is that when one wants to look for accuracy it is perhaps reflected in the rather brief but bitter letter in the Guardian yesterday. It states that in the newspaper's recent advertising columns for jobs the Department of Health was said to be seeking for the National Health Service a director of human resources at £90,000 salary. The advertisement added:
"An understanding of the NHS would be an advantage".
The writer of the letter says:
"That explains everything we need to know about the NHS!"
At the Conservative conference last autumn, the Secretary of State, perhaps reflecting some of the concerns about the enormous inflation in the numbers and salaries of managers, said that we must have tough controls on the costs of administration. Later in the autumn we had the Statement, which was the follow-up to the Langlands review, talking about the abolition or gradual phasing out of the regional health authorities.

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The Government congratulated themselves on reducing the bureaucratic, heavyweight nature of the regional structure. But, in fact, just three weeks ago, Mr. Alan Milburn, Member of Parliament in another place, succeeded in achieving, by his own efforts in writing to the regional health authorities, the information that only 12 per cent. of the recent growth in the number of managers had been at a regional level. In the 12 health regions he surveyed he found that 1,072 new managers were employed and had been recruited for the regional health authorities whereas there were 8,610 new managers working in local trusts. The idea therefore that somehow all will be well once the regions are abolished is simply untrue.
When the Secretary of State introduced the new management proposals she spoke of a "light touch" in relation to management organisation through the regions. That raises the question mentioned several times this evening of whether the idea of a "light touch" sits well with the question of accountability.
Several speakers have referred to the report of the Public Accounts Committee, Proper Conduct of Public Business, which talked about the need for the health service to be more tightly, rather than more lightly, managed. Several noble Lords have referred to the new codes of conduct and accountability which the Secretary of State has recently introduced. But as the Public Accounts Committee said, it is not looking for more detailed rules. Perhaps I may quote again:
"We emphasise we are not calling for any more detailed rules. Almost every case that we have examined involved breaches of existing rules of guidance".
What it was seeking—what we all seek—is a change in the atmosphere and the nature of the conduct of public business in the health service and indeed in many other areas of public life. So although, like the noble Baroness, Lady Robson, I welcome the codes of conduct and accountability which have been produced, I believe that they do not get to the root of the problem, which is the question of the change of culture which has happened and the change back to public service values which we need.
Obviously many noble Baronesses have concentrated on hospitals. But my noble friend Lord Rea also mentioned some of the issues in primary care and the increases in the costs of organising the new GP fund-holding system. Again, how do we know how much they cost? Where is the proper evaluation? One pressure group, the National Health Service Support Federation, has identified some figures. It says that an estimated £55 million a year is being spent by purchasers and providers negotiating and managing fund-holding contracts and budgets. Management allowances totalling £49.8 million were given to English fund-holders between 1990 and 1993. The group says that budget underspends retained by fund-holders added up to £14.5 million in 1991–92. Those are all costs which no doubt the Minister may challenge. But the problem remains that of access to information and evaluation.
Against all those costs how is the benefit to be measured? The Government always say that more patients have been treated. But the question raised by
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my noble friend Lord Rea and other noble Lords is whether the volumes of activity measured really reflect an increase in the number of patients being treated. I ask the Minister in her reply to explain again whether the increase in the volume of activity is a genuine reflection of the increase in the number of patients treated.
I turn to the question of waiting lists, which is more real to patients than the rather Alice in Wonderland world of government statistics on activity. We are told by the noble Baroness, Lady Seccombe, as we were in the earlier debate by the noble Lord, Lord McColl, that waiting lists are largely an irrelevance. But there is no getting away from the fact that the numbers waiting over a year for treatment rose by over a quarter between April and October last year. I am sure that the Government will not say that that is a benefit.
The fundamental problem with the whole system is the cost of two-tier fund-holding. From the patient's point of view, which should never be lost sight of, we should always address the question of whether or not the costs of creating GP fund-holding have also created a system where we get an inequitable health service. As already stated, the BMA showed that 42 per cent. of hospitals give preference to patients from fund-holding GPs.
We must have an open, nationally based evaluation of all the costs of introducing the internal market. That evaluation should be led by the Government. It should not be information painfully extracted through individual Questions in this House or the other place, or assembled by individual MPs and voluntary organisations. However—and I believe that this is fundamental to the public service ethos of the NHS—the evaluation must not simply be a financial profit and loss account. The bottom line judgment on the health service is about improved patient care and the improved health of the nation. If the administrative changes mentioned in my noble friend's Motion do not secure those improvements, then none of the additional £1 billion cost can be justified.
7.15 p.m.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege): My Lords, I am very grateful to the noble Lord, Lord Dean of Beswick, for this opportunity to set before the House the remarkable record of the Government in improving the National Health Service, particularly since the reforms of the service.
The noble Baroness, Lady Jay, is absolutely right when she says that it is important that the benefits outweigh the costs. But the NHS needs to be seen in context. To be effective it must be part of the culture of today's society. What was organisationally right in 1948 is irrelevant today. It could no longer remain a towering monolith, over-administered and chronically under-managed; it had to join the enterprise culture which pervades today's world and which delivers the services that people want.
It was Sir Roy Griffiths who in 1983 was commissioned to examine the management of the NHS and who left us in no doubt that it was monolithic,

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inefficient and a low achiever; and that what was needed was more and better management. But moving out of the greyness of socialism into the light of enterprise, is a shock.
Managers, doctors, nurses and those in ancillary services now have to show measurable results. Trust hospitals have to prove their worth and GP fund-holders their skills, not only in providing a wider range of local treatments but in their use of hospital facilities. This is accountability but not of course commercial activity. The difference between the NHS and private enterprise is that health services are not measured in pounds profit, but the effectiveness of treatments delivered. The NHS has had to become not a patronising "take it or leave it" state service, purveying political pills, but a cooperative between the people dedicated to providing the service and those who use it.
Unlike private enterprise the NHS uses public money and must always be accountable to Parliament and to the people. It has to be transparent in all its dealings. Managing in a goldfish bowl is daunting, but essential where taxpayers' money is concerned. The Audit Commission, the National Audit Office, the Public Accounts Committee, MPs, internal auditors, the non-executives and chairmen of trust boards and health authorities and community health councils all have a watching brief. But it is not the watchful eyes of the auditors which have made health authorities want to be more open; it is their wish to purchase the services which people want.
As a consequence they not only hold public meetings but hold their meetings in public. They produce leaflets and newspapers, have established focus groups, drawn up community care plans in partnership with local people, conducted satisfaction surveys and consulted directly and through the media. They are conscious that they are champions of the people and have to purchase the services which not only provide value for money but are quality services which people want.
Trusts, anxious to win contracts also recognise the importance of not only making their services acceptable to purchasers but of involving local people who will in turn influence purchasers. As never before, trusts are finding out what users think, be it in hospital or the community, for dissatisfied patients will lose contracts.
A great deal was said this evening about the two cases that have arisen in the Wessex and West Midlands regional health authorities. I should like to pay a tribute to the noble Lord, Lord Dean, who has been assiduous in his determination to ensure that at least the Wessex computer issue has been kept under constant review. We would not in any way want to take away from the seriousness of what has happened in either region or ignore the issues that have been raised. The Public Accounts Committee carried out a very thorough investigation and we have made a formal response. As the committee acknowledged, extensive remedial action has been taken by the National Health Service Management Executive and the two regional health authorities involved to ensure that the lessons have been learnt and the events criticised by the committee will not happen again. A new investment appraisal process has
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been introduced for information technology projects. As noble Lords mentioned, the Secretary of State is currently consulting the National Health Service on a code of conduct and accountability based on the recommendations of the corporate governance task force. It will be implemented in April if that consultation is agreed.
The noble Lord, Lord Dean of Beswick, mentioned the role of Sir Robin Buchanan. Most of the problems with the computer systems happened before Sir Robin became chairman of Wessex. He co-operated fully with the investigation and encouraged his regional general manager to take the necessary remedial action. He was criticised in two minor areas and he accepts those criticisms. But I agree with the noble Lord that some of the coverage was unjustified and even unfair.
The noble Lord also mentioned the National Health Service Supplies Authority. I should just like to say that that authority has been a great success since it was set up. It has achieved savings for the NHS of £84 million and has reduced operating costs by £20 million a year.
The noble Baroness, Lady Fisher, implied that the investment in computer systems in the West Midlands was wasted. But at no time did the district auditor say that the money had been wasted. In fact he said that the hospital information support system is probably an essential development in hospital management and the decision to implement it was correct. However, I am sure that the noble Baroness will be pleased to know that a detailed mid-term review of the project is being carried out by Coopers & Lybrand. They will carry out a full value-for-money assessment and report to both the National Health Service Management Executive and the chief executives of the hospitals comprising the Midlands consortia involved in the project.
The enterprise of the NHS management has improved productivity well beyond the high standards set by British industry; and we have only just begun. Tonight my noble friends, and in particular my noble friend Lady Seccombe, have clearly and succinctly pointed out that the statistics are impressive.
The increase of 32 per cent. between 1978 and 1991 in output per person employed in the hospital and community health services compares with an increase for the UK economy as a whole of 23.2 per cent. In the 1980s we increased the number of extra people treated from 1 per cent. per annum to 2 per cent. Now we are moving up a gear. Since the reforms the increase has been not 2 per cent. but 5 per cent. per year; or to put it another way 417,000 extra patients treated every year. That is the equivalent of treating the entire population of Somerset every year; or, in deference to the noble Lord, Lord Dean, who I know is a supporter of Manchester City FC, a capacity crowd at Maine Road not just tonight or tomorrow night but for 12 nights running.
Last year we set the NHS the target of increasing productivity by 1.75 per cent. above the increase in resources. The service has exceeded that target. This year the target is 2 per cent. and looks certain to be achieved. For the coming year the target is 2.25 per cent. and we fully expect that to be beaten again, thereby releasing a further £450 million to be spent on patient care. That is enough to buy nearly 118,000 hip

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replacements or to equal the annual turnover of a major commercial business like the Legal and General Insurance Company.
Taken against the more modest performances of the Lloyd's insurance markets and the main clearing banks in the same period, the health service has embraced the enterprise culture with flair, care and responsibility, and with the determination to succeed.
We introduced the Patient's Charter so that we had standards by which to judge the service. Before the reforms there were 51,000 people awaiting treatment for more than two years. Today, there are none. The average waiting time for treatment was nine months. Now it is five months.
The noble Baroness, Lady Dean, questioned whether that would have happened without the reforms. I have to say, as one who has been responsible, that waiting lists do need management. I know also that the reforms have had enormous impact in terms of the competition that they have generated. Credit for that must go not only to the clinicians but also to the managers. Eighty-three per cent. of people are now assessed immediately they enter the Accident and Emergency Department, which is good progress toward the 90 per cent. target. Eighty per cent. of out-patients are seen within 30 minutes. That is a huge improvement, but we must do better. I can only begin to touch on an endless list of good news and progress being made by the National Health Service. Other noble Lords have also raised those issues this evening.
What we have done in the reforms is to take a gently administered service and quite fundamentally change it into an actively managed service. In order to continue to do that, we need more and better managers. A health service which each year spends £647 for every man, woman and child in the country, £230 more at today's prices than in 1979, and a health service which is spending £100 million every day needs managing.
The increases in the numbers of patients treated, shorter stays in hospital, the reductions of waiting times, more doctors, more nurses, new trusts and new GP fundholders all need management. Yet senior and general managers account for only 2 per cent. of the NHS workforce and 3 per cent. of the wage bill; and whereas 10 years ago 60 per cent. of staff were involved in direct patient care, the figure today has increased to 65 per cent.
As my noble friend Lady Miller pointed out and the noble Lord, Lord Rea, acknowledged, many nurses have been reclassified as managers when they still have a clinical role. Student nurses are no longer counted in the nurse workforce figures; even once all the adjustments are made, the numbers of nurses and midwives rose by 6,490 between September 1989 and 1992.
As my noble friend Lady Miller of Hendon said in her very knowledgeable speech, we are determined to bear down on unnecessary administrative costs. We have taken decisions to sweep away a level of administration by abolishing the regional health authorities. We intend to reduce the number of health authorities by allowing family health service authorities and district health authorities to merge. We are streamlining both the NHS Management Executive and
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the Department of Health. We are determined to allow decision-making to take place as closely to patients as possible.
The noble Baronesses, Lady Dean of Thornton-leFylde and Lady Jay, criticised the money spent on implementing the reforms. In other places the Government have been attacked for spending £1.18 billion on the reforms. That is considered by the Opposition to be a waste of money—money that should have been put into patient care. The premise upon which that is based is that by simply increasing the numbers of doctors and nurses in the health service the problems will be solved.
But industry and commerce have proved time and again that increasing resources is not enough. It is the efficient management and use of resources which is of paramount importance. Returning to the figure of £1.18 billion, what the Opposition also fails to mention is that it includes £103 million for 100 extra consultants and their support staff, and, which is much more important, £150 million to initiate quality initiatives and £221 million for clinical audit.
The purpose of the NHS is to give the most effective treatments, treatments that give the best results; and the best results can only be achieved by continuous scrutiny and assessment of an individual's performance. Clinical audit, with doctors and other professionals critically analysing their care, is now undertaken regularly and systematically —which gives the lie to the cheap jibe that we know the cost of everything and the value of nothing.
The noble Lord, Lord Rea, and the right reverend Prelate the Bishop of Chester asked why no formal academic evaluation of the NHS reforms has been carried out by the Government. Other Members of your Lordships' House also raised that point tonight. But the NHS is an enormously complex organisation, and the reforms have been described as one of the largest exercises in change management ever carried out. The reforms involved a number of strands: the separation of purchasers and providers; increased delegation to trusts; improved audit arrangements; and the development of fund-holding. It is unrealistic to think that a formal evaluation could be undertaken in a reorganisation of this magnitude. We simply could not have waited upon the results of a long academic exercise before taking the steps that we considered necessary.
The problem with pilot schemes is that they take a year or so to set up; and must run for three or four years at least in order to prove their effectiveness. They then take another year or so to evaluate, and after five or six years the world has simply moved on. So we preferred an evolutionary approach with local people deciding for themselves whether they want to become trusts or fund-holders. In three years we have been amazed at the developments that have taken place. As my noble friend Lady Seccombe said, over 90 per cent. of hospital budgets will be held and managed by trusts, and one in three of the population will be part of a GP fund-holding practice.
I can assure the noble Baroness, Lady Fisher, that GP fund-holders do have access to all National Health Service hospitals. They are part of the NHS, as are

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trusts. The noble Lord, Lord Rea, and the noble Baroness, Lady Jay, criticised the costs of fund-holding. However, the administrative costs represent only around 2 per cent. of fund-holding budgets. Fund-holders have generated real benefits for patients both in reducing the cost of hospital treatment and improving the quality of service that patients receive. And we are getting better at evaluating what we do. There is a new drive to translate research funding into clinical practice. Purchasers are critically assessing the effectiveness of the treatments that they buy.
I agree with the noble Lord, Lord Rea, and the noble Baroness, Lady Dean of Thornton-le-Fylde. Of course many of the changes cannot be ascribed solely to the reforms. Medical advances are occurring all the time. But the reforms have set a framework and provide a new impetus towards improvement. Again, it would be unwise of the Government to say that because of the reforms more people are alive and well. None the less, real improvements are taking place.
As my noble friend Lady Miller of Hendon said, with her day-to-day knowledge of primary care, we are also trying to alter the emphasis of the NHS towards promoting health and preventing disease. The noble Baroness, Lady Fisher—I know a doughty fighter for the people of Birmingham—pointed out some of the sickness rates in the city. That is why we launched a major policy initiative entitled "Health of the Nation", which was warmly acclaimed by the World Health Organisation. Part and parcel of that policy is careful monitoring—indeed, we have just published a report entitled One Year On.
The noble Lord, Lord Kilmarnock, mentioned the financial efficiency of the National Health Service. I am not in a position to know the press cuttings that he has. But I know that the Audit Commission identified significant improvements in financial performance in the NHS in its 1993 national management letter to the NHS policy board. The number of district health authorities rated as good or very good increased from 49 to 84 per cent. in 1991–92 when compared with the previous year. Similar improvements were identified for family health service authorities and 85 per cent. of first wave trusts were rated as good or very good in the area of financial control.
Lord Kilmarnock: My Lords, perhaps the noble Baroness will forgive me. I was not criticising the general message that emerged from the annual abstract of health districts that I read out. Can the Minister identify for me—perhaps in writing—the item I raised on other government expenditure as I was unable to identify to what it should be attributed?
Baroness Cumberlege: My Lords, I am aware that many questions were raised tonight, not all of which I shall be able to answer during the course of the debate because time is moving on and the debate is time-limited. Perhaps I can take up that specific point with the noble Lord outside the Chamber.
The noble Baroness, Lady Gould of Potternewton, cited the recent case that had been investigated by the health service commissioner concerning a severely
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disabled patient in Leeds. As the noble Baroness said, the Leeds General Infirmary apologised and made an ex gratia payment and reviewed its policy. But I stress that those events occurred before the Community Care Act was introduced. In future, before people are discharged from hospital they must be assessed, and the assessment must be carried out in consultation with both the patient and carer. As the noble Baroness said, the policy is quite clear and it is something that we shall be monitoring with due diligence.
The right reverend Prelate the Bishop of Chester mentioned an individual who had to wait for an investigation. I am always prepared to take up individual cases. But I make the general point that prior to the reforms, people also had to wait for treatment and the NHS had a long history of running out of money before the end of the year. We are trying to manage that position so that it does not happen in the future. When visiting hospitals, that is always the question I ask; and I can say that progress is being made.
The noble Baroness, Lady Robson of Kiddington, asked specific questions about the Chelsea and Westminster Hospital and the 163 unused beds. When the hospital was designed it was anticipated at that time that the accident and emergency department would close at the Charing Cross Hospital, which clearly would have a major impact on the new hospital. But as the noble Baroness said, that is subject to review at the moment, and your Lordships will be aware that there will be some decisions concerning London made in the near future.
The noble Baroness also suggested that integrity and independence of mind should be the criteria for appointments to non-executive positions on health authorities and trusts. The noble Baroness is absolutely right. That is why three speakers in the debate tonight hold appointments made by my noble friend the Secretary of State, and two of them sit on the Opposition Benches.
Baroness Jay of Paddington: My Lords, I know that it is a timed debate, but perhaps the Minister will allow me to intervene. Several times in the recent past she has publicly referred to my being a member of a local health authority. I should like to place on record that I do not regard myself as being someone who has had the advantage of Government patronage. I have been on the health authority for over 20 years and served for a long time before it became a paid position. It is also the case that when it was suggested that I become chairman of the district health authority, I was politically vetoed.
Baroness Cumberlege: My Lords, I am in no way critical of the appointment of the noble Baroness to the health authority. I appreciate that she has made a major contribution to the National Health Service over 20 years or possibly more. I am not critical; I merely praise my noble friend the Secretary of State who reappointed her on one or more occasions.
Like those industries which fail to reform, the NHS would not survive without change. People do not want to work for inefficient, badly-managed organisations that belong to the past. The NHS is and must remain part of today's world. The proof of the change is that more

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people are receiving treatment; they are shown greater respect; costs are being contained; we are meeting the needs of modern medicine; closing out-of-date buildings and opening new ones. Nothing demonstrates the commitment of this Government to the NHS more vividly than our determination to give the most treasured service the best management that money can buy. We are proud of every penny spent and deplore those who would dare to wish that the NHS should be sold short.
7.38 p.m.
Lord Dean of Beswick: My Lords, perhaps I can first thank the Members of your Lordships' House who took part in the debate. There were differing views but nevertheless it was an interesting discussion. I am sure that we shall return to it as the effects of the changes about which we have been speaking unfold. I thank the Minister also for the way in which she replied to the debate, so long as she does not hold me responsible for the rather perilous situation in which Manchester City finds itself—at the bottom of the Premier League.
I can give her an assurance that, with regard to the question of the Wessex Regional Health Authority, I pronounced its benediction and it can go to bed. But I disagree with her on one small point. The Minister indicated that I said Sir Robert Buchanan had been badly treated in some respects by the press. He pleaded blame for the lot when he was responsible for only a minor part. I do not think the Public Accounts Committee thought that it was trivia or that he was wrong about some rather serious matters. Nevertheless, that is finished with. Once again I thank all those who have taken part in what has been an interesting debate. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Dangerous Dogs (Amendment) Bill [H.L.]
7.40 p.m.
Lord Houghton of Sowerby: My Lords, I beg to move that this Bill be now read a second time. This is not exactly a maiden speech although it is beginning to feel very much like one. Everything is so strange about my present location. I feel as if I have been dragged off my platform of many years and dropped into the internal mechanism of the Table. However, I must adapt myself as best I can under the compulsion of the afflictions which old age can impose upon one. If work in your Lordships' House is to continue it has to be done under different conditions but my main point, as I feel it, is that never before have I opened a debate without a leg to stand on! I speak from a position of weakness in that regard.
This is the first attempt to amend the Dangerous Dogs Act 1991. The amending Bill, however, has little to do with dangerous dogs. It has much to do—almost everything to do—with the deeds of dangerous Ministers who created the 1991 Act to deal with what they said was an emergency. The first question I must ask is: what about that emergency? The Bill was created with excessive demands upon the loyalty of citizens and
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the people generally to meet the exceptional circumstances of the time. But emergencies are not everlasting. What has happened to the emergency now? Is it still on? Is the 1991 Act needed any longer in full to meet the emergency of 1991? I may point to some figures later which suggest that a considerable change is taking place of which we know so little in the general trend of affairs in the administration of this legislation.
The Bill deals solely with two of the most objectionable excesses of the 1991 Act which come very close indeed to being matters of the constitution, of the rights of the citizen and of the administration of justice through the judicial system. Noble Lords will notice what strong and influential backing the Bill has received. Never before in my time has the accumulation of organisations interested in canine life come together so speedily and with such purpose to get an Act changed. I have sponsors on the Floor of the House who I am glad to see will speak later. They represent distinguished interests in your Lordships' House. The noble Lord, Lord Soulsby, would be here but for the fact that he is in South Africa. However, we have a remarkable array of influence not only in your Lordships' House but outside it and I think the Government will be foolish if they do not heed this. We are no longer a demonstrating body in Whitehall or elsewhere. We represent the sober and intellectual side of a very important question in our society; that of the relationship between man and his dog.
The Bill itself concentrates on two questions only. One is the mandatory sentencing requirement of Section 1 of the Act. The other relates to the conditions in which the citizen has been virtually deprived of his property rights the moment the police have seized part of his property, which is his dog. I shall come to the disgraceful conditions that that has led to in the administration of the Act itself.
Have these mandatory sentences a place in the Act any longer? Mandatory sentences are probably objectionable in principle. They are a denial of some part of the judicial system to which the citizen is entitled to go. If he is denied that, there is possibly a part of the justice that is due to him which he is denied. I think also that mandatory sentences leave behind one of the strongest and deepest feelings of bitterness that any contact with the judicial system can bring about.
There is a suggestion in correspondence that has been taking place with Ministers about the value of the mandatory sentence. A Home Office letter which I have before me states that it is the Government's view that the mandatory sentence,
"provides a powerful incentive to owners to comply fully with the requirements of the law".
If the severity of a sentence is to be a strong incentive to compliance with the law, why do we not have more of them? Surely the statute book should be littered with a list of crimes and offences for which the sentence is unduly severe. But it is there to provide the incentive to comply with the law.
If this is the general philosophy of what inspires people to comply with the law, I think that the Government are sadly mistaken. Instead of leading a lot of people to comply with the law it leads many people

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to feel that they want to defy it. Moreover, there is an aspect of the draconian measures taken to control pit bull terriers that comes into this. One talks about the incentive to dog owners to comply with the law. Some dog owners would like to comply with the law. They missed complying with the law when the register for exemption closed on 31st August 1991. They missed it for some reason, good or indifferent, but nevertheless a reason which may well have to be considered if justice is to be done in the future. A person who failed to register by 31st August 1991 cannot get into the register now, so he cannot comply with the law in that regard. So no severity of sentence will help him to comply with the law. The more severe one makes it, the more he is determined to avoid the law. He will do anything not to have to go to prison himself when he finds that he does not have a remedy to comply with the law.
If complying with the law depends on severity and if mandatory sentences are of great value, why have we not got more of them? What we have already is a mandatory sentence of death for treason and a mandatory sentence of death for assault on the person of Her Majesty. We have a mandatory sentence of life imprisonment for murder which used to be a mandatory death sentence. What is the other one on the list? It is for dangerous dogs. We have mandatory sentences of death for treason; for an offence affecting the Queen's bodily safety, murder and dangerous dogs. Then they say that the British have no sense of humour or of looking ridiculous. Surely, that is the most absurd list of mandatory sentences that one can imagine, bearing in mind that your Lordships' House has decided against a mandatory sentence for murder and is in favour of fixed periods of sentence; not imprisonment for life as there is, literally, no such sentence.
The idea of maintaining a mandatory sentence as a powerful incentive for dog owners to comply with the law is quite mistaken. Why then do we have to keep it? The Bill is not to disturb the general structure of the definition of the offences in the Act. The Act creates 10 new criminal offences and the mandatory destruction of the dog is involved in six of them. That is the mischief we are trying to deal with. That measure relates not only to pit bull terriers but to all dogs who are covered by another section of the Act; namely, that of being out of control and injuring any person, for which there is a mandatory sentence of destruction.
The maintenance of the mandatory sentence is of very great importance although probably of diminishing importance as regards pit bull terriers. We want to provide some way out of the deadlock which people are in if they are barred from the register and there is no way in which they can bring themselves within the law. Even if they offer to give up the dog, the police will probably tell them: "You cannot give up your dog; we are going to seize it and charge you with unlawful possession of a prohibited animal". There is no escape for a person who has missed the registration date of 31st August 1991.
The Bill provides that, where suitable, at the discretion of the magistrates, they should offer to the dog owner the opportunity of bringing his dog within
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the scope of registration by fulfilling the conditions and by adding his name specially and specifically to the list by order of the court. That is the way out for a number of people who are in the wilderness. They are in possession of a prohibited animal and they cannot do anything to get rid of this incubus around their necks. In the Bill which we have presented there is something of special value. It humanises the regime. Surely it has not to be kept at the level of 1991 emergency conditions.
The second point of the Bill relates to the shambles which followed the Government's policy of at first raking in the dogs and then housing them, identifying them and bringing them to court. The result was that many more dogs were seized than the police could possibly deal with. They had nowhere to put them; they certainly could not get them before the courts and they did not have any experts to identify a pit bull terrier. The dogs accumulated in large numbers under appalling conditions.
I had a letter from a woman who was employed in some kennels in the north of England. She left her job because she could no longer stand the appalling cruelty imposed on dogs in these kennels. Dogs were put in cages which were far too small for them. They were scratching on the wire until they had pulled their claws out of their front paws trying to escape. She said that it was appalling. That was the way in which the danger of the pit bull terrier was being lifted from the public; namely, by cruelty of unforgivable severity imposed on the animals.
That situation has eased in the course of time because kennels have been built and dogs better housed. However, the appalling fact is that a citizen whose dog is seized ceases to have all the rights of property ownership. They are taken away from him by the 1991 Act in respect of the dog. He cannot get it back and he has no right to go and see it. He cannot get information as to what is being done about it and he is kept in ignorance.
I have dozens of cases of a most lamentable kind. A woman was raided on Boxing Day and the dog was taken away. She asked: "What are you going to do now?" The reply was: "We shall let you know". They did not let her know. Easter came and then she was told she was going to be charged. It was August before the case reached court. That kind of delay is not at all unusual. The longest period for the kennelling of a dog is two years and three months, and that is not awaiting trial. The trial came on months after the dog was taken, but the prosecuting authorities made such a mess of it that the prosecution was withdrawn.
The man then asked for his dog back. The charge had been withdrawn and there was no charge against the dog. He was entitled to have the dog back, but the authorities did not let him have it back. He went to court to get his dog back and the court ordered that the dog should be returned to its owner. The police said: "Come to the police station and we shall hand it over to you", which they did. The dog was brought down in a cage and put on the pavement. The police said: "Here is your dog: sign for it", which he did. Then they said to him: "We are now going to take it back because we are going to bring charges as the dog is a pit bull terrier". The dog

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was taken away from his owner and he has never had it back. That kind of treatment which citizens have received at the hands of the police is quite disgraceful.
The second part of the Bill provides that innocent dogs awaiting trial and being kept for long periods in kennels, should be released on the application of the owner, if the court so decides, and under strict security conditions and probably with very substantial monetary assurances. That is quite reasonable.
A case came before a Croydon court earlier this week, which was referred to in Auberon Waugh's column of 5th February. It was widely talked about on television and radio today. A dog had been 18 months in captivity and the Croydon magistrates, after a nine-day hearing, decided that it was not a pit bull terrier and it was released. Fancy that! Nobody takes any account of the cost. Justice is not supposed to have any money value; justice is justice for justice's sake.
But let us consider the expenditure. The man who owns the dog in the case to which I referred earlier said that his case has already cost the state at least £70,000. Therefore, this is not an unreasonable request to make: that a person whose dog is being kept for trial—it has not been convicted; it is an innocent dog awaiting trial —should be allowed, after a certain minimum period, to go to court to ask for the dog to be returned home to him on bail. That is a reasonable request.
I refer now to the problem of the review of the Act, which we are told the department has been conducting regularly. We are told that the Act is under constant review. On what is the department conducting the review? Very few statistics are available about the way in which the Act is working. Over Christmas we received the first lot of statistics on the working of the Act. They related to the first full year of the working of the Act; that is, 1992. However, 1993 has now gone by and it looks as though we may have to wait until the end of this year to get those vital statistics about the second year of the working of the legislation. Knowing what is happening makes an enormous difference when one is considering what one requires the legislation to do.
I shall give your Lordships just a few figures from that list. The original register contained 8,600 dogs. On 1st January 1993, that figure had fallen to 5,000, so the register is being reduced all the time. The idea that registering a few more dogs in exceptional circumstances will weaken the operation of the Act is absolute nonsense. Another thing that we notice is the gap between the number of dogs that are charged and the number that are convicted. One wonders why that gap exists. I shall give your Lordships another figure. In 1992, the number of pit bull terriers that were charged was 423; the number convicted for sentence was 219. The extraordinary thing is that all the figures show a serious gap between the number charged and the number convicted. It runs at a ratio of roughly 2:1.
Another trend that we must watch is the reactions of the magistrates' courts to the continued severity that is shown to people who are charged under the Act. Under Section 3, dogs that run amok and bite somebody are liable to a mandatory sentence of death if convicted of that serious offence. It is called an aggravated offence of being out of control. However, I have noticed that a
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strange thing happens after conviction: 60 per cent. of those convicted are given absolute or conditional discharges. How does that come about? Are the magistrates in a sense revolting against the absurd severity of the death sentence for some of the offences for which the dogs can be convicted?
We need from the Home Office a considered statement of what the statistics imply. The statistics for 1993 should be made available urgently so that we can see just what is happening. Already the number of charges under Section 3—that is, the biting animals—exceed the number of charges against pit bull terriers. The number of charges against pit bull terrier owners will fall. In 1992, only 209 people were charged with unlawful possession of a prohibited animal. That number is falling. Actually, although 209 people were charged only 204 were convicted. That must be examined. The implication is that the 1991 Act must be relaxed in the interests of the good administration of this problem.
I finish by saying that there will be no sense in our policy on dogs in this country until we get a dog control and welfare council. The Home Office is not fit to be in charge of dogs. It knows nothing about dogs. It has no responsibility for the welfare of dogs. In fact, no single department has any responsibility for the welfare of dogs. We have an enormous population of dogs of all breeds and types in families which cherish their company and affection, yet we treat them in this manner because we are scared of the pit bull terrier. One cannot easily say what the real risk was, but I think that it was greatly exaggerated during the campaign for the legislation.
Therefore, I hope that your Lordships will give the Bill its Second Reading. Let us go forward with the opportunity that may exist in connection with the Criminal Justice Bill, which is now before the House of Commons, or in the Police and Magistrates' Courts Bill, which is still before your Lordships' House, and have a go at grafting these amendments onto Government Bills, thus ensuring that they can have a free run in the House of Commons. We will get it done somehow. We are not prepared to go on with the present situation. I beg to move.
Moved, That the Bill be now read a second time.
—(Lord Houghton of Sowerby.)
8.6 p.m.>
The Viscountof Falkland: My Lords, I shall be brief, which will be a relief to your Lordships' House, following the noble Lord, Lord Houghton of Sowerby, who, as usual, has covered the topic on which he speaks so well, which tonight is the Bill that he has introduced. I do not think that my voice will last for even a small percentage of the time that the noble Lord took to describe his Bill so ably.
We on these Benches have been opposed to the original legislation for all the reasons on which the noble Lord has touched. We felt—I still feel this very strongly—that the Act was a typical case of legislation in reaction to press pressure which came about as a

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result of some tragic events when severe injuries were caused to children as a result of attacks by pit bull terriers.
The problems which the noble Lord did not touch on in great detail, but which still remain, are the difficulties of the sure identification of a pit bull terrier. There are many problems, particularly for the police, who are not necessarily dog experts. They usually act on information that is given to them. Unhappily these days, bodies from the social services to the Inland Revenue seem to be moved into action on the receipt of such information. When the police are given such information, they have to act on it. A dog is then brought into custody and, if the owner has not complied with the legislation, it has to face the mandatory sentence, as the noble Lord described. That has led to appeals and to dogs being put into kennels for prolonged periods, often in conditions which are far from satisfactory and which lead to a great deal of unhappiness and anxiety for the owners. I do not think that those are the results which the Government intended to flow from the legislation although they were warned that this would happen. The mandatory sentencing seems totally unsatisfactory. I hope that the Minister will be able to give us some comfort on that point.
The issue of late registration should be dealt with in all humanity. All people who for one reason or another do not register their dogs according to statutory requirements are subject to the same sanctions of the law which give them no possible way out. The way in which the Government view dog ownership is highly unsatisfactory for a nation as advanced as ours. We do not know the total number of dogs in the country—but that leads to the ticklish subject of dog registration to which, for reasons often expressed in this House, the Government are bitterly opposed. I do not believe that they have grasped even the most basic facts about dogs and their danger to society.
My vet, who is a perspicacious Irishman, told me that when dogs are brought into his surgery he looks first at the owners. He says that pit bull terriers, or pit bull-type terriers, are of particular anxiety to him as a vet. If during his work he is bitten by a dog, even a large dog, he may suffer discomfort for perhaps 24 hours. However, if he is bitten by a pit bull terrier, with its massive muscle formation, he is likely to be out of action for two weeks or more. They are dangerous dogs. I have had many conversations with owners of such dogs and it may surprise your Lordships to know that the dogs are affectionate and make good pets.
It is interesting to note that recently there have been tragic attacks by dogs other than pit bull terriers. It happens all the time and involves small dogs in the park. Anyone who walks in the park with children, as I do, is always cautious of dogs. It does not matter whether it is a small terrier no higher than one's ankle or whether it is a Great Dane or an Alsatian. One must always be careful and look at the owner. The owners are the problem and not the dogs, but the Government do not seem to have grasped that basic fact.
My voice is disappearing and I shall conclude by saying that we on these Benches support the Bill. It is
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modest in its scope and rights an injustice, which will be acknowledged by the Minister. There have been well-documented cases such as that mentioned by the noble Lord, Lord Houghton, of the small boy who took off his dog's muzzle temporarily in order to give it a drink of water from a puddle in the road. He was spotted and the dog was taken. There is only one course that the courts can take and that is to condemn the dog to death with all the heart-breaking deprivation that results.
On behalf of Members on these Benches, I give the Bill my full support and I hope that it will be given a fair wind by the Government.
8.13 p.m.
Baroness Strange: My Lords, I rise to support the noble Lord, Lord Houghton of Sowerby, in his Amendment Bill to the Dangerous Dogs Act. I also congratulate the noble Lord on his maiden speech from the Table, but point out that he is not the one who is Strange. There can be nobody, dog-loving or otherwise, who does not admire the noble Lord for his doggedness and, indeed, pugnacity in the defence of dogs. No matter that his Motions are always put at the end of business at a very late hour; no matter that many—dare I say younger—noble Lords have departed home, still at whatever hour, the noble Lord, Lord Houghton of Sowerby, is there to defend dogs.
I am not here to howl like a cynic in the defence of dogs but merely to yap. And I can assure your Lordships that I shall be brief. This Bill proposes two essential changes to the Act. First, that the death sentence should not be mandatory and that the ancient right of discretion should be restored to magistrates. In Ecclesiastes it states:
"a living dog is better than a dead lion".
I am sure that anyone who saw the expressions of Toffee and her owner on this morning's television will know how they both feel. The Magistrates' Association is also behind this, for it is yet another of the insidious ways that power is being removed from the judiciary.
The noble Lord's second point seeks to alleviate the distress of dog owners and of the dogs themselves when they are removed for long periods awaiting trial. I know myself how unhappy and desperate I feel when my dog is not with me. And one must also remember that the dog loves his owner too and is not only bereft of his owner, whom he loves, but is taken to a strange, uncomfortable place with no familiar faces. The dog cannot explain how he feels nor how he suffers. It is of course right that we prevent dogs from ill-treating people. Conversely, we must not allow people to ill-treat dogs. It would be a sad world indeed if we did not stand up for our friends and those who love us. I support the Bill.
8.16 p.m.
Baroness Wharton: My Lords, I too thank my noble friend Lord Houghton for bringing the Bill before us tonight. I congratulate him not only on his maiden speech but for bringing together so many dog organisations and animal welfare agencies for the sole purpose of working together to improve this Act.

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I would like to make it clear that I am not in favour of fighting dogs, be they pit bulls or any kind bred solely for fighting. The Dangerous Dogs (Amendment) Bill does not alter the protection of the public in that respect. However, I do understand that a considerable number of pit bulls are still unregistered and probably many of them live in squalid conditions, hidden from public view. I echo the noble Lord in saying that if the magistrate has discretionary power to allow a dog to be added to the index of exempt dogs, provided that all the conditions are met, the owners of unregistered dogs will, I hope, come forward and plead guilty.
Pleading not guilty results in lengthy court cases and high kennelling costs which are met by the taxpayer. Both the Magistrates' Association and the Association of Chief Police Officers are extremely anxious about the time spent in long court cases arising from not guilty pleas and the large number of expert witnesses who have to be called. I have to confess that I am more concerned for the welfare of the dog, but I suspect that there are many ignorant owners out there.
It is worth mentioning at this time that many Staffordshire bull terriers are caught up under Section 1 and wrongly identified by sometimes non-experts. The consequence is lengthy detention, often in solitary confinement, with an eventual change in the dog's character, not to mention a substantial cost to the taxpayer. Many have not committed a crime; they are simply wrongly identified. The trouble is that by the time they are returned to their stressed owners the damage has been done. With discretion restored to the courts many dogs could be reunited with their owners much sooner.
Sadly, it was the introduction of pit bulls to this country and the subsequent attacks on people by them that brought about the Dangerous Dogs Act. Perhaps I may quote from the noble Earl, Lord Ferrers. He stated:
"If the import of those two dogs had been banned at the time when they were introduced into this country, it is very likely that we should not be debating the Bill today. That makes it all the more important that the Government should have clear powers to ban the domestic ownership and import of any other new types of fighting dog which may emerge in the future".—[Official Report, 25/6/91; col. 512.]
I agree with that, but it is worth noting that the RSPCA recommended a ban in the 1970s. Section 3 of the 1991 Act provides that a dog out of control in a public place that causes injury, irrespective of the circumstances of the attack and no matter how minor, must be destroyed. I refer to dogs of any breed. Those dogs could be guarding their owner's home or be even in a locked car, which is deemed to be a public place. I have to confess that I did not know until recently that a car was a public place. Dogs only need to appear to be aggressive to cause fear in the on-looker, with the result that they end up in court. What happens when a dog in a house bites a burglar, or if uninvited intruders enter a private fenced garden or backyard while the owner's dog is there? I am not sure. It is very important for magistrates courts to have discretionary powers in cases like these.
I should like to give your Lordships another quote, this time from Andrew Bowden in an adjournment debate in another place. He said:
"Section 3 of the Act could affect every dog in the country —including many dogs that are owned by hon. Members. Let me
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give an example of what could happen as a result of the Act. Let us suppose that a woman peacefully walking her dog in the woods, enjoying an afternoon stroll and minding her own business, is suddenly attacked by a man who may attempt to rape, assault or rob her. The dog, devoted to its owner, immediately goes to her defence and bites the man. The man runs off but within a few hours is detained and charged by the police. He is sent to court and then to prison for assault or whatever. It is quite possible, however, that, as a result of the Act, that woman's dog will be destroyed and the woman will have a criminal record for life. That cannot be right."—[Official Report, Commons, 4/11/91; col. 387.]
It makes you think, does it not?
Prior to the Dangerous Dogs Act 1991, there was already legislation in place which dealt with dogs that were out of control in a public place. Under Section 2 of the Dogs Act 1871, a magistrates' court may, upon the complaint of any person that a dog is dangerous and not kept under proper control, order the owner to keep it under proper control, or may order it to be destroyed, if the evidence proves that the animal is dangerous. Prosecution under the 1871 Act allows the magistrate discretion and does not impose the mandatory death sentence on an animal, which if prosecuted under the Dangerous Dogs Act would have to be destroyed. Many owners would far rather keep their dogs muzzled while out walking, than lose a much loved pet, and the 1871 Act allows the magistrate full discretion while giving the option for destruction in more serious cases.
Finally, could we not encourage more education in schools about how to cope with pets which, if properly handled, bring great rewards? After all dogs have been called "man's best friend". They have on many occasions saved our lives. They have given us love and helped to stave off loneliness and depression. They rarely answer back and amazingly put up with a great deal of abuse, intentioned or otherwise. We are supposed to be a nation of dog lovers. I pray that we remain so.
8.22 p.m.
Lord Hayter: My Lords, I am in a somewhat interesting position. If your Lordships look at the list of members of the reform group in favour of the Dangerous Dogs (Amendment) Bill, your Lordships will find that there are 15 organisations and seven individuals. With the exception of me, I believe that the whole lot are dog lovers. I am not. To be honest, I do not like dogs. Therefore, I represent a dispassionate view in connection with the amendment.
I wish to see that dogs receive a fair deal. In just the same way, when the reform group was considering the wording of the amendment Bill, in its turn it wanted to ensure the safety of the public. For example, your Lordships may notice, when going through the Bill, that there are 13 "mays" and only one "shall". How many times have we had to consider those words in this House? Therefore, we are agreed in principle that everybody connected with the Bill does not like the mandatory sentence.
On the other hand, we must make sure that there is confidence in the courts and in the police; for example, a police dog handler who is giving his opinion as an expert witness as to whether or not a dog is a pit bull. The courts need to be sure, when releasing or imposing

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conditions upon an owner of a dog, that it will not return to its owner and be allowed to breed again because the whole point of the Act is to eliminate all pit bulls in due course.
The same applies—and this is rather more controversial to my mind—to releasing a dog while proceedings are pending. The court can impose conditions; it says so in our Bill. The court must be mindful not only of the public safety but of all the implications that there may be of releasing the dog back to its owner. I believe that I am right to say that the police believe they will never see the dog again or if they see a dog, it will not be that dog. But electronic tags can be put on the dogs so that there can be certainty in that regard.
We then move on to something about which I imagine there is universal agreement—that is, the care of dogs while they are under surveillance. The Bill provides that such dogs must be kept in licensed boarding establishments. I confess that I found it strange to learn of the existence of such establishments. As the noble Lord, Lord Houghton, suggested, it may be that as the situation has improved, such circumstances may not arise again. But I am in favour of the provision in the Bill that all such dogs should be kept in licensed boarding establishments.
It is true that the original 1991 Act was passed in a hurry. Its prime object was to safeguard the public. I am told by the police that it has been partially successful. This amending Bill is reasonable, sensible and essential. We can review the situation in Committee. Therefore, I support the Second Reading of this Bill.
8.27 p.m.
Baroness Mallalieu: My Lords, if anybody is entitled to say to this Government, "I told you so", it is the noble Lord, Lord Houghton of Sowerby, in relation to the Dangerous Dogs Act 1991. As I remember it, time after time during the progress of that Bill in the long, hot summer of 1991, he warned the Government of the futility of the exercise upon which they were embarking, and he spoke all too prophetically as to the likely consequences of the hasty and ill-advised legislation which they had started.
Sure enough, the sky is now black with pigeons coming home to roost. It is not surprising that the noble Earl, Lord Ferrers, a chief keeper of the pigeon loft, and his noble assistant, the noble Viscount, Lord Astor, who dealt with the original Bill, have fled the coop and have left the unfortunate and noble Lord, Lord Mackay of Ardbrecknish, to do the best that he can this evening with a mop and bucket.
The Dangerous Dogs Act must have been conceived by the Home Secretary of the day, whoever he was—and there have been so many holders of that office in recent times that it is difficult to be sure upon whom to place the blame—in a moment of bathtime inspiration. The newspapers had carried several distressing stories of young children badly bitten, and in one case killed, by large and powerful dogs. But instead of looking carefully at the real causes and looking for solutions to what is a genuine and continuing problem, the Bill was
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raced through both Houses of Parliament that summer in the face of objection from all sides of the House so that this Government could be seen to be taking instant action in relation to a topical matter.
What has the Act achieved in its two or more years in existence? Has there been any reduction in dog attacks? If there has, I should be glad to hear about that from the Minister. Ironically, since the amendment Bill received its First Reading, there have been two serious attacks by dogs on young children which have received national coverage. Has there been any reduction in the keeping of potentially dangerous dogs? One has only to drive through any of our major cities or to drive out of London in any direction to see over and over again large and powerful dogs which are wholly inappropriate as town pets towing their owners along pavements and scattering pedestrians at their approach. If there has been any reduction in the keeping of inappropriate dogs in inappropriate places, it has not been apparent to me.
Nor has the Act done anything for the countless dogs who live their lives on the end of chains, kept as living burglar deterrents and made fierce and even vicious by lack of exercise and an unnatural way of life which is often forced upon them. What is it exactly that this Act has achieved? Section 1 of the Dangerous Dogs Act has proved immensely beneficial to the legal profession and to a selection of the veterinary profession also. The courts have seen nothing quite like it since the obscenity trials of the 1970s when a panel of self-proclaimed expert witnesses used to go from court to court testifying to the merits of various publications alleged by the Crown to be obscene. There was, as I recall, a doctor from Sandwich, a psychiatrist and a vicar from East London. They were in much demand to defend Linda Lovelace's memoirs and other similar works of literature.
Today a panel of veterinary surgeons, ready to argue in court over the parentage of any suspect pit bull terrier, has taken their place. Such experts have to be paid, of course, and more often than not paid by legal aid, as do the prosecuting barristers and solicitor, and the defence solicitor and banisters who appear for the family of the dog. Indeed a cottage industry has grown up around Section 1 of the Dangerous Dogs Act. It is, unhappily, an industry which is paid for largely out of the public purse.
While they await their trial the dogs themselves are also kept at public expense. The Daily Mail recently carried a story giving an example of one such case where the dog in question had apparently been blessed with puppies while in custody. There had been delays of the sort to which both the noble Baroness, Lady Wharton, and the noble Lord, Lord Houghton, have referred; and total costs, including legal fees, kennelling and dog food, amounted to something of the order of £26,000 and were still continuing. I have no means of knowing whether that was accurate; and I should be grateful if the noble Minister would tell us, if he can, how many dogs are currently detained at Her Majesty's pleasure under the various provisions of this Act, and what the total cost of keeping such dogs has been in the period since this Act came into force.

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Section 3 of the Act dealt with keeping dogs under proper control, and two of its subsections created aggravated offences where injury was actually caused by dogs. In other words, two of those parts of Section 3 went to the heart of what this Bill was supposed to be about.
The 1992 figures—they are the most recent ones as the noble Lord, Lord Houghton, pointed out—indicate that, in relation to those matters, offences where injury was caused by dogs resulted in a total of 131 convictions in magistrates' courts throughout the whole of England and Wales. Only eight were of sufficient seriousness to reach the Crown Court. In other words, a total of 139 dogs that caused injury were the subject of successful prosecutions under this Act in 1992. It would perhaps be interesting to know from a Government who speak constantly about value for money as regards all aspects of their programme, what the cost per dog of those convictions amounts to.
The amendment Bill of the noble Lord, Lord Houghton, is to be welcomed in that it gives a court discretion as to whether or not to order destruction. Surely where a dog is not at fault, even though the owner may be, as a matter of plain fairness destruction should not be compulsory. Surely also the provisions of Section 3 of the Bill, which permit the court to allow the dog to be returned to the owner pending the conclusion of a case, in a suitable case, is a sensible and (dare I say it?) cost-saving, value for money measure which should appeal to the Minister. Similarly, the same arguments should appeal to him as regards late registration.
The Dangerous Dogs Act has brought about no noticeable improvement in the mischief that that Act was intended to cure. This Bill modifies some of its unfairness. It was a case of an Act which was conceived in haste. We on these Benches hope that the Government have now had sufficient leisure to repent and will at least give a fair wind to the noble Lord's sensible amendment Bill.
8.34 p.m.
Lord Mackay of Ardbrecknish: My Lords, for the second time in recent months I return to the Chamber to debate the subject of dogs with the noble Lord, Lord Houghton of Sowerby. It is perhaps appropriate that we should debate this subject today because at lunchtime I ate a pleasant Chinese meal to celebrate the Chinese New Year. This year happens to be the Year of the Dog. I have brought with me an astrologer's guide to try to discover the Chinese symbol which corresponds to the year in which the noble Lord, Lord Houghton, was born. I am sure that the noble Lord is proud of the age that he has reached. However, the astrological chart does not go back sufficiently far to record the year of his birth. But, if I am right, and if the system is logical—those are two quite big "ifs"—I believe that the noble Lord was born in a Year of the Dog. That is appropriate. However, the bad news for him is that I was born in the Year of the Tiger and I am not too sure whether tigers and dogs are totally compatible.
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I know, as indeed does the whole House, that the Dangerous Dogs Act has caused the noble Lord much anxiety. He led the opposition to the Act during its original passage through your Lordships' House.
Before dealing with the specific proposals in the Bill now before us and the points that have been made, I want to make plain the Government's position. We introduced the Dangerous Dogs Act because we recognised the very real anxiety there was about the presence of fighting dogs in this country, as well as broader concern about dog attacks more generally. This was not a panic reaction, as some noble Lords have from time to time suggested, but a responsible recognition that the public demanded action and that it was our duty to take it. No one who is a parent, or dare I say more likely in your Lordships' House, a grandparent, can be other than horrified at the instances where dogs have savaged and killed small children. No government worth the name could have done otherwise than to take action.
It is interesting to note that I am the first person who has referred to some of the horrendous attacks that have taken place in any detail. Finding the right approach was not easy, but nothing that I have heard tonight, or which has happened since the Act was passed has persuaded us that we were wrong in taking the action we did, either in principle or so far as the details of the legislation are concerned. The need for public protection and reassurance is as real today as it was when the Act was passed. In saying this, I do not underrate the anxieties which some feel about the legislation, or indeed the depth of the noble Lord's conviction that changes are needed in the Act. I understand the pain that some owners must have felt at realising that their animals were covered by the legislation. But that pain is nothing to the pain and suffering of the young victims attacked by those dogs or of the parents of those young victims. I am happy to be their advocate rather than an advocate for the dogs. The first duty of government and of a civilised society was, and remains, the protection of human beings.
With these preliminary comments, I turn to the Bill now before the House. As the noble Lord, Lord Houghton, has explained, its objectives are threefold. First, it seeks to give the courts discretion in sentencing where there is presently no option but to order the destruction of a dog. Secondly, it seeks to allow owners of dogs which have been seized by the police and local authorities to apply for custody of their dog pending a court hearing. Thirdly, it seeks to oblige the police and local authorities to keep dogs which have been seized in licensed boarding establishments.
The underlying principles of the Dangerous Dogs Act are to eliminate fighting dogs from this country and to protect the public from dangerous dogs. Under the Act owners of pit bull terriers and other dogs bred for fighting were allowed to keep their animals on condition that they complied with stringent conditions by 30th November 1991, including registering their dog and keeping them on a lead and muzzled when in a public place.
The obligations in the legislation were very widely publicised. The Bill received a great deal of publicity

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during its passage through both Houses. A clear message was sent out that conforming with the obligations of the legislation was the only way in which owners could lawfully retain their animals. In those cases where the owner of a fighting dog has failed to comply with the requirements of the law, or where a dog of any type or breed causes injury to a person, magistrates have no option but to order the destruction of the dog. And rightly so.
The reason Parliament gave the courts no option in these cases is clear. The provision is there in the Act in order to provide a powerful incentive to owners of fighting dogs to comply fully with the requirements of the law, and to ensure that people who fail to do so do not remain in charge of potentially dangerous dogs. There would be an outcry if a dog which had attacked were returned to a convicted owner and attacked again. Similarly, if the courts were given discretion on sentencing and decided not to order the destruction of the dog, then the dog would have to be returned to an owner who would already have shown that he was not sufficiently responsible to observe the clear requirements of the legislation.
Clause 1 of the Bill before the House this evening would give the courts a discretion on sentencing that would include the re-opening of the Index of Exempted Dogs for an indefinite period. To allow those owners who originally failed to register to do so now would, I am sure, bring justified criticism from those owners whose dogs have already been put down because they failed to comply with the registration requirements. Furthermore, it would suggest that Parliament was no longer committed to ensuring that the current generation of pit bull terriers is the last in this country, since there would be nothing to prevent fresh dogs, imported into this country or bred unlawfully here, from benefiting from this method of retrospective legalisation. I repeat that the object of the legislation is to make sure that the current generation of this type of dog is the last in this country.
I do not agree with the proposition advanced in Clause 3 of the Bill that the courts be given a locus in the decision whether or not to allow dogs back into the custody of their owners pending the full court hearing. That is a matter for those holding the animal.
Section 5 of the 1991 Act states that a police officer or an officer of the local authority may seize a dog which is believed to have committed an offence under the Act. There is therefore no obligation on the police or local authority to impound a dog and to hold it pending trial. That has to be an operational matter for the agency concerned. The police or local authority have to consider the safety of the public and the likelihood of the animal being surrendered again to custody at the appropriate time. There would be justified criticism if the police were to leave a dog with its owner or to release a dog which then caused injury to somebody.
Returning dogs to their owners "on bail" pending the outcome of proceedings could well lead to enforcement problems. For example, owners might be very reluctant to return a dog to custody when they knew that the result of the proceedings could be an order for its destruction.
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The temptation might be very great to claim that the dog had been lost or involved in an accident while in their custody.
Clause 4 of the Bill proposes that dogs which are seized by the police or the local authority dog warden should be kept in boarding establishments approved and licensed by the local authority. I do not believe it to be right or necessary for us to seek to prescribe detailed practices in that way. The police and the local authorities have the responsibility for deciding where seized dogs should be kennelled, and there may be all sorts of security and other considerations which they must bear in mind.
The Government remain convinced that the provisions of the Dangerous Dogs Act were a necessary and justified response to public anxieties about dangerous dogs. I know that the noble Lord, Lord Houghton, believes that his Bill is concerned only with matters which he regards as the more extreme aspects of the 1991 Act. However, the Government consider that the mandatory destruction order and the one-off nature of the registration scheme are matters which are integral to the provisions of the Act and to the objective which Parliament agreed and with which I am sure the bulk of the people in our country agree—the elimination of these particular types of dog. We believe that it would be wrong to seek to modify the provisions of the Act as the noble Lord proposes. I am sorry to tell the noble Lord that because one cannot but admire his spirit on these matters, but I am afraid that the Government cannot support the Bill. Of course, it is a Private Members' Bill and, as such, we would not propose to vote against it.
The Government consider that what is needed are not changes to the Act, but whatever help we can give to those responsible for its implementation. The Home Office will shortly be issuing a circular to the courts, prosecutors, police and local authorities about a number of aspects of the Act, which we hope will meet some of the concerns that have been voiced about its operation. This will reflect suggestions that have been made to the Home Office for improving the welfare of detained dogs in custody, which is one of the items in the Bill before us this evening, and will draw attention to the panel set up by the Kennel Club and the British Veterinary Association. This consists of people willing to give advice on whether or not a dog is a pit bull terrier. I hope that that will prove a helpful contribution to the fair but effective operation of the Act.
The Government do take seriously the problem of dangerous dogs and the need for responsible dog ownership. We shall continue to listen to the views which are put to us, and I hope that the circular that I mentioned will demonstrate our commitment to that process.
But I have to say again that protecting the public against dangerous dogs—and let us not forget, as I have said before and make no apology for saying again, that on occasion such dogs have done the most appalling damage to people—has to be the Government's paramount responsibility. Were the provisions of the

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Act to be modified in the way envisaged by the Bill before your Lordships today the protection afforded to the public would be very seriously weakened.
8.45 p.m.
Lord Houghton of Sowerby: My Lords, I wish to thank all noble Lords who have taken part in the debate and the Front Bench spokesman for the Government. Not for the first time in a reply to a debate on this subject, he has clarified the issues and enabled us to consider what is the measure of the difference that will exist in the later stages of the debate. I shall therefore regard this as an important statement by the Government on a matter which will be the subject of continual debate for the rest of this Session. It will arise in more than one place and there is no point in keeping the House late tonight to continue the discussion.
The Minister has given us the starting point for the next debate. We shall have to deal with that and with the Government's record of negligence and indifference on the dog issue for years before this matter broke out in 1991. I commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Child Support Act 1991
8.47 p.m.
Earl Russell Earl Russell rose to ask Her Majesty's Government whether they are planning any amendments to the Child Support Act 1991.
The noble Earl said: My Lords, when a debate in another place was got back on course in 1628 one of the reporters remarked:
"As when a good old hound recovers the scent, so the rest come on in full career".
The noble Lord, Lord Houghton of Sowerby, was one of the good old hounds who recovered the scent in 1991 when we first debated the Child Support Bill. We, my Lords, are the rest who come on in full career.
It is not only Members of the two Houses of Parliament who have been inundated with correspondence on this subject. The National Association of Citizens Advice Bureaux regards 1,000 evidence forms in a year on any one subject as a sign of something pretty seriously wrong. On this subject it received 290 evidence forms in October and 430 in November.
I shall not go on simply saying that there is a vast amount of concern about the Act. We know that. The question I am trying to address tonight is what should be done instead. We on these Benches, as the Minister knows, are committed to a fundamental review of the Act. He may know that my honourable friend Mr. Kirkwood this morning made a statement saying that if that review is not genuinely fundamental and if we do not have substantial changes we may not be able to support the continuation of the Act in any form. If we are considering a fundamental review, we need to ask these questions: what are the good features of the Act; what are the bad features; and what are the features which are capable of being made acceptable?
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The good feature of the Act is the use of the power of the state to help to collect maintenance in cases where it has proved extremely difficult to collect. I have not heard that aspect questioned at any stage of the debate this year. It is a factor that accounts for the cases which the department has quoted where the Act does good. We admit that such cases exist. We do not wish them to cease to exist. However, when the Minister claims the formula as one of the virtues of the Act on the ground that it introduces consistency where there was previously discretion, we say that for us the formula is at best neutral. Because they do not take account of individual cases and circumstances, formulae are not the most liberal of methods. The formula which achieves the appearance of consistency by treating highly different cases as the same is not achieving consistency unless it is the spurious and limited consistency achieved by Procrustes for those he put in his bed. The formula will need serious attention. It has to take account of the infinite variousness of human relationships and especially of the infinite variousness of marriages as economic partnerships.
Another factor that we believe is entirely wrong is the amount of money being demanded in maintenance assessments. We believe that it was right that a number of maintenance assessments should rise. We do not say that all the assessments should go back to their previous levels. Nor indeed are large numbers of the people who write to us protesting about the Act. We say that the increases are altogether too big. It strikes me as one of the curious aspects of the modern Conservative Party that while it underrates the amount that people can pay in the form of taxation, it tends to overrate with equal consistency the amount of money which people can pay out of the other pocket which is labelled private.
The size of the alleged tax bombshell of the past general election was £1,250 a year. If I may follow the example of Goldman Sachs and add a new word to our currency, when I find someone whose maintenance assessment has been increased by £2,800 a year, I say that his assessment has been increased by 2.3 bombshells. Let us suppose that Mr. John Smith had proposed increasing people's taxes by £2,800 a year. I do not believe that the Government would have stopped at "tax holocaust"; they would have needed some expression a little stronger. As I believe everyone knows, we proposed increasing income tax by one penny. The only one of my correspondents who quoted his tax assessment is paying 150 per cent. of his income tax in child maintenance. Let us suppose that we had proposed to increase income tax by 37.5 pence. I am sorry to disappoint the noble Viscount but I shall not stretch my imagination to work out what Conservative Central Office might have said about us. For all I know my powers of invective might possibly be greater and I do not wish to give Central Office that assistance.
The amount that is demanded of people will have to come down. In particular we should consider the possibility of a cap on maintenance assessment: that no one should pay more maintenance assessment than they pay in income tax. Even under this Government, the

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burden of income tax is not that negligible. I do not believe that the Government would wish to tell voters that it is.
We need to consider achieving a realistic formula. That means that there must be a realistic system of appeal. No formula, however perfect, will cover everything. Every formula will cause highly undesirable results in some cases. On these Benches, we have always been unhappy about the total exclusion of resort to the courts under the Act. It seems to us a breach of justice. In another place, Mr. Burt said that that would merely return us to the discretionary system which previously existed. Some of us might prefer to re-phrase that by saying that it might return us to somewhere rather nearer the real world.
It is difficult to say that it is impossible to have a system of appeal. The Australians have set out specified grounds of appeal and appear to have done so with success. Therefore, however much we improve the formula, it is no good having a formula unless there is a system of appeal. I think it unlikely that these Benches will support the continuation of a formula without an appeal system.
The formula has to include an assessment on disposable income and not on gross income. Sums of this size bite deeply into people's available income. The Government have only two options: either they must treat as allowable expenses certain activities they do not wish to stop people doing; or they must bite on the bullet and accept that people will give up those activities.
Let me take the first activity which I should have thought the Treasury would allow as desirable: going to work. I take a case from my correspondence. A man in Henley-in-Arden had to travel 30 miles daily to work. There was no public transport available, an increasingly common case. He was buying a car on hire purchase. If he paid his child maintenance, he was unable to continue his hire purchase payments on the car. He called the Child Support Agency hot line and asked for advice. The agency advised him to sell his car. I wrote to Mr. Burt and asked for an assurance that that was not government policy. Mr. Burt wrote me a long and careful letter in which he stated that he was sorry to say that he would probably disappoint my correspondent. He did not give the assurance required. That is surely against the public interest.
The point was raised on 2nd February in another place by the Member for Castle Point on behalf of a constituent who had to commute to London. Mr. Burt told him that his was a highly exceptional constituency. If he intends to classify all the commuter constituencies around London as highly exceptional constituencies, he will find rather a lot of them. He may even find that he loses a good deal of support in those areas. If he wishes to do that, that is his right, but I feel some sympathy for the people by whose suffering he does so. If you are going to lose support, do not do so at the expense of ordinary voters. It is not fair on them.
The next point that must be considered is debt. No marriage breaks up without a reassessment of debt. It involves not only the house; it often involves the
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breaking up of a business partnership. That can be extremely complicated. The Minister may say to me that debts can be abused and indeed they can. So can alcohol. But if the Minister gave that as a ground for prohibiting it, he might receive a dusty response from this House.
The next point that must be considered is the cost of access to children. The Minister can say, as the Government have said before, that there may be a difficulty in assessing the cost. I suggest that he uses the American tax withholding system. You have a sum on account, then you put in receipts for what is actually spent and either get a bit more or pay back a little of it. It is a system I have operated with American tax; it works. If the Minister intends to persuade fathers to operate the system under a policy entitled, "Children come first", he cannot do so in a form which prevents fathers ever seeing their children. Flesh and blood simply will not consent to it. I shall say no more about step-children because I dealt with the issue last week.
The Minister must deal with the point of capital settlements. He told us last week that it was impossible for the Government to do it. It is perfectly possible for the Australians. Why not for us? I am sure that our Civil Service is as good as its Australian counterpart. I should have thought the matter was within its competence. If not, then bad luck for the Act itself, because capital settlements, especially involving housing, are vital to many people's lives. There must be a disregard for those who receive the maintenance, a point I am sure the noble Baroness, Lady Hollis, will make at greater length. Perhaps I may say that she will be speaking for me too on that point.
The same applies on passported benefits. In 1991 we divided the House on the issue of passported benefits. We were right to do so because to introduce the system and leave the women who are receiving the child maintenance worse off than they were before offends the sense of justice of the fathers as well as the mothers and, indeed, of any ordinary people who hear of it.
There must also be more thought about the benefit penalty. Mr. Burt said in another place that there had only been 160 cases so far. I am glad to hear that. I congratulate Mr. Burt on the sensitivity with which he has handled the issue so far. However, he will not be in office for ever; that sensitivity will not necessarily continue. Also, the number who receive the benefit penalty is not the full measure of the amount of hardship caused. Many people have voluntarily gone off benefit rather than go through the process of assessment.
The citizens advice bureaux have found one case of a woman who voluntarily took the benefit penalty rather than maintenance at a level which would disturb the children's relationship with their father. That may sound saintly, but there are saintly people about and one should not unnecessarily punish them for that. The issue must have attention.
There has been sensitivity so far on the issue of harm and undue distress to the mother—a concession in 1991 which is valued deeply. It has not always worked perfectly. There was a case at a citizens advice bureau in Lancashire of a woman who claimed domestic violence. The Child Support Agency told her to run

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along and not be a nuisance. That, I think, is an example of the evils of performance-related pay. The person who was ignoring an Act of Parliament was under a financial inducement to do what he did. That is why it appears to us on these Benches that performance-related pay, even if those to whom it is given resist temptation, comes perilously near the character of a corrupt payment.
9.4 p.m.
Lord Kilbracken: My Lords, I am grateful to the noble Earl for putting down the Question today and also for all the work he has already done in drawing the attention of the public and the world to the iniquities of this pernicious statute. I do not hesitate so to describe it.
I have an interest to declare in that I am what is called, with such inaccuracy and insensitivity, an absent father. I spoke about that a week ago. However, I have no financial interest to declare because although I am an absent father, my own case has not come and I believe cannot come before the Child Support Agency. Therefore mine is not a financial interest.
I wish to draw attention to three or four matters on which I think that the present Act is grossly deficient and unfair. The first is connected with what is known as "clean break" arrangements. I should mention that such arrangements are now made and have been made for several years in, I understand, about half of all agreements made at the time of the divorce. The thought behind them is that the wife—and it is almost always the wife—should receive the matrimonial home and/or a large part of the available equity. In return, she receives less in the way of maintenance both to herself and for the child or children of the marriage than she would otherwise receive.
However, the Child Support Agency—unlike the court in such cases—under the formulae set down by the Act and the regulations, in deciding what maintenance the children should receive, cannot take any account of the fact that the wife has gained in the form of the house or other equity. It seems to me that in these cases the husband's only remedy, if indeed it exists, is to return to the court and ask for the agreement to be modified because the child maintenance has been agreed. His only other recourse is to sue his lawyer for negligence if he has recommended that course of action after the Child Support Act has become law. I am glad that the noble Lord, Lord Meston, appears to find that an insufficient reason to feel any anxiety. My proposal is that, in fairness, the Child Support Agency should not take on cases in which "clean break" arrangements have been made so long as those arrangements are being adhered to by the father.
Secondly, there are three or four cases in which certain expenditure by the father should be taken into account by the formulae in working out the maintenance payments but is not. The noble Earl referred to expenses that would be incurred by the father in travelling to and from work. Such expenses can arise where he wants to remain in the part of the country where his children are but has a job, for instance, in the City and has to travel backwards and forwards between Brighton and London. Such expenses are not deductible for tax purposes. But
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in my opinion they should be deductible in determining how much of his income should be taken into account for the purposes of the formulae.
Much more important, although it does not affect everyone, is the question of school fees. It seems quite remarkable that if parents decide that their child should have a private education, which will cost nowadays somewhere in the region of £4,000 or £5,000 a term —let us say, £12,000 or £14,000 annually; and that is not just for Eton but for quite minor so-called public schools—then no part of what the father pays in respect of that private education is taken into account at all by the formulae. That is despite the fact that if the child goes to a boarding school he will be at that boarding school for 36 weeks of the year, or whatever it may be, and during that time the mother is still entitled to receive as much as she received before he went there. In whatever way the father manages to pay that money —by running into debt, by taking another mortgage on the house or by selling the family silver—the fact that he spends all that extra money on the son and diminishes the amount that it costs the child's mother is simply not taken into account at all.
The next point which seems to me to be quite extraordinary relates to what it costs the father to spend time with his children at weekends or during his holidays—I know from personal experience and I assure noble Lords that that time can be very considerable—is simply ignored unless the child spends 104 nights a year with him. How the regulations got hold of that extraordinary figure of 104 nights a year, which is two-sevenths of the year, I do not know. But it means that if a father spends 103 nights a year with his child, which may cost him £500 or £800 a year, that time is not taken into account at all in working out the maintenance that is payable. Let us suppose that he spends 104 nights of the year with his child, which is two-sevenths of the year. In that case he has to give the mother only two-sevenths of what he would otherwise give her. Were he therefore to spend half the year, or 182 nights a year, with his son he would have to pay her only one-half of what he now has to pay her. One thing to remember about that is that it very often happens that a father picks up his son or daughter at 9 a.m. on Saturday morning, spends the whole of Saturday and the whole of Sunday with him or her and returns the child to its mother at 10 o'clock on Sunday night. That counts just as one night when working out how many nights the child spends with the father.
I spend a great deal of time with my son—every other weekend and half the holidays. In fact, it usually comes to more than that because his mother has taken a full-time job and cannot give him so much of her time. I was quite surprised to find, having added up the figures today, that my score for the past 12 months has been only 99 nights—"99 not out" and I am hoping to reach a century this weekend. In other words, although I spend far more time with my son than the average absent father, I would not qualify for a rebate of two-sevenths on what I would be giving to his mother under the Act.
Another point is that there are mothers who are quite devious. Certain mothers, having reckoned up and seen that the magic figure of 104 nights was approaching,

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would do what they could to deny access so as to keep the figure below 104 and thereby obtain an additional £800 a year, or whatever it maybe.
The only other example that I want to give is where mortgage payments have to be made by the husband in respect of what used to be the marital home and has now become the wife's house under a clean break arrangement. As I understand it, if the husband is making such payments of that mortgage, they are not taken into account. He might just as well not be making them. In my opinion, in all those cases the expense involved to the father should be deductible from his income under the formulae mentioned in the Act.
I should like to raise one last personal point. I keep asking myself: if ever this did come to the Child Support Agency, what would be the position with regard to the reimbursement of my expenses incurred through attending your Lordships' House? I hope it is quite clear that those expenses are not income. They are not liable to income tax and do not have to be declared to the Inland Revenue. They are merely the reimbursement of the expense it costs me to come to this city to appear in this House. I wonder what would be the position if some noble Lord—not me, of course—found himself in that same situation. Would such very generous reimbursement of expenses be considered relevant for the purposes of calculating the maintenance payable? I hope that that remains a hypothetical question.
9.18 p.m.
Lord Simon of Glaisdale: My Lords, we are all deeply indebted to the noble Earl for enabling us to consider the serious issues in relation to child support on a wider basis than we did last week when we considered the regulations. With all his engaging buoyancy, the noble Viscount can hardly feel that the Act itself or the regulations emerged unfrayed from your Lordships' scrutiny last week.
There are two matters arising out of last week's discussion that I wish to take up before coming on to the opportunity given to us by the noble Earl to consider questions of the support of children outside the nuclear family when it is subsumed and, within that, the effect on single parent families. The first is purely a question of parliamentary procedure.
When I spoke last week I ventured to draw attention to the advantage of the affirmative resolution procedure because it enabled the noble Viscount to explain the regulations to us in a way that is not open under the negative resolution procedure. But I nevertheless drew attention to the fact that he shied away from a most important point that was raised by the Joint Select Committee on Statutory Instruments; namely, the extraordinary way in which the department was claiming to use the word "transitional" in relation to the regulation-making power.
The noble Viscount said that he would deal with that matter when he replied, and very convenient was that for him because the point was this. I ventured to quote what the department wrote to the Joint Select Committee, and I said —I am sure rightly—that what the department was claiming under the word "transitional" was to
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correct mistakes that were made in the Act itself which would not have been made if they knew what they now know. That is indeed an extraordinary use of that word, as the committee pointed out.
When the noble Viscount came to reply, he merely read out what the department had written to the Joint Select Committee which, I may say, I had read out earlier. We therefore had no opportunity of checking with the noble Viscount whether he agreed that what was claimed under the word "transitional" was to make regulations correcting mistakes in the Act itself which had subsequently come to light and which would have been corrected if they had been known of at the time. But that is a matter of the political parliamentary machinery.
Another point arises from the regulations. One of the attractions held out to your Lordships in the Act was the great saving of public funds. I took a fairly favourable view of that, naturally, as an ex-Treasury Minister—though it hardly commended itself to most of your Lordships. But your Lordships will want to know now how far that figure must be mitigated in view of the regulations altering the impact of the formulae. I hope that when the noble Viscount replies he will tell us that.
I turn from that point to the general question raised by the noble Earl's Question. I refer to the machinery. I beg the noble Viscount not to say again that the general principle of the Act is approved; namely, that parents shall contribute to their children's maintenance so far as they can and so far as is equitable. That is quite useless because that was precisely what the previous law endeavoured to do, and indeed did. The difference was that that law was administered by magistrates taking account of the local economic and social circumstances, and, as the noble Earl, Lord Russell, and the noble Lord, Lord Kilbracken, said, able to adjust the decision to all the manifold circumstances that obtain after a separation and the children need support.
I can see no escape from the iniquities of the Act —indeed, even mitigated by the regulations—save its total repeal and reversion to what we had before; in other words, maintenance assessed by human beings in a magistrates' court rather than by officials applying a completely unintelligible formula. The great architect, Lethaby, used to describe the arts and crafts endeavour as making things by human beings for human beings. That was how the previous law was administered. It was administered by human beings sitting in the magistrates' court for human beings—the wife, the husband and the children, with all their manifold differences of circumstances. That is the first thing I think should go out on this review—get rid of the Act altogether.
Along with that I cannot help feeling it regrettable that we have had not one word of regret from the department for the injustices that admittedly—because they have had to be put right by regulations—have been perpetrated. If there was still any complacency, I should have thought that it would have to go in view of the two speeches that your Lordships have already heard and in view of the two briefing papers from the citizens advice bureaux, which were absolutely devastating and showed how much injustice is still outstanding.

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I turn from the matter of machinery to the general question of single-parent families. I find it extraordinarily difficult to know how they are made up. The figures I have seen have varied enormously—I think probably because certain components like divorcees and cohabitees outside marriage and ex-cohabitees are growing rapidly. But there is one component of which we should not lose sight and to which I shall come later. I refer to widows and widowers. There are many examples where a widow left as sole parent has brought up the children admirably. We can all think of some of our colleagues in that respect.
The second thing that has to be said is that of the other components, many no doubt cope very well with their difficulties and do their best, and often an admirable best, for the children. Nevertheless, these matters must be looked at statistically as well as by anecdote. There is no doubt statistically that the single child in a single-parent family is at a grave disadvantage unless it is not, so the surveys show, due solely to the poverty that is so often attendant.
In discussing what we should do to mitigate that harm it is necessary to look at what we should do immediately and in the long run. For example, immediately we are bound to say that the widow who is the sole parent shall have proper social support. Unless we are prepared to concede that, the welfare state or the welfare society, however one looks at it, is meaningless.
Then there are the divorcees. Since it is our fault in manufacturing a wholly unsatisfactory divorce law facilitating easy divorce and often with gross injustice, it is surely our immediate duty, pending the improvement of the divorce law, to see that the divorcee is properly looked after. That applies also in the case of the absent father, as he is called. The noble Lord, Lord Kilbracken, mentioned the clean-break divorce, as it is called. That was a piece of humbug supervening on the greater humbug of the Divorce Reform Act 1969. As the noble Lord explained, the theory was that the father surrendered his interest in the equity of the matrimonial home to the caring mother on condition that maintenance should be either eliminated or mitigated. The only effect was that the burden of maintenance was shifted to the general taxpayer. That was pointed out —the noble Lord, Lord Meston, would have noted it —in a very able letter to the Spectator a little time ago from the secretary of the Family Law Bar Association.
I have dealt with divorcees. The same applies to the ex-cohabitees because it is our fault also, in our debasement of our concept of marriage, that there are so many unions now outside marriage. I noted the other day from the general household survey, that women who cohabited without marriage in 1981 were 11 per cent.; in 1992 it was 21 per cent. That is merely carrying forward the spirit of the permissive society; and as we permitted it, we, as a society, are under obligation to shoulder the support.
So much for the immediate rectification. In the long run, the overriding aim should be to restore the status and prestige of marriage. We should certainly cease treating a divorced wife more favourably from the point of view of finance or property than a woman who stands by her marriage. That is merely encouraging divorce.
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Changing that is, I should have thought, an elementary step that should be taken by a Government who profess the aims that the present Government profess.
Next, we want a far sounder divorce law. As was pointed out at the time of the Divorce Reform Act 1969 by the two most knowledgeable Members of your Lordships' House, Lord Hodson and Lady Summerskill, the fact is that there are mighty few people in this country who can support two families. The noble Baroness, Lady Hollis, made that point last week; and I see that she nods in approbation, perhaps because she made it herself last week—
Baroness Hollis of Heigham: My Lords, I agree with it.
Lord Simon of Glaisdale: My Lords, that is the first thing. We must go back to having a divorce law which does not allow for merely consensual divorce whereby the burden of the children is shuffled on to the general taxpayer—still less have the divorce provision that we have at the moment, whereby a woman who has stood by her marriage may nevertheless be cast off because she has ceased to find favour in her husband's eyes.
I should like to say one final thing about the clean break. The noble Lord, Lord Kilbracken, suggested that the provisions could lead to the reopening of all the maintenance assessments that have been made by the courts on the basis of the so-called clean break. However, there has recently been a decision by Mrs. Justice Booth in the Family Division in which she said that such assessments cannot be reopened. I think that she did that reluctantly; but that is the law as it stands.
The noble Lord, Lord Kilbracken, said that he hoped that there might be a second specific: namely, to sue the lawyers who had led the parties into this deplorable mess. I cannot encourage that—not only because I would not like to see lawyers so treated, but because the situation is absolutely hopeless. No lawyer could possibly have envisaged so fantastic a measure as the Child Support Act, which has led us into this trouble. I do not think that either way will work, but I hope to hear from the noble Viscount, Lord Astor, how he answers the points that have been put to him; how he answers the other points that are raised by the citizens advice bureaux; and generally how he sees the Act operating more equitably than at the moment and, in particular, what can be done to rectify the mischief that has been done.
Lord Kilbracken: My Lords, before the noble and learned Lord sits down, perhaps I could just say that what I was proposing was that there might be a cause for action against the lawyers if the course of action had been proposed after the Child Support Bill became an Act.
Lord Simon of Glaisdale: My Lords, no. The fact is that the Child Support Act has virtually killed off the clean-break divorce. I bow to the more current information of the noble Lord, Lord Meston, but that is what I understand.
9.40 p.m.
Lord Meston: My Lords, I ought to begin by saying that all this talk of suing lawyers is making me very nervous! We are fortunate that my noble friend's Question gives us an opportunity to take a fresh look at the impact of the child support legislation and at ways of improving it beyond merely tinkering with the amounts stipulated by the regulations. This is not an occasion yet again to go over ground already travelled several times in earlier debates on the legislation and the subsequent regulations.
However, it should be said that in respect of men who have given up all or a larger share of their capital interest in a former home, it is quite clear that the Government have simply not got the point. It really is not an adequate answer to say that such a person will have an allowance for his own housing costs. The Act has and will hit hard those who entered into such capital settlements before the legislation was even thought of. It is now a strong disincentive for future settlements on similar terms, as the noble and learned Lord indicated.
The result will be a return to settlements which require women to sell up their homes when the children have grown up in order to pay a deferred capital share to men who by then may not need it and who during the period of deferment will have had exactly the same housing costs as if they had given up all their interests in the property. Paragraph 4.12 of the 1990 White Paper at least contemplated the possibility of reducing the formula amount by using standard accounting techniques for converting a lump sum into an equivalent weekly amount.
The Government did not take up the idea in the legislation and the Select Committee of another place, in its report of December last year, seemed to have accepted the Government's view. At paragraph 74 it stated rather lamely:
"We can see no sensible way of attempting to place a current value on settlements made in the past in order to give some notional figure for current income which could be taken account in the formula. The only option for absent parents who find themselves having to make increased maintenance payments under the formula, having previously made capital settlements, is to return to the courts to see if the existing orders can be varied on the basis of altered circumstances".
As the noble and learned Lord pointed out, there is no such option in reality and it is astonishing that the Select Committee thought that that was possible. Surely it is not too much to ask the Government to think again on this topic.
We all appreciate that this legislation inflexibly covers all types of fathers from those who care nothing at all about the welfare of the children they produce to those at the other extreme who care very much about their children and who mind very much about being described, whether accurately or inaccurately, as "absent parents". It also covers the large number of fathers in between who want to contribute as best they can to their children but who also want a reasonable opportunity to rebuild their lives.
Family lawyers have the practical experience of trying to deal with the impact of child support legislation on parents who want to resolve their financial and property affairs on divorce or on breakdown of a
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relationship, preferably in a civilised and sensible way. The heart of the problem is that lawyers and clients are now confronted with a rigid system of child support superimposed on an essentially flexible system of discretionary law governing income and capital distribution after divorce and governing provision for children under the Children Act 1989.
The two organisations representative of the family law practitioners—namely, the Family Law Bar Association and the Solicitors Family Law Association —put at the very forefront of their joint submission to the Select Committee of another place the proposal that wherever there has been an assessment, there should be the opportunity to apply to a court for a review of that assessment. The model for that proposal was and is the Australian system which allows for the application for review to an independent child support review office and further review by the court. The review allows a discretion to depart from the formula in circumstances specified in statute.
It is, frankly, regrettable that the Select Committee expressed no comment or opinion whatever on that proposal. But in the circumstances, it is probably not surprising that the Government did not address the idea in formulating their recent rather limited changes. However, it was noticeable that on the day after the Government's announcement of changes on 22nd December, leading articles in The Times, the Guardian and the Independent all spoke of the continuing inflexibility of the system and of the need for a right of independent appeal to ensure that the system works fairly.
So far, the Government's only response to that idea has been to suggest that the Australian system of assessment is cruder and that our more sophisticated system does not require such a review mechanism. There are two short answers to that suggestion.
Baroness Hollis of Heigham: Rubbish.
Lord Meston: My Lords, not as short as the answer offered by the noble Baroness, but I suggest that there are two relatively short answers: first, that no formula, however sophisticated, can be devised to deal with the infinitely diverse financial circumstances of different families; and secondly, if our assessment formula is more sophisticated, it is unlikely that there will be as many reviews in this country to deal with the special circumstances for which a review is justified.
The joint FLBA/SFLA submission gave a list of examples of the kind of situation in which a review may be required. I shall not take time reading them out now. But statistics show that even in Australia only 11 per cent. of assessments are the subject of review; under 4 per cent. of payers receive a decrease on review; and 2 per cent. of recipients receive an increase. Moreover, the average increase is about twice the average decrease so that the result is fiscally neutral. Moreover, the cost of running a review office can certainly be set against the cost of the existing appeal tribunals.
That proposal deserves better attention than it has received so far. It is not a panacea for aggrieved fathers or for indignant mothers. A general sense of grievance will not be sufficient to justify a discretionary review.

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Special circumstances set out by law will be required to provide the basis for such a review. However, it is quite clear that the existing system will not work fairly and will not be seen to do so without a proper safety valve in the form of an independent appeal mechanism.
The debate in another place on 2nd February ended abruptly at 10 o'clock with the Minister having just begun a sentence with the tantalising words, "As to the future". I hope that the noble Viscount can give us a glimpse of what was to have followed.
9.50 p.m.
Lord Stoddart of Swindon: My Lords, I, too, wish to thank the noble Earl, Lord Russell, for raising this matter again and for giving all of us an opportunity to say a few more words about the Child Support Agency and the Act which brought it into being. The Minister knows that I was very much opposed to that Act, and remain opposed to it, because I believe it was conceived out of hysteria and ignorance. It was processed through Parliament with scant regard for the consequences and indeed is being implemented in chaos and with a ruthless disregard for the interests of so-called absent parents, especially those who have been meeting their responsibilities.
The Act of Parliament was introduced allegedly to deal with runaway fathers. Perhaps noble Lords remember that Mrs. Thatcher, as she then was, had her picture all over the papers. The newspapers proclaimed that she intended to deal with runaway fathers. But of course things have not turned out that way. This business of chasing runaway fathers has turned out to be a racket to extract considerably more money from people who have already made provision for their children, either on a continuing basis or by means of a clean break approved by the courts.
In case anyone thinks I am being a little tough on the Government and the Child Support Agency, I should perhaps refer to a couple of CSA memos which were leaked to the Guardian newspaper. The memos state that in order to meet financial targets—there is nothing about fairness there —cases with potential should be dealt with first. I emphasise the word "potential". Then other cases would be dealt with comprising existing income support claimants chosen by CSA staff made up of good quality cases from the "stocktake" where the absent parent is already paying, or from cases held over from April where the CSA was fairly confident of a large maintenance assessment and where the absent parent would be able and willing to pay. The memos emphasise that the name of the game is maximising the maintenance yield and urged officials not to waste time on the non-profitable stuff.
I suppose the document is authentic. Perhaps the Minister will tell me if that is not the case. If the document is authentic, that is a terrible way to deal with people. What a way to deal with parents! I hope that the Child Support Agency has learnt something from the outcry that has arisen throughout the land over its handling of these cases.
The amendments made last week to the regulations were of some help but the fact remains that the Act was cobbled together in haste and remains defective, as we
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have heard tonight from every noble Lord who has spoken. The debate has focused on the defects of the Act in great detail. I hope the Minister has taken notice of what has been said.
I agree with the noble and learned Lord, Lord Simon of Glaisdale, that the best thing the Government could do would be to scrap the Act, scrap the whole business and start again after proper consultation and after proper discussion in Parliament. The Government should introduce a Bill enabling us in Parliament to decide the regulations and not a group of unaccountable civil servants egged on by a greedy government who are determined to get as much money as they possibly can out of this measure. Perhaps we could then produce something that is more in keeping with our democratic heritage rather than the Stalinist model with which we are now stuck.
Since the Government are unlikely to do that they had better consider some amendments. Many have already been proposed. The first amendment that ought to be made relates to a point that I raised when we had a debate on the regulations last week. I said that I did not believe that there was equality of treatment between the father and the mother. That was confirmed in a letter which appeared in the Daily Mail yesterday, 8th February. It is headed "Biased bureaucrats". The letter is interesting. It reads:
"The numerous reports of fathers being financially crippled by the Child Support Agency have made interesting reading, as I count myself among them. However, my situation is different.
My wife left me and our two children in August 1992 to live with another man. We have since divorced and she has remarried. A month after our split, I was made redundant.
My wife offered maintenance of £20 per week per child which, on the advice of my solicitor, I accepted. In April last year, the CSA became involved and I was told by my solicitor that, based on the earnings of my former wife and her husband, I could expect more.
But, rather than increasing the payment, the CSA reduced it to £4.05 per week per child, leaving me £125 a month worse off. Moreover, I was informed that any additional sum my wife paid voluntarily would be deducted from my income support.
To say that I have received less than fair treatment at the hands of the CSA is putting it mildly".
We would probably agree.
I sincerely hope that the CSA will have seen that letter and will investigate. It seems to confirm what I said last week, that perhaps an even-handed approach is not being adopted as between husband and wife, or between male and female partners. Therefore, that is a matter which has to be addressed.
The other point I wish to make is this. When the carer —the person who has physical charge of the child—is allocated the whole of the allowance of £44 per week, why should the so-called absent parent have to meet the whole cost of that care? If parents are equally responsible then surely they should each meet half of the carer's costs. In other words, instead of having to find the whole of the £44, the absent parent should be expected to find only £22. It is a difficult matter, but nevertheless I believe that it has to be considered.
Moreover, the Government should ensure that where care is shared the financial arrangements should be based on a 365 day, pro rata basis—as my noble friend

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mentioned—and not on a notional formula which does not treat the so-called absent parent (who is often not absent by choice) fairly.
We have heard a great deal about clean-break settlements which have been made by the courts. My own view is that where a court makes a settlement it is the court which should break that settlement. I understand everything that has been said, particularly by the noble and learned Lord, Lord Simon of Glaisdale, and the noble Lord, Lord Meston, and I appreciate the difficulties. But among fathers who have made such clean break settlements there is a sense of grave injustice. They believed when they made them that they were making those arrangements for all time, and that they were reasonable and acceptable not only to the wife or other partner but also to the courts. When those fathers sign such an arrangement and for whatever reason, fair or unfair, it is set aside by an unaccountable agency, they rightly feel very frustrated and angry about the whole business. I believe that somehow or other where clean break settlements have been made, the courts that made and agreed them must become involved in breaking them. I do not know how, if that is not lawful at present. The Government, of course, have the power in their hands to bring forward suggestions through legislation or by regulation.
In any event, as the noble Lord, Lord Meston, said, there should be an independent appeal procedure. It cannot be right that people who are suddenly confronted with huge increases in their outgoings should have no redress, and no one to whom they can put their case other than the people who have made the assessment in the first place. That is against all sense of justice and against the British system of justice.
Other factors have been referred to. I wish to emphasise them. Unavoidable expenses in maintaining employment should certainly be exempt when assessing the non-resident parent's income. If a man—in some cases it may be a woman—is desperately seeking to keep himself off the dole and works to ensure that his children can be properly maintained, but in order to do so he incurs very much higher expenses than usual, they should be taken into account. He is making every effort to do what the Government and everyone else believes that he should do: that is, maintain his own children. He should be assisted in such circumstances.
As has already been mentioned, the expenses of the non-resident parent when visiting children should be taken into account where they are excessive through no fault of the absent parent. Very often the children are removed to far away places in order that the absent parent cannot gain access. Because those circumstances are not taken into account when making the assessment, the absent parent is denied access to his children.
We then have to deal with the problem of passported benefits. It is quite wrong that the parent who has care should, at the margin, be denied those passported benefits; he or she will be very much worse off. That cannot be right and the Government ought to take note and do something about it.
There is a great danger that the operation of the Child Support Act may well encourage the break-up of
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families. That is the very reverse of what we wish to do at present. The BBC "Panorama" programme on Monday showed the damage that is done to children through divorce and the break-up of a family. We have to take that factor very seriously indeed. I agree with the noble and learned Lord, Lord Simon of Glaisdale. We have to try to reverse the trend. We have to ensure that children can be brought up so far as possible in a caring and loving home with two parents. That has been unfashionable and politically incorrect for a long time and it is about time that we made it politically correct. Why should we do that? Because the children want it and they do better under that system. That has now been shown, but in my view the Act encourages the break-up of families.
I believe that men are now seriously considering their position. They know perfectly well that if they are not careful they can be saddled with a heavy burden for a long time. It may be that, side by side with sex education, young people should be made aware of the serious implications of becoming parents. As an aside, I suggest that parents should perhaps now advise their boys, as well as their girls, to say "no".
I return to the vexed question of access, which I raised last week. Whatever the Government may say, whatever we may believe in this place, the fact is that parents, particularly fathers, feel that if they discharge their financial responsibilities to their children they are entitled to have contact with them. They say that if parents have equal financial responsibility for the maintenance of the children, then they should have equal rights in respect of contact with their children. I believe that is true, provided there are no good reasons why they should not; for example, if they beat up their wives or their children, or some other reason. I believe that both parents are entitled to that contact with their children.
All too often, unfortunately, we find that men, in particular, who are making proper financial provision for their children are now being wilfully denied access, even when a court order is in operation. Something must be done about that. Undoubtedly, men feel hard done by at present and if they are to have financial responsibility they must have access rights as well.
In conclusion, I say that the Government will ignore at their peril the outcry that there has been about the Act. They passed it wilfully, in spite of the opposition in this House and in spite of the warnings. It was conceived in haste and it is about time the Government realised that it will cause them only pain for so long as it remains on the statute book in its present form. I urge the Government to do something not only for the sake of the people in the country who are paying the price but also for their own sake at the next general election and the local elections which will come shortly. If they are not careful, they will find their numbers decimated.
10.8 p.m.
Baroness Hollis of Heigham: My Lords, like others I wish to thank the noble Earl, Lord Russell, for giving us this opportunity, perhaps for the first time recently, to scrutinise the working of the Child Support Act and the agency. It is a significant measure because it will bring

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about 20 million people within the remit of the social security system, many of whom would never dream of that being so. Therefore, there is an important set of questions that we must consider tonight.
Notwithstanding the noble and learned Lord, Lord Simon, on this side I believe it is worth repeating that we believe that absent parents and not the state should, wherever possible, support their children. I say that because for the rest of my remarks I wish to criticise the Child Support Agency. The more we learn and read about it, the more we receive letters and talk to people who are affected by it, the more we are all left with a deep and abiding sense of its unfairness.
To whom is it unfair? First, it is unfair to the poorest women and to the lowest paid men. We have not heard very much about women tonight. But lone parents with children are already very poor. On average, such women with children have only two-thirds of the income of a couple with a similar number of children. They are the main clients of the Social Fund. They take up, for example, 49 per cent. of its loans. They are quite likely to be in debt with fuel and water bills, and therefore will already have their income support top-sliced. Their children are likely to be on free school dinners. The children themselves are likely to be poorly nourished, poorly clothed and show poor school performance. That mother receives £2 per day per child—the price of a hamburger—to feed, clothe and keep her child warm.
Under the Child Support Agency that mother will lose her benefit pound for pound. Indeed, as my noble friend Lord Stoddart rightly said, she will lose it more than pound for pound. She will lose passported benefits, of which free school dinners for two children are worth £10 a week alone.
We are pleased that the Government agreed to raise the protected income for men for additional costs from £8 to £30 to cover such items as travel costs and the like. Why should not the Government consider a similar disregard, as the chairman of the Select Committee and the chairman of the Social Security Advisory Committee said, and as the noble Earl, Lord Russell, said, which would at the very least cover the loss of passported benefits and prevent the mother and her children being made even poorer by this alleged child "support" Act.
Nor is the formula fair to women on family credit, any more than it is fair to women on income support. Assuming that a woman on family credit gets, say, £40 maintenance, £40 earnings and £30 family credit, the family credit is fixed six months at a time. Should the maintenance falter and the absent parent become unemployed, her family credit will not rise accordingly to compensate. For five months that woman could be required to live at an income well below income support level. But she will not be eligible for income support if she works more than 16 hours a week. If she is wise, of course, she will probably give up her job and go fully on to income support. Will the Minister please look at this point? Will he also assure us that where family credit is based on full maintenance payments, which the Government have now decided, quite rightly, are to be phased in, that family credit will now immediately be
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adjusted to compensate for those phasing-in arrangements? Otherwise, a welcome concession to the father will be paid for quite directly by the mother and her children, and that would be monstrous.
Only better-off women will be better off under the Child Support Act—that is, if they receive no benefit and will in future receive maintenance in an assured way. We are pleased for them and that is forward looking for them. But it is worth remarking that they can look forward to maintenance of around £60 to £80 per child per week, whereas the state saw fit to support that same child on £15 a week.
The formula is therefore not only unfair to poor women, those on income support and those on family credit; it is also unfair to low-paid men. Those below the protected income level will lose 85p in the pound. Those who are much better off will lose only 25p in the pound on the top slice of their income, and less than that if they have three children. So the poorer you are as a man, the higher the proportion of your income will be claimed by the Child Support Agency. I repeat: poorest women and lowest paid men both do worse out of the CSA. That is not fair. It must be reformed.
Secondly, the CSA is deeply and abidingly unfair as between first and second families, a point which was explored by your Lordships tonight. It is unfair precisely because absent parents, usually men, on earnings below average, as the noble and learned Lord, Lord Simon, rightly said, simply cannot maintain two families at or above the poverty line. Obviously it is right that such an absent father should so far as possible be expected to maintain equally all his children from whatever marriage. But the formula does not achieve or indeed have that intention.
Let us consider housing. As the noble Lord, Lord Meston, rightly said, whatever the Minister says, there is no connection between equity forgone and subsequent housing costs incurred. Clean break settlements often involve quite substantial equity in housing and they have been ignored. So, no solicitor of any separating father will in future allow his client to sign away the family home.
So to the stress of separation and the strain of relentless poverty, which the caring mother will face, will now be added the trauma of homelessness, either immediately or when the youngest child is 18. Under the despicable proposals of Sir George Young, she will no doubt find herself in bed and breakfast or temporary accommodation rather than in a settled home. Does the Department of the Environment ever talk to the Department of Social Security, when each tries to ship its costs of support to lone parents onto the other, leaving the lone parent stranded and forlorn?
Children belong to their parents but they also belong to all of us because we have a public policy interest in their welfare and well-being. We are making their future even more bleak in this, the year of the family.
Nor is the Child Support Act fair in terms of the obligation facing an absent parent who is now in a second family. My noble friend Lord Stoddart rightly described the problems of the soft target. That absent parent entered marriage and made that family in good

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faith. Court settlements are behind him and maintenance is being paid. If that maintenance is inadequate, that was the judgment and fault of the court and not his.
Half of all absent parents are in a second family. Half of those have children in that family who are dependent on the step-father usually, at least to begin with, brought by the new partner. As a result that partner is not on income support. In the early stages therefore the mother will not bring enforced maintenance from her absent partner. Indeed, if the absent partner of the new parent is sick, unemployed or dead, she has no maintenance to bring.
What do the Government expect the step-father to do? If he does the decent and humane thing and supports the children, he is financially penalised. But if he does not do so, that second family will break up as surely as the first and the domino effect of deprivation will extend.
It is clear from research into the children born in the cohort of 1958 that children in step-families are fragile. They are more likely to truant and leave home and the girls are more likely to become pregnant when young even than are the children of lone parent families. Every aspect of the Child Support Agency's treatment of such step-children adds to their vulnerability. "Oh," say the Government, "let the step-father adopt them." That is an appalling recommendation, which I hope that the Minister, in common decency, will not repeat tonight. It means that if one is unemployed and too poor to maintain one's natural children, another man should adopt them so that he can claw back money that would otherwise be taken by the Treasury—even though all the research into the children in broken families shows that contact with the absent father in a supportive, friendly and non-controversial way is crucial to their emotional health.
Does the DSS not know of that research, much of it sponsored by that department? If it does know, why does it not care about it? There is a very simple and sane solution recommended by the Select Committee—and it is interesting to see how the Government have picked and chosen among the Select Committee's recommendations—which says that one should count in the step-father's exempt income support for step-children until, or if and when, that is displaced by maintenance from the partner's absent spouse.
Still dealing with the problems of the relationship between the first and second families, is it really fair that the income of the partner of the absent father, the new wife, and any other adult such as her adult sons in that household, should be taken into account when determining the amount the second family recycles back to the first family? That may include supporting the unemployed new male partner of the first family. Is the Minister really comfortable that the wife of the second family will be working to support the male partner of the first family? Is that fair? But that is the Act. It is not surprising that there have already been 900 contested paternity cases as a consequence of the Act—I do not blame them.
The Secretary of State said in another place that the three objectives of the Child Support Agency were, first,
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to give a child maintenance from both parents; secondly, to increase incentives for lone parents to work; and, thirdly, to reduce the burden on the taxpayer. On the first of those, yes; child maintenance will come. But the child on income support will not benefit because child maintenance does not mean child support. Children in many first families will often find their mothers poorer; stepchildren in second families are, in financial terms, invisible, non-existent or, to coin a phrase, zero-rated. Let us hope that they do not need to eat as well!
On the second of Mr. Lilley's objectives—the incentive for lone parents to work—research by Bradshaw and Millar, and Holterman shows that lone parents already desperately want to work. Three-quarters of single parents want to and intend to work but usually they can do so only when the child is over five and there is adequate childcare. We were the first to congratulate the Government on making some moves in that direction in the last Budget. It is still not enough. But why are we being so punitive? As Bradshaw and Millar show in their research, the average time for lone parents to be on income support is, what? Between 15 and 20 years? No. It is between two and two-and-a-half years; that is all, and generally until the youngest child is old enough to permit them to work. The person who stays on income support longer tends to be the much older divorced woman who finds it hard to re-enter the labour market. For all others income support is a transitory stage through which that mother passes usually into work, occasionally into marriage, and it supports her and her children while they remake and reshape their lives.
So, Government myths to the contrary, there is no terrifying dependency culture out there. Instead there are young women, single mothers working desperately hard with their children on minimal income to bring them up, fit them out for life and, as soon as possible, achieve their own economic independence on a total weekly income of usually around £77 for a mother with two children that many of us would spend on an evening's dinner. Too often we have had character assassination of women who are unsung heroines; not because they are lone parents but because they are poor lone parents.
With regard to the third of Mr. Lilley's criteria, yes, it probably will reduce the burden on taxpayers. After all, four-fifths of the money is being recycled back to the taxpayer. We support the contention that when the father can, he should maintain his children. But the evidence suggested and repeated tonight shows that for many families the poverty of the first family will not be relieved by pressing the second family down into poverty as well.
There was an alternative, as has already been mentioned—the Australian system. Despite Mr. Burt's remarks to the contrary in another place, it is a simple and sophisticated scheme which we could and should have adopted. It is based on gross rather than on net income, to be sure. But as the Australian Government's handbook explains, that is to ensure that there is no fiscal inequity between the fathers in first families who receive no tax relief and other absent parents. It goes on

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to say that that is reflected in an altered percentage of taper. But leaving aside the difference between gross and net, what are the other features of the Australian system that we should have adopted?
First, introduced in 1989, it is not retrospective. Existing court settlements are respected but uplifted, with court approval, by the CSA and collection is enforced by the CSA. Only parents separated after October 1989 come within the full remit of the Child Support Agency. Therefore, parents who had made future plans in good faith did not see them come tumbling down due to retrospective legislation.
That is too late for us now, but we could at least adopt the second distinctive feature of the Australian system. As the noble Lord, Lord Kilbracken, emphasised, property settlements, including those of clean-break arrangements, are taken into account and can proxy for up to 25 per cent. of maintenance awards. The third feature of the Australian system is that the parent with care has a right to retain a modest amount of maintenance—what is called in Australia a free area. It is a disregard worth about £12 a week for two children, something, again, which all commentators have called for. Thereafter there is a taper of 50 cents in the dollar.
Above all, the Australian system has a review or appeal procedure by which the formula may be departed from on defined grounds laid down in the law. I shall mention four of the grounds on which one may ask for a departure from the assessment: the unusually high cost of travel access, often between states; the extra cost of maintaining a handicapped or chronically sick child or relative; where one parent is repaying the joint debts incurred by both; and where the absent parent is paying the mortgage for the parent with care. These are defined and narrow grounds laid down by legislation; so defined and so narrow (but nonetheless fair) that, as the noble Lord, Lord Meston, cited, only one in 10 of maintenance awards actually goes to the review officer. It is not floodgate stuff. I hope that we are not told that tonight. One in 10 goes to the review officer. About half are successful. Of those one-third are increased at the request of the parent with care and two-thirds are reduced at the request of the absent parent. Such a procedure is seen, felt and experienced to be fair. We could even now adopt it.
It is too late for our Child Support Act to be retrospective but we could at least learn from the experience of other countries. Had we done so the complaints about the workings of the Child Support Act would have been minimal and the Child Support Agency would have found itself working with the grain of public consent.
With some temerity, perhaps I may disagree with the noble and learned Lord, Lord Simon. I believe that the old court-based system had to be amended. Its awards were sometimes too low, were paid irregularly, were not increased over time and were not always enforced. But the Australian Child Support Agency addresses each and all of those problems. It has the powers to make good existing court settlements. There is much to be said for standard formulae which are not subject to the whims of discretion, as we see, for example, with the
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social fund. But we need at the same time a basis from which there can be departures from that formula for good and specified cause, again, as in Australia.
We believe that parents should support their children. That is their family covenant. But absent parents on below-average earnings cannot support both families without plunging those families into poverty. We have as a society also a covenant—that all children should have the same chances and opportunities that we would wish for our own children. Nothing less is anywhere near good enough. This Act does not offer those children such chances and therefore it must be reformed.
10.29 p.m.
The Parliamentary Under-Secretary of State, Department of Social Security (Viscount Astor): My Lords, the noble Lord, Lord Meston, reminded your Lordships that in a debate on the regulations in another place on 2nd February my honourable friend the Parliamentary Under-Secretary of State ran out of time and ended the debate in mid-sentence while saying "as to the future". I know that your Lordships would have preferred that he was able to finish the sentence, so I intend to start by taking your Lordships back to the future after dealing with the concerns raised tonight.
I have listened with care to the contributions which your Lordships have made this evening. Only last week we debated proposed changes by regulations to the child support scheme. I hope that these are still fresh in the mind so I will not repeat them here this evening. During the course of our debate last week and in the debate in another place, it was evident that there is still widespread belief in the basic principles of the Child Support Act.
The Government have a responsibility in framing social legislation to balance the needs of all concerned. In this instance our responsibility lies primarily with the children for whom we arrange maintenance. We have also to consider the parents with care; absent parents, second and step families and the taxpayers in our deliberations and I believe that all parties are treated equitably by the changes to the child support scheme.
There are, however, some aspects of the child support scheme about which noble Lords have indicated continued concern. The noble Earl, Lord Russell, expressed concern about the costs incurred by absent parents in travelling to work and in travelling to see their children. They are, of course, very important items of expenditure, but absent parents will be able to meet the costs from the large margin of their net income which, under the formula, is left after meeting their maintenance obligation. Noble Lords will recall that as a result of the changes which came into effect this week more absent parents will have more money to meet these sorts of expenses.
Of course, there will be hard cases; but the majority of these are the direct result of the deficiencies within the old system. That system allowed other expenses to be placed before child support; it allowed absent parents to move to commuter belts to enjoy a better quality of life; it allowed their fares at the expense of their children. That cannot be right. It will be difficult for an absent parent with high travel costs to adjust their

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incomes to meet their new liabilities, but for years it has been an awful lot harder for parents with care and their children, struggling to make ends meet on woefully inadequate amounts of maintenance.
To try to incorporate into the formula a range of specific costs, such as travel to work and visiting first families, would provide a shopping list of items that would be viewed as essential by some but not by others and would have the effect of reducing the priority given to child maintenance. Indeed, under the old court system this is invariably what happened, resulting in unrealistically low levels of award.
This view was supported by the Social Security Select Committee which, in its recent report, concluded that it would be better to increase the level of protected income. As noble Lords will know, these changes were introduced last week.
Maintaining their children should be the parents' first priority. Allowing for individual items of expenditure in the formula would give those expenses a higher priority than child support. As a result of the increase in protected income, the net income of the absent parent will be at least £30 a week above the appropriate level of income support. In a substantial majority of cases the absent parent will be paying no more than 30 per cent. of his net income in maintenance even once the phasing period is over. As I said, the old system of allowing other expenses and debts before child maintenance, as the noble Lord mentioned, resulted in increasingly low levels of payment.
The noble Earl also said that the formula needs to take account of other individual circumstances. I believe that the formula already does take account of individual circumstances. It looks at the income and the outgoings of both parents, including housing costs and the ages and numbers of the children. It produces realistic amounts of maintenance which reflect the true costs of bringing up a child.
The formula produces maintenance assessments which reflect the true cost of maintaining a child, while also ensuring that absent parents can afford to meet the payments. There can be no comparison between tax and the needs of a child. It is true that for some absent parents the maintenance assessment represents a substantial increase in payments when compared with orders made by the courts. However, as I said, many court orders were very low, did not reflect the cost of maintaining a child and were not increased in line with the cost of living.
I make no apologies for stating again that there can be no clean break between parents and children. Under the court system, parents had the right to seek periodical maintenance for a child or to seek variation of an existing order following a capital or property settlement. It has always been open to the Secretary of State for Social Security to seek such a variation where the taxpayer became involved in supporting the children. Often, a property settlement which transfers the equity in the home also transfers a debt in the shape of mortgage repayments. Where the parent with care is on
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income support, as many are, the taxpayer foots the bill, not only for the day-to-day maintenance of the children but for the repayments on the mortgage as well.
Baroness Hollis of Heigham: My Lords, perhaps the noble Viscount will permit me to intervene. Does that mean that where a parent passes over a substantial equity without any mortgage liability to be borne by the taxpayer, the Minister accepts that there is an argument for that equity to be taken into account in the settlement?
Viscount Astor: My Lords, the noble Baroness will have to allow me to finish what I am saying about clean-break settlements.
In its report, the Select Committee concluded that there is no sensible way in which the capital value of past settlements can be taken account of in current maintenance assessments. The formula already reflects the practical consequence of settling a house on the former partner. In such cases it is likely that the absent parent, unable to call upon the equity of the matrimonial home, will incur higher housing costs than would otherwise be the case. The absent parent's costs of rehousing himself and any new children are deducted pound for pound from his assessable income, so reducing his maintenance bill.
Your Lordships have expressed concern that in future absent parents will not so readily agree to clean-break settlements and that as a result the matrimonial home will be sold and the parent with care will be made homeless. Where there is a family home, the courts continue to decide how that asset is to be divided. They are required to give first consideration to the welfare of the children, which includes the need for a home, when they settle property issues in divorce. They will know in advance how child maintenance is worked out. So decisions about the family home can be made in full knowledge of how much child maintenance will be payable.
The situation of absent parents with second families which include step-children—
Baroness Hollis of Heigham: My Lords, I am sorry but can the Minister answer the question I put to him? I believe that the note may now have come from the Box.
Viscount Astor: My Lords, the noble Baroness keeps interrupting and asking me questions when I am half-way through my speech. She really will have to contain herself and not be like a jack-in-the-box until I have covered all the points.
Baroness Hollis of Heigham: But—
Viscount Astor: No, I shall not give way. The noble Baroness must allow me to proceed with my speech. She has spoken and she must give the Government time to reply—
Baroness Hollis of Heigham: But the Minister is not replying.
Viscount Astor: Nor must the noble Baroness make sedentary interventions.

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I accept that there are circumstances where, for instance, the step-child is the child of a widow or widower or where, for some other reason, it is not possible for their other natural parent to provide them with financial support. However, I must reiterate that it is not considered to be right that an absent parent's step-children should be given priority over his or her own natural children. Where it is possible, the agency will seek to obtain adequate provision for the step-children from their natural parent, but where this is not possible the formula provides a safeguard for these children in the form of the protected income calculation.
The protected income calculation provides that an absent parent retains enough income after paying maintenance to meet his or her day-to-day needs and that of any second family. To ensure this, an adjustment is made to the assessed amount of child maintenance where the absent parent's disposable income would otherwise fall below his protected level. The protected level of income reflects the day-to-day expenses of the absent parent and his latest family. In this calculation, the entire second family is considered. In effect, therefore, the needs of the step-children are placed before the needs of the natural children. There would be cases where the protected income assessment abates the whole of the assessed maintenance, and in that case there is in effect no payment by the absent parent to the parent with care.
Your Lordships will recollect that one of the changes which we have just introduced increases the protected income levels for second families. This will benefit any step-children in the maintenance assessment unit, as will the new phasing provisions which I described earlier.
Your Lordships have mentioned the Australian appeal system. That system allows appeals against the amount of a formula assessment in certain circumstances. The appeal was originally to a court but since July 1992 the work has been transferred to the Australian Child Support Agency where it is carried out by specially appointed review officers. There are some very particular reasons why an appeal system is necessary in Australia. There are some very significant differences in the way in which child support is assessed which makes it essential to have a mechanism for varying the amount of maintenance in certain cases.
The assessment is far more broad-brush, taking the gross amount of the income declared in the absent parent's tax return for the year before last (multiplied by an indexation factor) and allowing for day-to-day expenses for the absent parent and any child of his own living with him. Unlike our system, there is no allowance for housing costs. Once this basic amount for living expenses has been deducted, the child support payable is a fixed percentage of the remaining income. The percentage varies according to the number of children involved; from 18 per cent. for one child up to 36 per cent. for five or more. The amount does not vary depending on the age of the child as it does in this country.
Moreover—and this is an important point—there is no equivalent of "protected income" provision which ensures that the absent parent and his current family
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keep a minimum amount of income after paying maintenance. In Australia, therefore, it is entirely possible for an absent parent's income after paying maintenance to drop below benefit levels, particularly if he has step-children. Thus discretion is required to avoid severe hardship which could otherwise occur.
There are two grounds of appeal. First, that the absent parent's ability to pay the formula amount is reduced because of the cost of providing for himself or another child or person he is liable to maintain; or because of the costs associated with access to the child of the assessment; or because he is meeting other particular costs of the child in the assessment.
The second basis for appeal is that there has been an unjust and inequitable result from the application of the formula because either it has not taken account of the full financial resources of either parent, or the value of a financial or property transfer made for the benefit of the child has not been taken into account.
On the surface a discretion-based appeal system seems like a simple solution to all the criticisms that have been levelled against the Child Support Act. Advocates of such a system argue that it would preserve the basic structure of the scheme while at the same time introducing an effective mechanism for dealing with hard cases. Such a solution is not the panacea it might at first appear. If the right of appeal were to be universal the flood gates would open. Everyone will apply and the Child Support Agency and the formula will, in effect, become redundant. This would herald a return to the old system where a whole list of expenses were placed ahead of the child's support with the result that many awards were for derisory amounts.
If a right of appeal were to be limited to specific circumstances we would still have another problem. If the entry rules were drawn too wide we would still be left with the situation that I have just described; if the definitions were too precise we would still be left with hard cases. This would leave us with the worst of all worlds: a formulaic system seriously undermined by discretionary adjunct that is divisive and unfair. To suggest, therefore, that we could introduce discretion through an appeal system that is open to all and capable of solving all problems, and yet preserve the integrity of the system, is not practical. The plain truth is that there are two options: discretion or a formula. These options are mutually exclusive; you may have one or you may have the other, but there is no middle road.
Lord Simon of Glaisdale: My Lords, why does the noble Viscount say that? Why are they mutually exclusive? Why can you not have, as in Australia, initially a formula to be applied and then a discretion to review it when it operates harshly and inequitably?
Viscount Astor: My Lords, I understand the point that the noble and learned Lord is making, but I have described that the appeal system in Australia is very different and is done on a very different basis.
We believe that you either have to have a system that is discretionary or which has a formula. We tried discretion and it does not work. We know that the old court-based system failed the vast majority of parents

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with care and their children. There were far more hard cases under that system. The I million parents reliant on income support were a testament to that.
Lord Stoddart of Swindon: My Lords, the noble Viscount says that you cannot have a mixed system, but of course you can have a mixed system. We have already got it in the social security system. If a person is dissatisfied with his social security allocation, he can appeal to a tribunal. Surely that is possible for child maintenance. Why cannot that be done? There is a precedent for it.
Viscount Astor: My Lords, the noble Lord, Lord Stoddart, is talking about adjudication within the benefit system. Of course there is that adjudication in the benefit system, but it is based on law and what someone is or is not entitled to. It is based on case law built up over a period of time. Therefore, it is not a discretionary system in any way. We do not have that in this system and that is why it is different.
Baroness Hollis of Heigham: My Lords, that is precisely the Australian system which we were recommending to the Minister; namely that it is a discretion which is shaped and laid down by law. What the Minister described as part of the social security system is exactly the same as that in the Australian Child Support Act in which, as I understand it, the absent parent's income is analogous to social security rates. The noble Viscount may have been misinformed about that matter. What he describes already exists in Australia and works perfectly well.
Viscount Astor: My Lords, I am well aware of what exists in Australia. I have already described that to the noble Baroness. However, I am trying to explain that the system is different in Australia because it is based on entirely different matters. That is why the Australian system cannot be transferred here and be made to work. I realise that the noble Lord, Lord Stoddart, disagrees with me. We shall have to disagree on that point.
We believe that the formula must be given time to work. It is inevitable that people must adjust their outgoings to meet their liabilities. We cannot escape that and I recognise that, for some, it will not be easy. However, I believe that the changes that we made last week will go a long way towards easing those transitional problems.
I turn now to the noble Lord, Lord Kilbracken. The noble Lord talked about attendance in your Lordships' House. That is often a pleasure for many of your Lordships and, indeed, as noble Lords may have noticed, attendance in your Lordships' House can also be hard work for others. But I assure the noble Lord that work-related expenses are not taken into account when calculating an absent parent's net income.
The noble Lord, Lord Kilbracken, spoke about the 104-night rule. Where a child spends on average at least two nights a week with the absent parent, his maintenance is adjusted. Use of the figure of two nights ensures that absent parents have significant care of a child before the maintenance is reduced.
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He asked also about school fees. The formula takes no account of payment that absent parents make in respect of school fees because the basic needs of the child and, therefore, the cost of providing day-to-day support should come first. It would not be right for an absent parent to pay for a child's private education while the taxpayer pays for his every-day needs.
The noble and learned Lord, Lord Simon of Glaisdale, talked about, among other things, the transitional provisions. I believe that the provisions which we brought before your Lordships were not merely to correct mistakes but to deal with a transitional problem which was not previously identified. We could have made permanent changes to the formula. We could have achieved the same effect using the powers in Schedule 1 to the Act, rather than using a transitional power. Part 3 of the regulations merely modifies the formula, in some cases for a limited period. It does not amend the Act.
Earl Russell: My Lords, may I clarify what the noble Viscount says? Is he saying that whenever the Government change their mind, that is transitional and, therefore, justified under transitional provisions?
Viscount Astor: My Lords, the noble Earl, Lord Russell, makes an interesting point, but here we are dealing with a specific aspect of the child support regulations which passed through your Lordships' House last week. I am replying to that. I am not dealing with all legislation which the Government may or may not produce before your Lordships. We must stick to the subject that we have before us, which is the noble Earl's subject.
As I have said, Parliament agrees regulations which are put forward by the Government. It was quite out of order for the noble Lord, Lord Stoddart of Swindon, to criticise civil servants. That is not a usual custom of your Lordships' House. Ministers are responsible to Parliament and the Government are responsible for bringing forward regulations. I believe the noble Lord knows that as well as anyone here tonight.
The Child Support Agency was set up to collect maintenance from absent parents who are not paying and to ensure that those who pay do so at a realistic rate. I must remind your Lordships that in 1979 50 per cent. of lone parents in receipt of income support were receiving maintenance payments, but by 1989 this figure had fallen to 23 per cent. In 1991 two-thirds of lone parents were dependent on income support to meet their day-to-day expenses. Clearly even where maintenance was being paid it was in many cases being paid at an unrealistically low rate.
I believe the noble Lord, Lord Stoddart, also accused us of targeting payers. I do not think that is the case. It is not true that the agency has concentrated on the so-called soft cases. I must inform the noble Lord that of the approximately 1 million cases that the agency will deal with in its first year over 60 per cent. will involve absent parents currently paying no maintenance at all. The noble Lord must take account of that.
I now turn to the effect the child support scheme has had upon parents with care. One of the basic aims of the Child Support Act is that the burden on the taxpayer

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should be reduced where parents can afford to support their children. It is a natural consequence of receiving maintenance that many parents with care will no longer receive income support. Many lone parents tell us that they want to work and regular maintenance provides a platform between benefit dependency and total independence.
Of course, such parents will no longer automatically qualify for entitlement to free school meals and exemption from National Health Service charges such as prescriptions and optical and dental charges. But parents on low income will still be eligible to apply for a range of income-related benefits such as housing benefit, council tax benefit and family credit, as well as help with NHS charges on income grounds. This phenomenon is not new. It could have applied to those floated off income support due to maintenance arranged under the old court system or indeed to any other form of income the person may acquire.
It is true that free school meals are only available to children in families receiving income support, but the line must be drawn somewhere. I should also point out that an amount is built into the family credit rates to reflect the cost of school meals, so it is not a case of withdrawing assistance totally once people leave income support.
Some parents with care may be worse off. However, many will actually receive more in maintenance than they had been receiving on income support. And what is really important is that this now frees them from the benefit trap. For example, it could free them to take part-time work.
Baroness Hollis of Heigham: My Lords, what are the Minister and the Government proposing to do about those parents who the Minister recognises will now be worse off?
Viscount Astor: My Lords, I have said I recognise that some parents might be worse off but I hope I have explained the position clearly as regards family credit and the benefit trap.
For some parents with care the changes which we have just introduced will mean a reduction in the child maintenance they receive. However, most will still receive more maintenance than they did under the old court-based system, even after these changes have taken effect. Additionally, those in receipt of income support will have their benefit adjusted to compensate for the reduction in their income.
The noble Baroness asked me about the effect the changes will have on parents with care in receipt of family credit. Family credit is payable for 26 weeks and not normally adjusted for changes of circumstances. Changes in maintenance will not therefore be taken into account until a renewal claim is made. Because income can move up or down, some will gain because of this rule while others lose. Other in-work benefits, such as housing benefit, can be adjusted immediately, minimising the effect on any losers. Family credit is a broad brush benefit with the awards made for six months. There will always be people who will gain from changes of circumstance during the award and there will be people who will not. That is the nature of the benefit.
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Changes in maintenance during one duration of a family credit award are treated exactly the same as changes in any other income. Other in-work benefits, such as housing benefit, can be adjusted immediately, minimising the effect on the parents with care who will see their income reduce.
We have decided that it is inappropriate to disregard maintenance in income support, for various reasons. The first is that income support is payable as a last resort to people who have no other means of support. To allow a disregard would be to make double provision. Such a move would provide a perverse incentive to remain on benefit. For that reason we have put the disregards into the in-work benefits such as family credit. We know that the majority of parents with care wish to work, especially as their children get older, and regular payments of maintenance, together with the disregards in the in-work benefits, will help them to achieve that goal.
There is also an argument of equity. Why should one parent with care on income support be better off than another simply because the Child Support Agency has managed to secure maintenance for her?
Before maintenance is paid at all, allowances are made in the absent parent's net income for his essential living expenses—and housing costs, and living expenses and housing costs for any child living with him. The income left is known as the assessable income.
Earl Russell: My Lords, perhaps I may check whether I heard the noble Viscount correctly. Did he say, why should a woman be better off than another previously on income support simply because the Child Support Agency had secured maintenance for her? If he said that, does he understand that he has made a fundamental statement about the purpose of the Act?
Viscount Astor: My Lords, I am aware of what I said. I gave the noble Earl a number of reasons why we feel that there should be no maintenance disregard in income support. He will recall that there were three reasons.
To return to the formula, the absent parent is expected to pay half this income as child maintenance only until the basic maintenance requirement is met. Where the absent parent has assessable income left over after he has met the basic requirement the formula provides for an "additional element" at the lower deduction rate to be paid. The lower deduction rate reflects the fact that as parents' income increases, a smaller proportion is spent on the children and more is retained by the parents to spend on themselves. The recent changes mean that an absent parent with one child will pay 15 per cent. of his remaining assessable income in child maintenance; a parent with two children will pay 20 per cent.; and one with three children will pay 25 per cent., up to the maximum amount.
Before any maintenance is paid, a check is made to ensure that the absent parent retains enough income after paying maintenance to meet his or her day-to-day needs and those of any second family. That is known as the protected income calculation. The recent changes to protected income significantly increase the level of income kept by lower-paid absent parents. The net

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income of absent parents will now be at least £30 a week above the appropriate level of income support. In a substantial majority of cases, the absent parent will be paying no more than 30 per cent. of his net income in maintenance.
The reforms introduced last week will deal with some of the anxieties raised over the past few months, in particular those highlighted by the Select Committee. We said at the introduction of the scheme that we would keep the legislation continually under scrutiny. That still holds good. However, we feel that it is vital to give the recent changes time to take effect. We expect the changes to have a more significant impact than most absent parents have recognised. Once they see how their maintenance bills have been reduced that will become readily apparent. Long-term changes should rightly be assessed over a period of time, but we have demonstrated that we can respond to anxieties after proper consideration.
I have listened with care to all the points that have been made this evening; and of course I shall study Hansard with great care. I shall indeed bring all the anxieties raised tonight by your Lordships to the attention of my right honourable friend the Secretary of State.
Lord Simon of Glaisdale: My Lords, before the noble Viscount sits down, is he in a position to answer the question which I specifically asked? When the Act was introduced to us, a very large sum was held out as inuring to the benefit of the taxpayer due to increased contributions from absent fathers. I asked whether that figure has not now been modified by the regulations. Can he give us a few figures?
Viscount Astor: My Lords, I apologise to the noble and learned Lord. I took note of his question, which was: what is the reduction in savings to the taxpayer as
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a result of the changes? Next year's costs are expected to be in the region of £100 million, with long-term costs of £95 million. These estimates are derived using the original assumptions about volumes of cases, throughput, compliance rates and many other factors which affect the agency's work. With a brand new scheme such assumptions may obviously need to be reviewed in the light of experience. The cost of those measures may therefore change because they do not at this stage make allowance for possible variations on those assumptions.
I apologise for not answering the noble and learned Lord earlier. I trust that that has now answered his point.
Lord Simon of Glaisdale: My Lords, on the contrary, I thank the noble Viscount for answering now.
Lord Stoddart of Swindon: My Lords, the Minister will recall that my noble friend Lady Hollis asked him about clean breaks where a considerable sum of money had been handed over and there was no charge against that money. He promised to answer that question. Indeed, he refused to give way to my noble friend on the ground that he would come to that item. Will he now give us the answer?
Viscount Astor: My Lords, I gave the general answer to your Lordships. The point is that even where there is no outstanding mortgage, such a situation still leaves the taxpayer to meet the ongoing needs of the child in most cases.

Greater Nottingham Light Rapid Transit Bill
Reported from the Select Committee with amendments and recommitted to the Unopposed Bill Committee.
House adjourned at two minutes past eleven o'clock.