Lords Sitting of 20 July 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 Lichfield.

Lord Quirk
Sir Charles Randolph Quirk, Knight, CBE, having been created Baron Quirk, of Bloomsbury in the London Borough of Camden, for life—Was, in his robes, introduced between the Lord Wolfson and the Lord Porter of Luddenham.

Wandsworth Borough Council: Housing Policy
2.49 p.m.
Lord Dean of Beswick Lord Dean of Beswick asked Her Majesty's Government:
Whether they are satisfied that Wandsworth London Borough Council is acting in the best interests of the council tax payers of the borough by selling off accommodation which gives less financial return than if the accommodation was rented.
The Parliamentary Under-Secretary of State, Department of the Environment (The Earl of Arran): My Lords, whether the policies and decisions of Wandsworth Borough Council are in the best interests of its council tax payers is a matter for the council tax payers to judge.
Lord Dean of Beswick: My Lords, is the Minister aware than when I and others in your Lordships' House were involved in local government there was almost a statutory duty on members of local authorities to do the best financially for the people in the area. Have the rules changed? If not, why is Wandsworth not being brought to heel and made to deal with the situation referred to in the Question in the interests of the taxpayers in Wandsworth?
The Earl of Arran: My Lords, I know that the noble Lord has considerable experience in local authority management. However, I think he will agree that it is for each local authority to ensure that it exercises its discretion in a manner which does not conflict with statutory obligations.
Lord Hailsham of Saint Marylebone: My Lords, as a council tax payer in the borough of wise Wandsworth,
230
I ask my noble friend whether he is aware that we are altogether satisfied with our council in comparison with some of the neighbouring bodies.
The Earl of Arran: My Lords, I am delighted to hear what my noble and learned friend says. Indeed, I have heard the same from many other people besides the noble and learned Lord.
Lord Jenkins of Putney: My Lords, as another taxpayer and ratepayer in Wandsworth, may I say that Wandsworth Borough Council is beginning to smell and will soon have a similar effluvium to that already emerging from Westminster?
The Earl of Arran: My Lords, frankly, I do not think that that is playing the game. The noble Lord well knows that there are some serious and grave allegations against councillors in Westminster and that an able and qualified district auditor is pursuing the case as quickly as he can.
Lord Finsberg: My Lords, is it not the answer that, first, if anything was occurring which was not right the district auditor would already have taken action? Secondly, did not the sensible inhabitants of Wandsworth re-elect their council only a few months ago? Surely they are the best judge of the situation?
The Earl of Arran: My Lords, my noble friend is quite right. Of course the district auditor would have taken action if he had thought it appropriate in the particular circumstances.
Lord Monkswell: My Lords, perhaps I may—
Noble Lords: Order!
Viscount St. Davids: My Lords, the noble Lord, Lord Monkswell, may not speak from the Gangway.
Lord Monkswell: My Lords, I had thought that I was within the precincts of the House. I thought that one was outside those precincts a little further to the right. Having moved slightly to the left, perhaps I may ask my question. Is it not right that local councillors have a legal duty to respect and protect the fiduciary interests of their local inhabitants? Surely the case identified by the noble Lord, Lord Dean of Beswick, would suggest that local councillors in Wandsworth are not abiding by their legal duty. What action are the Government going to take to investigate the matter and ensure that the law is upheld?
The Earl of Arran: My Lords, there is a statutory obligatory duty upon the councillors in every local authority to house the homeless as they think appropriate in their particular local authority. That is what is happening.
Lord Williams of Elvel: My Lords, is the noble Earl aware that there are serious allegations that Wandsworth's housing policy was illegal and that it failed to fulfil the council's obligation to the homeless as part of its duties under the Housing Act 1985, to which I believe the noble Earl was referring? Is he further aware that distinguished lawyers have reported that the impact on the homeless of sales policy in Wandsworth is,

231
"close to the margins of legality"?
Will the noble Earl take this opportunity to make sure that the Government give Wandsworth Council proper notice that it is "close to the margins of legality" and that it should not stray over those margins?
The Earl of Arran: My Lords, I understand the point that the noble Lord makes. But I also understand that the council has reviewed its procedures with a view to reducing the maximum time that is spent in bed-and-breakfast and other forms of temporary accommodation.
Lord Dean of Beswick: My Lords, in his Answer a few moments ago the noble Earl referred to the question of homelessness. A Statement on homelessness was made in another place earlier this week which, because of the pressures of business in this House, unfortunately we could not take. Is the Minister aware that Wandsworth, and the other councils that follow the same policy, are exacerbating the present plight of the homeless in London? Is he further aware that, according to independent bodies in the area which deal with the homeless, the situation has now once again begun to deteriorate and more homeless people are appearing on the streets in London?
The Earl of Arran: My Lords, the local authority in Wandsworth is not exacerbating the situation on the homeless. As I recently said to another noble Lord, there is a statutory obligation upon each local authority to house the homeless. That is precisely what Wandsworth is doing.

Local Government: Reorganisation
2.55 p.m.
Lord Boyd-Carpenter Lord Boyd-Carpenter asked Her Majesty's Government:
Whether it is still their intention to increase the area of the United Kingdom in which local government is organised on a single-tier basis, and what progress has been achieved in this respect.
The Earl of Arran: My Lords, in England, the Local Government Commission is due to complete its review of the shire counties by the end of 1994. We have so far accepted the commission's proposals for the creation of unitary authorities in the Isle of Wight and Cleveland. In Scotland and Wales unitary authorities will be established by primary legislation. In Wales there will be 22 unitary authorities from 1st April 1996. A Bill for Scotland is currently before this House.
Lord Boyd-Carpenter: My Lords, I thank my noble friend for that comprehensive Answer. However, is he aware that many of us feel that there is far too much reorganisation of local government in the areas where there are two tiers operating; and will the Government exercise their influence to bring about the economy in administrative costs which follows as widely as possible where there is a single-tier authority?
The Earl of Arran: My Lords, as regards cost, this is part of the point of the whole exercise in having a
232
look again at local government. I believe that my noble friend would agree that after 20 years of one particular structure it is only sensible and justifiable to take a very close look at local government in order to see that it gives good value to those whom it serves.
Lord Jenkins of Putney: My Lords, will the noble Earl agree that there are large cities where it is necessary to have not merely a borough type of organisation for the various parts of that city but also another tier over and above it, so that the interests of the city as a whole can be represented? Is it not the case that that is sadly missed in London? While they are looking at this matter, will the Government reconsider the possibility of recreating a body to take the place of the late lamented Greater London Council?
The Earl of Arran: My Lords, it was some time ago (back in 1986) when the Greater London Council expanded. The noble Lord raises a point; but what I am saying is, very simply, that each particular county is being looked at extremely carefully to see that the considerations that are given are appropriate to that particular county.
Lord Pym: My Lords, is there any reason why counties where the electorate and the inhabitants prefer the existing two-tier arrangement rather than any of the alternatives that are proposed should not continue as they are?
The Earl of Arran: No, my Lords, I want to make it quite clear to my noble friend that there is no national blueprint; and that may well be the case in some counties.
Lord Stoddart of Swindon: My Lords, can we have an absolute assurance from the noble Earl that the Government are still committed to the unitary authority system, since it is quite clearly the most democratic system of local government, being nearest to the people, responsive to their wishes, and far more economical?
The Earl of Arran: Yes, my Lords. Of course the Government are committed to the unitary authority system. But they are having a very good look at each particular case to see how many unitary authorities might be necessary.
Lord Peyton of Yeovil: My Lords, will my noble friend remind his superiors elsewhere of the views expressed in this House in a debate not very long ago and of the anxiety that was then expressed that the commission did not listen quite as carefully as it might have done to local views and local preferences?
The Earl of Arran: My Lords, I hope very much that the commission did consult widely and indeed listen very carefully. On the first point that my noble friend mentioned, I am aware of the strength of opinions and

233
views on this matter among many of your Lordships. My right honourable friend the Secretary of State is also well aware of that.
Lord Mackie of Benshie: My Lords, is the Minister aware that the dissatisfaction in Scotland is not with local government but with his government?
The Earl of Arran: No, I am not aware of it, my Lords. Furthermore, I totally dispute it.
Lord Renton: My Lords, in regard to the question of my noble friend Lord Pym and the reply given to him, where local people find that a unitary authority is proposed and they have expressed their wishes in favour of it, does my noble friend Lord Arran agree that their wishes should be observed?
The Earl of Arran: My Lords, that is the whole point of the consultation exercise; namely, that the views of local people should be taken into account and widely known.
Lord Cledwyn of Penrhos: My Lords, is the Minister aware that, under the present system, in Wales there are eight education authorities, eight directors of education and so on; but under the new system there will be 22 education authorities and 22 directors? Does he believe that that is an improvement?
The Earl of Arran: My Lords, that is for the people concerned to decide. I understand that most of the existing authorities are already co-operating in the transition process.
Lord Kimball: My Lords, is my noble friend aware that in the case of Leicestershire and the boundary commission's welcome proposals for the restoration of the historic county of Rutland, unfortunately the consultation process is seriously flawed? Will he accept that whole villages have not received the consultation paper and houses in multi-occupation in Leicestershire have received only one form? Will he look at that situation? Does he agree that it is also important that the consultation process should include a section giving people the option to vote for the status quo?
The Earl of Arran: Yes, my Lords, the status quo is certainly an option, as my noble friend said. With regard to the flawed consultation to which he referred, I shall pass that information on to my right honourable friend the Secretary of State.
Baroness Hollis of Heigham: My Lords, does the Minister accept that we on these Benches support the unitary principle wherever possible so that local people know who does what and who is to be held accountable? Does he fully appreciate that our continued support of the review process - support which he may come to need—is entirely conditional on two matters? The first is that all elections to shadow authorities should be all-out; in other words, the Cleveland fiasco should not be repeated. The second is that there should be
234
satisfactory and civilised arrangements for the transfer of staff. Will the Minister give us proper assurances on both those points?
The Earl of Arran: My Lords, I am certainly aware of the conditions which, according to the noble Baroness, we shall have to observe in order to have the support of her party. I feel that that may perhaps be a kind of blackmail or something of a threat, so to speak. But perhaps not—let us take it in the lightest possible way. It is certainly something of which the Government are aware and at which they are looking extremely closely as the process continues.
Lord Rodgers of Quarry Bank: My Lords, is the Minister aware that it is clear from all sides in the other place today that there is widespread dissatisfaction with the outcome of the review? He has made clear that it is the Government's intention to pursue it, however mistaken that may be. He referred to the Government having made a decision in respect of Cleveland. Will he accept that, although the judicial review found nothing to set aside, it made a number of pertinent criticisms of the way in which the commission was operating? In those circumstances and in view of the strong local feeling in favour of the re-creation of the Borough of Teesside, will he think again and accept further consultation to that end?
The Earl of Arran: My Lords, there is the possibility that as regards Cleveland there may be a wish to appeal. I gather that they have until the end of July to appeal.

Pensions: UK Nationals Overseas
3.4 p.m.
Lord Mackie of Benshie Lord Mackie of Benshie asked Her Majesty's Government:
Whether they will now cease the practice of freezing the pensions of British nationals living overseas at their level on departure from the United Kingdom.
The Parliamentary Under-Secretary of State, Department of Social Security (Viscount Astor): My Lords, it would cost some £230 million a year to unfreeze these pensions fully. In view of the continued need to contain public expenditure, we have no plans to change this longstanding policy.
Lord Mackie of Benshie: My Lords, I thank the Minister for his Answer, which I expected from the Government. Is he aware that the principle I raise arises from cases such as the following example? My ex-secretary was widowed early. She worked all her life and did not live in a subsidised house. When she retired she went to live in South Africa where her son was working. Now, 14 years or so later, she is £20 a week worse off. It appears to me that that is a case of gross injustice. Does the Minister agree that the £230 million of which he spoke would be better saved elsewhere?
Viscount Astor: My Lords, social security spending is running at more than £80 billion a year and is the Government's largest expenditure programme. We are

235
committed to an efficient, effective and affordable social security system that is appropriate to modern needs and protects the most vulnerable. But we have to ensure that spending on social security does not outstrip the nation's ability to pay for it. My right honourable friend the Secretary of State announced some specific proposals for the reform of the social security system which are designed to help restrain the growth in cost. To achieve that aim, the control of spending must be tight. Payments to people resident overseas cannot be an exception. We cannot hold out any prospect of an increase in our expenditure by adding to spending on pensions overseas.
Lord Elton: My Lords, can my noble friend tell the House whether any of the people at present in receipt of frozen pensions left this country before the pensions were frozen? Is it a fact that all of them were aware of the rule at the time that they took the decision to leave this country?
Viscount Astor: My Lords, the answer is that probably most of them were aware of the rule when they decided to leave this country. We pay over £800 million a year to nearly 700,000 pensioners worldwide. Of those, about 300,000 receive annual uprating increases. That is largely because they are resident in the European Community or the wider EEA.
Lord Clark of Kempston: My Lords, apart from the cost to the British taxpayer of unfreezing those pensions, does my noble friend agree that a pensioner receiving a pension in this country pays UK taxes whereas pensioners living abroad do not pay any taxes to the United Kingdom Exchequer? Does he further agree that consequently it would be extremely unfair not to differentiate between the two pensions?
Viscount Astor: My Lords, my noble friend makes an important point. Many of the pensioners living abroad may also qualify for assistance in the countries in which they now live.
Baroness Hollis of Heigham: My Lords, will the Minister accept that in 33 countries (so I understand) where there are reciprocal relationships pensions are inflation-proofed? As the old age pension is a contributory benefit, will he tell the House why reciprocity is an issue? Why are inflation-proofed pensions paid to British people in Jamaica but not in Trinidad?
Viscount Astor: My Lords, the national insurance scheme works on a pay-as-you-go basis. That means that this year's contributions go to this year's pensioners. The funds that an individual pensioner contributes are not earmarked for that individual pensioner. The scheme has never been and is not a fully funded scheme. The noble Baroness is quite right. We have reciprocal arrangements with some 15 countries. Most of those arrangements were negotiated some years ago.
Earl Russell: My Lords, having made my apologies to my noble friend Lord Mackie of Benshie, does the
236
Minister agree that the key principle is reciprocity? For example, Australians living in this country have their pensions uprated by the Australian Government. If that should not happen, the cost to his department could be considerable. Does he understand that the Australian Government believe that that policy is doing considerable harm to this country's international relations.
Viscount Astor: My Lords, with Canada, Australia and New Zealand we have a social security convention. That convention does not provide for pension increases to be paid. There are situations in which someone might receive a pension—for example, someone with, say, 20 years' residence in Australia, who has paid full Australian tax or national insurance equivalent, and who moved here prior to retirement, working here until retirement age. That person would qualify for full uprated UK pension while he was here or for a non-uprated pension if he moved back to Australia after retirement.
Lord Airedale: My Lords, can the noble Viscount tell the House the saving to the National Health Service in not looking after these people in their old age?
Viscount Astor: My Lords, we do not know what calls these people, as individuals, have on the National Health Service. Many went abroad long before reaching pension age and therefore for many years did not contribute to the national health cost. The pensioners concerned chose to live abroad, and to pay them unfrozen pensions would be an extra cost to the Exchequer.

South Glamorgan: Youth Unemployment, 1993
3.10 p.m.
Earl Russell Earl Russell asked Her Majesty's Government:
Further to Viscount St. Davids' reply of 4th July (H.L. Deb. col. WA62) to the question, how many 16 or 17 year-olds in South Glamorgan were not in education, training or employment in each of the first four months of 1993, and what percentages of the age group these figures represent, whether they have anything to add to the reply that "the information is not available in the form requested".
Viscount St. Davids: My Lords, the information which I gave in reply to the noble Earl, Lord Russell, was the basis on which the Government monitor the performance of South Glamorgan Training and Enterprise Council in meeting the youth training guarantee. It therefore represented the closest approximation to the information requested which could be provided from the records held by the Careers Service and the South Glamorgan Training and Enterprise Council.
Earl Russell: My Lords, is the Minister aware that he answered the wrong Question? He mentioned the Youth Training Guarantee group. We have now available a report published by South Glamorgan TEC which

237
pointed out that as an indicator of what was requested— the number of people not in education, training or employment—
"it is not a defensible indicator".
Is the Minister aware that that report indicates that those in this condition comprise 1,673 persons or 17.9 per cent. of the age group? Is he aware also that the records available to his department do not enable him to refute or even criticise that figure?
Viscount St Davids: My Lords, the Government are aware of the report commissioned by South Glamorgan Training and Enterprise Council. The source figures used in the report relating to the Youth Training Guarantee are consistent with those provided by the Careers Service and the TEC to the Government. The Government are not able to comment on the reliability or accuracy of other tables in the report without detailed information being provided on survey methodology, including the basis of assumptions made in compilation of the tables.
The figures I gave in the written response to the noble Earl, Lord Russell, have no direct counterpart in the South Glamorgan report. The report used the Youth Training Guarantee figures, which he will find on Table 3.1, of which the figures quoted in the earlier reply are a. sub-set.
Lord Callaghan of Cardiff: My Lords, if I may say so that is an exercise in obfuscation. Is not the nub of the Question the fact that there are several hundred young people at any one time in South Glamorgan of the age of 16 and 17 who are neither in training, in a job nor, alternatively, continuing with their education? That is supposed to be the Government's policy. It is failing by between 15 and 25 per cent. In those circumstances, instead of arguing about figures, should not the Government find out by means of a pilot survey whether or not the information from the University of Wales, Cardiff, is accurate? If it is, will they please take steps to make sure that this vulnerable group of young people are found in one or other of the categories to which the Government are directing their policies?
Viscount St. Davids: My Lords, the Government made sufficient funds available to meet demand for youth training. In addition, training and enterprise councils in Wales were invited to bid against £250,000 available in the current financial year for pilot schemes aimed at encouraging young people to take up employment, training or further education. That is intended to help the TECs work with both voluntary and statutory organisations to trace and identify those young people who may have fallen through the net.
Viscount Tonypandy: My Lords, is the Minister aware that his reply sounds unpleasantly complacent? A major problem exists and my noble friend Lord
238
Callaghan of Cardiff expressed the deep anxieties of people in South Glamorgan at the figures revealed by those responsible people in the University of Cardiff.
Viscount St Davids: My Lords, I can assure the noble Viscount, Lord Tonypandy, that the Government, and through them the Welsh Office, are far from complacent in this matter.
Lord Skelmersdale: My Lords, are we not in danger of going off the rails? Surely what matters is not so much the figures—1,673 was quoted from a particular source—but why some young people, for one reason or another, are unable to take advantage of the Government's guarantee of work, training or education. Is it not a fact that some people will inevitably be waiting while courses are arranged for them?
Viscount St. Davids: My Lords, the youth training scheme is not a compulsory programme. It is therefore entirely reasonable that compliance with the YT guarantee should be measured with reference to those registered with the Careers Service.
Lord Murray of Epping Forest: My Lords, are the Government aware that, contrary to what was suggested in the previous response, it is not a marginal or transitory problem? The South Glamorgan study bore out the results of research conducted by many other organisations including, for example, the NCH report on a "lost generation". If the noble Viscount is doubtful about the quality of the statistics or the results, will he commission independent research to examine the reasons for this, the consequences and the actions that should be taken both by government and other organisations to deal with what I am sure he accepts is a serious social problem?
Viscount St. Davids: My Lords, the Government have examined many studies in this area which include the labour force study, the pupil destinations statistics prepared by the Careers Service, the youth cohort study and the national on-line manpower information service prepared by the University of Durham. I can only repeat that the Government are extremely concerned and that is why they are making extra funds available for TECs to bid against in order to find a solution to these problems.
Lord Molloy: My Lords, bearing in mind that this is a serious problem in South Glamorgan for 16 and 17 year-olds, who now seem to have no interest in their future and no one else seems to be interested in their future, will the noble Viscount make an examination of 16 and 17 year-olds throughout the entire nation who may be suffering from this form of deprivation? It is extremely serious for the future of our country and should command the immediate and full attention of the Government.
Viscount St. Davids: My Lords, the Welsh Office and other departments of the Government are concerned

239
with these matters and do everything they can to relieve the situation and bring themselves up to date with all the statistics available.
Lord Cledwyn of Penrhos: My Lords, the replies of the noble Viscount thus far, particularly to my noble friend Lord Callaghan, have not satisfied the House that the Government are in possession of the facts. Will he now give an undertaking that they will conduct a survey in the area so that we may be satisfied that the Government know what are the real facts?
Viscount St. Davids: My Lords, I shall ask my right honourable friend the Secretary of State to read today's Hansard and consider your Lordships' expressed anxiety. If possible he will ensure that any further statistics and guidance will be made available.
Lord Prys-Davies: My Lords, the Government have had five months to digest the report. First, do they now accept that the YT guarantee group information, which they gave in reply to the noble Earl, Lord Russell, on 4th July, is a gross underestimation of the young people aged 16 and 17 not in education, training and employment? Secondly, in response to the question posed by my noble friends Lord Murray of Epping Forest and Lord Cledwyn of Penrhos, can we urge the Government to commission research in South Glamorgan in order to validate those figures? Will they initiate research also on an all-Wales basis and on a Wales and England basis? This is a matter of great anxiety to the people of Great Britain generally.
Viscount St. Davids: My Lords, I have just assured the noble Lord, Lord Cledwyn, that I shall bring this matter to the attention of my right honourable friend and I shall certainly make sure that it is drawn to the attention of other departments.

Sittings of the House: Report
3.20 p.m.
Viscount Ullswater: My Lords, on behalf of my noble friend Lord Wakeham, I beg to move the first Motion standing in his name on the Order Paper.
The House will recall that earlier this year my noble friend appointed a working group, under the chairmanship of my noble friend Lord Rippon of Hexham, to consider the practices and procedures of the House in so far as they affect the sittings of the House.
The group has submitted its report to my noble friend and on his behalf I should like to take this opportunity publicly to thank all the members of the group for the work which they have carried out. With the approval of the Procedure Committee, my noble friend has proposed that the report should be printed, and thus made available to all Members of the House, and that thereafter a debate on the report be arranged for after the Summer Recess. In the light of that debate, the Procedure Committee might be invited to consider ways in which the report's recommendations might be implemented.
Moved, That the Report to the Leader of the House from the Group on Sittings of the House be printed.— (Viscount Ullswater.)
On Question, Motion agreed to.

Lords' Expenses
3.21 p.m.
Viscount Ullswater: My Lords, on behalf of my noble friend, I beg to move the second Motion standing in his name on the Order Paper. It may be for the convenience of the House if, in moving this Motion, I speak also to the three other Motions standing in his name relating to Lords' expenses. I can only apologise to the House for the apparent complexity of these Motions. Their purpose is as set out in the answer my noble friend gave to a Written Question from the noble Lord, Lord Bruce of Donington, last Wednesday. It may, however, assist the House if I were briefly to clarify the effect of the Motions before the House today.
As your Lordships will be only too aware, the usual uprating of your Lordships' expenses, which is due at the beginning of August each year, did not take place last summer. I know that that has caused your Lordships some disquiet, for which I can only express my regret. The reason for the delay is that the basis on which your Lordships' expenses have been uprated since 1984, by reference to increases in corresponding Civil Service subsistence rates, and in respect of the secretarial allowance by reference to changes in Civil Service secretarial pay, no longer holds good. The Civil Service no longer promulgates central subsistence rates, which have been delegated to individual departments. And a new system for secretarial pay has been introduced.
The Government have therefore been investigating proposals as to how the subsistence rates applicable to your Lordships should in future be uprated. The conclusion we have reached is that upratings should in future be determined by reference to the retail prices index. I believe that this offers the most practical and convenient mechanism for the future, which preserves the value of the allowances without changing their nature (and which, importantly, preserves the existing tax position of the allowances).
For the future, the allowances will be uprated from 1st August by reference to the RPI in July. This means that at the end of this month the subsistence allowances will be further increased by the RPI index for this month. That will be in addition to the increases in the three Lords' allowances, up to an aggregated maximum rate of £2 per day, which your Lordships will be entitled to recover backdated to 1st August 1993.
I should also point out one small change in the eligibility for claiming expenses. This concerns those Members of the House who attend the boards of the Parliamentary Office of Science and Technology and of the Parliamentary Broadcasting Unit Limited. As Members of the House are appointed to these bodies by the Committee of Selection, and as the bodies themselves are very much parliamentary in their character, it seemed to the Government that Peers who attended meetings of the board should be eligible for

241
expenses in the same way as if they had attended a committee of the House. I trust your Lordships will look on that small change favourably.
The second Motion concerns the London allowance for office holders. This Motion follows the Motion which was agreed to in another place last week and is necessitated due to the replacement of the London allowance in the Civil Service by a recruitment and retention allowance.
The third Motion uprates the motor mileage allowance in accordance with the proposals which were agreed to by the other place last week. This Motion maintains the single rate allowance applicable to your Lordships, to which the House agreed in 1984. Again, this Motion is required because the schedule of motoring costs by which parliamentary motor mileage allowances were calculated is no longer available in a form which can be operated within the terms of the resolution.
Finally, the fourth Motion corrects an anomaly in the eligibility to claim expenses incurred in respect of a recall of Parliament during a Recess. The effect of the Motion, which again is similar to a Motion agreed to in another place, is to enable those of your Lordships who are abroad and who wish to attend the House in the event of a recall during the Recess to reclaim any necessary extra costs as may be incurred in respect of travelling back to London, together with the return journey. Ministers are currently able to recover such expenses from their departments, and this Motion will place other Members of the House on a similar footing. Lest there be any doubt about this, let me add that there are. no plans for such a recall! I hope that all this is sufficiently clear.
Moved, That this House approves the following proposals with respect to expenses incurred by Members of this House after 31st July 1993—
(1) The limit on the expenses incurred in a year which a Lord may recover under paragraph (1) (d) of the Resolution of 22nd July 1980 (office, secretarial and research allowance) should be the amount obtained by multiplying—

(a) the number of days of attendance by him in that year at relevant sittings or relevant meetings, by

(b) the appropriate amount for expenses incurred in that year;

but this paragraph is subject to paragraph (4).
(2) In paragraph (1)—
"relevant sitting" means a sitting of this House or of a Committee of this House, other than a judicial sitting;
and
"relevant meeting" means a meeting of the Board of the Parliamentary Office of Science and Technology or the Parliamentary Broadcasting Unit Limited.
(3) For the purposes of paragraph (1)—

(a) the appropriate amount for expenses incurred in the year beginning with 1st August 1993 should be £30–50; and

(b) the appropriate amount for expenses incurred in any subsequent year should be the amount obtained by increasing the appropriate amount for expenses incurred in the immediately preceding year by the relevant percentage for that subsequent year.

(4) In calculating the limit under paragraph (1) for any year there should, if a Lord so requires, be added to the number of days of attendance by him in that year such number of days in that year on which this House does not sit as are specified by him, but subject to a maximum of thirty days.
(5) The limit on the expenses which a Lord may recover under paragraph (3) of the Resolution of 22nd July 1980 (office holders' secretarial allowance)—

(a) for expenses incurred in the year beginning with 1st August 1993, should be £3,684; and

(b) for expenses incurred in any subsequent year, should be the amount obtained by increasing the limit for expenses incurred in the immediately preceding year by the relevant percentage for that subsequent year.

(6) The references in the Resolution of 25th July 1991 (day and night subsistence) to a sitting of this House or of a Committee of this House should include references to a meeting of the Board of the Parliamentary Office of Science and Technology or the Parliamentary Broadcasting Unit Limited.
(7) In determining, in accordance with paragraph (2) of the Resolution of 25th July 1991, the limit on the expenses which a Lord may recover under paragraph (1) (a) of that Resolution (day subsistence), the maximum daily amount—

(a) for a day in the year beginning with 1st August 1993, should be £31·50; and

(b) for a day in any subsequent year, should be the amount obtained by increasing the maximum daily amount for a day in the immediately preceding year by the relevant percentage for that subsequent year.

(8) In determining, in accordance with paragraph (4) of the Resolution of 25th July 1991, the limit on the expenses which a Lord may recover under paragraph (1) (b) of that Resolution (night subsistence), the maximum daily amount—

(a) for a day in the year beginning with 1st August 1993, should be £70; and

(b) for a day in any subsequent year, should be the amount obtained by increasing the maximum daily amount for a day in the immediately preceding year by the relevant percentage for that subsequent year.

(9) In this Resolution "year" means a year beginning with 1st August, and for the purposes of this Resolution—

(a) the relevant percentage for any year is the percentage by which the retail prices index for July in the immediately preceding year has increased compared with the retail prices index for the previous July;

(b) any amount obtained under paragraph (3) (b), (7) (b) or (8) (b) should be calculated to the nearest multiple of fifty pence; and

(c) any amount obtained under paragraph (5) (b) should be calculated to the nearest pound.

(10) The references in paragraph (9) (a) to the retail prices index are references to the general index of retail prices (for all items) published by the Cental Statistical Office; but if that index is not published for a month which is relevant for the purposes of this Resolution,

243
those references in that paragraph shall be construed as references to any index or index figure published in place of that index.—(Viscount Ullswater.)
Lord Dean of Beswick: My Lords, the Minister will not be surprised to see that I have risen to speak on this subject. I fully agree with him, as will other Members of the House, that this is a long and complicated Motion. I shall restrict my remarks to three items which I would say cover Back Benchers in your Lordships' House.
I express my thanks to the noble Lord, Lord Wakeham, who, unfortunately, is no longer with us in his former capacity, for spending time yesterday discussing some of the intricacies of the report. The overnight allowance has risen from £69 to £70. That is not adequate. I rent a flat in London in order to carry out my duties here and I do not think that an increase of £1 is adequate. I am told that these rises have been determined by the Treasury and not by any independent adjudication body. The daily subsistence allowance rises from £31 to £31·50. Members of your Lordships' House who come in to make the place work—and the House is working harder now than when these allowances were first introduced—take three meals a day here. In addition they have other refreshments. They are also expected to pay their postage out of the allowance. They are expected to use some of it for telephone calls made outside the House. Worst of all, they are expected to pay for taxis from the £31·50, after paying for their meals and sustenance for the day.
I think noble Lords will agree with me that it is absolute nonsense. It is almost essential at night, with the hours we are sitting, that noble Lords go home from here by taxi. A number of Members of your Lordships' House and members of staff working here and in another place have been mugged on the way home. Going home by Tube from this House late at night is not the most pleasant experience. People are seriously at risk. A couple of years ago I was on a train travelling only from Victoria to Pimlico, where I live. I have never been on a train late at night since then. A gang was "steaming" through it from the back mugging everybody, taking rings and wristwatches from people. As I was only going the one stop and I was at the front of the train, I got off before the gang reached me. That is the scenario. The payment of £31·50 to Peers who are attending here in order to make the place work needs to be looked at again.
The secretarial allowance goes up by 50p to £30·50p. When this allowance was first awarded it was to cover 18 days a year. Due to the efforts of the noble Lord, Lord Wakeham, that was increased to cover 30 days a year. I still believe that the secretarial allowance for 30 days a year, when we sit four days a week for over 30 weeks a year, is grossly inadequate. I do not think the rate of payment is sufficient to pay for reasonable hours of work from a secretary. The question of the number of days ought to be looked at.
As I said at the commencement of my remarks a few moments ago, I understand that these proposals are the brainchild of the Treasury. As the noble Lord said in his very detailed explanation of what is before us, the difficulty is that we used to be linked to a grade of civil servant which is no longer applicable. The proposal now
244
before us is that we are now linked to the retail prices index. But if the base is too low now there is an inbuilt deficiency, and an increase related to the retail prices index will not make up the difference. I do not want to follow another place in voting themselves sums of money. That is not the right way to go about it. We are entitled to an independent adjudication for the changes which we shall have to live with in the foreseeable future and I do not believe that that should be undertaken by the Treasury.
Perhaps I may make a constructive suggestion to the Minister. Would it not be better, through the usual channels, to refer the matter back to the Top Salaries Review Body in order to return next year with some proposals which will at least protect the position for us in future? I hope that that suggestion meets with some approval. I do not want to delay anything. What the Minister has said is very welcome at this time; but the danger lies in the future and not today.
3.30 p.m.
Lord Boyd-Carpenter: My Lords, we are indebted to the noble Lord opposite for what he has just said because this is a matter which concerns a great many of your Lordships.
I am sure that the House is indebted to my noble friend and his colleagues for the care with which they have outlined these proposals, even though the increases in remuneration which they provide are modest on the whole. I rise to raise one particular point with which they do not deal and which I hope may be dealt with in future— that is to say, the cost of postage. I believe that many of your Lordships find, as I do, that one gets a great deal of mail from outside institutions, organisations, public relations firms and pressure groups of one sort or another, all of whom expect a reply. The cost of postage for these replies is quite substantial. In another place they have free postage, and any correspondence that comes there can be answered without having to pay for the stamp; whereas our replies, even if one is prepared to use second class stamps—which some organisations regard as slightly offensive—incur still quite a substantial cost.
I hope that this matter will be looked at carefully. It is a little illogical that if your Lordships desire to respond by telephone to representations made to them they generally get a free telephone service; but if noble Lords desire to reply more formally—and, from a practical point of view, perhaps more wisely—by letter, then they have to pay the current very high rates of postage.
I do not believe that we could propose an amendment to these particular proposals at this stage; but I hope that the various organisations which go into these matters such as the usual channels or the Rippon committee, or whatever it may be, will look at the question of postage— and, if necessary, take evidence from those of us who have a great deal of correspondence—and consider bringing forward some recommendations in respect of postage in the near future.
Lord Avebury: My Lords, I should like to reinforce what the noble Lord, Lord Boyd-Carpenter, has said. At some point in the past, I tried to get something done about postage. I have written to the authorities in the House; and

245
I believe that at my instigation the question of postage was put on the agenda at one time. The committee which looked into this matter decided that it was not a good idea to have free postage at this end of the corridor as there is in another place. There is an additional factor which reinforces the plea which has been made by the noble Lord, Lord Boyd-Carpenter. The more work that one does in this House, the greater the cost of postage. In no way is any part of the allowance paid to your Lordships performance-related. This is one way in which it could be made to be so. The proposal which I made several years ago was to work out the average amount that a noble Lord spends on postage and then to reduce the secretarial allowance by that amount. Then there is free postage. The noble Lord, Lord Boyd-Carpenter, makes interventions on a great many different subjects and receives a large postbag which he feels duty bound to reply to. I respect the noble Lord for that. Why should he be "in the red" because he has so many varied interests and takes such an active role in your Lordships' proceedings whereas some other noble Lord simply "clocks in", receives the allowance and does not receive any letters because he does not speak and therefore whatever element of the allowance is attributed to postage is for nothing? That is grossly unfair.
I cannot see that the Treasury can possibly have any objection if there was no net addition to the bulk allowance paid to your Lordships for secretarial purposes. If that amount remained the same and was redistributed in favour of those who received a large postbag, then I am sure that the Treasury would be happy, and those who face a large postbag would have some recompense for the work that they do.
While I am on my feet, perhaps I may say that the alternative of the telephone is only available to those who have an office in this building, and there are many of us who do not.
Noble Lords: No!
Lord Avebury: My Lords, noble Lords say no; but if one wants to make a confidential telephone call to someone who has intervened with you on a matter, it is not very satisfactory to do so in the corridor, as we are obliged to do. Many of us have been in this House for years and years. I have been in this House for 20 years and I have not got a desk yet, whereas in another place, being in the Whips' Office, I was fortunate enough to be equipped with proper office facilities from the word go. I do feel the contrast. For that reason, very largely I work from an office in my own home and I incur all the telephone costs which, in some cases, may be an alternative to answering by letter. There are also fax charges, which can be sent free from downstairs in this building. However, if I am not on the premises and am working in my office at home, that means I have to spend money on the telephone and also incur fax costs.
The third point I wish to raise is on the opposite side. Do not noble Lords believe that the motoring allowance of 44p per mile is excessive? I know, as the noble Lord explained, that this is not something which we decided
246
for ourselves but copied from another place. I believe that the other place is being extraordinarily greedy—and we are, too. The average cost of running a motor car could not possibly amount to as much as 14p per mile unless one has a Rolls-Royce. I know that there are one or two of those in the car park here. But those who are rich enough to afford a Rolls-Royce do not need the 44p. It is all very well for the noble Lord to wave his hand—he may well have a Rolls-Royce; I do not know. I am asking for this matter to be included in the reconsideration of our allowances for which the noble Lord, Lord Dean of Beswick, has asked. I hope that this matter can be considered at the same time.
Lord Taylor of Gryfe: My Lords, I appreciate what has been done by the committee. During the committee's proceedings I took the trouble to submit certain details. I sought to ascertain the average cost of staying in a hotel fairly near to the House. I can advise your Lordships that the allowance of £70 per night, which is an increase of £1 on our overnight allowance, hardly covers the cost of staying in a reasonable hotel within a reasonable distance of this House. I fear that members of the committee might have been influenced by the proximity of their homes to this House and by the fact that they are not required to travel 500 miles to come to this House or to incur overnight expenses, as many noble Lords from Scotland have to do.
I travel frequently by plane and train with civil servants from the Scottish Office who come down here regularly to serve their Ministers. The last time that I asked about their overnight expenses, I discovered that they were allowed something like £120 per night as against the £70 which is allowed to Members of your Lordships' House. I have submitted those figures to the Minister. I am not a poor man, but I do not think that we should be out of pocket for attending the House of Lords. I believe that the expenses of staying overnight in a reasonable hotel incurred by Members of this House should be properly covered. That cost is not covered by the £70 which is now to be granted although, as I have said, we are thankful for the increase of £1 per night.
All this is related to the retail prices index, but the RPI has little to do with hotel costs. Hotel costs fall into a different category. It cannot be right to apply the RPI to the matter of our overnight allowances. Indeed, I do not think that hotel costs feature in RPI calculations. Therefore, the House should try to relate our overnight allowance to the actual cost of staying in reasonable accommodation overnight.
Lord Airedale: My Lords, I shall be very brief indeed—
Lord Stoddart of Swindon: My Lords—
Lord Hailsham of Saint Marylebone: Order!
Lord Stoddart of Swindon: All right, I am a decent sort of chap.
Lord Airedale: My Lords, I shall be brief. The noble Viscount referred us to a Written Answer of last Wednesday. Does he accept, on reflection, that it is misleading because it says nothing about any maximum? Indeed, it reads as follows:

"

£

Backbench Peers (Daily rates)

Day subsistence

31·50

"

—[Official Report, 13th July 1994; col. WA 104.]
That leads the reader to suppose that Back-Bench Peers get an attendance allowance of £31·50 per day.
3.45 p.m.
Lord Stoddart of Swindon: My Lords, it is altogether good that we are having this discussion. I should like to thank not only the Government Chief Whip and my noble friend but also other noble Lords who have spoken for raising some of the issues which have been raised. Noble Lords are very diffident, and have been diffident over a long period of time, about discussing their own expenses. That is altogether to the credit of this House. However, I think that the time has come when we have to discuss our expenses and, at the same time, the way in which this House is resourced and whether the resources that are given to this House are adequate for it to do the very important job that it has to do, which is to check the Executive.
There seems to be some worry among Members of this House that if they shout too loud, the moves for them to be abolished will be increased. That is not a very good reason for telling the truth about what happens here, and it is about time that we did begin to tell the truth about what happens here. Furthermore, if there is to be a discussion —and undoubtedly in the years to come there will be discussions—about what happens in this House, about whether it is to be reformed and, if so, how it is to be reformed, the House will have not only the opportunity but the duty to contribute to that debate because Members of the House will be very much involved. Therefore, we must discuss not only our expenses, but the way in which this House is resourced and whether it is able to do the job that it is supposed to do.
The work of the House has increased markedly over the past 20 years. It has increasingly had to act as a check and a brake on the excesses of government and of another place. I am sure that noble Lords will understand that even since I became a Member of this House—that was getting on for 11 years ago—the nature of the House has changed completely. I happen to believe that it has changed for the good. The House is now sitting far more days and hours than ever before. We now find that the House of Lords is sitting into the early hours when the House of Commons has long gone home. We find that we are often sitting when the House of Commons is still in Recess. Indeed, in the present term this House returned to its duties on 6th June; the House of Commons returned to its duties on 14th June—eight days later. We find that the House of Commons will rise tomorrow. The House of Lords will not rise until 26th July, so the House of Lords is now quite a different place from what it used to be. Indeed, it is doing a lot more work than ever before.
248
The costs of this place are minimal. Noble Lords might well have seen the Written Answer to a question that I tabled last December in which I asked Her Majesty's Government:
"What is the total cost of running (a) the House of Commons; (b) House of Lords; (c) the European Parliament: and how much this cost represents per active member in each case".
The answer read:
"The total voted costs of the House of Commons this year are some £170 million. This represents £261,000 for each Member of Parliament The corresponding costs for the House of Lords are £39·5 million, or some £38,000 for each active member of the House. Equivalent costs for the European Parliament are some £476 million; £919,000 for each MEP".—[Official Report, 17/12/93; col. WA 155.]
I understand that the total costs of the House of Lords for 1993–94 are only £36,260,000. You can bet your life that the costs of the European Parliament have soared in the same period.
One of the arguments that is used against Members of this House having proper expenses and proper places in which to work rather than slummy offices is that this House is not elected. I suppose that that has some legitimacy. However, I should like to examine it. It is true that the House of Commons is elected, but whether its Members remain representative for the whole of their five-year tenure is a different matter. What is more, the Members of the European Parliament, who enjoy lavish expenses as well as a salary, were elected by just 36.4 per cent. of the electorate. Nearly two-thirds of the electorate showed its utter contempt for the whole business by not voting at all. So where is the legitimacy in all that? However, that is not the only point about the legitimacy that I wish to make: £40 billion of government money is expended by unelected quangos, all of which are made up of people who are paid a salary and lavish expenses. So even the legitimacy or illegitimacy of not being elected does not wash.
The House of Lords is the only second Chamber that we have. If we believe in a bicameral system of government, we have to ensure that both Chambers are enabled to do the job that they have to do; that is, to check on the Executive; to examine legislation; and to examine it closely to ensure that when it leaves this House and receives Royal Assent it is in good order. I expect that all of us wish that the Government would lay off legislation a bit so that both Houses could spend much more time in examining legislation more closely to ensure that it reaches the statute book in good order.
Lord Tordoff: My Lords, perhaps I may intervene as one of the members of the usual channels who is in the position of a Back Bencher in relation to expenses. I am not trying to make a particular point there, except that that is the position upon which I stand. The House is clearly grateful to the noble Lord, Lord Dean of Beswick, for introducing this topic in response to the noble Viscount the Government Chief Whip, with whom I have to say I have considerable sympathy at having been forced into this position at a very late hour due to certain circumstances outside his control.
First, I should like to pick up the point made by my noble friend Lord Airedale which was a trap into which I believe the noble Lord, Lord Dean of Beswick, also

249
fell: we should not be talking about allowances; we should be talking about reclaiming expenses which are paid out in the course of our duties here. It is important that we should always remember that.
Mention was made by the noble Lord, Lord Taylor of Gryfe, of the overnight allowance. He talked about the difficulty of obtaining hotels within the scope of the £70 expenses maximum. I believe that the problem—I should be glad to hear from the noble Viscount the Chief Whip—is that civil servants have some kind of arrangement with a group of hotels in London whereby they can obtain hotel rooms at lower rates than can the average member of the public, among whom we count ourselves. If the Government can come to some arrangement with a suitable hotel chain whereby noble Lords can obtain cheaper accommodation I am sure that they would all be grateful. That might be why the calculation included here is inaccurate. It has been based on the false presumption that we can tap into that network of hotel rooms which civil servants can use.
My noble friend Lord Avebury, in an interesting plea to get a desk, which I heard, raised the question of the mileage allowance. He will not remember because, at the time, although he was a Member of the House he was not attending as frequently as he does now—I am glad to see him back fully in action—we had a debate in the House as to what the mileage allowance should be. I remember vividly that I had a head-on collision with the noble Viscount, Lord Whitelaw, because the other place has three separate rates of mileage allowance for different sizes of cars. I argued that we should dispense with the top rate since the lower rate was for Mini Minors into which noble Lords would find it difficult to prise themselves in most cases. I was not thinking then of the noble Lord, Lord Hesketh, and others. We have that allowance because your Lordships decided to agree with me and not the noble Viscount. I do not disagree with the fact that the rate may be higher than it should be in environmental terms, but still it is better than it might have been.
I agree on the subject of postage. It is a strange facet of our life here that we have to lick stamps all the time to reply to the correspondence which the more active Members of your Lordships' House receive.
There is one issue that I should like to raise which is not covered by this Motion and which is something that occurs in another place but not here; that is, the ability of spouses to be given some type of travel facility to get to London from distant parts of the country. It is unfortunate that there is not some mechanism whereby spouses of Members of your Lordships' House could receive some allowance or warrant to come to London on a certain number of occasions a year. I wonder whether the Minister would care to look at that issue.
Finally, I am not at all sure—this is where I agree with the noble Lord, Lord Dean of Beswick—that the RPI is the right index. He was right when he talked about taxi fares. They have escalated out of all measure in the past few years compared with the RPI. Although noble Lords will undoubtedly agree to the Motion today, I wonder whether the noble Viscount the Chief Whip, and through him the Lord Privy Seal, whoever that may be, is prepared to take this matter away to see whether
250
it is possible to produce some index which is more applicable to the job that we do here and the expenses that we incur here so that we can get on to a sensible index and not have to discuss these issues in the future.
Lord Bruce of Donington: My Lords, I would not wish to stir up any undue controversy in a matter of this kind, but I must say that when my noble friend said that he thought the existing proposals were some kind of punishment it occurred to me that the microscopic increases which your Lordships will have over the next few years possibly result from the number of defeats that your Lordships' House has inflicted on the Government in increasing quantity over the past few years. If a graph were drawn showing the various degrees of expenses to which we are entitled and the number of defeats that the Government have suffered, it would not surprise me to see at any rate a mild correlation.
There has been a tendency, since we have seen the new rates, to heap undue criticism upon the Treasury. I believe that that is entirely misplaced. Those to whom we should address ourselves are the Government themselves and, beyond that, the general public, including the media. There is in your Lordships' House a second Chamber. In addition to its revising functions, and the other useful functions it performs, it happens to be one of the two public forums for public debate on public issues. There are only two: the Commons and the Lords.
I am bound to say that over the past few years when subjects come up for public debate—important issues of principle, policy and action—the quality of debate in your Lordships' House is not inferior to me quality of debate in another place. Often that is accomplished without the catcalls which occur from time to time in another place in order to enliven the proceedings.
We in this House perform a useful function. It may be that we are on our way out and that we shall be replaced by some other body. However, while we are here we are serving a useful purpose in public and constitutional terms.
The question is what reward we should receive for performing our function. As I read the allowances to which we are to become entitled, I could not help comparing them with those of European Members of Parliament. Your Lordships may know that I have had some four years' experience in that capacity. The average attending Member of the House of Lords works more hours here than do MEPs in Brussels, Strasbourg and elsewhere. We in this House sit many more days than do the MEPs in the plenary, the committees and the various study groups of the European Parliament.
I do not suggest that we should receive the same lush terms —and, believe me, they are lush!—as Members of the European Parliament. However, it is wrong that when considering the expenses that are. to be made available to Members here the Government and the public at large take one view, but when it comes to considering those of MEPs they take a totally different view.

251
I could go into some detail about the expenses of a European Member of Parliament but it sticks in the craw a little to realise that MEPs are entitled to £20,000 per annum general expenses without having to account to anybody as to their expenditure. I do not deny that they have expenses; but when I look at our increases of 50 pence per day, I believe that people should re-think the matter.
What bothers me is not the extent of the difference in principle that arise when Her Majesty's Government consider the proper remuneration for MEPs and your Lordships but the insult that is implicit in a rise of 50 pence per day for any Member of this House, wherever they sit, whether hereditary or life Peers. We are peers of the realm, we serve a useful purpose and we try our best to do the job as we see it. The Government should think again before offering yet another insult to your Lordships.
4.4 p.m.
Viscount Ullswater: My Lords, I am grateful for the somewhat qualified welcome that the Motion has received. I am sensitive to the feeling which many noble Lords have expressed about the existing maximum rates for expenses. The noble Lord, Lord Airedale, was right in pointing out that they are maximum rates rather than daily flat rates.
The noble Lord, Lord Dean of Beswick, informed your Lordships that yesterday he had a useful meeting with the then Lord Privy Seal. I am grateful to the noble Lord for mentioning that because that discussion has been taken on board. His anxiety was with the basic rates rather than with the method of increase, which is the subject of today's Motion. The rates were originally set in 1983 on the recommendation of the Top Salaries Review Body, as it was then called. That recommendation was based on a full examination of the relevant costs that your Lordships might incur.
It appears from our discussions today that there may be a good reason why that should be looked at again. I suggest that the basic levels, the costs of postage, which was raised by my noble friend Lord Boyd-Carpenter, the increase in the workload, which was implied by the noble Lord, Lord Stoddart, and travel, as raised by the noble Lord, Lord Tordoff, could be dealt with in another review or another discussion which could take place through the usual channels, in order to see whether the basic levels are correct.
The noble Lord, Lord Avebury, can be comforted by the fact that his party is most anxious about the cost of motoring. His noble friend moved a Motion to cut the top rate for Members of this House. It is interesting that we should talk about these allowances being too small and then have one being criticised as being too large.
252
I must tell the noble Lord, Lord Taylor of Gryfe, that the price of hotel accommodation does not always obey the RPI. I understand that during the past four years, for instance, the cost of hotel accommodation has fallen by a considerable amount and therefore—
Noble Lords: No!
Viscount Ullswater: My Lords, of course it depends on which hotel one goes to but average prices have not risen with the RPI. The noble Lord, Lord Tordoff, asked about the cheap hotel accommodation that has been arranged through the Civil Service. The basis on which the allowance has been made to your Lordships pays no regard to the fact that a deal may have been done through the Civil Service. The allowance has not been agreed on that basis.
The noble Lord, Lord Stoddart, was anxious about the legitimacy of this House. I have no such anxiety. This House does a very good job as a second, non-competitive Chamber to the other place and long may it remain a second, non-competitive Chamber.
Requests have been made for a different index on which your Lordships' expenses can be reviewed. I am standing at this Dispatch Box almost a year to the day when the expenses should have been up-rated, which indicates the great difficulty that we have had in finding an index which will properly measure the increase in the levels. It became apparent to those involved in the task that the use of the RPI as an up-rating mechanism is perceptibly fair and reasonable both to your Lordships and to the taxpayer—
Baroness White: My Lords, am I wrong in supposing that it does not include value added tax?
Viscount Ullswater: My Lords, I am not sure what the noble Baroness means by that. No value added tax is placed on the expenses—
Baroness White: My Lords, does the index include value added tax in its calculation? If it does not, one is not given a fair idea of the increase in costs.
Viscount Ullswater: My Lords, of course, the retail prices index includes the rate of VAT on the goods measured by the index because that is the cost of the goods. Therefore, in as much as the goods carry VAT, it measures that proportion of VAT placed on them.
I hope that your Lordships will approve the Motions. They are reimbursement allowances. They have a special tax status and we should be conscious of that fact.
Lord Graham of Edmonton: My Lords, before the noble Viscount sits down at the end of this interesting and valuable debate, perhaps I may assure him from this side of the House that we would welcome any invitation by the Government to discuss those issues through the usual channels because we have not been party to reaching the agreement placed before the House today.
On Question, Motion agreed to.

Office Holders' London Allowance
4.11 p.m.
Viscount Ullswater: My Lords, on behalf of my noble friend, I beg to move the third Motion standing in his name on the Order Paper.
Moved, That this House approves the following proposals—
(1) Members of this House who receive a salary under the Ministerial and other Salaries Act 1975 and the Chairman and Principal Deputy Chairman of Committees should receive a supplementary London allowance at an annual rate determined in accordance with paragraph (2), but this paragraph is subject to paragraph (3).
(2) The annual rate of the supplementary London allowance—

(a) for the period of three months beginning with 1st January 1994, should be £1,240;

(b) for the year beginning with 1st April 1994, should be £1,245; and

(c) for any subsequent year, should be the amount obtained by increasing the rate for the immediately preceding year by the percentage by which the retail prices index for March in that immediately preceding year has increased compared with the retail prices index for the previous March.

(3) Any Member—

(a) who receives a salary under section 1(1) (a) of the Ministerial and other Salaries Act 1975 and an allowance under section 5 of the Ministerial and other Pensions and Salaries Act 1991, or

(b) who holds (whether as a Minister or otherwise) a paid office in respect of which an official residence is provided from public funds,

should not be entitled to receive (he supplementary London allowance.
(4) In this Resolution "year" means a year beginning with 1st April.
(5) Any amount obtained under paragraph (2) (c) should be calculated to the nearest pound.
(6) The references in paragraph (2) (c) to the retail prices index are references to the general index of retail prices (for all items) published by the Central Statistical Office; but if that index is not published for a month which is relevant for the purposes of this Resolution, those references in that paragraph shall be construed as references to any index or index figure published in place of that index.—(Viscount Ullswater.)
On Question, Motion agreed to.

Car Mileage Allowance
Viscount Ullswater: My Lords, on behalf of my noble friend I beg to move the fourth Motion standing in his name on the Order Paper.
Moved, That this House approves the following proposals with respect to the rates of car mileage allowance—
(1) The allowance payable in respect of a journey commenced in the year beginning with 1st April 1994 should be payable—

(a) subject to the limit specified in paragraph (3) below, at the rate per mile shown in column 1 of the following Table; and

(b) in respect of miles in excess of that limit, at the rate per mile shown in column 2 of that Table.

TABLE

Mileage up to limit

Further mileage

44·4p

20·4p

(2) Paragraph (1) should have effect in relation to journeys commenced in the year beginning with 1st April 1995 or any subsequent year as if the rates per mile shown in the Table were the rates obtained by increasing each of the rates for the. immediately preceding year by the percentage by which the retail prices index for March in that immediately preceding year has increased compared with the retail prices index for the previous March.
(3) For the purposes of this Resolution the limit on the number of miles in respect of which car mileage allowance may be paid at the rate specified in column 1 of the Table is 20,000 miles for each year.
(4) In this Resolution "year" means a year beginning with 1st April.
(5) Any rate per mile determined in accordance with paragraph (2) should be calculated to the nearest tenth of a penny.
(6) The references in paragraph (2) to the retail prices index are references to the general index of retail prices (for all items) published by the Central Statistical Office; but if that index is not published for a month which is relevant for the purposes of this Resolution, those references in that paragraph shall be construed as references to any index or index figure published in place of that index.—(Viscount Ullswater.)
On Question, Motion agreed to.

Lords' Expenses—Recall During a Recess
Viscount Ullswater: My Lords, on behalf of my noble friend I beg to move the fifth Motion standing in his name on the Order Paper.
Moved, That the following provision should be made with respect to any occasion on which, during a recess, this House is recalled before the expected end of the recess—
(1) Members who attend the House during the recall, except any Member who is permanently resident abroad, should be reimbursed in respect of such extra costs which are wholly and exclusively attributable to the recall as are necessarily incurred by them in connection with travelling—

(a) from any place to London; and

(b) during any further recess immediately following the recall, from London to any place (provided that the purpose is to fulfil, before the expected end of that further recess, plans which were in existence before the recall).

(2) For the purposes of this Resolution—

(a) "recess" means not only a period when Parliament stands prorogued to a specified date but also any period when this House stands adjourned to a specified date, and the references to the expected end of a recess are references to that specified date; and

(b) "extra costs", in the case of a Member, means costs in respect of which the Member cannot be reimbursed by virtue of any resolution other than this.— (Viscount Ullswater.)

On Question, Motion agreed to.

Business of the House
4.12 p.m.
Viscount Ullswater: My Lords, on behalf of my noble friend, I beg to move the sixth Motion standing in his name on the Order Paper.
Moved, That Standing Order 44 (No two stages of a Bill to be taken on one day) be dispensed with to enable the Consolidated Fund (Appropriation) Bill to be taken through all its stages this day.—(Viscount Ullswater.)
Lord Boyd-Carpenter: My Lords, in the circumstances, this Motion is a farce. The object of the rule about taking not more than two stages of a Bill on the same day is obviously to facilitate debate and to prevent debate being crowded. But we know perfectly well that thanks to the decision of the Procedure Committee, the usual channels, or both—and I do not know which it was—we are not permitted to debate the Consolidated Fund Bill. It is my understanding that that ban still stands and, if so, it makes a farce of the Motion.
Lord Eatwell: My Lords, I acknowledge that there has been discussion between Front Benches with regard to economic debates. I believe that the Government have agreed that extra time should be made available for economic debates and that will substitute for our usual wrangle in relation to the Consolidated Fund.
Lord Boyd-Carpenter: My Lords, perhaps my noble friend will confirm that that is so. The Opposition spokesman has made a very helpful comment, but it is for the Government to answer.
Lord Monkswell: My Lords, I believe that I heard the noble Lord, Lord Boyd-Carpenter, to say that we cannot debate the Consolidated Fund. I understand that debate is permissible but we cannot vary any decision made by the other place. If I am wrong about that, then I stand to be corrected. However, my understanding is that year after year noble Lords have reasserted the right to make comments.
Lord Boyd-Carpenter: My Lords, perhaps I may intervene to save time. A ruling was made, which I unsuccessfully sought to contest, that we are not
256
permitted to debate the Consolidated Fund Bill. As far as I know, that is still the Government's ruling, although I believe it to be wholly wrong.
Lord Monkswell: My Lords, I thank the noble Lord for that information. I must admit that, for once in my life, I find myself in total agreement with him.
Lord Bruce of Donington: My Lords, I rise briefly to support the proposition put forward by the noble Lord, Lord Boyd-Carpenter. Notwithstanding anything that has been said by the Government or any ruling that has been made, on future occasions I wish to reserve my right to raise again the whole question of debate on the Consolidated Fund Bill.
Viscount Ullswater: My Lords, my noble friend Lord Boyd-Carpenter has returned to a theme which I understand that he has aired on one or two occasions. Also, I gather that the noble Lord has written to my noble friend the Leader of the House and has recently received a reply which intimated to him that the Government intend to allow economic debate and the timing of it.
Perhaps I may remind the House that it is not the Government's decision to move formally the Consolidated Fund Bill. That is the decision of the House as set out in the Companion to Standing Orders. It is important to realise also that during the course of 1994 we had three debates on economic matters: on 30th March there was an Unstarred Question on export promotion; on 29th April, there was the Second Reading debate on the Finance Bill; and on 22nd June we had a debate on job creation in a technological age.
I believe that opportunities have been afforded to the House to have those debates but I note what my noble friend said.
Lord Boyd-Carpenter: My Lords, I am grateful to my noble friend for giving way. The point is that it has not been agreed that the Consolidated Fund Bill should be debated. A general offer was made of an economic debate some time after the Recess. The point which I desire to stress is that the Consolidated Fund Bill is extremely important. It is perhaps the most important Bill in the whole of our annual calendar. It is a wrong and foolish decision that it cannot be debated.
Viscount Ullswater: My Lords, I must reaffirm that that is a decision which the House has taken.
On Question, Motion agreed to.

Lerwick Harbour Order Confirmation Bill
4.17 p.m.
Read a third time, and passed.

Firearms (Amendment) Bill
Read a third time, and passed.

Deregulation and Contracting Out Bill
4.19 p.m.
The Minister of State, Department of Trade and Industry (Lord Strathclyde): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Strathclyde.)
On Question, Motion agreed to.
House in Committee accordingly.
[The DEPUTY CHAIRMAN OF COMMITTEES (Lord Strabolgi) in the Chair.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 197F:
Before Clause 58, insert the following new clause:
("Preliminary consultation on contracting out
.—(1) Before a Minister makes an order under sections 58 or 59 below, he shall

(a) consult such organisations as appear to him to be representative of interests substantially affected by his proposals (including, in the case of an order under section 59, persons representative of local government); and

(b) consult such other persons as he considers appropriate.

(2) If it appears to the Minister, as a result of the consultation required by subsection (1) above, that it is appropriate to vary the whole or any part of his proposals, he shall undertake such further consultation with respect to the variations as appears to him to be appropriate.
(3) If, after the conclusion of—

(a) the consultation required by subsection (a) above; and

(b) any further consultation undertaken as mentioned in subsection (2) above, the Minister considers it appropriate to proceed with the making of an order under sections 58 or 59 below, he shall lay before Parliament a document containing his proposals in the form of a draft of the order, together with details of the matters specified in subsection (4) below.

(4) The matters referred to in subsection (3) above are—

(a) the burden, authorisation or requirement which it is proposed to remove or reduce;

(b) whether the existing provision affords any necessary protection and, if so, how that protection is to be continued if the burden, authorisation or requirement is removed or reduced;

(c) whether any savings in cost are estimated to result from the proposals and, if so, either the estimated amount or the reasons why savings should be expected;

(d) any other benefits which are expected to flow from the removal or reduction of the burden, authorisation or requirement,

(e) any consultation undertaken as required by subsection (1) or subsection (2) above;

(f) any representations received as a result of that consultation; and

(g) the changes (if any) which the Minister has made to his original proposals in the light of those representations.

(5) In giving details of the representations referred to in subsection (4) (f) above, the Minister shall not disclose any information relating to a particular person or business except—
258

(a) with the consent of that person or of the person carrying on that business; or

(b) in such a manner as not to identify that person or business.

(6) If, before the day on which this section comes into force, any consultation was undertaken which, had it been undertaken after that day, would to any extent have satisfied the requirements of subsection (1) above, those requirements shall to that extent be taken to have been satisfied.")
The noble Lord said: In moving this amendment it may be for the convenience of the Committee if I speak also to Amendments Nos. 197G and 205 and to the Motion That Clause 66 shall stand part of the Bill.
Perhaps I may have the attention of the Minister who I believe is still the Minister of State for the Department of Trade and Industry. We are now embarking on the contracting out provisions of the Deregulation and Contracting Out Bill. My purpose in moving the amendment and speaking to the amendments in the name of the noble Lord, Lord Rodgers of Quarry Bank, is to draw attention to the report of the Delegated Powers Scrutiny Committee. Perhaps I may quote first from paragraph 6 of the 9th report of that committee which reads:
"The Committee accordingly urges the House to consider whether the procedure for deregulation orders, with the improved safeguards for parliamentary scrutiny, should apply not only to orders under Chapter I of Part I of the bill, but also to delegated legislation made under Clauses 27, 58 and 59 of the bill".
As Members of the Committee will be aware, we are dealing with Clauses 58 and 59. There is; no doubt that the Bill as drafted gives power to Ministers in pursuance of the contracting out provisions to amend, by order— or, indeed, possibly by contract, although I am open to advice on that aspect of the matter—primary legislation. The question is whether the Committee is prepared to see those provisions made without the safeguards which are contained in the deregulation part of the Bill; namely, Part I.
Perhaps I may draw the attention of Members of the Committee to the provisions of Clause 66. Subsection (1) (b) says:
"An Order under Section 58 or 59 above—
(b) may contain provisions"—
and I emphasise the following words—
"(including provisions modifying enactments)".
An enactment is defined in Clause 68 as,
"an enactment contained in an Act … [or] an enactment contained in subordinate legislation",
and that applies whenever an Act is passed or whenever an order is made.
We have had many arguments and much discussion on the deregulation part of the Bill; but to date this Committee has not addressed the matter raised by the Delegated Powers Scrutiny Committee. The amendments to which I speak would satisfy the concerns of the scrutiny committee. Amendment No. 197F provides for,
"preliminary consultation on contracting out".
Amendment No. 197G tracks the arrangements made in Part I of the Bill for parliamentary consideration of contracting out.
We are advised by the Delegated Powers Scrutiny Committee to look most seriously at the matter. The amendments are designed to enable this Committee to look very seriously at the matter. Members of the Committee will know the arguments involved. Therefore, I shall not repeat the arguments that were put forward during earlier stages of the Committee. I shall simply say that I believe that what we propose is right. We should like to ensure that noble Lords in Committee, or, if not in Committee, then at a later stage of the Bill's proceedings, accept the recommendation—and I believe that it is a recommendation—of the Delegated Powers Scrutiny Committee that all orders made under Part II of the Bill should be subject to the same procedure as orders made under Part I. I beg to move.
Lord Strathclyde: The noble Lord, Lord Williams, is absolutely right on two counts. First of all, this is the first of the amendments dealing with the contracting out proposals in this part of the Bill. Secondly, the decision as to whether such orders should require the use of the special powers which were debated in connection with Clauses 1 to 4, is immensely important. Further, the amendments would implement one of the recommendations of the Delegated Powers Scrutiny Committee.
The Government fully accept that the powers provided for in Clauses 1 to 4 are exceptional. They could be used to make deregulatory changes to primary legislation across a wide range of policy areas. It is for that reason that requirements for the consultation and a unique parliamentary procedure have been proposed for orders made under that power. The Government have carefully considered the committee's view that Clauses 58 and 59 confer a widely drawn order-making power for which the same parliamentary procedure could be appropriate.
The powers in Clauses 58 and 59 can be used only for a narrowly defined purpose; namely, to allow the authorisation of contractors to exercise statutory functions on behalf of Ministers, office holders or local authorities which may be exercised at present only by their staff. The nature of the function itself remains unchanged, although the people who carry out the day-to-day business may alter as a result of the powers in Clauses 58 and 59.
During the passage of the Bill, Parliament will have had the opportunity to consider in detail the principle of extending contracting and market testing to such statutory functions, and the application of that principle in practice. For example, in Clause 61 the Bill makes explicit provision to preserve existing lines of accountability for statutory functions contracted out following the use of the power. Explicit safeguards are also provided on the face of the Bill to preserve and extend existing protection for confidential information disclosed to a contractor. Further, subject to a few express exceptions, Clause 60 excludes any function which would necessarily interfere with or affect the liberty of an individual: it is a power or right of entry, search or seizure into or of any property; or it is a power to make secondary legislation.
260
Parliament will thus be able, during the Bill's passage, to consider in detail the key issue to which the principle of contracting statutory functions covered by the Bill might give rise in any individual case and the safeguards which are needed. The order-making power in Clauses 58 and 59 would be used only to apply the principle to particular cases.
As the noble Lord, Lord Williams, pointed out, Clause 66 provides that an order may contain provisions which are consequential upon, or supplemental or incidental to the provisions made by the order. I believe that such provisions do not constitute a wide power to amend primary legislation. They are well precedented in order-making powers subject to the normal affirmative resolution procedure and are always strictly and narrowly construed. Where more than minimal sweeping-up changes to current legislation would be required to permit contracting out of a particular statutory function, primary legislation would then be needed to achieve them; indeed, some such provisions are included on the face of the Bill in Schedule 14. The power in Clause 66(1) (b) could not be used to make any of the amendments to legislation contained in Schedule 14.
Against that background, and having taken careful account of the Committee's views, the Government remain of the view that the affirmative resolution procedure will offer an appropriate level of scrutiny for orders made under Clauses 58 and 59.
As regards consultation, again it is important to recognise the differences between the order-making power in Clauses 1 to 4 and the contracting out order-making power in Clauses 58 and 59. The contracting out order-making power could not be used to change the purpose of a statutory function; it merely makes it possible for contractors to be employed to carry out a function. That is only possible if at present the staff of a Minister, an office holder or local authority are able to carry out such a function. The function itself remains unaltered. In that way the interests of third parties are unaffected by the change in who carries out a particular function.
Therefore, the Government do not believe that it is necessary to define the requirements for consulting third parties in legislation. However, there will be circumstances, perhaps because the clients of a service may feel that they are affected by a change in provider, in which the Minister may consider it necessary to consult more widely. I can assure Members of the Committee that consultation will be undertaken as appropriate. As an example, the Central Statistical Office has already conducted a survey of business attitudes to possible contracting out in the collection of business statistics. But we do not believe that it would be appropriate to impose an additional statutory consultation requirement. Such a requirement would prevent Ministers from responding flexibly as appropriate to particular cases.
At the beginning I joined with the noble Lord, Lord Williams of Elvel, in saying that this was an important issue. It is one that the Government have considered in great detail, not least because of the recommendation of

261
the Scrutiny Committee. I hope that this Committee will agree to go ahead in the way that the Bill is currently drafted.
4.30 p.m.
Lord Rodgers of Quarry Bank: My wits may have been dulled by the earlier business, but, as I understood it, the Minister sought to reply to an amendment that I had not yet moved to which the noble Lord, Lord Williams, referred in his opening remarks: Amendment No. 205 standing in my name, which was taken with this group, and Clause 66 stand part. The Minister's remarks make it more difficult for me to make a powerful case, to which I hope he will reply sympathetically.
Having listened to him carefully, either my wits have been partly dulled by the business so far or he has not sufficiently explained why Clauses 1 to 4 are exceptional, whereas there is nothing exceptional in Clauses 58 and 59. Further, he has not explained, at least to my satisfaction, except in the most peremptory and passing way, why the recommendations of the scrutiny committee, which on previous occasions he has acknowledged have validity, have no validity on this occasion. In the case of Amendment No. 196, which sought to implement the recommendation in paragraph 8 of the ninth report of the Scrutiny Committee in respect of Clause 39, the Minister found it impossible to accept the amendment but found a better way to achieve the same purpose with his amendment. Perhaps it is still not too late to hope, given that we are only at the Committee stage of the Bill, that he may likewise say that, whereas Amendment No. 205 in its drafting falls short in its purpose, he is prepared to bring forward an amendment of his own at a later stage.
Grave concern has been expressed on all sides of the House about the scrutiny provisions of the Bill. That is not to say that the Minister did not anticipate some of them and that steps have not already been taken to provide safeguards. But it remains the case that the House is disturbed. I should have thought that it would require only a very small gesture on the part of the Minister now to accept the recommendations as they apply to Clauses 58 and 59, which are in paragraph 6 of the report of the scrutiny committee. The Minister will recall that because of the late hour we did not seek to move the amendment that related to Clause 27. Therefore, on that occasion the Minister was not called upon to respond and indicate his wishes.
I am sorry that he has anticipated what I may say about Amendment No. 205 this afternoon. I simply ask him to reconsider whether the views of the scrutiny committee should be set aside and perhaps a clearer way found to explain to your Lordships why Clauses 1 to 4 are exceptional but the clauses at present being considered have no exceptional quality.
Lord Simon of Glaisdale: I should like to raise an incidental matter that relates to the power to make transitional orders which the Minister mentioned particularly. I raise it because of the very curious use made of the power to make transitional orders that arose out of the Child Support Act. It applied a series of
262
formulae for the assessment of child support by absent parents in place of the flexible and much more satisfactory assessment of maintenance by the courts.
Your Lordships thoroughly examined that Act as a Bill and disapproved of it thoroughly. Your Lordships disapproved not only of that provision, which was at the heart of the Bill, but of a great many other provisions. Unfortunately, as happens so often, the debates were carried on very late at night so that your Lordships had no effective parliamentary opportunity to amend the Bill. When one looks back at it, undoubtedly it ought to have been voted against at Third Reading in view of the lack of response by the Government. As soon as that Act came into force it was apprehended that the formulae operated capriciously and harshly. There were loud outcries, so much so that Members of another place had a bigger volume of correspondence than they have ever had on any other issue. It even caused the department to take notice. Even though some of the assessments had had statutory force and had been applicable in law, nevertheless the department changed the formulae in some respects under the rubric that they were operating the power to make transitional provisions. They said that what had happened was not what they expected when the Bill was passed into law, which was undoubtedly true, and they were therefore entitled to operate the transitional power to alleviate the hardship that the Act had caused.
The Joint Committee on Statutory Instruments, under the very able chairmanship of the late Mr. Bob Cryer— whose demise is so much regretted—immediately pointed out that the use of the word "transitional" was, in a phrase that rang alarm bells, unusual and unexpected, as of course it was. It was used not to ease the provisions so far as they had not come into law but to alter them so far as they had come into law. I believe that all that is required at this moment is an assurance from the Minister that he does not intend to use the word "transitional" and operate the power to make transitional orders in any unusual or unexpected way, as the Department of Social Security did in relation to the Child Support Act.
Lord Strathclyde: I am grateful to the noble and learned Lord, Lord Simon, and the noble Lord, Lord Rodgers. I am sorry if I pre-empted what the noble Lord intended to say. The point that he made and the point made by the noble Lord, Lord Williams of Elvel, are very similar. Their amendments are grouped together on the Marshalled List. Therefore perhaps I should have been rather slower to get to my feet and allowed the noble Lord, Lord Rodgers, to make his comments.
The fundamental principle with which we are dealing here, and the difference between Clauses 1 to 4 and Clauses 58 to 59, is that Clauses 1 to 4 provide for the power to amend a great deal of primary legislation whereas in these later clauses we are discussing the principle of contracting out. It is well precedented in legislation that once the principle has been decided the detail is dealt with under orders which are subject to the affirmative resolution procedure.
Lord Williams of Elvel: Before the noble Lord continues, will he explain to the Committee exactly

263
what is meant by "the exercise of functions"? Does it imply that the legal responsibility for, say, a public service is contracted out? Or does the legal responsibility for the performance of that service remain with the person to whom the statute confers that obligation?
Lord Strathclyde: The noble Lord is right. As he said in the latter part of his intervention, the legal responsibility remains with the office holder, the Minister or the local authority. That responsibility cannot be contracted out. All we are talking about is the contracting out of the function itself.
Lord Williams of Elvel: We are talking about the contracting out of the exercise of the function, not the function itself.
Lord Strathclyde: Yes, that is exactly what I meant. It is the exercise of the function.
The noble and learned Lord, Lord Simon of Glaisdale, dealt with a point which had not been drawn to my attention previously. I do not pretend to be an expert on the Child Support Act and all the ramifications of the orders. However, I am in a position to confirm to the noble and learned Lord and to give him the reassurance that he seeks that we have absolutely no intention of using the power to make transitional provisions in any unusual way. I hope that that is helpful to the noble and learned Lord.
Lord Simon of Glaisdale: I said unusual or unexpected.
Lord Strathclyde: I am happy to give the noble and learned Lord the reassurance that the power will not be used in an unusual or unexpected way.
Lord Rodgers of Quarry Bank: Before the noble Lord sits down perhaps I may raise this point. In response to an intervention by the noble Lord, Lord Williams, the Minister said that the clauses refer to the exercise of functions. Can he help the Committee by indicating a practical example of how matters will be dealt with differently in future as a result of these clauses?
Your Lordships' House considered the final stages of the Local Government Bill in the early part of 1992. Clause 8(2) (b) dealt with new powers for contracting out and extending that to services. It may not be that these clauses apply to that part of the 1992 Act, but can the noble Lord explain which particular services will now be dealt with by contractors as a result of this provision, subject to orders being made?
Lord Strathclyde: That is an entirely fair question. It is one which is not easy to answer. This part of the Bill allows for the contracting out of the exercise of statutory functions. Therefore, those functions which are currently governed by statute and which have to be carried out either by a Minister, an office holder or a local authority will be able to be carried out by third party contractors.
264
The noble Lord seeks an example. For instance, the contracting out of the administration of a government pension fund, which at the moment is a statutory function of a Minister—and which can obviously be undertaken by his civil servants—could not be undertaken by a private company. That is the kind of operation which we are seeking to contract out.
We have been able, or sought, to contract out non-statutory functions either through primary legislation or, where there is no necessity for primary legislation, we have gone ahead and market tested in the normal way. The Government's competing for quality programme, through the introduction of competition, has already brought about significant improvements in efficiency and achieved considerable savings in public expenditure. Indeed, since April 1992 more than £1.1 billion worth of activities have been market tested. That has been extremely helpful. I hope that that explains the position.
4.45 p.m.
Lord Williams of Elvel: Perhaps I may pursue the argument which the Minister has brought forward about the contracting out of the exercise of functions. He quite rightly responded to the noble Lord, Lord Rodgers, with an example. At the moment a government pension fund is a statutory responsibility of Ministers. According to the Government's view it may well be contracted out. As I understand from what the Minister said previously, the legal responsibility remains with the Minister. In that case—and the question whether Clause 66 shall stand part of the Bill is part of this grouping—why do we have in Clause 66(1) (b) the words:
"may contain provisions (including provisions modifying enactments)"?
As I understand the logic of the Minister's argument, there is no delegation of responsibility for the functions. The functions and responsibilities set by statute will remain with those whom the statute has indicated. The functions will be contracted out without legal responsibility.
Lord Strathclyde: I think that I can assist the noble Lord, Lord Williams. Clause 61 deals with the question of liability. It is made plain in subsection (2) that the authorised person passes his liability back to the Minister, the office holder or local authority and so on. That is important.
What I have not understood is the point that the noble Lord, Lord Williams, is making in relation to Clause 66, which deals with the orders. I understand that this is a form of words which is commonly used in legislation and that there is nothing mysterious about the phrase "including provisions modifying enactments" because that is qualified by the words:
"which are consequential upon, or supplemental or incidental to"
and so on. Those words are fixed and well understood as to their meaning. Therefore the Government cannot rampage through the statute book.
Lord Williams of Elvel: With respect to the Minister, that is the whole point of my argument. If there is provision to amend primary legislation under the contracting out part of the Bill, then that provision

265
should be subject to the same criteria as are contained in the deregulation part of the Bill. If there is, as the Minister seems to be arguing, no provision to amend primary legislation by order, therefore he will no doubt wish to oppose the Motion that Clause 66 stand part of the Bill.
I accept that it is perfectly in order for contracting out to take place by contract and that the Minister, local authorities, or whoever has the statutory function, will remain responsible in law. That is not a small point, as I am sure the Minister understands. The transfer of the legal responsibility for a public service, in whatever form that may take, as opposed to contracting out its implementation, is in my view likely to be seen as a turning point in the history of public service provision at national and local level. For that reason I believe that the Minister should concede the point that the noble Lord, Lord Rodgers, and I are making that he should accept our view on the amendments that I am moving.
Lord Strathclyde: I believe that we are talking at cross purposes. I am not sure on which exact point we disagree. There is the issue of whether the order-making powers of Clauses 1 to 4 should be appropriate for contracting out. I contend that they are not, for the reasons I explained. Nothing that the noble Lord said has led me to believe that I am wrong in that view. I do not think that he has argued the point.
The noble Lord made a point about legal liability. As I explained, that is firmly dealt with under Clause 61. We shall deal with Clause 61 in a moment.
The noble Lord said one thing which confused me. He gave the impression that the order-making power was not amending primary legislation. Of course it amends primary legislation; there is no question about that. However, it amends primary legislation in a small way. The principle of contracting out is being dealt with now using the full force of the parliamentary process. Once the principle is agreed, then I believe that it is entirely appropriate that the detail of how it will work in practice should be done using the affirmative resolution procedure.
Lord Williams of Elvel: I do not wish to take up the Committee's time for longer than I have to. I believe that we do not have a meeting of minds. I am sorry that the Minister has not understood the point that I sought to make. The point is simply this, if I may repeat myself for the hundredth time. Where an order amends primary legislation, affirmative procedure is not enough. We have had the argument under the deregulation part of the Bill. I believe that the same argument applies under the contracting out part of the Bill. I believe that the Delegated Powers Scrutiny Committee of your Lordships' House made the same point. I invite the Committee to consider that.
Having established that we do not seem to have a meeting of minds on the basic point of the argument, I hope that the Minister will read what I have said. I shall read what the Minister said. No doubt we shall have another opportunity to consider the issue. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 197G not moved.]
Clause 58 [Functions of Ministers and office-holders]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 197H:
Page 53, line 11, after ("(2)") insert ("or (2A)").
The noble Lord said: In moving the amendment it may be for the convenience of the Committee if I speak also to Amendment No. 199A. The two amendments go together. The first is a paving amendment for the second. The substantive amendment is Amendment No. 199A.
I find this such an obvious amendment that I am sure the Government will have no difficulty in accepting it. It is perfectly clear that in all defence matters where there is no threat to the defence of the United Kingdom, it is in order for certain procedures of contracting out to take place. I hope that no Member of the Committee will challenge the contracting out of the washing of chief of staffs' cars, or whatever it may be.
Amendment No. 199A is therefore rather precisely drafted. It states:
"A function is excluded … if the contracting-out of that function would adversely affect the defence of the United Kingdom".
I should have thought that that was an absolutely obvious amendment. We cannot contract out the Army, the Navy or the Air Force. We cannot contract out the fundamental core of the defence of the United Kingdom. If the Minister disagrees with that, I shall be interested to hear his arguments. I emphasise that I do not refer to the peripheral services where there would possibly be no adverse effect on the defence of the United Kingdom. I am simply making sure that the functions which represent the core defence of the United Kingdom should not be subject to contracting out procedure. I had thought that that was perfectly obvious. I hope that the Committee will accept the amendment. I beg to move.
Lord Boyd-Carpenter: I hope that my noble friend has an answer to the question because, on the face of it, what the noble Lord says is rather disturbing.
Lord Strathclyde: I always like to be in a position to give my noble friend some comfort. I think that I shall be able to do so on this matter. The noble Lord, Lord Williams, says that since it is so perfectly obvious to make the provision, why have we not done so? We have not done so for some very good reasons.
The plain fact is that there are very few functions in the defence field which would fall within the scope of the contracting out power. Many functions in the defence area involve the exercise of prerogative powers which fall outside the terms of Part II, whereas others, the functions of the defence council, for instance, to make regulations, are excluded by the Bill itself by virtue of Clause 60.
However, there is more to this argument than meets the eye. For many years the private sector has been right at the heart of the defence of the United Elingdom. As but one example, the ballistic missile early warning system at Fylingdales, hardly a peripheral activity, has

267
been ran by a private contractor for three decades with notable and repeatedly verified benefits. The dockyards have benefited greatly from private management, and the Government intend to remove them completely from the constraints of the public sector. During the Gulf War, the private sector played a major part in the rapid and effective supply of behind-the-lines services, as did many other parts of the private sector already operating from within and completely separate from the Ministry of Defence. Long may that continue.
I suspect that the noble Lord, Lord Williams, is probing our views on the matter. I hope that I have explained the issue in some detail. As the Committee will know, the Secretary of State for Defence recently published his report, Front Line First. That includes further possible extensions to the principle of contracting out. All those factors will simply make our defence forces even more effective than they currently are. I hope that after that explanation, the noble Lord will withdraw the amendment.
Lord Williams of Elvel: From what the Minister says, I take it that he accepts my amendment and that there will be no contracting out of any function which adversely affects the defence of the United Kingdom. I take it that that is what he says.
He is right in saying that the private sector plays a part in this, that, and the other area of the defence of the United Kingdom. I do not wish to challenge that. I assume that the assurances that he has given to the Committee are tantamount to accepting the point that I make. He is right to say that it is a probing amendment. I believe that I am right to ask the Government for a proper response on the matter. Whether that response is satisfactory, we shall have to see.
If the Committee decided to insert the proposed provision into the Bill, it would be incumbent upon the government of the day, whichever party forms that government, to demonstrate that any contracting out which took place did not adversely affect the defence of the United Kingdom. The onus of proof would be on the government of the day to demonstrate that. Otherwise they could be challenged under the Act, as it would then be.
I take it from what the noble Lord said that he accepts the basic thrust of what I say and that the Government will not contract out any function which would adversely affect the defence of the United Kingdom.
Lord Strathclyde: The noble Lord encourages me to rise to my feet once more. I was trying to say that, apart from anything else, I do not think that there is any particular reason that the defence services should in themselves be excluded from competition.
Furthermore, it is worth remembering that the provisions in this Bill are enabling only. They also ensure that the Minister remains accountable and legally liable for the carrying out of a function when contractors are employed. The safeguards in the Bill set out parameters within which each potential candidate for contracting out can be considered on its own merits.
268
These amendments are ultimately unnecessary. We should not be in the business in this Chamber of putting into legislation unnecessary amendments.
As I said earlier, the vast amount of defence regulation and defence work falls under the prerogative powers which fall outside the terms of Part II. It is an unnecessary burden for the Government to have to prove, in the words of the amendment, that each piece of contracting out does not
"adversely affect the defence of the United Kingdom".
5 p.m.
Lord Williams of Elvel: The Minister has slightly changed his tune. I thought when he started off, in his first reply, that he was saying that he accepted the basic premise of what I was trying to establish, but that it was unnecessary because of this, that and thus. Now he seems to be sliding away from that position, saying that it is not right to have this sort of thing in the Bill because there is no reason why the Armed Forces like anybody else should not be subject to the contracting out procedure. If that is the case, I would simply insist that if the defence of the United Kingdom is adversely ' affected by any contracting out procedure, it is up to the Government to prove that.
Having said that, I do not think that we shall get very far with this argument. I shall look at the matter to see whether we shall return to it at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Harris of Greenwich Lord Harris of Greenwich moved Amendment No. 197J.
Page 53, line 11, after ("(2)") insert ("or (2B)").
The noble Lord said: I beg leave to move this amendment on behalf of the noble Lord, Lord Allen of Abbeydale, who cannot be with us today. To be blunt, I am disappointed that there is no Home Office Minister in the Chamber to deal with this issue.
The question that I raise is that of the interface between this legislation and the present Home Office inquiry into core police functions. However well the noble Lord, Lord Strathclyde, has been briefed, he does not have any direct personal knowledge of these matters. It is most unfortunate that a Home Office Minister is not here to deal with this situation, which is causing serious disquiet in the police service. When we come back to this subject at Report—as we probably shall— let me make it quite clear that I, and 1 am sure others, will expect the matter to be dealt with by a Home Office Minister and not by somebody from the DTI.
The purpose of this brief debate and the questions that I intend to ask raise an issue of considerable importance to the police service and the public. The question that we want answered by the noble Lord—uninstructed other than by, presumably, a Home Office official—is this: precisely what are the Government planning to do in respect of the present inquiry which is now taking place into core police responsibilities? Is there a likelihood that the present Bill could be used to transfer major responsibilities from the police to private security firms?
The purpose of this amendment is to allow the Government to explain what precisely are their intentions. As I have indicated, there is serious concern in the police service, and indeed outside it, about what is now going on. If anything, that concern has intensified as a result of Mr. Howard's speech to the British Security Industry Association a few days ago, when he indicated that it could rest assured that more work would be coming the way of its members.
The Government's review of police functions has, as the noble Lord, Lord Strathclyde, will have been told in the briefing material supplied to him, the following terms of reference:
"to examine the services provided by the police; to make recommendations about the most cost-effective way of delivering core police services; and to assess the scope for relinquishing ancillary tasks".
Those are the terms of reference. They were announced by the Home Secretary; but of course in reality they are the terms of reference that have been determined by the Treasury. The central objective is clearly to cut police budgets.
The dangers of that approach are, I would have thought, obvious. What ancillary tasks, as they are now described, are likely to be dropped? Will this Bill be used to effect such changes? What about the crime prevention activities of the police? Are they not a core police function? What about visits to schools? What about help to confused elderly people who may inadvertently have lost their keys and go to the police station in order to get assistance from the police? What about helping to trace missing people? The reason that the British police service has such a high international reputation is that it performs just those social service functions with considerable skill and sensitivity. There is a growing fear that in a crude cost-cutting exercise there will be pressure for those responsibilities to be abandoned.
The Committee should have no doubt—as I am sure those who follow these matters have no doubt—about the risks involved in an approach along those lines. We have seen the police outside our shores reduced to the status of exclusively law enforcement agencies. That is true in particular in many inner-city areas of the United Slates and in many parts of continental Europe. The effect of such an approach has been deeply damaging. Public confidence in the police in those countries has declined sharply and, as a result, their capacity to deal effectively with law enforcement problems has been diminished.
Fortunately, so far we have declined to follow this particular approach. The reason that British police officers—by and large; there are obviously notable exceptions—get on better with the public than is the case with their colleagues in the United States and many other parts of Europe is precisely because of the social service responsibilities that they cheerfully carry. They are probably this country's only 24-hour social service.
I have indicated already the alarm in the police service about the Government's intentions. Let me summarise the view of a number of chief police officers
270
who have expressed concerns on this matter. The chief constable of South Yorkshire—an experienced officer, formerly with the Metropolitan Police—said this:
"What I see is all the antecedent action which in other public services—health and education—has led to privatisation … We ask the Home Office: 'Please tell us what is different this time. Why should we be different to health?' And we get back: 'Privatisation is not on the agenda'. So we are mistrustful".
The chief constable of Derbyshire said:
"We need a Royal Commission. There has to be a proper debate … There is a feeling among chief officers that there is a hidden agenda, a great deal of suspicion".
The acting chief constable of North Wales said:
"I am cynical about the Home Office's aims. If you privatise it means you do it cheaper, and the public will lose out. If we are left with the functions which the Home Office sees as important, we will be left dealing with the public only in situations of conflict".
The chief constable of the Thames Valley force said:
"The review could change the whole face of policing without the public being aware. It's ironic that at the very time, more and more countries are taking a look at our policing because it's perceived to be the best, there are policies in train which could change the very things that make us unique".
The chief constable of Avon and Somerset said:
"The stark reality is that we have already been,given the verdict and now they are trying to fill in the facts".
Those are the views of just a handful of chief officers. So far as I am aware, they are the views of every senior chief officer in this country; and in the debate when we are discussing this matter we do not even have a Home Office Minister sitting on the Government Front Bench. In my view this is no way to conduct business which is as serious as this.
The reality of the matter is that there is now a climate of deep suspicion in the police services. They simply do not believe the assurances that they have been given that there is not a hidden agenda in the Treasury to compel the police to divest themselves of some of their most important responsibilities. Some believe that legislation of this character can be used to effect dramatic changes.
It is hardly surprising that there is such suspicion. Many noble Lords will remember only too clearly the follies of the Sheehy Committee whose members were hand-picked by Mr. Clarke to produce the report that he wanted. Those recommendations were largely dropped after 20,000 policemen had gathered together at Wembley to express their views on the matter. They remember also the present Chancellor's attempt to put political placemen into the chairmanship of every police authority in this country—a proposal which was destroyed as a result of opposition in this House. Now, once again the Government appear to be preparing to take action which could have deeply damaging consequences. Once again there is no form of genuine independent inquiry offered in order to analyse the issues before us.
In a few moments the noble Lord, Lord Strathclyde, no doubt will tell us that the Government have no such intentions; that they are looking only at ancillary tasks, such as, perhaps, escorting wide loads on motorways; and that in any event the public will be consulted, probably some time next January, according; to the leaks which have appeared in the newspapers.
I believe that this debate, brief though it will be, is of considerable importance. It gives the Government the opportunity to set out their intentions with some clarity. But I hope that we will remember that the police service in this country is not the property of one group of politicians who happen to form the current Government of this country. To quote a former commissioner of the Metropolitan Police, they are the people's police. No sensible person wants yet another major conflict between the police service and the Government. But Ministers should be under no illusion: if there is any attempt to impose on the police privatisation of functions which the service and the public see as essential to carrying out the wide social service responsibilities to which I referred, I suspect that many of us in all parts of the House will resist them with all the power at our command. I beg to move.
Lord Williams of Elvel: I should like to support the amendment of the noble Lord, Lord Harris. I regret the absence today of both the noble Lord, Lord Allen of Abbeydale, who would have been extremely persuasive on this issue, and my noble friend Lady Hilton of Eggardon. The Minister must not say that it is not his fault. I do not say that it is his fault. I merely regret their absence. If the Minister will allow me to proceed without interruption and without mutterings from the Privy Council Bench opposite, I should like to ask the noble Lord, Lord Strathclyde, one simple question. Do the Government propose to contract out the police national computer? If so, let them say so.
Lord Strathclyde: I now have an opportunity of taking part in this debate, much to the regret of the noble Lord, Lord Harris of Greenwich. I have to say that I have not come across the noble Lord, Lord Harris of Greenwich, before in my ministerial capacity. I have come across many of his colleagues and have much enjoyed doing business with them. I do not feel that the relationship that I must have with the noble Lord, Lord Harris, will be a particularly fruitful one because he is very unhappy that I am here. I have to say that I am very unhappy that he is over there. In fact, if he felt quite so strongly about the lack of a Minister from the Home Office, perhaps he should not have moved his amendment in the first place.
Lord Harris of Greenwich: If the noble Lord will allow me to intervene, that is an absurd suggestion. The noble Lord knows perfectly well that there is a major review going on at the moment of core police functions. It did not occur to me before entering the Chamber today that the noble Earl, Lord Ferrers, would not be here. I automatically assumed that he would be anxious to deal with these particular issues. I know that he has been working very hard recently. But the idea that I would not move the amendment simply because he was not here is a quite extraordinary statement to make.
5.15 p.m.
Lord Strathclyde: I have no idea whether or not my noble friend Lord Ferrers wanted to deal with the noble Lord, Lord Harris of Greenwich. It is not a subject that we discuss on many occasions. However, I am the
272
Minister responsible for the Bill and I shall deal with the Bill for as long as I am responsible. If the noble Lord, Lord Harris of Greenwich, does not like it, that is his problem and not mine. I found his words at the beginning gratuitous and insulting. I would not wish to hear him speak in that vein again; otherwise, I can assure him that I shall be less than helpful in my responses to him.
The statutory functions of the police are multifarious. The most important involve the exercise of powers of stop and search, entry, search and seizure, arrest and detention. More minor powers involve regulatory powers of inspection and licensing across a wide range of activities, for instance, inspecting chemists' registers.
Clause 60 of the Bill, which we shall detail in a moment, excludes from the contracting out order-making power in Clause 58 any functions which affect the liberty of any individual or are powers or rights of entry, search into or seizure of property. Clause 60 therefore excludes the core functions of the police from the contracting out order-making power. The police authorities already successfully employ contractors to carry out services and activities. There is no reason that that should not continue.
Your Lordships may also be aware that the Home Office is currently reviewing police tasks to see whether any can be carried out more effectively and efficiently through transfer to other more appropriate agencies. It is not in the interests of the police or the taxpayer to have widely trained police officers performing routine or administrative functions which do not require their skills or powers. However, I should point out that there are no plans to use the contracting out order-making power in respect of any functions of the police. But it would not make sense at this stage to rule out completely the consideration of exposing the services to competition should they fall within the scope of the Clause 58 order-making power.
That includes the question put by the noble Lord, Lord Williams of Elvel. I am not certain whether or not the national police computer is a statutory function. If it is a statutory function, it could fall under the provisions of the Bill. If it is not, it falls outwith the statutory powers and contracting out could be dealt with in the normal way.
The Committee will also be aware that the Security Service Act 1989 put the security service on a statutory footing for the first time. That Act sets out the functions of the security service. They are functions of the service and not of a Minister or an officer. Such functions therefore lie outside the scope of Clause 58.
The 1989 Act also confers functions on the director general of the service. Those functions are personal to the director general and may not be carried out by her officers. Again, therefore, they lie outside the scope of the contracting out order-making power.
The 1989 Act does not permit the functions of the Secretary of State to be performed by one of his officials except in cases of urgency and even then they are of temporary validity. In any event, Clause 60(1) (c) excludes such functions from the order-making power. In respect of the security services therefore the amendment would be negatory.

273
The exclusions to the Bill which currently exist offer a significant safeguard. Also, the great extent to which functions in the areas of defence and of the police are able at present to be contracted out successfully, without the need for additional order-making powers, suggests that the amendments are both anomalous and unnecessary. I urge the Committee therefore to resist the amendments if they are pressed, but I hope that the noble Lord, Lord Harris, can withdraw them.
Lord Williams of Elvel: I understand that the Minister cannot reply immediately to my question regarding the police national computer. He does not know its status. But will he be good enough to write to me stating the Government's intentions in regard to the police national computer? It is an important point.
Lord Strathclyde: I shall be delighted to do so.
Lord Peston: Perhaps I can intervene on one matter. Both in his answer to an earlier amendment on defence and now in this one, the Minister referred to Clause 60. I find it impossible to see any reference to defence in Clause 60. I did not raise it then and the Minister refers again to Clause 60 with regard to the police. I assume he received high-powered legal advice. If he looks at Clause 60(1) (a), which refers to the liberty of the individual, he may agree that I could persuasively argue that everything the Government do refers one way or another to the liberty of the individual. Therefore I could interpret that provision as saying that no contracting out could possibly take place in any way whatever. That is my first point and perhaps the Minister can explain it.
Secondly, can the noble Lord interpret Clause 60 in terms of the safeguards that he says exist? I cannot see them with regard to the police in the terms referred to earlier by the noble Lord, Lord Harris of Greenwich, and I cannot see them in connection with defence. The noble Lord emphasised Clause 60 as being important; but I have difficulty in understanding what it is meant to do for these purposes.
Lord Strathclyde; I cannot remember referring to Clause 60 vis à vis defence. I may have done so but I cannot remember in what regard. I shall no doubt be able to read it in Hansard tomorrow.
Lord Peston: I took the noble Lord to say that Clause 60 prevented what he referred to as the "core" function—in that case of defence—being in danger. It may be that it was a slip of the tongue; I am willing to accept that. But I was intrigued by his reference to it because I cannot see any connection.
Lord Strathclyde: Flicking briefly back to my notes on the last amendment, I cannot see that I mentioned Clause 60 at all. However, I may well have done. In my reply to the noble Lord, Lord Williams, I said that Clause 60 excludes the core functions of the police because of Clause 60(1) (b) which refers to the,
"power or right of entry, search or seizure into or of any property",
and of course Clause 60(1) (a) dealing with liberty. I shall not be drawn into a great debate on Clause 60 at this stage because we shall be dealing with it in some
274
detail—including an amendment which seeks to define the word "liberty", and that is something to which we can look forward—later this afternoon.
The fundamental point is that we do not believe that the core functions of the police can be contracted out under this Bill because of Clause 60. Other aspects of services are provided by the police which it may be appropriate to contract out. We are not even suggesting that in the Bill. All we are suggesting in the Bill is that where there exists a statutory function, the Government should be able to look at it in terms of whether or not there should be contracting out. An order will then be made and brought before Parliament at that time.
Lord Harris of Greenwich: The beginning of the speech of the noble.Lord, Lord Strathclyde, was even by recent standards unusual. I understand that if one is not nice to him he will not feel obliged to answer questions. I have not heard a more preposterous statement made by a Minister of the Crown since being involved in politics.
The reason for my original statement was obvious. When we are discussing what are essentially Home Office issues, it is not sensible to have a DTI Minister answering. An inquiry on core police functions was announced by the Home Secretary. The various questions I raised have not been answered in any way by the noble Lord, Lord Strathclyde. He merely read out his briefing material—supplied, no doubt, by the Home Office. I do not blame him for that. He relies on that because he has no day-to-day ministerial responsibility. But if we are to discuss these matters in a sensible fashion it means that the noble Earl, Lord Ferrers—who always goes to considerable trouble to assist the House and who has direct personal responsibility for the police—should be here to answer questions. For instance, he would have been able to answer the question put to him by the noble Lord, Lord Williams of Elvel; namely, what is the position about the police national computer? It is a reasonable question to ask. For the most understandable reasons—because he does not come from the Home Office—the noble Lord, Lord Strathclyde, is unable to answer the question. I put other questions to him which have not been answered.
This is not a sensible way of proceeding. We shall certainly come back to the matter—if I can have the attention of the noble Lord, Lord Strathclyde, for a moment —on Report. I urge the noble Lord to suggest to his noble friend Lord Ferrers that he assists the House. Would the noble Lord like to intervene?
Lord Strathclyde: In this Chamber I reply for Her Majesty's Government. If the noble Lord does not know that by now then he should make it his business to find out.
Lord Harris of Greenwich: Having been in this House and having been a Minister rather longer than the noble Lord, Lord Strathclyde, I know that as well as he does. All I can say to him, in the nicest possible way because I want an answer to some of these questions— now that we have this appalling threat hanging over us that he may not wish to give us an answer in the future—is that I hope he will discuss the matter with the

275
noble Earl, Lord Ferrers, between now and Report stage. Unlike the demeanour of the noble Lord, the noble Earl, Lord Ferrers, always goes to the greatest personal trouble to answer serious questions. He would have known the answer to the police national computer issue; he would have known the answer to all the other questions raised which the noble Lord, Lord Strathclyde—again, for understandable reasons—had not the faintest idea about other than the briefing supplied by the Home Office. It is not a sensible way of proceeding when we face a situation of widespread concern in the police service in relation to what is happening at the moment. All they will see in Hansard tomorrow is a reply from a DTI Minister who had not the faintest idea what the facts of the matter were other than what appeared in his briefing note.
As I indicated, the amendment was tabled for probing purposes. We shall probe further on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 198 had been withdrawn from the Marshalled List.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 199:
Page 53, line 18, at end insert:
("(f) any other function which is of a judicial nature.").
The noble Lord said: Amendment No. 199 stands in my name and that of my noble friend Lord Williams of Mostyn. For the convenience of the Committee, I shall speak also to Amendments Nos. 201K, 201L, 206A and 215B. Amendment No. 199 is a probing amendment.
Exclusions from judicial functions which are contained in the Bill, particularly in Section 58(2), do not seem to clear up the matter. What I mean by the "matter" is that there are many functions exercised by judicial or quasi judicial bodies and we need to know whether or not they are to be contracted out. As I understand the Bill as drafted, a number of sensitive areas could easily be contracted out. For instance, certain aspects of the High Court—the Queen's Bench, the Bankruptcy Court, the Restrictive Practices Court, the tipstaffs and the taxation of bills—and certain tribunals and part of the Lord Chancellor's Department could be contracted out. Possibly some aspects of the Crown Court could be contracted out. On all these matters we have tried—when I say "we" I mean that my noble friend Lord Williams of Mostyn and I have tried and indeed other noble Lords have tried—to ascertain from the noble and learned Lord the Lord Chancellor exactly what is and what is not within the ambit of the Bill. It has been very difficult to get a final reply.
In moving the amendment and speaking to the amendments to Schedule 14 I am asking exactly what the Government believe should be contracted out in the way of organisations which have a judicial function. Others much more expert than I will be able to enlarge on the argument but that is the basic premise. It is a probing amendment at the moment, although we may
276
well wish to come back to it at a later stage. We wish to know from the Government precisely what this means. I beg to move.
5.30 p.m.
Lord Ackner: In the Notes on Clauses to Clause 58(2) it is stated in regard to the judiciary:
"The functions are identified so as to mark the constitutional separation of the judges from the executive".
The clause does not do that because, as your Lordships see, all it does is to specify that there is to be excluded from the section,
"if its exercise would constitute the exercise of jurisdiction of any of the following".
There is then set out from (a) to (e) the senior appellate courts down to the county court. That seems to be the Government's limit of their understanding of where the judiciary are to be found.
My noble and learned friend Lord Brightman, who regrets that he is not able to be present today, asked of the Minister in a Written Question on 28th June:
"To what judicial functions of what office-holders Clause 58 of the Deregulation and Contracting Out Bill (as at present drafted) will apply".
The rather limited answer he received from the noble Lord, Lord Strathclyde, was in these terms:
"The functions of the judges are excluded from the ambit of the clause by the conditions in Clause 58(1) coupled with the exclusions in Clause 58(2). There is no comprehensive list of functions of office-holders. Nor is there a clearly defined distinction between judicial and other public functions. It is not, therefore, practicable to compile a list of judicial functions as requested".—[Official Report, 28/6/94; col. WA39–40.]
It is therefore a little difficult to see how Clause 58(2) has identified functions so as to mark the constitutional separation of the judges from the Executive.
There is an interesting schedule—Schedule 11 to the Courts and Legal Services Act 1990—which identifies judges who are barred from legal practice. Those who are included, and clearly are not included in Clause 58(2), are as follows: stipendiary magistrate; social security commissioner; president of Social Security Appeal Tribunals; president of the Industrial Tribunals; president or member of the Immigration Appeal Tribunal; member of the Lands Tribunal; president of Value Added Tax Tribunals; special commissioners appointed under Section 4 of the Taxes Management Act 1970; charity commissioner appointed under the first schedule to the Charities Act 1960; coroner appointed under Section 2 of the Coroners Act 1988. They have been specifically identified as judges and they are not, as I see it at first sight, within the protection which is referred to here.
I have consulted the Lord Chief Justice in order to see whether he wished any observations to be made. He has authorised me to say that the ambit of the clause is a source of considerable concern both to him and to other senior judges. Speaking at the Mansion House on 6th July, the Lord Chief Justice referred to recent press reports that some tribunals were being considered for possible privatisation which made it necessary, in his

277
view, to reassert the importance of maintaining inviolate judicial independence. These are the words which I quote very shortly from his speech:
"Neither the Queen's Courts nor statutory Tribunals must be, nor be thought, susceptible to pressure or influence from any outside body which would be inevitable should any aspect of the judicial process be put in the hands of private contractors".
As I have indicated, the Lord Chief Justice very much regrets that he is unable to be here, but he has told me that he will read the report of today's debate, and in particular what the Minister says in response to it, with great interest. Should it be necessary to do so, he will certainly speak at a later stage of the Bill's progress.
I invite the Minister to agree with the observation that it is axiomatic that the authority of determination of the rights and obligations of individuals as between each other or in relation to the Executive is the exclusive and fundamental responsibility of the judicial arm of the state. Judicial independence requires that the Queen's courts and statutory tribunals—I emphasise them—are not, and are seen not to be, susceptible to pressure or influence from any outside body or faction, as would inevitably be the case should any aspect of the judicial process be placed in the hands of private contractors.
There is grouped with the amendment moved by the noble Lord, Lord Williams of Elvel, Amendment No. 215B, which seeks to leave out paragraph 2 of Schedule 14. The paragraph and the schedule enables contractors to take over from the Lord Chancellor's Department activities of that department. Section 27 of the Courts Act 1971 vests in the Lord Chancellor the power to appoint the officers and staff of district probate registries, the Supreme Court and the county courts. The section as it stands thus prevents most of the work of court staff being undertaken by independent contractors rather than by civil servants. The amendment proposed in paragraph 2 would allow any of the functions of court staff to be undertaken by private contractors.
Some of the tasks undertaken by civil servants of the Lord Chancellor's Department have a substantial judicial element; for example, court listing. That is done on behalf of the judiciary. The drawing up of court orders is again done on behalf of the judiciary. Others are exercised under the direct supervision of the judiciary; for instance, court clerking and the personal support to judges. Those functions should be taken only by servants of the Crown.
It may also be relevant to your Lordships to know in this context that Section 110 of the Courts and Legal Services Act, which for the first time gave the parliamentary ombudsman jurisdiction to investigate the actions of court staff, of which I know my noble and learned friend Lord Hailsham has distinct recollection, expressly excluded the possibility of inquiry into acts which have this judicial element. According to Section 110(2), the ombudsman is denied jurisdiction over,
"Action taken by any person appointed by the Lord Chancellor as a member of the administrative staff of any court or tribunal, so far as that action is taken at the direction, or on the authority (whether expressed or implied), on any person acting in a judicial capacity or in his capacity as a member of the tribunal".
Perhaps I may finally emphasise this matter. The impartiality of the courts and support for the judiciary is based on trust between the staff, the judiciary, the
278
professions and the public. Continuity of staff employment and relationships built up over time are a crucial part of that trust. Quite understandably, contractors are motivated by profit. The varied operations run by contractors can, if applied in particular areas, create conflicts of interest and possibly undermine that trust. That makes it all the more important that this form of contracting out does not take place.
Lord Hailsham of Saint Marylebune: Perhaps I may add a word or two by way of inquiry. I do not believe that this amendment of itself is very well drafted, but there are points to be discussed. Why are the judicial officers limited in the way in which the clause would appear to suggest? For instance, there are the stipendiary magistrates who, until recently, were the only minor judiciary in London; then there are the lay magistrates all over the country. There are also quite a number of stipendiary magistrates in provincial cities. What is the situation or intention as regards the statutory tribunals which exist throughout the country and which are certainly quasi-judicial in character, although I doubt whether my noble and learned friend Lord Ackner would describe the officers who man them as judges.
There is a functionary called the president of the Employment Appeals Tribunal. It is quite certainly a court, but it is not mentioned in Clause 58 of the Bill. One can go on almost indefinitely. My noble and learned friend Lord Ackner referred to the fact that listing has been claimed—and I believe rightly claimed—by a succession of Lord Chief Justices as being a judicial and not a purely administrative function. What about the position of the ushers in courts and the persons who take charge of juries? I may be talking out of turn.
The drafting of Clause 58 may require a certain amount of attention. I know that there has been a good deal of trouble about the difference between purely administrative functions and judicial functions. There are people such as district judges who are probably part of the county court for this purpose. There are a great number of quasi-judicial officers who do not seem to be mentioned at all. I cannot speak for the judiciary of Scotland. The only specifically Scottish reference appears to be the sheriff court. But is that so? I do not want to bully my noble friend on the Front Bench, but the drafting needs looking at. I am sure that the intentions of the Government are perfectly honourable.
5.45 p.m.
Lord Lester of Herne Hill: Much of the debate on this Bill has rightly concentrated on the need to avoid any excessive delegation by Parliament, under Part I of the Bill, of its law-making powers. The constitutional issues raised by the contracting out provisions in Part II are, if anything, more important. But as I read Hansard they were scarcely touched on at all during Second Reading.
It has been said by all Members of the Committee who have spoken so far—and I gratefully and respectfully adopt what they have said—that the powers in Clause 58 in one way or another threaten the basis of the rule of law in this country, unless I misinterpret

279
them. On the face of it, they would authorise serious breaches of Article 6 of the European Convention on Human Rights.
Perhaps I may deal with just one point to show why I share the views expressed so far. Clause 58 in its present form empowers a Minister by order made by statutory instrument, subject to the affirmative resolution procedure, to contract out any function of an office holder which is conferred by or under any enactment. "Office holder" is defined by Clause 68(1). It is apparently intended by the Government that it should include those who exercise judicial functions. I say that because, as has been said, Clause 58(2) excludes functions from the contracting out provisions if their exercise would constitute the exercise of jurisdiction by the ordinary civil courts, from the county court or, in Scotland, the sheriff court, to the Appeal Committee of this House.
Clause 60(2) also excludes any function of the official receiver attached to any court. In other words, but for Clauses 58(2) and 60(2), even the judicial functions there referred to could be contracted out and, conversely, according to the old maxim, expressio unius est exclusio alterius, any judicial functions exercised by any other independent courts or tribunals established by law to exercise judicial power in this country remain within the scope of the contracting out powers conferred by Clause 58.
Clause 60(1) (a) provides somewhat ambiguously that a function is excluded from Clause 58 if,
"its exercise, or a failure to exercise it, would necessarily interfere with or otherwise affect the liberty of any individual".
At first blush, one might have thought that the exercise of judicial powers in civil cases—for example, about the determination by industrial tribunals of the fundamental civil right to equal pay or equal treatment without sex discrimination in employment under British and European legislation—would be classic examples of functions whose exercise would necessarily affect individual liberty.
Unfortunately, that is not how I read the relevant statutory provisions. Clause 58(2) must have been included because the Government do not consider that the exercise of jurisdiction by the ordinary civil courts comes within the Clause 60(1) (a) exception. It follows that the Government are apparently seeking powers which will enable them to contract out the exercise of the power to determine civil rights and obligations by any court or tribunal other than those specifically mentioned in Clause 58(2). I find that so extraordinary that I have read, re-read and read yet again the Bill in the hope that I am mistaken. But I believe that I am correct. Clearly, my elders and betters in the noble and learned Lords, Lord Ackner and Lord Hailsham of Saint Marylebone, are also concerned for similar reasons.
What then is so objectionable and repugnant about a power to contract out the exercise of judicial functions carried out by the many independent courts and tribunals not exempted by Clause 58(2)? A philosophical answer is given by the noble and learned Lord, Lord Hailsham of Saint Marylebone, in his fascinating, profound and perfectly timed new book, Values: Collapse and Cure,
280
which I am delighted to advertise this afternoon. The noble and learned Lord wrote—this seems entirely apt to this issue:
"If the state is to operate a near monopoly of the use of force, it has to take upon itself the responsibility for the peaceful settlement of all private disputes which might lead individuals to use violence themselves as a means of self help".
That is the reason why judicial power is vested exclusively in independent and impartial courts and tribunals. It is because the state has taken upon itself— and not delegated to some private contractor—the responsibility for what Article 6 of the European Convention describes as the determination of civil rights and obligations by an independent and impartial court established by law.
Very regrettably, the Government have not incorporated Article 6 into our legal system. That means that the only effective safeguards of the rule of law are safeguards which Parliament writes into the Bill to ensure that the judicial functions of all courts and tribunals in this country cannot be contracted out. Otherwise it will have to be left to the courts to construe these very ambiguous provisions and ensure compliance with Article 6 of the convention. It would surely be preferable for the matter to be put beyond doubt by accepting Amendment No. 199, or a similarly drafted amendment, which provides a crucial safeguard which is at present missing from the Bill.
Baroness Hamwee: Grouped with Amendment No. 199 are two amendments that I have tabled relating to the part of the Bill dealing with the functions of local authorities. The fact that I shall not mention the amendments which have already been debated should not be taken as an indication that I do not believe that the points raised are extremely serious. With hindsight, it may have been more convenient if the amendments had been degrouped but, in order to allow us to move on—I suspect that there is a mood to move on at something between a trot and a canter—I shall speak to the amendments briefly now.
Amendments Nos. 201K and 201L seek to exclude from the ambit of Clause 59 those functions exercised by local authorities which constitute quasi-judicial functions. I have in mind two particular areas: licensing and development control in town and country planning. Local authorities exercise many functions in relation to licensing ranging over, to take something of a random list: acupuncture; tattooing; ear-piercing and electrolysis; food and food premises; house-to-house collections; music, dancing and entertainment licences; sex shops and sex cinemas; street trading—the latter are not connected—and wild animals and zoos. The Committee will be aware that local authorities decide on the granting or refusal of planning applications.
It is not always easy to mix democratic accountability and the exercise of quasi-judicial responsibilities, as I know having juggled the various criteria myself and having observed them being juggled for some years. That is particularly the case where those elected to serve at local government level are applying rules which they have not drawn up. However, it is an area of work that

281
needs to be sensitive to the aspirations of local communities and in which democratic accountability is an important element.
In the area of development control, I dare say that the Minister would argue that it is up to the elected members to work out their planning policies and that, using the guide of the local plan, matters are currently delegated to planning officers although they might equally be performed by contractors. However, I believe that most local authorities will not be slow to use their powers now to call back to the elected members the exercise of those functions from officer level if they feel that the decisions should be made by elected members with, as I have said, a sensitivity to the needs of the local community and an understanding of local pressures. Frankly, I am appalled at any prospect of contracting out the exercise of what, as I have said before, I believe to be local government, not merely local administration.
I refer finally to the fact that members of local authorities are required to make declarations of interest and to make it clear if they have an interest in the matters that are being determined. It is important that that is seen to be done. Many of your Lordships could speak far more forcefully than I on the need for justice to be seen to be done, but it needs to be seen to be done in this area as well as others.
Lord Strathclyde: I am grateful to all noble Lords who have spoken in this debate, and particularly the noble and learned Lord, Lord Ackner, my noble and learned friend Lord Hailsham, the noble Lord, Lord Lester of Herne Hill, and of course, the noble Lord, Lord Williams of Elvel, who moved the amendment. I join the noble Baroness, Lady Hamwee, in speaking to all the amendments in the group. It was the noble Baroness who said that these are important amendments. They are. I recognise that the amendments were tabled because of a concern, shared by the Government, about the continued independence and probity of the judicial process. I welcome the comment of the noble Lord, Lord Williams, that these are probing amendments. I shall treat them as such.
I should like first to deal with Amendments Nos. 206A and 215B and then turn to the wider questions raised by the other amendments. Clause 60(1) may already address the heart of the concern that lies behind Amendment No. 206A. That is because where the issue of proceedings will directly require an individual to attend a court or some other place on pain of some sanction, paragraph (a) will take that function outside the scope of the order-making power.
We shall be discussing the provisions of Clause 63 shortly, but this example illustrates the point well. Noble Lords will be aware that Clause 63 would, following an order and due authorisation, allow a contractor not only to take the decision to seek a liability order for non-payment of local taxes, but also to decide on what method of collection is to be used. However, that ability does not extend to an exemption from the exclusion made in Clause 60(1) (a) and an order would not extend to enabling a contractor to seek committal of a debtor to prison. At that level, the Government share the
282
concern that a general order-making power might be used to facilitate the use of contractors to exercise such functions. In the light of the pre-existing exclusions of subsection (1) I suggest that the amendment is unnecessary and will prevent the efficient use of contractors in areas where it is entirely appropriate to consider their use.
Turning to Amendment No. 215B, approximately 10,000 staff work in the Court of Appeal, the High Court and the county courts, carrying out a wide variety of jobs ranging from mechanical and clerical tasks through to managerial functions and areas of technical expertise, such as information technology. Amendment No. 215B would give a right of monopoly supply to the public sector across a wide range of jobs, irrespective of the merits, and it cannot be right to preclude the use of non-civil servants where their use would be a more effective way of meeting the needs of the judiciary and court users and represent improved value for taxpayers' money.
My noble and learned friend the Lord Chancellor is currently exploring with the senior judiciary what functions it might be inappropriate to contract out. Subject to the outcome of those discussions, any particular proposal would be considered on its own merits, always bearing in mind the paramount need to preserve the integrity of the judicial process.
Perhaps I may turn to the wider issues raised in the debate. I can assure the Committee that we would not compromise the probity and independence of the judicial process. We attach the highest importance to the constitutional principle of the separation of the powers of the judiciary and the Executive. To mark that principle, we brought forward an amendment in another place to exclude the functions of the judges, even though it is not clear that any of them would have fallen within the scope of the Bill.
Amendment No. 199, and, in the context of local governments Amendments Nos. 20lK and 201L, would further exclude from the Bill functions of a judicial nature and quasi-judicial functions. Those go very wide, and would introduce a great degree of uncertainty into consideration of which functions were in practice covered by the Bill. They could, on some interpretations, cover activities involving little or no discretion, currently carried out by very junior public servants, which we might wish to contract out. We recognise that there are important points about judicial functions, such as those of the magistrates, the tribunals and others, raised by my noble and learned friend Lord Hailsham. We attach the greatest importance to ensuring that the judicial process is not, and cannot be thought to be, susceptible to pressure or influence from any outside body. In order to allay the anxiety expressed, the Government will look again carefully at the list of functions excluded from Clause 58 in order to mark those points of principle. In particular, we believe that it would be appropriate to make a further exclusion for magistrates.
We recognise also the serious worries about tribunals which have been expressed. Only those tribunals which are statutory office-holders and can delegate their functions to their staff currently fall within the scope of

283
Clause 58. We are prepared to look carefully at which functions should be excluded. In principle, we believe that the functions of tribunals which amount to the exercise of the judicial power of the state should not generally be susceptible to contracting out. However, that is a complex matter. There is a wide variety of tribunals performing a wide variety of functions. Indeed, in relation to some functions mentioned in the Bill, we have made it clear that we are considering a range of options, and that the option of using those powers should not be precluded.
We intend to look carefully at those issues and bring forward appropriate amendments on Report. We are fortunate at this stage of the parliamentary year to have a considerable amount of time before we reach the Report stage, and so, having given that commitment to the Committee, I hope that the noble Lord, Lord Williams of Elvel, will feel that his probing has been successful and that he can withdraw the amendment.
6 p.m.
Lord Williams of Elvel: I am most grateful to the Minister for his reply. As he quite rightly said, some very important issues have been raised in this debate. I am grateful to all those noble Lords who have taken part. I take it from what the Minister said that he agrees—I think that it is with the remarks of the noble and learned Lord, Lord Ackner—that the impartiality of the courts and support for the judiciary is based on trust between staff, judiciary, professions and public. That seems to be the fundamental principle which the noble and learned Lord set out, and I hope very much that when the Government bring forward their amendments on Report they will reflect that principle. I expect also that in studying the matter the Government will pay attention to the comments of the noble and learned Lord, the Lord Chief Justice, as related by the noble and learned Lord, Lord Ackner. Having said that, I beg leave to withdraw the amendment.
Baroness Hamwee: Before the noble Lord does that, perhaps I may ask the Minister whether he proposes to deal at a later stage with the questions of local authority functions which I raised or whether I should continue to wish!
Lord Strathclyde: With respect to the noble Baroness, I am not entirely certain to which function she is now referring. If I have not done the noble Baroness justice—as she knows I always try to do so—perhaps I could look at the matter further. I am reminded that the noble Baroness asked a question about licensing and development control. Those are issues raised in the amendments grouped with Amendment No. 205H. Perhaps she will bear with me, and I shall give her a fuller answer at that stage.
Baroness Hamwee: Again, before the Minister sits down, perhaps I may ask him whether, if he does not respond this afternoon, he will at least consider not merely the specific functions—I used those as the example and they are probably the primary example—
284
but that there are quasi-judicial functions exercised by local authorities and so there is an issue of principle as well as particularity.
Lord Williams of Elvel: I beg leave to withdraw the amendment.
Amendment, by leave, with drawn.
[Amendments Nos. 199A and 199B not move.]
Baroness Hamwee Baroness Hamwee moved Amendment No. 199C:
Page 53, line 20, leave out ("or by employees of").
The noble Baroness said: Amendment No. 199C is grouped with Amendments Nos. 199B and 199E. With those three amendments I am seeking some clarification on the drafting of Clause 58(3). Amendment No. 199C refers to employees. The subsection provides that a function may be exercised by a person or by that person's employees. In moving an amendment to delete that reference, I am asking whether the function is exercised by the person who is authorised or by the employees of that person. Is it the employees who exercise the function or are they merely doing work on behalf of the authorised person? In other words, who takes responsibility?
I am further confused by the fact that the definition of "employee" in Clause 64 seems to include an employee of an employee. That is because "employee" is defined as including a person who performs ancillary services for the authorised person, and any employee of such a person. That is difficult to understand without having the words before one, but there are two persons referred to in that definition, and so in referring to an employee of such a person it is not clear whether that means an employee of an employee.
The second amendment deals with the words in parenthesis. The subsection provides that the function may be exercised by:
"such person (if any) as may be authorised".
Having read that provision several times, I do not understand what is meant by a "person (if any)". That subsection seems to be the meat of the clause; but who is authorised if no person is authorised by it? I am sure that due to the heat of the last few days I have been unable to conclude what that is driving at.
Amendment No. 199E leaves out the phrase "the office-holder". Subsection (3) provides that:
"a function … may be exercised by … such person … authorised by the office-holder or the Minister whose function it is".
Should it be for the office-holder to authorise or should it always be a ministerial matter? I beg to move.
The Parliamentary Under-Secretary of State, Department of Employment (Lord Henley): I am grateful to the noble Baroness for agreeing to take the three amendments together and for explaining that they are merely probing amendments. Amendment No. 199C appeared to me to wreck the purpose of the order-making power, which is to allow the Government the ability to involve the private sector where a contractor can offer the best value for money in the delivery of that service. It would be impossible to do

285
that if each function or part of one had to be carried out by a named individual, with each of whom the Minister or office-holder had a discrete contract.
The contracting-out provision in the Bill will allow the benefits of competition to reach areas of the public sector where at present because of restrictions contractors may not be employed. I recognise that the Minister or office-holder would need to be assured that the employees of a contractor would be capable of carrying out the function properly so that the rights of third parties are protected. I assure the noble Baroness mat Clause 61 and the other safeguards in the Bill and in law will ensure that the rights of third parties are unaffected by the Bill. The noble Baroness was keen to have stressed exactly who takes responsibility.
The noble Baroness asked about the definition of "employee". I assure her that the definition in Clause 64(9) is exclusive to that clause. The noble Baroness will see that it states "In this section". The interpretation given by the noble Baroness was correct for Clause 64 but not otherwise.
Amendment No. 199D would delete words which were added to the subsection in another place in order to clarify the respective roles of Ministers and office-holders under Clause 58. Concern was expressed in another place that, as originally introduced to Parliament, what is now Section 58(2) could have been interpreted to mean that a Minister could make both an order and an authorisation for the contracting out of an office-holder's functions. That was certainly not our intention. Our policy is to provide for an enabling measure in this Bill. The words "if any" make it quite clear that the letting of a contract would not follow automatically from the making of an order. They thus underline that the provisions are permissive and that nothing in the Bill provides for any powers to force an office-holder to use contractors.
Amendment No. 199E removes from office-holders the power to authorise contractors to carry out a function following the making of an order. It means that, although a Minister may still specify an office-holder's functions, under Clause 58 the logical corollary— namely, an authorisation given to a contractor to carry out that function where appropriate—can never occur. That is because the Minister does not have the power under Clause 58(3) as drafted to give such an authorisation, and this amendment would delete the office-holder's power to do so. It would, therefore, render Clause 58 useless as far as the office-holder's powers are concerned.
I assure the noble Baroness that there is no difference in principle between the functions conferred on office-holders and those conferred on Ministers. The need for improvements in value for money in the delivery of office-holders' functions is just as great as it is for the functions of a Minister. Office-holders cannot be replaced by contractors by virtue of Clause 58. The office-holder will remain in place; and safeguards in the Bill, which ensure that accountability remains unchanged, apply equally to the functions of office-holders as they do to those of a Minister. Any function which must be exercised personally by an office-holder is outside the order-making power.
286
Finally, perhaps I may stress that the order-making power is enabling only. It would be for a Minister to make an order specifying a function, subject to consultation with the office-holder concerned. The order would be subject to the affirmative resolution procedure of both Houses.
I believe that that explanation deals with the various probings of the noble Baroness, but if it does not I shall try to do better.
Baroness Hamwee: I am grateful to the Minister for those explanations. I am not sure whether he dealt with the phrase "such person (if any)" but I shall read his response to check. I pause to see whether be is aware of doing so. Perhaps I had better leave the matter and read his reply in Hansard. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 199D and 199E not moved.]
6.15 p.m.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 200:
Page 53, line 22, at end insert ("provided that, in the case of employees, they are fit and proper persons.").
The noble Lord said: In moving Amendment No. 200 I shall speak also to Amendments Nos. 201, 201A, 201C, 203A and 217AA. I welcome the noble Lord, Lord Henley, to the Committee—
Lord Henley: I can assure the noble Lord that I was earlier involved in the Committee. The noble Lord may remember that we had an exchange about the admissibility of certain amendments. I believe that it was some weeks ago.
Lord Williams of Elvel: I remember that very well. I was wondering whether this was a permanent or temporary change on the Government Front Bench. No doubt we shall see.
Lord Henley: We can only speculate.
Lord Williams of Elvel: We can only speculate, as the noble Lord rightly says.
These are probing amendments. There is an important point that I wish to raise and it is right to do so by way of amendment. The whole principle of contracting out involves risks. Members of the Committee would be wrong to ignore the risks that are inherent in this procedure. Many Members will be able to cite cases where the contracting out of functions has been achieved—in particular, in local authorities and I do not blame them or any firm—where some undue influence was brought to bear on the contract that was finally let. In other words, and not to put too fine a point on it, I am talking about the possibility of corruption.
I wish to hear from the Government a strong assertion that they are committed to rooting out corruption wherever it may appear and, in particular, preventing corruption in the contracting-out procedure. I see nothing in the Bill which in any way restricts those people to whom contracts may be let in the event of the exercise of a function being contracted out. Perhaps the Minister will be able to help me on that matter.

287
Although the amendments to which I speak are probing, they seek to suggest how that might be done. As regards Amendment No. 200, it could be done, for instance, by ensuring that they are "fit and proper persons". That expression is used, among others, in the Financial Services Act and the Banking Act. There could be a limitation on former servants of the Crown and of local authorities or there could be a period of delay. All those suggestions are possible.
I am not particularly concerned about the precise formula but I am very concerned about the principle. I hope very much that when the noble Lord, Lord Henley, replies, he will give an indication of the Government's thinking on the matter so that we can be satisfied that even if the Committee accepts the principle of contracting out, which I think it has now accepted, we can be quite certain that there will be no corruption in its performance. I beg to move.
Baroness Hamwee: This is another slightly odd grouping. Perhaps I may speak to Amendments Nos. 201A and 203A which deal with consultation in regard to Ministers and office holders and local authorities. Both amendments seek to extend the consultation to representatives of persons who have previously carried out the function.
I hope that it is not necessary to spend any time on the importance of consultation and what good consultation should be. That is a matter which your Lordships have discussed on many occasions that I can recall. I am sure that as good employers, apart from anything else, there will be an awareness of the need to consult those who are at the sharp end. I say that not simply because their personal interest is important, although it is. Staff who have been carrying out the function need to have their interests considered very fully—and I make the point briefly in order to keep us moving forward—but they should be consulted also because by giving their views, staff can contribute to the whole process. They have been carrying out the functions and have seen the day-to-day problems and opportunities. They have experience and expertise which should not be ignored.
Lord Henley: The noble Lord, Lord Williams, is right to draw attention to the importance of impartiality and probity and to the dangers of corruption. It is right that I should take the opportunity on behalf of the Government to spell out how strongly we feel about those matters.
Obviously, impartiality and probity in the exercise of statutory functions have to be at the heart of our policy. We should be the first to recognise that they are issues of absolutely vital importance. I hope that I can assure the noble Lord that the safeguards in existing law and in the Bill as drafted address that issue. I appreciate that the amendments are probing amendments but I believe that those safeguards are more direct and effective than those proposed in the amendments.
Amendment No. 201C would preclude any of those organisations which had contributed to a government review, however slight their contribution, from making
288
bids should that function be put out to competition. That could make an effective process of review before the introduction of competition unworkable in practice.
Ensuring regularity and propriety in the conduct of competitions for the supply of services is a responsibility which rests firmly with individual Ministers, office holders and their accounting officers. That responsibility, for which these individuals are accountable to Parliament, is underpinned by the role of the Comptroller and Auditor General.
Thus Ministers, office holders and their accounting officers must ensure that there is no conflict of interest on the part of any of those involved in the competitive process, including civil servants. If in any case there is the potential for conflict, then they must resolve this or exclude that organisation or individual from the bidding process. Guidance issued to departments makes that perfectly clear.
Given the variety of different circumstances in which advice may be sought, and competitions organised, it would be undesirable, and probably impossible, to codify that guidance in statutory form. The attempt to do so in this amendment shows that only too well.
In addition the rule in law against bias and the appearance of bias will offer further safeguards to the interests of third parties who may be affected by a contract where a decision-making function is involved. That rule means that if a contractor was biased in making a decision affecting a third party, or even where there was a real possibility that he might be biased, then the decision would be invalid and would be overturned by the courts.
Strong safeguards are also provided for the protection of confidential information. Contractors would be subject to all the same restrictions and penalties as are those public servants and others who may currently handle such information. An additional duty to safeguard the information is also imposed on contractors and their employees.
I turn now to consultation with staff, which was raised by the noble Baroness in Amendment No. 201A. Authority for personnel matters is the responsibility of individual departments and, where appropriate, office holders. Consultation arrangements with staff about market testing and contracting out are therefore matters for discussion between departments and their trade union sides. It is right that local staff are able to meet local management and consider particular circumstances, and to negotiate their own arrangements for doing so. Consultation will also be affected by the nature of existing collective agreements with trade unions in individual cases. It would be inappropriate to specify a statutory requirement for consultation in the general case. There must be freedom to negotiate appropriate consultation arrangements.
I turn now to Amendment No. 203A in the local government context. The process of consultation with the representatives of local employees is a delegated process which individual local authorities undertake with local representatives. It would be quite exceptional—even unprecedented—for a Minister to adopt a direct consultation role such as that suggested by the amendment.

289
Perhaps I may return to the heart of the noble Lord's amendment. I hope that he will accept that there are appropriate safeguards in the Bill and in existing law. I hope that he will accept also that we take those matters extremely seriously and that we are as concerned as he is to ensure that corruption should in no circumstances rear its ugly head.
Lord Williams of Elvel: I am most grateful to the noble Lord for that assurance. Of course, I accept it. That is a view which we share with him. I just wonder whether it might be sensible—and I offer it as a suggestion to the noble Lord—to incorporate into Clause 58(3) a "fit and proper person" provision both with regard to the "contractee", if I may put it like that, and the employee of a contractee. That would certainly ensure that any person who takes on the exercise of a function which is a statutory function laid on a Minister or an officer by Parliament is a fit and proper person.
The Banking Act makes a similar "fit and proper person" provision. I do not believe that: the Government would be giving away any vital point of principle. It would go a long way towards reassuring us that there would be absolute and total implementation of the principles which the noble Lord, Lord Henley, announced and with which we agree.
Lord Henley: I am always prepared to consider those matters between now and the next stage, or I and others may like to consider them between now and the next stage.
Baroness Hollis of Heigham: You are the Government.
Lord Henley: As my noble friend Lord Strathclyde reminded us earlier, we all speak on behalf of Her Majesty's Government. However, I am sure that we will be prepared to consider such matters between now and the next stage of the Bill's proceedings. But obviously I cannot give the noble Lord any assurance that we may consider them as appropriate. I do not believe that it would necessarily add that much to the Bill to include the words suggested.
Lord Williams of Elvel: I understand that the noble Lord, in whatever capacity he speaks, cannot give us any assurance. However I am grateful that the Government will at least look at my suggestion. Although I do not believe that it would contribute substantially, it would reassure those of us who are especially worried about the point if such an expression, suitably drafted, could find its way into Clause 58(3). Having said that, and having expressed my gratitude to the noble Lord, Lord Henley, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
6.30 p.m.
The Deputy Chairman of Committees (Baroness Lockwood): I must just point out to Members of the
290
Committee that if Amendment No. 200A is agreed I shall be unable to call Amendments Nos. 201 or 201A under the pre-emption rule.
Baroness Hollis of Heigham Baroness Hollis of Heigham: moved Amendment No. 200A:
Page 53, line 24, leave out ("first consulting him") and insert;
("(a) consulting him; and
(b) showing that substantial value for money savings will be achieved during the period of the contract").
The noble Baroness said: When Mr. Heseltine was Secretary of State for the Environment in 1992 he said that with CCT,
"we will obtain better value for money and higher quality services".
The above amendment would ensure that VCT (voluntary competitive tendering) would only be pursued where the Secretary of State's objectives were likely to be met. After all, DLOs (direct labour organisations) and DSOs (direct service organisations) within local authorities are required to show a 5 per cent. return on notional capital. If not, they will be closed down. Indeed, directions have only recently been given to half a dozen local authorities which have failed to meet that 5 per cent. return and they may indeed experience a closure of their DLOs and DSOs.
Therefore, it is not unreasonable to expect similar savings at the very least when a contract goes out house, otherwise the local authority would be worse off. That is an obvious point; but is it? There are two problems involved. First —and this is the main reason for moving the amendment—is the experience we have had of CCTs since 1988. Secondly, there is the impact of TUPE—the transferred rights directive.
As regards the experience of CCT since 1988, by the beginning of 1993 about one-third of all local authority contracts had been won out house to a value of about £2 billion. In their White Paper of 1991 the Government asserted that they expected CCT to generate savings for local authorities of 25 per cent. to 30 per cent. at the very least. But what have we found? Well, I have with me a copy of the report of the Audit Commission which states that the first round of tenders resulted in gross cost savings on average not of 25 per cent. to 30 per cent but of 6.6 per cent. Moreover, those savings were heavily concentrated in a handful of areas—for example, ground maintenance, catering and the cleaning of buildings—where the average savings came mainly from the cutting of wage rates.
Such savings in those areas were on average 15 per cent. That meant that other contracts barely produced savings for the local authority. Further, much of the first year's savings were in turn offset by the in-house cost to the local authority of the contracting process itself— that is, separating the client and contractor function, the preparation of specifications, the possible cost of management consultants, advertising, processing, evaluating tenders and, finally, instituting financial and administrative arrangements for their monitoring. As the Audit Commission and the DoE's research conducted by INLOGOV have shown, such considerations have cost between 7 per cent. to 10 per cent. of the first year's worth of contract. Therefore, for the most part, that has fully offset the first year's savings.
One might argue that, although in the first year of CCT very little savings would generate to the local authority, subsequent savings might trickle in. Yes, that may be so for a couple of years, but only until the renewal of the contract falls due, which is usually in the third or fourth year. Then, with no in-house contract as competition, and often with a relatively weak market outside, prices in our experience have leapt. In other words, predatory pricing in the first round of CCT has done what it set out to do; namely, to wipe out competition. Subsequently, the losses associated with that predatory pricing have been recovered on the second round of bidding where there is no in-house contract to bring the price down.
Again—this is also the experience of the Audit Commission —we have had evidence of cartels. For example, the Office of Fair Trading found that cartels were probably operating in contracts of the Property Services Agency, and in some cases price fixing contractors are clearly operating in various regions. That has all been done against a worsening background for local authorities in which they have had to lower their service specifications by, for example, extending house painting cycles from five years to six years, grass cutting from 10 days to 12 days, and so on. That means that it is quite hard to disentangle the savings coming from CCT and those coming from the need to reduce budgets.
It is clear from the first few years' experience of CCT since 1988 that most of those contract savings have been paid for by cuts in staff, by cuts in their wages, their hours, their holidays and in their sick pay and pension entitlement. In Leicestershire, for example, because of the contracts that went out, the cleaners of school buildings took pay cuts which brought their hourly wage down from £3.77 to £2.83. As regards holidays, 25 days in local government has been reduced to 10 days in the private sector. We have also seen the replacement of full time staff with part time staff to avoid obligations regarding sick and maternity pay.
That brings me to the second reason for the amendment. In future, if our understanding of TUPE is correct, contractors will not be able to make such savings from CCT or VCT. As John Hall of the Cleaning Support Services Association said:
"Contractors would be required to employ all the existing staff on exactly the same rates of pay, terms and conditions as they previously enjoyed. Under these circumstances, competition would not be viable".
TUPE will not protect staff indefinitely, but it will mean that the contractor will not be able to win contracts by predatory pricing which is at the direct expense of employees' rights. Therefore, that, too, means that the likelihood of significant savings will recede. Moreover, as the value for money arguments recede we shall merely be left with a washed-up, beached-up corpse of Thatcherite ideology about privatisation which is no way to discharge one's fiduciary duty to the council tax payers. Hence the amendment.
There are real costs to competition, especially compulsory competitive tendering. It tends to casualise the workforce and undermine their employment and trade union rights; it worsens employment conditions as
292
regards pay and hours; it means the end of contract compliance which has often brought the most marginal people—namely, the disabled and disadvantaged—into the labour market; it means less control over services provided by elected members and, therefore, by customers; and, significantly, the service provided by contractors has often sharply deteriorated. We have experienced a vicious cycle in which low wages have demoralised staff. In turn, that has led to a high turnover, has meant little or no training, poor work and an increase in complaints, which has led to more dismissals and a still higher turnover rate.
Members of the Committee may think that the latter is an exaggerated statement. However, I must point out that my information comes from the research project of the Department of. the Environment conducted by INLOGOV last year. What does the DoE's research project on CCT show? It shows that three out of four contracts have suffered from a notable failure to perform, especially in the areas of ground maintenance and building cleaning, and that most savings have been screwed out of the system by wage cuts. There was also a noticeable failure to perform in terms of poor standards of work and work not completed in time. One-in-four of all contracts going out under CCT have given rise to substantial public complaint. In one contract in 10 going out to CCT the complaints have been so severe and the work so shoddy that the contract had to be terminated. The record of CCT in savings has often been dubious and the service extraordinarily poor. Of 150 schools surveyed by the Audit Commission one-third were extremely unhappy about the quality of school cleaning performed by CCT.
A poorer quality of service may be a price worth paying if the savings are substantial: if they are not, it is not. In 1992 the Audit Commission warned the Government as well as local authorities that CCT proposals ran the risk of producing a system which was bureaucratic and unwieldy, difficult to administer and maintain, and gave rise to substantial costs that far exceeded benefits. It is precisely to ensure that we do not carry forward into VCT the problem that costs exceed benefits that I move this amendment.
Baroness Hamwee:In supporting this amendment, I should like to mention one aspect of cost savings. I ask that the Government take seriously the cost of tendering and going out to competition. To ensure that services are provided appropriately, by which I mean cost as well as quality, is something that must be considered and revisited frequently. Sometimes the costs incurred in person hours in preparing tenders for specification and going through the whole process are quite out of scale with the savings that can be made. Indeed, it may cause a hidden cost to be incurred which will become not quite so hidden and a source of regret when, at the end of the day, it appears that relatively little can be saved and achieved.
6.45 p.m.
Lord Haskel: I should like to support the amendment. Contracting out appears to have reduced the price of some local authority services but at the cost of driving down wages and reducing employee benefits,

293
such as holiday entitlement, sickness benefits and pensions contributions. Whether or not that is desirable or brings any benefits to the wider economy is questionable. It is a trend that the recent White Paper from the DTI on competitiveness does not encourage. The reduction has been possible because most of the jobs in these services are unskilled. In the past 10 years the number of unskilled people without work has remained high. That has enabled contractors to drive down wages and force people to work longer hours. However, the whole legal basis of this matter is being challenged. TUPE is being tested in the courts and the jury is still out. If the courts decide that the Government are wrong, some contractors will find themselves in severe financial difficulties. That does not bode well for the future of these services.
The President of the Board of Trade (if he is still the President of the Board of Trade) exhorts us to become more competitive, not by predatory pricing but by investing in new equipment, improving the skills of our workforce and being more innovative. That requires both local authorities and contractors to take a longer-term view of their relationships. Perhaps the Minister will bear that in mind when he considers this amendment. Short-term relationships discourage investment. In addition, the Government discourage innovation by local authorities by institutionalising compulsory competitive tendering and setting it in stone. They, too, must find new ways to achieve their objectives. For instance, people can themselves cut costs by taking their rubbish to a small local depot or skip. Local authorities can provide new services, such as digging up the streets only once and laying large pipes in which they lease space to telephone, gas, cable and electricity companies. Some of us who live in London will certainly appreciate that.
The CCT has been successful in delivering quality. In a small number of cases it has been achieved by the use of better systems and methods. It has been achieved largely by making contractors and their staff aware of the need for quality. To make people aware of the need for quality and more responsive to customers' needs is a function of management and responsiveness to the market, not a function of CCT. Improvements in quality have been achieved in cases where services have both been contracted out and kept within the local authority.
Does not the Minister agree that it is poor management practice on the part of the Government to institutionalise CCT when the price reductions achieved appear to have a dubious legal and economic basis? Does not the Minister prefer to encourage both contractors and local authorities to improve services and cut costs by innovation, training and investment? That is what the Government exhort the rest of industry to do. Why should these public services be different?
Lord Henley: I have to say that I find hypocrisy in the party opposite in regard to TUPE quite staggering. The noble Baroness will be aware—if she is not, I shall remind her and the Committee—that when the party opposite were in government they tried to bring in the acquired rights directive with their draft TUPE proposals and proposed to exclude the entire public sector. I can assure the noble Baroness that that is the
294
case. If she cares to look at Hansard covering 1981 or thereabouts, she will find that her noble friend Lord McCarthy confirmed that that was exactly the case. The draft proposals of the Labour Party when in government to bring in the acquired rights directive excluded the entire public sector.
Lord Peston: Is the Minister referring to 1981?
Lord Henley: I refer to the time when the House debated the Government's TUPE regulations. The noble Lord, Lord McCarthy, confessed or admitted to the House that the draft proposals of the Labour Government in the late 1970s would not have included the public sector. It is not fair that we should now witness the crocodile tears of the party opposite about our failings with regard to TUPE.
I reject the suggestion that savings can be made only by cutting staff numbers or pay. Savings can come from a whole variety of novel methods and approaches to undertaking tasks. I shall give examples in due course. There are a number of problems in regard to this amendment. The amendment focuses purely on the savings and as a result can prevent contracting out of an office-holder's function where it is done in order to secure not so much savings as improvements in quality without cash savings. I am sure that even the noble Baroness does not wish to rule out the capacity of the private sector to improve the standard of service, even if the same or greater cost is incurred by the current in-house team.
Lord Peston: Perhaps I may be permitted to interrupt the noble Lord. It may be a matter of clarification, but the expression used in the amendment is "value for money savings". That includes both the quality and benefits from the service and any substantial pecuniary savings on the other side. It does not refer to money savings; in other words, I believe that it means what the noble Lord, Lord Henley, thinks it ought to mean.
Lord Henley: My guess is that it does not mean that. However, there is no point in arguing over such things. I presume that the amendment of the noble Baroness is only a matter of probing, anyway. I stress that we are keen that competing for quality is about quality and standards as well as about price.
The noble Baroness, quite rightly, drew on her vast experience of CCT in the local government sector. She quoted the figure of 6 or 7 per cent. as being the average saving from CCT. She suggested to the Committee that there would be only similar savings by contracting out in central government. That is simply not the case. So far I believe that the average savings have been more of the order of 25 per cent. I can give other examples from my experience of other departments in which I have worked. I believe that to look at central government and local government savings is to compare apples with pears. Central government market testing is selective. In the case of local authorities, the 6 or 7 per cent. average applies to services that are subjected to compulsory competitive tendering across the board. In some areas subject to CCT, such as building, cleaning and refuse disposal, the figure is closer to the central government average. In any event, there cannot be the slightest doubt

295
that savings at the average achieved by local government or above would yield millions of pounds to the Exchequer. Resources would obviously then be deployed far more efficiently.
The noble Baroness spoke from her experience of local government. Perhaps I may give one example from central government based on my own experience in the Department of Social Security. I can assure the noble Baroness that there the Contributions Agency microfilming service has, as a result of the process, reduced its costs by £1,360,000—over 40 per cent.— after a market test. That market test was won by the in-house team. The noble Baroness will accept that in other departments there are equally large savings to be made. The average is of the order of 20 per cent. to 25 per cent.
The noble Baroness, Lady Hamwee, was quite rightly worried about the actual costs of the tendering process. I hope that she will be reassured when I point out that in the Competing for Quality programme in central government annual savings of at least £150 million have been achieved compared with the overall annual cost of supporting the programme that produced the saving which is estimated at some £20 million. That represents a fairly good investment.
The next point I wish to make is that the scheme of the Bill is to enable Ministers to lay orders under Clause 58 which would specify functions which they consider may be appropriate for contracting out. As an order requires an affirmative resolution in each House, Parliament will then have the opportunity to debate whether the function so specified is appropriate in principle. The Minister will be able to say whether he thinks savings are likely. However, at mat stage no decision as to whether to contract out would necessarily have been taken; nor would it be possible for either the Minister or office-holder to undertake the detailed evaluation necessary to satisfy the condition which the amendment seeks to impose. An order would typically be followed by a competitive tender to choose a provider.
I hope that the noble Baroness will accept that there are sufficient safeguards in place to ensure that office-holders would satisfy themselves that contracting out would provide good value for money, as the noble Lord, Lord Peston, put it, before authorising a contractor to carry out one of their functions. That is because Clause 61 makes sure that all the present accountability arrangements, including scrutiny of the position by the Public Accounts Committee, would remain in place. I hope, therefore, that the noble Baroness will feel able to withdraw her amendment.
Baroness Hollis of Heigham: I thank the Minister for that reply. There was one aspect with which I agreed; namely, that this is a probing amendment. I did not agree with much else in his reply. In my view he made precisely the same judgments of error that infused the Local Government Act 1992, which required local authorities to take the cheapest tender and did not allow them to introduce service level specifications that could be deemed uncompetitive.
296
As my noble friend said, the amendment is concerned with inputs and outputs. It is about value for money. If a competitive tender is not better—in other words, if it is not either cheaper while providing the same level of service or, for the same price, offers a better level of service—it should not be pursued. The reason for bringing forward the amendment is that experience of local government CCT shows that too often contracts have not delivered either a cheaper price for the same level of service or, for the same price, a better level of service. Where cheapness has occurred it has been at the expense of wage levels and quality of service. A great deal of additional local authority time has been taken up in implementing penalty clauses and the like in order to get grass cut, street lights repaired and roads mended. We want an appropriate level of service for VCT.
We shall obviously study the Minister's reply. At this stage obviously I wish to withdraw the amendment. However, I have to say that nothing in what he said tonight persuades me that there are any safeguards that VCT will produce value for money. If it does not, then it is merely ideologically driven. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 201 and 201A not moved. ]
Baroness Hamwee Baroness Hamwee moved Amendment No. 201B:
Page 53, line 24, at end insert:
("( ) A Minister shall not make an order under this section unless—

(a) the function is to be exercised by acceptance of the offer of the person authorised to carry out the work;

(b) the person authorised makes the offer in response to an invitation by the Minister to submit such offers, and

(c) the invitation is made to at least three other persons who are willing to carry out the function."

The noble Baroness said: This too is a probing amendment on the issue of market testing. The purpose is to give the Government the opportunity to explain why, having made so much of market testing to underpin the objectives of the Bill, they have not referred to it on the face of the Bill.
The words that I have used in the amendment are a rough adaptation of part of the Local Government Act 1988. I have used them merely in order to highlight the issue.
Local government is required to go through considerable hoops in order to market test the exercise of its functions. It seems to me that if the Government believe that it is necessary to include so many hundreds of words in legislation about precisely how local authorities should go about the job, then they should at least justify why they include no words at all as to how central government should go about contracting out. In other words, if that is right for one part of government, it should apply to the other. The purpose of the amendment, therefore, is to give the Government the opportunity to explain why there is no reference to market testing on the face of the Bill. I beg to move.
Lord Strathdyde: I thank the noble Baroness for explaining her amendment. It is clearly designed to ensure that contracts are awarded after a proper process of competition and not at the whim of a Minister or

297
office-holder. It sets out a number of detailed preconditions before an authorisation could be given to a contractor to carry out a function specified in an order made under Clause 58, which would not always be appropriate.
I have a great deal of sympathy with the purpose of the amendment. Competition is central to the process of government procurement. It is required for most large procurements by our obligations under the European procurement directives. Where it is not required it is recommended, except in the most exceptional circumstances. The Government have stated, in the Competing for Quality White Paper, that competition is the best guarantee of quality and value for money.
However, the Government also recognise that competition can take many forms, and that government departments and office-holders should have flexibility to choose the most appropriate method of procurement, subject to the directives and provided that value for money is always the key consideration in the process.
Although departments are likely to wish to choose a service provider through competition, and it is part of the Competing for Quality policy that they should do so, there could be circumstances where it was evident that only one provider was capable of delivering a service. In those cases it might be wholly inappropriate to impose a competition condition.
The circumstances that I have in mind are in a sparsely populated rural area where there is limited scope for competition. There may be only one business capable of providing a service. If it fulfils the terms of the contract, there is no reason that it should not be awarded the contract. Indeed, in some such circumstances it might be a waste of both private sector and departmental resources to require a competitive process. I emphasise that I regard that as being a relatively rare occurrence, but that is why I have difficulties with the detail of the noble Baroness's amendment rather than with the fundamental purpose behind it.
The noble Baroness also asked why the Government are less prescriptive for themselves than for local government. The point is that it is central government policy to involve the private sector to extend competition. Sadly, I doubt whether that proposition is true of the policy of many local authorities. The Government, regrettably, feel that they must be more prescriptive for the local government sector than for themselves. That is a perfectly appropriate division of powers.
I conclude by saying that the amendment is unnecessary. Because of its inflexibility it may on occasion possibly be harmful. I invite the noble Baroness to withdraw the amendment.
Lord Peston: I did not intervene earlier because I was keen to hear the Minister's reply in order to learn from it. He has left me extremely puzzled. It is a subject on which I have taught for many years. I do not understand what the expression, "competition can take many forms" means. Competition is competition. It means having an alternative set of potential providers. If competition is desirable, it is desirable. What puzzles
298
me is that, having said that competition takes many forms, the Minister then switched away from competition to discuss a monopoly. He referred to the case of the single possible provider. He admitted that that situation is rare. My judgment is that it is rare, and should be made even rarer. In my judgment, any rational person on being offered something should always ask the question, "Can I not obtain it better or more cheaply elsewhere?".
Lastly, I must admit that I was not happy on this point. I should like the Minister to reflect on it. The noble Baroness, Lady Hamwee, will speak again in a moment. The Minister referred to being less prescriptive for himself than for local government. I should have thought that the minimum position, not logically but philosophically, is that what is appropriately prescriptive for local government is precisely appropriately prescriptive for the Minister on the usual ground that one should always do oneself what one tells others to do. That is a golden rule in life generally. I would apply it to Government at central level.
I do not know whether the noble Baroness wishes to pursue the matter in greater detail. However, will the Minister at least reflect on the matter? I believe that some such principle or statement incorporated into the Bill would make the Bill a good deal more acceptable, not necessarily to me —the noble Lord knows my general view of the Bill—but to a number of people whom I think the noble Lord wishes to convince.
Baroness Hamwee: The noble Lord, Lord Peston, dealt with two areas of the Minister's reply. However, I wish to speak further on them. I, too, wrote down the words, "competition can take many forms". That being so, and if there are circumstances where market testing might not be appropriate, then, perhaps at another stage, as part of our deregulation we should deregulate some of the regulations which apply to the other level of government which prescribes that local government market test to the umpteenth degree.
Secondly, the issue relates to what constitutes government. The Minister makes it perfectly clear that he regards local government as merely some tedious arm of central government which rather too often fails to do the bidding of central government.
It is a matter which deserves further reflection on all our parts. I shall certainly reflect further on the issue and consider whether the amendment which I drafted swiftly as a means of introducing the issue could be altered or defined. I shall return to the matter at a later stage. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 201C not moved. ]
Viscount Goschen: I beg to move that the House do now resume. In moving the Motion, perhaps I may suggest that the Committee stage begin again at not before five minutes past eight.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Ports (Northern Ireland) Order 1994
7.5 p.m.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Baroness Denton of Wakefield)The Parliamentary Under-Secretary of State, Northern Ireland Office (Baroness Denton of Wakefield) rose to move, That the draft order laid before the House on 19th January be approved.
The noble Baroness said: My Lords, the purpose of the draft Ports (Northern Ireland) Order 1994 is to enable a relevant port authority, if it so desires, to form a successor company, registered under the Companies (Northern Ireland) Order 1986, and to transfer to that company all of the port undertakings. It would introduce provisions broadly in line with those already in force in Great Britain by the enactment of the Ports Act 1991, which was designed to provide a more efficient means than currently existed for ports to privatise themselves. It is right that Northern Ireland should have the same freedom as Great Britain.
At the same time I would like to speak to the draft Ports (Northern Ireland Consequential Provisions) Order 1994 which deals with taxation.
Noble Lords will be aware that to advance the strategy of progressively opening up the ports industry to market forces, the Government concluded that it was in the public interest for most of the major trust ports in Great Britain to enter the private sector although it was accepted that immediate privatisation might not necessarily be right for all of them.
The main thrust of the Government's policy was to enable these ports to develop their potential by giving them access to share capital as well as loan capital. It was intended that this would make them more attractive as partners to companies that might wish to go forward in joint ventures. It would also enable them to stimulate the development of land surplus to their requirements and make it easier for them to diversify their activities, thereby ensuring their viability for the future.
It may be helpful if I say something by way of background about the position of the Northern Ireland trust ports although the order is not confined to these alone. There are only four; namely, Belfast, Coleraine, Londonderry and Warrenpoint. In addition, Carlingford, which is essentially a navigational authority, is also included in this category. These ports are independent statutory bodies, each established under its own local legislation. They are not owned by anyone, nor are they accountable to anyone. Their status makes them neither properly public nor properly private, answerable neither to shareholders nor to the Government. Nor is there an overall pattern to the scope of, or the restriction on, their powers and duties, which differ from port to port.
The order before your Lordships is essentially a technical measure to extend the Government's policy on the privatisation of trust ports to Northern Ireland. It is an enabling measure which recognises that since many different circumstances affect individual ports, it would not be appropriate or sensible to have a blanket policy which automatically applied to all ports.
The order would empower any relevant Northern Ireland port authority, as defined in the order, to submit a privatisation scheme to the Northern Ireland
300
Department of the Environment for approval. The port authority would be required to pay to government a 50 per cent. levy on the sale proceeds, with a further levy payable by the new owners on gains arising from any disposals of land within 10 years of privatisation.
The order would recognise the desirability of employee participation in the privatisation process by empowering a relevant port authority to reimburse the costs incurred by a management-employee buy-out team in mounting a bid for a port's undertaking.
While it is essential enabling legislation, the order would also empower the department to give a direction requiring a harbour authority to bring forward a transfer scheme. This reserve power has been made subject to a number of constraints. It cannot be used until a period of two years has elapsed from the enactment of the order, and only then after consultation with the port authority concerned. Moreover, it will apply only to those ports with an annual turnover of £5 million. This amount will be index-linked and in a Northern Ireland context. This effectively excludes all ports except Belfast.
Finally, if after two years the department consults a port about the application of its powers of compulsion but decides not to apply them, it will not be able to reconsider the application to that port for a further period of five years. I hope that these important safeguards in the order will reassure your Lordships that the Government have the clear intention of applying reserve powers only in a careful and responsible manner.
I would, in closing, stress again that this is not an order to privatise Belfast port. It is an enabling order, following the Ports Act 1991. It may be useful for the House to know that in Great Britain, where the powers of compulsion have been available for over a year, they have not been used. I hope tonight we may discuss the orders in front of us, and not hypothetical scenarios. I beg to move.
Moved, That the draft order laid before the House on 19th January be approved.—(Baroness Denton of Wakefield.)
Lord Fitt: My Lords, there is one very short question that must be asked at the beginning of this debate. That question is: why? Why have the Government embarked on this exercise to privatise Belfast harbour? I listened very intently to what the noble Baroness said. This is not an order to privatise; it is only an enabling order to allow the Government after two years to compel the harbour authorities in Belfast to privatise. So this is a matter of semantics. It is a play on words. If the Government were not intent on, at some time or other in the future, pushing the Belfast harbour authorities into the position of privatising themselves by the compulsory acquisition of harbour property, why would they go ahead with this provision?
It may be said—I believe it was said on another occasion by the Minister—that the purpose of this measure is to bring legislation in Northern Ireland into line with that in Great Britain. In this House and in another place it has been said repeatedly that Northern Ireland—and in this case Belfast—is totally unlike any

301
other part of the UK. The port of Belfast is not like any other port in the United Kingdom. The port of Belfast is situated on the island of Ireland. It is not in competition with other UK ports. But it is very, very much in competition with ports in the Republic of Ireland.
If we read carefully the words on what is liable to happen if and when privatisation takes place, then the port of Belfast, and Northern Ireland, will be at a serious disadvantage. It has been clearly stated—and I leave it to the noble Baroness to clarify the position tonight— that a trust port such as Dublin will be eligible for a 75 per cent. European Union grant, while a private company, if it were to go on to own the port of Belfast, would be liable for only a 50 per cent. grant.
The British and German governments have been until now—it may change within the next year or two—the main contributors to European funds. Here we have a British Government, one of the main contributors to the EC and continuing to be so into the foreseeable future, denying the people of Belfast and Northern Ireland the extra 25 per cent., or indeed 35 per cent., grant from European funds. One must ask: is this Tory philosophy? Is it Tory philosophy gone haywire? Is it pure ideology and Tory dogma —a case of, "We have done it in Great Britain so it must be good for Northern Ireland?"
Many times in this House I have had to say that Northern Ireland is not like Kent. It is not like any other part of the UK. And it has been proved repeatedly that it is certainly not like Finchley. The situation in Northern Ireland is totally different. What applies to ports in other parts of the United Kingdom certainly may not be applicable to the port of Belfast.
I speak with some experience on this issue. For many years I was a Member of Parliament in the Northern Ireland Assembly. I was also a Member of Parliament in the UK for the Belfast West constituency. At one time my constituency covered the whole of the Belfast harbour area. I remember the times when there were hundreds and hundreds of dockers. Now there are 85. I remember when the dock labour scheme was in operation. Now it is no longer in existence. And perhaps advances have taken place on the running of Belfast harbour.
The reason given for privatisation throughout the 1980s by the then Conservative Government was that it brings about more efficiency; that it does away with overmanning; that in the situation that existed then it was to the advantage of the taxpayer to transfer from a failing industry or a failing enterprise to one which the Government, with private enterprise, could remedy. That is not so in Belfast.
Since 1785 the port of Belfast has been a trust port. It is rather questionable whether the Government can legally undertake what they are trying to do with this legislation. It has been said—the noble Baroness herself said so this evening—that trust ports are not owned by anyone. But the facts of life in Northern Ireland are that the trust port of Belfast does not receive one single penny from the Government. Over a number of years the authorities have run that port and its accessories in so successful a way that they pay very heavy capital gains tax to the Government. They do not ask for
302
anything in return. All they ask for, and get—which is their entitlement—are grants from the European funds, which have nothing to do with the Government unless the Government make application to the funds. So why —I keep asking the question—have the Government done this?
At the moment there are nine harbour commissioners in control of Belfast harbour. They are appointed by the Government. Whatever may be said of the present situation, the Belfast harbour commissioners over many decades—indeed it runs to over a century—have carried out their functions with efficiency, and indeed honour to the city of Belfast. By all the agencies of direct rule since the abolition of Stormont, the Government have now taken over the position whereby they appoint the commissioners. I must ask—one would be foolish not to ask—seeing that the Government are in the position of appointing the commissioners, will there not be a gun pointed at their head? Is it not likely that the Government will appoint "yes" men. They will make the appointments in October this year. Within two years, if the present Government are in existence, and certainly in the run-up to the two-year period when the Government will begin thinking about compulsion, they will want to have as many people as possible among the harbour commissioners who support their ideas on privatisation. That is a very, very unfair way to treat the harbour commissioners in the port of Belfast, and indeed in Northern Ireland.
When we talk about Belfast, we are not talking about one little area of the harbour commissioners, or about one little port in Belfast. We are talking about the whole Northern Ireland economy. Belfast is crucial to the whole six-county economy in Northern Ireland. If the port of Belfast fails, it will affect not only the people of Belfast; it will affect the people of Fermanagh and Tyrone and the outlying districts of the Province. So again I ask: why are the Government laying down this edict that within two years the harbour commissioners must come up with their own privatisation scheme?
With a great deal of regret I say to the noble Baroness that not for the first time I am deeply offended by the way in which Northern Ireland business has been conducted in this House. If the port of Belfast were situated in any other part of the United Kingdom—on the land mass of Great Britain—there would not be such a sparse attendance in the Chamber as there is this evening. We should not be threatened by an Order in Council which is of such major and crucial importance to the future of Belfast. We should not be threatened that it would go through on a negative resolution. It would not be an order if it affected any other part of the United Kingdom; it would be a Bill. There would be a debate: first and second readings and a Committee stage to go through. The Bill would probably come to this House. I believe that the people of Northern Ireland have a right to feel seriously aggrieved by the way in which the order has been promulgated.
I listened to the debate in another place. The new Minister who introduced the Bill did not do himself any favours. I am not sure how he conducts himself in the other place as such, but so far as concerns Northern Ireland he did not do himself any favours. Let me put

303
to the noble Baroness what was put to him in that debate. The Government say that they asked for submissions from those who would be interested in the development of the harbour and future developments. They said that they received 50 representations—in fact, I understand that the number was 54. So there are that number of organisations in Belfast who are connected with the port and who are very fearful of future developments. They made submissions to the Minister who, in quite an airy-fairy way, said: "I read them all but it didn't really matter."
The people of Belfast and Northern Ireland must not be treated in such a high-handed fashion. I ask the noble Baroness whether she can give some detail tonight of who were those 50 or so people who made representations. Were they connected with Belfast harbour? Were they or had they been involved in the running of the harbour over many years? Did they have misgivings about what was liable to happen in the future? Let me ask the noble Baroness a straight question: did any of those 54 representations say, "Yes, yes, we are standing up and applauding the Government for taking this initiative." I have serious doubts whether any one of those representations were in fact in support of the Government.
The question has not been fully answered. Perhaps the Minister will say that they do not need to answer these questions because nothing will happen for two years. But that is not the way the people of Northern Ireland see the matter. They see this order as the first step down the very short road to privatisation.
What will happen to the harbour police, a body which has been in control of the security of harbour property over many years? They have carried out their functions very visibly and very well. They are an armed force in Belfast. The reason that they are armed is to prove that they are not like the police in Finchley. You do not need armed police in Finchley; you do need them in Northern Ireland. If that armed police force is to be privatised, will a Group 4 organisation be set up in Northern Ireland? Is there to be a privately armed police force to look after harbour property in Northern Ireland? That is quite unlikely. Given the record of this Government, I believe that it would be very foolhardy to put a Group 4 organisation in control of Belfast harbour. Again I say that Northern Ireland is totally unlike any other part of the United Kingdom,and that is certainly true of the port of Belfast.
The Minister says that trust ports are not accountable. There are a great number of quangos in the United Kingdom at the moment. They are unaccountable, in the view of many people. Far too many quangos, with their lack of accountability, have been created by this Government. So why is there the implication that because the trust port of Belfast has been unaccountable it has been doing something wrong? Has any charge ever been made against the harbour commissioners and those who are in control of the port facilities of Belfast? Has any charge been made that they have been doing something to the detriment of the city of Belfast and thereby to the detriment of Northern Ireland? If such a
304
charge can be made, it may mean that other people feel some justification in examining the Government's proposals.
I know the area very well. On the east side of Belfast harbour there is a lot of land, particularly in the Belfast shipyards and around Belfast city airport, which could be exploited by private enterprise if it were ever to get its hands on it. All too sadly we have seen fly-by-night private companies coming into Northern Ireland, obtaining government grants, making a profit and then leaving. We have only to think of DeLorean, or Birmingham Sound in Deny, or Zeenozipp in Newry. Private companies do not and will not come into the city of Belfast or Northern Ireland with the intention of helping people in that area. Private companies come with the idea of making a profit for themselves. I would have serious reservations about letting a private company come into Northern Ireland to bring about open exploitation of the land on the eastern side of Belfast Lough.
I can only repeat my question: why have the Government embarked on this change? The port is being efficiently run. It is paying tax to the Government. There have been no great scandals. People have not been caught with their hands in the till. No money has been filched from the harbour authorities. It is not as though thèy have not enough to do. This Government have a lot of things to do and could have been doing something much more important than embarking on this enterprise.
I tell the noble Baroness that this proposal has succeeded in bringing together the most diverse elements in Northern Ireland. Belfast city council, the trade union movement, politicians of all descriptions, people who have been involved with the harbour, the harbour commissioners themselves and the executives who run the business end of the harbour have all voiced opposition to this proposal by the Government.
As we have so sadly seen over many years, Northern Ireland has many problems. I urge the Government to think again before going ahead with the order. It will cause serious trouble and a serious breakdown in relations between the people of Belfast and Northern Ireland and the people of the United Kingdom.
7.30 p.m.
Lord Cooke of Islandreagh: My Lords, I find myself at one with the noble Lord, Lord Fitt, in what he said most ably. He made the case without any matter of doubt. But this is so important to all of us in Northern Ireland that several parts of the argument must be gone over again.
This is not a hypothetical order. It is written in general terms but it can only apply to the port of Belfast. The port of Belfast has a specific place in the Province. Fifty-four different organisations submitted papers in response to the consultation process. The views expressed by those interested parties were disregarded. Why on earth do the Government wish to proceed with the order if in due course they do not intend to see that the harbour is privatised? One can only assume that it is the Government's intention to privatise the port in due course and that is what is causing such widespread and general alarm.

305
We ask: what is the case for privatising Belfast port? Will it bring substantial benefit to the port, to the users and to the economy of Northern Ireland? If not, is the Treasury simply interested in the cash that privatisation will bring? Everyone engaged in trade or industry in Northern Ireland knows that we work at a disadvantage to those on this side of the water. The costs of raw materials are higher to us in Northern Ireland and it costs more to export our goods. That is something the bosses, the managers and every other person knows. It is vital that our transport costs are kept to a minimum. That is what the Belfast Harbour Commissioners have been trying to do for 200 years.
As the noble Lord, Lord Fitt, said, formal management started in 1785. Under the Harbour, Docks and Piers Clauses Act of 1847 the commissioners were elected by the business rate payers of the city and their powers and duties are clearly set out. I can think of nothing more democratic than having them elected by the business users of the city. Many families whose companies traded or manufactured in the Belfast area have been connected with the port. My own great-grandfather was one, as Lord Mayor of Belfast in 1866. My uncle was a commissioner and I served as a commissioner in the late 1960s and 1970s.
Throughout the history of the Belfast port the majority of commissioners have been prominent business people who have headed up private businesses in and around Belfast. It has been their objective to ensure that the port is efficient with low charges and facilities to match the needs of industry in the area. The relevant Act requires the commissioners to deal fairly with all users—an important point—whereas it is not unknown for a privately-owned port to favour its owners. If Belfast port is privatised and the owner appears to be inefficient or to neglect the interests of one type of user, little can be done. If the present commissioners should appear to so act, they will be replaced.
Naturally, the management style of the Belfast Harbour Commissioners has changed over the years, but probably never more quickly than in (he past 10 years when the commissioners have felt it necessary to reduce costs wherever possible and to ensure that the port is competitive. To measure the efficiency of a large general port like Belfast is difficult and must include consideration of the stevedoring arrangements. Stevedoring in UK ports has been inefficient in the past and Belfast port, although better than others, had inefficiencies as well. However, after lengthy negotiations including input from the harbour commissioners, stevedoring was reorganised. The old stevedoring organisations were disbanded in 1993 and we now have three competitive companies employing port operatives. Restrictive practices have gone. And they really have gone. I visited the port last week and was told that a port operative can be driving a train one moment but if he is not needed there he will be sticking notices on containers or some other menial job. In 1985, 277 men were employed in stevedoring duties. In 1994, 84 port operatives are employed leading to a very substantial reduction in the cost of loading and unloading cargoes. Those numbers represent a reduction
306
of 70 per cent. In 1984 the total employed by Belfast harbour commissioners was 324; in 1994 the total is 158 including the police service—less than half the number 10 years ago. That means 158 employees are responsible for management, administration and attention to the wide variety of equipment for which they are responsible over many hundreds of acres. Support services have been contracted out to private companies wherever practicable. In 1993 84 dock workers and 158 harbour employees handled 11 million tonnes of cargo. It would be interesting to know how those figures compare with other large UK ports.
That rapid change has not been easy. The commissioners are supported by their dedicated management team and the change has been carried out in consultation with the trade unions and other relevant parties. Tribute must be paid to all concerned that the; changes have taken place without disruption or withdrawal of labour. That is because everybody concerned understands that if transport costs can be: reduced the chances of jobs elsewhere in Northern Ireland are improved.
I want to turn for a moment to the capital investment which has taken place, because that is important. In the late 1960s it was realised that the old port, with its restrictive space and long sheds, could not be made convenient, suitable or economic for Ro-Ro and lift-on lift-off traffic. The only way to rearrange things to make it economic was to reclaim several hundred acres of land to form new quays and hard standing to the north of the present port in what was then open water. Each year the profits from harbour operations after tax are put into the new facilities. Last year the new berths were commissioned—25 years after the decision to reclaim the land. The process is on-going and over £100 million has been invested in the past 10 years.
Trust ports generally are eligible for support by the European Regional Development Fund to a maximum of 75 per cent. but private companies are limited to a maximum of 50 per cent. I understand that that is fact and nothing could be done about it if Belfast port were to be privatised. There is also the possibility that if Belfast port should be privatised some of the EC funding already given would be clawed back, thus either reducing the proceeds to the Treasury or crippling the port.
Belfast is the only port in Northern Ireland with 34 feet of water and able to handle all cargoes including bulk cargoes, petroleum products, coal, grain, chemicals and general cargo. It is not in competition with ports in Great Britain; it is in competition with the deep-water ports of Dublin and Cork, primarily Dublin. At present 55 per cent. of the total sea-borne tonnage handled in Northern Ireland passes through the port of Belfast and a substantial proportion of the sea-borne trade generated in the greater Dublin area passes through the port of Belfast because it is the cheaper way to move the traffic.
Dublin port has had serious labour problems in recent years which resulted in the almost complete closure of Dublin some two years ago, but Dublin is moving forward again under new arrangements and is determined to become efficient and recover trade presently handled by Belfast. Dublin will make full use

307
of the 75 per cent. funding of fixed assets to which it is eligible and could get 85 per cent. under new Cohesion Fund arrangements.
Port charges which shippers have to pay reflect the fact that fixed costs represent at least 75 per cent. of the total charge, the small balance being variable costs. Dublin is eligible for grants of up to 75 per cent. and probably 80 per cent. A privatised Belfast port would only be eligible for 50 per cent., meaning that the nett cost of fixed assets in Belfast would be double that for Dublin. A privatised Belfast even with zero variable costs would be unable to compete with Dublin on port charges. In other words, if the port were privatised and the management and everything to do with it and the financing were zero, Belfast would still be at a disadvantage compared with Dublin. To us in Northern Ireland that is a very serious matter.
It is interesting that the Government in the Republic of Ireland have taken note of the efficient operations of Belfast port and decided that their ports should be restructured with trust or semi-trust status in order to make them eligible for maximum European funding support. They are changing the structures in order to make them eligible. The conclusion must be that Belfast port, if privatised, could not in time compete with Dublin port which would receive almost double the assistance with new facilities. Belfast charges would have to rise and Dublin charges would reduce. The cost to the industry would be more because the costs of Belfast would have risen.
There is also the property side, which the noble Lord, Lord Fitt, mentioned. Belfast harbour commissioners own more than 2,000 acres, which is leased to large companies such as Harland and Wolff, Shorts, Bombardier and many other companies large and small. Twelve thousand people are employed on the estate. New acreage is being reclaimed and presently 350 acres are available for development. The harbour commissioners intend this land to be let as far as possible for port-related activities and planning is carried out in conjunction with the Industrial Development Board in order to make the best use of a very scarce resource.
It is bound to be tempting for a new private owner to sell off land for maximum cash generation and without regard to the long-term development in the interests of industry generally. Careful long-term development of this land in consultation with the city and government is a pre-requisite. Could a private owner be relied on to do that? If there is no obvious advantage to port users in privatising the port, why take the risk on the property development side of putting in private hands what is presently being responsibly developed as an asset to the Province?
The order includes provisions for the way in which the proceeds of a sale would be dealt with, which strike us in Northern Ireland as a little unusual. The Government have said that no one owns the port. Surely that is a little dismissive. What 200 years ago was marshland in the estuary of the River Lagan has been progressively developed for the benefit of port users and the economy—first of all for the ratepayers in Belfast
308
but in recent years for the Province as a whole. The harbour belongs to the Province. In our view in Northern Ireland, the Treasury has no right to it.
Belfast port has never received any government assistance for capital assets. It pays corporation tax and all other taxes as would a private company. However, the Treasury is nothing if not cunning and has devised a way of pulling in the proceeds of the sale without suggesting ownership. The order requires the port authority to pay the Government a 50 per cent. levy on the proceeds of the sale. The other 50 per cent. would remain with the authority and therefore the purchasers will get it back again. As the purchasers will get 50 per cent. back into their own pockets, this means that they can afford to bid twice what they think the port is worth, which means in effect that the Treasury will get 100 per cent. of the value after costs. I refrain from commenting on the morality of such an arrangement as no reason has yet been advanced by government to show the benefit of privatisation to the port of Belfast or the community. Is the sole reason that the Government are craving to get their hands on £50 million or £75 million?
Last year various interests were consulted by government as is required before putting forward the order. Fifty-four replies were received and I have copies of three of the replies submitted. CBI Northern Ireland opposed privatisation as being harmful. The Northern Ireland Chamber of Commerce and Industry set out in great detail the reasons why the Government's proposal for privatisation should be dropped. The submission of the port of Belfast trade union side is well set out and was well argued by the able people leading the trade unions in Northern Ireland. I can do no better than quote from the conclusion of the trade union submission:
"TUS believes that no good case exists for the privatisation of the Port of Belfast. The position of Northern Ireland Trust Ports, in particular Belfast, is substantially different from ports in Great Britain, especially with the competition from ports in the Republic of Ireland and that privatisation would therefore do untold damage to the whole of the Northern Ireland economy. It is extremely reprehensible of Government to enforce privatisation and benefit from the sale of Trust Ports when Government neither owns the ports nor supports them.
"The Government, by its actions, will attempt to force through the legislation against the will of the workforce and the united voice of all the main political parties in Northern Ireland. TUS therefore calls on the Government to respect the democratic wishes of all involved and to abandon this unwelcome and unnecessary legislation".
I have quoted that because I do not think it could be better spelt out and because it indicates the unanimity on the matter in Northern Ireland.
Apart from generalisations which the Government have made about the reasons for privatisation—the exposure to market forces, increased efficiency and so on—no specific reason has been given to justify privatisation. If the Government think that the working of Belfast port can be improved they should tell the people of Northern Ireland and they should certainly communicate their views to the harbour commissioners.
It should be clear to your Lordships that the passing of this order will inevitably lead to a period of considerable uncertainty over the next two years, which will not be good for the port and its continuing development. To offset that as far as possible, I ask the

309
noble Baroness the Minister if she will give an undertaking that the Government will not permit or cause the port of Belfast to be privatised unless substantial benefits will derive therefrom for the port and for the economy of Northern Ireland. If there are considered to be substantial benefits, will the Government undertake to consult the Belfast harbour commissioners and other interested parties?
Finally, I must mention a most unsatisfactory aspect of the order. For technical reasons it is subject to negative resolution whereas the Ports Act 1991 was subject to affirmative resolution. For such an important matter as this, which affects the whole economy of Northern Ireland, to be implemented without debate is in my view quite outrageous. Can the Minister give an undertaking that in the event of the Government wishing to privatise Belfast port because of substantial advantages they will ensure that it is debated in this House and in another place? I hope I have made it clear that this order is not welcome.
7.48 p.m.
Lord Blease: My Lords, the stated purpose of the two orders is primarily to provide an enabling measure designed to offer a more efficient mechanism than currently exists for the ports to privatise themselves. My noble friends Lord Fitt and Lord Cooke rightly asked why. My few remarks will be directed towards trying to extract an explanation.
Whatever the industrial, economic and social reasons or the political or ideological purposes in Britain, there is certainly no such compelling manifestation of the need for the legislation in Northern Ireland. That point has been emphasised by my noble friends Lord Fitt and Lord Cooke. Indeed, there is widespread and pronounced opposition in Northern Ireland, particularly in Belfast, to any such change as provided for by these two draft orders.
I shall begin with a point on which I should also like to conclude. I shall argue a few points to justify why I am putting them forward. Suitable democratic parliamentary provision should be made to ensure that the proposed legislation meets the needs of employment and prosperity in the Province. If in two years' and two months' time—I believe that that is the correct period of time within a month or two, depending on when the order is adopted by this House and the Privy Council— the Government propose to use compulsory powers to privatise, whatever undertaking may be given, the Belfast Harbour commissioners should be presented with an affirmative order following debate in both Houses of the Parliament of the United Kingdom. There is time for progress before that decision is made.
The two draft orders are complex and difficult, and that pertains to orders in general concerning Northern Ireland. The two draft orders are particularly difficult. They are tabled under the Northern Ireland Constitution Act 1973, the Northern Ireland Act 1974 and the Ports Act 1991. The two orders raise many vital issues not only as regards the suitability of the parliamentary procedure but also about the industrial, economic, social
310
and employment prosperity of the Belfast port and of Northern Ireland. Those factors have been presented in argument by previous speakers.
I invite the Minister to consider the following points and I also ask for clarification of Article 1. What date will the Department of the Environment, acting on behalf of the Government, be in a position to approach the Belfast Harbour Commission, if it does not come forward in the meantime with a scheme for privatisation? Am I correct in putting a date on that of two years plus two months after this order has received approval by the Privy Council?
Article 4(2) (a) and (b) refers to
"all property, rights and liabilities … all functions conferred or imposed on the [authority]"
In the intervening period, it will have to have pledged to put forward a scheme to meet all those situations if there is privatisation. That will involve a considerable amount of consultation with a number of bodies. It will involve not only the harbour commissioners, who would have to consider the scheme that is presented; there would also have to be consultation with the Belfast City Council, which is an associated body, the port users and those who rent property on the estate. Various employees would have to be consulted. Therefore, in the intervening two years before the Government impose any particular legislation or guidelines for a scheme, the harbour commissioners will be involved in consultations with the Department of the Environment, the Northern Ireland Office and the Government in order to clarify the various issues.
A welter—if that is the proper term to use—of issues are involved which have not been argued either in another place or in this House tonight. They are left unstated. There are tremendous gaps in the general understanding of those who are interested in the harbour itself and what it means to the city of Belfast and to Northern Ireland. Other noble Lords have mentioned a few of these concerns. There are the police, the dredgers, those involved in pilotage schemes, co-ordination with other bodies and who rent facilities. There are the controls imposed on the harbour by statutory rules and orders over the years and the question of how they are to be adjusted. Therefore, not only is property involved and financing and assets; but other functions have impinged on the harbour since it was originally established.
Perhaps I may also refer to the very close connection with the new Laganside development which is a tremendous project. It is making a tremendous improvement in Northern Ireland. There is an inter-relationship there. I have here information concerning the Clarendon Dock. The headquarters of the Laganside Corporation is on the dockside. I have a picture of the two chief executives side by side. That indicates clearly what is said in the Laganside Annual Report; namely, that there is a close and ongoing inter-relationship. It is not publicly known what particular deals have been made and what the relationships mean.
We look forward, with the Belfast Harbour Commission, to converting the interest into a living reality. That means that there is an ongoing situation

311
which must certainly be examined by the general public. It cannot be confined merely to the Belfast harbour commissioners.
The Minister has rightly said that five ports (I believe that there were 12 originally) have been privatised since the 1991 order came into existence. I wish to quote as briefly as I can from a 20-page document. It is entitled Committee of Public Accounts Thirty-first Report [Session 1993–94] Department of Transport: The First Sales of Trust Ports). I shall not go into a lot of detail, but a number of very relevant points emerge which require answer. The report states:
"In 1992 five port authorities, Tees and Hartlepool, Clyde, Forth, Medway and the Port of London, used powers under the Ports Act 1991 (the Ports Act) voluntarily to sell their ports".
That was a voluntary arrangement. We have not yet reached a compulsory arrangement. We have not yet had any experience of a compulsory arrangement. The Government hope that if there is privatisation, it should be undertaken by the Belfast harbour commissioners.
The Committee of Public Accounts goes on to say that the sales have proceeded under certain guidelines. The report states:
"We accept that these were only guides based on the judgement of advisers, but we are concerned that prices fell below the lower benchmarks in two cases and that the upper benchmark was achieved in only one of the five sales".
The report continues:
"We are particularly concerned that, having been sold for £29.7 million, little more than three quarters of the lower benchmark, Medway was re-sold some 18 months later for £103 million. In this onward sale the management of the company and their backers made profits which considerably exceeded the taxpayer's receipt of some £13 million on privatisation".
Here we have a voluntary privatisation going ahead and there is a rake-off of about £80 million. The report further states:
"We note the bases on which Chatham Docks were valued and that if, contrary to the Department's expectations at the time of the sale, the land proves to be suitable for development and is developed, the clawback provisions will apply".
As I understand it that is because of an underestimate of what the sale would realise.
Paragraph 27 of the conclusions of the report states:
"We are particularly concerned that, having been sold for £29.7 million, little more than three quarters of the lower benchmark, Medway was re-sold some 18 months later for £103 million".
The report is repeating itself.
"In this onward sale the management of the company and their backers made profits which considerably exceeded the taxpayer's receipt of some £13 million on privatisation. We note the Department's view that the key factor was the reduction of the workforce following privatisation, while turnover was maintained. In all these circumstances we are surprised at the Department's view that they had not done badly for the taxpayer in this sale".
The report goes on to deal with the handling of employees' interests and states:
"Given the Department's objective that a substantial part of the equity share capital should be sold to managers or other employees of the port concerned, we asked why employee participation in these sales ranged from five per cent. at Tees and Hartlepool to at least 60 per cent. in the case of Clyde.
The Department told us that the objectives was concerned with encouraging management buy-outs".
312
That is a very good case to make.
The report continues:
"The Clyde, Medway and Tilbury sales were of this type, and therefore by definition more than 50 per cent. of the equity could be expected to go to employees. Tees and Hartlepool by contrast went to an outside bidder who conceded five per cent. of the equity to the employees. In the Department's view this was to ensure that the employees not only had salaries from their employment but also a stake in the port. The Forth Ports sale was a flotation in which slightly different considerations applied; employees acquired 11.2 per cent. of the equity".
I give your Lordships only a smattering of the argument to make the point.
The report continues:
"We asked the Department whether it was correct that those people who had lost their jobs had also been required to sell back their shares, on which they had made only a small profit, and whether it was this that had enhanced the company's profitability before the second sale. The Department told us that the reduction in the workforce would have made a significant difference to profitability.
In relation to the surrender value of £2.50 per share against their worth of £35 and the advice which the individuals concerned, who had lost their jobs, had received on this, the Department told us that this was a matter for those individuals".
Employees' shares had been undervalued and although those employees had expected to be in profit, in fact, they are worse off than if they had taken redundancy.
If my memory is correct, the Minister has been at the Northern Ireland Office for about nine months. It is known that she is held in high regard because of her constructive approach to the issues that are put before her. She has met, and been a willing listener to, those with genuine arguments and representations to make. Therefore, I am sure that the noble Baroness will take on board what has been said this evening. I believe that it has been said in the best interests of the Government's future relationship with, and the prosperity of, the people of Northern Ireland.
8.3 p.m.
Lord Sefton of Garston: My Lords, I apologise for the fact that my name does not appear on the list of those noble Lords wishing to speak. I could not find the list, but I have now discovered it.
Liverpool, in which I have an interest, and Northern Ireland are closely linked in more ways than one. The port of Liverpool was once a trust port. It is now a PLC. I expressed my anxiety at the time, but that is how the port finished up.
I have a fundamental objection to any infrastructure that has been created by the community (either through the local authority or in other ways) being passed into private hands. That fundamental objection is not only ideological; it stems from the fact that such a proposal cannot possibly meet the requirements of a modern community. I shall give your Lordships an example in only two minutes because I have promised noble Lords that I shall take only two minutes. Liverpool has become a profitable port. The fact that the number of employees has dropped from about 30,000 to 2,000 has nothing to do with it. The port has money. The local paper on Merseyside hailed as a great tribute the fact that the port of Liverpool can now talk about acquiring Medway Ports.

313
However, there is another side to this that needs careful consideration. If it is found, given the general drift to the South-East, to Brussels, Luxembourg and Paris, that it would be more economical from the point of view of a private company to develop the port of Medway rather than the port of Liverpool, I am quite certain that the interests of the private company would be met. And Liverpool will be sacrificed in the name of profit.
I conclude on a serious note. Many questions have been asked about this, but the fundamental question is: at this stage of the developments in Northern Ireland and when some people consider that there is a possibility of peace, why should the Government deliberately upset, and contradict the wishes of, the majority of the population in Northern Ireland? There is no doubt that the vast majority of the people in Northern Ireland see this proposal as anti-them. That is the situation, so I ask the Minister to think carefully.
It is bad enough looking around the House because one then realises that although we axe discussing this very important measure, the Government Benches are empty. Indeed, it is bad enough that the rest of the Benches are empty, but because of this order and because of the way in which the Government have handled it the message will go out from this House that the Government do not really care about Northern Ireland.
The port of Belfast was created by the community of Belfast and Northern Ireland in the same way as the port of Liverpool was created by the people of Liverpool. Therefore, I plead with the Government: hands off. Until they have more sense, it would be better for the Government to spend more time seeking to solve the problems of Northern Ireland rather than introducing measures of this kind. The problems still need to be solved. The Minister may well look askance at my suggestion; but the problems there still need to be solved. One of the ways of not solving those problems is to send out a message to the people of Northern Ireland that the Government do not care about them and that they intend to carry out their ideological wish.
8.7 p.m.
Lord Holme of Cheltenham: My Lords, I am glad that we have had the chance to hear that powerful intervention from the noble Lord, Lord Sefton of Garston. I begin by thanking the Minister for her usual persuasive and clear presentation. I am bound to say that she must feel a bit lonely this evening as we hear the sheer amount of information and feeling in the speeches of the three noble Lords who have spoken from their great experience and knowledge of Northern Ireland. I am quite certain that those noble Lords reflect the feeling of everybody in Northern Ireland on this issue; not just the Confederation of British Industry; not just the unions; not just the people who work in the port; and not just the present commissioners. Those noble Lords reflected the feeling of everybody in Northern Ireland about their port. The Minister might want to address that in her reply.
314
Rather than making out any general case for or against privatisation, I should like to address particular arguments of a practical nature against this privatisation. As the Minister pointed out, the order makes provisions for the ports to privatise themselves if they have an annual turnover of more than £5 million. In practice, that means that only the port of Belfast is affected. Belfast port is a very successful business. It has a very impressive growth rate. I think that the noble Baroness will agree that it has increased its turnover by more than 40 per cent. in the past five years. There have been notable increases in productivity which the noble Lord, Lord Cooke, outlined. The port accounts for no less than 55 per cent. of Northern Ireland's trade.
The most worrying thing about the order is that it will hang like the Sword of Damocles over the port because the order contains reserve powers whereby, if the harbour commissioners fail to apply for privatisation, the Government will have the power of coercion, at their own discretion, to compel the privatisation of the port of Belfast. I heard the Minister say that this is just enabling legislation; but what is the point of introducing it unless it is the Government's intention to proceed with that privatisation? Why would they want all that hassle? Why would they want all that difficulty? Why would they want to fly in the teeth of local opinion unless it was their intention to proceed onwards to privatisation?
I am glad that the Minister's moral support has now returned. I remember the Government recently being extremely forceful about refusing to sign up for a single European currency until we saw a definitive proposal. How could anyone possibly sign up for a single European currency in principle unless they saw definitive proposals? Is not that an exact analogy with what we are being asked to do tonight? We are being asked to sign up for possible future privatisation, and the Government have not yet even promised that there will be a debate if they decide to come forward with an order on privatisation. All they have said is that they will consider carefully a debate at that point.
I came here this evening knowing that I was opposed to the privatisation and knowing that there was a great deal of opposition to it in Northern Ireland. I am sure that the Minister will be affected by the fact that not one Member on her side of the House has seen fit—there are some noble Lords with great experience of Northern Ireland—to come here and support the order. I believe that that is no coincidence. I merely ask her to consider that it will make it difficult for those of us who have reservations about the order to be acquiescent in it unless the Government can give a categorical assurance that it will come back to Parliament. I cannot see why she would not want that. The people of Northern Ireland would be greatly reassured if the proposal—when the Government have a definitive proposal —came back to Parliament. I hope that the Minister will address herself specifically to that point and try to avoid, if she can, vague and evasive phrases. It is something that the House would like to hear from her this evening.
Perhaps I may make one other important point of which I have given the Minister notice. It is the point raised by the noble Lord, Lord Fitt, about the eligibility of funding from the European development fund. It will

315
be reduced from 75 per cent. to 50 per cent when the ports transfer to the private sector. There must be some commercial reason, hidden from the average person, that would make a government deliberately turn their back on a subsidy of that order. We are talking about large sums of money. The estimate is of course that the port currently receives about £12 million in aid. What will that be reduced by? Will it be £2 million to £3 million? Will not that create an automatic competitive advantage for Dublin? Dublin does not just receive the 75 per cent. level of support. Because it obtains money from the cohesion fund, it receives 85 per cent. support.
If the Government's privatisation proposals go ahead the port of Belfast will receive 50 per cent. support while Dublin will receive 85 per cent. support. That is an enormous commercial differential. What will make it possible for the port to be successful? In that respect, I have a question for the Minister. Could there be clawback by the European Commission of funds that have hitherto been given to the port by way of subsidy? As the Minister will be aware, Mr. Bruce Millan, the European Commissioner for regional funding, says that it is possible that there could be clawback. That could be incredibly serious. I should like to know categorically from the Minister whether she admits that there is a possibility of clawback. She may say that it is unlikely. But is there a possibility that money could be clawed back? That would make it even more foolhardy to proceed with the potential privatisation.
I have two final points. They are points which should be of great concern to the House. There is the issue of accountability, which has been raised by other noble Lords. The noble Lord, Lord Cooke, related an extremely interesting history. We recognise that the Belfast harbour commissioners are publicly accountable at present. They draw upon various elements of the community in Northern Ireland. Will there be any provisions to ensure that if the port is privatised the new owners will have a similar breadth of background and that they are similarly rooted in the community? Or will they, as with so many other similar ventures, turn out to be narrowly commercial or just friends of the Government? Will they have the same obligations to dredge the harbour; to guarantee the pension rights of the employees and former employees; to health and safety provisions; and to the local community as a whole?
Then there is the question asked by a previous speaker, about which the Minister knows I was concerned in the instance of the privatisation of the airport. I refer to the question of a private police force. We are going to privatise the security force. Is it sensible in Northern Ireland, with all its great problems, to create these private security forces carrying arms all over the place? Group 4? What is the future of Northern Ireland? Does it not depend crucially in these delicate times on the total integration of security rather than a patchwork of private security forces?
I am afraid that what I have had to say has not been very encouraging for the Minister. My last question may be even less encouraging. However, I do not for the life
316
of me understand how the Government can sell something they do not own. I should be grateful if the Minister will tell us how that feat is possible.
8.15 p.m.
Lord Prys-Davies: My Lords, I too thank the Minister for guiding us through this important order. For reasons which have been well rehearsed by all speakers, and admirably summed up by the noble Lord, Lord Holme, we cannot welcome the order. It is clear that the order is aimed at the port of Belfast. That point has been made by every speaker. Its essential purpose is to make it possible for the department to enforce privatisation of the port if its commissioners fail to apply for a privatisation scheme within two years after the enactment of the order, subject only to negative resolution. I must say that I was surprised when the Minister referred to the negative resolution as being a safeguard. We are opposed to compulsion, and we are opposed to the negative resolution procedure.
The order applies the Ports Act 1991 to Belfast. However, in 1991 the Government based their legislation on two separate grounds. The first was that it was the Government's policy to open up the ports industry to market forces. The Minister relied upon that ground this evening, but it is only one ground. The second ground was the claim in 1991 that a number of the larger ports had made clear their enthusiasm for privatisation and that two of them had gone so far as to introduce Private Bills. The Minister has been unable to rely upon that ground in support of the order today.
We have heard some powerful speeches this evening. I would rate them among the most powerful I have heard on any Northern Ireland order in the House. There is no desire in Belfast or Northern Ireland for the privatisation of the port. There is no popular support for the order. The port commissioners, unlike two of the English ports in 1991, have never toyed with the idea of promoting a Private Bill, and they are opposed to the order. So is the Belfast city council; so are the trade unions; so are all the political parties in Northern Ireland; and, if it matters to this Government, so are the elected Members of Northern Ireland in another House.
Accordingly, the second limb of the case for the Ports Act 1991 cannot be made out in 1994 to support the order. I should have thought that when more than a year ago it became crystal clear to the department that there was powerful opposition to this order and that there was no consent for it the idea of privatisation would have been buried there and then.
Like the noble Lord, Lord Holme, I was glad that the noble Lord, Lord Cooke, gave us the history of the port of Belfast, which for more than 200 years has been built up on the delta of the Lagan. He described his family connections with the port and spoke of it with great affection. Indeed, the people of Northern Ireland speak of the port with great affection. It has no shareholders. The profit goes to reserves or to finance new capital investment, about which we have heard tonight, or to reduce charges.
Moreover, the port commissioners are and have always been representative of the many organisations which have a direct interest in the efficient and smooth

317
working of the port. Not withstanding what Ministers say, in a lay sense the board is accountable to those organisations. It does not matter what lawyers say; in a lay • sense the commissioners of the board are accountable to the people who use the port. That point was well made by my noble friends Lord Fitt and Lord Blease and by the noble Lord, Lord Cooke.
Of course, the commissioners cannot be faulted in any way. We have had not one word from the Minister blaming the commissioners for this or that. The commissioners have ensured that the port is modern and efficient. They have managed the assets honourably and effectively. In the result, the port has a fine record of service to the people of Belfast and Northern Ireland. It has earned for itself a unique place in the estimation of the people of Northern Ireland. Therefore, it is not surprising that there is no enthusiasm for the order and that there is opposition to it. If the Government had any regard for the principle of subsidiarity they would pay careful attention to what is being said in Northern Ireland. The Minister has not referred to that tonight.
The order is directed at Belfast harbour. However, as has been made clear, it could adversely affect the whole economy of Northern Ireland, not merely Belfast and its immediate neighbourhood. That is why it is such an important order for Northern Ireland, and that is why it should not be the subject of an Order in Council.
From this side of the House, that is our first issue of principle with the Government. With the greatest respect to the Minister—we hold her in high regard—I have not heard from her or from any of her Northern Ireland ministerial colleagues a single argument, apart from doctrine, to justify the order. Indeed, I found the speeches of the Minister's colleagues and their letters— we have been corresponding with Ministers— extraordinarily unconvincing on the subject.
We have heard tonight that the view of those who responded to the order is that the privatisation will create problems where there are none. Moreover, during the next two years there will be uncertainty about the port's future where there ought not to be uncertainty. We believe that there is a grave risk that the privatisation of the port of Belfast could be a backward step.
I summarise the points that have been made by all speakers tonight in saying that there are at least three main grounds for our anxiety. The first is that a privatised port would not be eligible for European Union funding at the current rate of 75 per cent. That could lead to increased charges by port users and eventually affect the whole industry of Northern Ireland. In addition, there is the question of the clawback, mentioned by the noble Lord, Lord Holme.
Secondly, the privatised port, receiving substantially lower grants from Brussels, might not be able to continue to compete successfully against the deep water ports of the Republic, in particular Dublin. Thirdly, the substantial and valuable portfolio of properties in and around the port, which may be surplus to the requirements of the board and which are in the ownership of the commissioners, will be sold off. Current lessees of small business premises in and around the port may find it difficult if not impossible to renew
318
their leases on acceptable and affordable terms. In the past, the Minister has had special responsibility for small businesses. I draw to her attention the anxieties and fears of small businessmen in and around the harbour. The long-term interest of the lessees in and around the harbour should not be sacrificed to short-term advantage.
I turn to the second ground of opposition to the order. It is that the department is empowered to privatise the port after the expiration of two years by a subordinate order, subject only to negative resolution procedure. The subordinate order will not therefore be debated in Parliament. There will be no opportunity to question the Minister about the criteria that have been applied or to challenge the grounds upon which the decision has been taken. In other words, when we come to the subordinate order, privatisation will be a fait accompli. Is that fair to the people of Northern Ireland? Is it fair to proceed by way of legislation which is a fait accompli? The point has been made that a port in Great Britain may be enforced to privatise under the 1991 Act only under an affirmative resolution. We must ask the Government to justify the change of procedure for Northern Ireland. We must press the Minister for a satisfactory explanation.
I have always understood from the Northern Ireland Office, and not from my understanding of the law, that the Government will resort to the negative resolution procedure under the 1974 Act only where the proposed Northern Ireland legislation corresponds to primary legislation for Great Britain. All right, the Government can satisfy that condition, but I understand that they must also satisfy another condition; namely, that it is desirable for Northern Ireland legislation to be made speedily. That is the advice I have received in the past from the Northern Ireland Office:
I feel justified in quoting from a letter which the Minister's immediate predecessor sent to me on 20th May 1993. He stated:
"The negative resolution procedure for Northern Ireland Orders in Council is only used where Northern Ireland requires legislation corresponding to the purposes of a Great Britain Bill (or part thereof) and it is desirable for the legislation to be made speedily".
That was said in May last year. But such reasoning cannot possibly apply in respect of this order. First, Northern Ireland does not require the legislation. Of course, there is no urgency attending the matter. The history of the order to date demonstrates that its provisions are not required to be speedily applied. That being so, the Government should not be relying on the negative resolution procedure.
Perhaps I may rehearse the facts. The draft order was published in February of last year. That is 18 months after the passing of the 1991 Act. It was subsequently held back for 15 months and it was not until last month that the Government decided to issue the order. Of course I do not complain, but the delay is evidence that there is no need for the order to be speedily applied. Therefore, it should receive the affirmative resolution of each House.
In those circumstances and if the Northern Ireland Office advice which I received in May of last year is correct, it seems to me that the use of the negative procedure in this case is an abuse of that procedure. I

319
believe that the noble Lord, Lord Holme, is being generous to the Government when he asks for an undertaking that if the Government decide to privatise the harbour board, it will be the subject of a debate in both Houses of Parliament. We must press the Minister for an assurance that such a debate will be forthcoming, unless the Northern Ireland Office has changed its mind and has decided that it is no longer necessary for the order to be introduced speedily. We are sorely tempted to vote against the order but I hope that the Minister will be able to give us those assurances.
There are at least two questions on which we on these Benches require information from the Government, additional to the questions that have been asked by other noble Lords. First, in the event of the enforced privatisation, will the European Union be entitled to recover the grants or any part of them paid to the commissioners? That was a point made by the noble Lord, Lord Holme. If it is entitled to a clawback, who will be responsible for the repayment? Will it be the successor company or companies or the Northern Ireland Office and, therefore, a charge on the whole budget of Northern Ireland? Perhaps the Minister will respond to that question.
I should very much like to know what will happen to the capital reserves of the Belfast harbour pension fund and, indeed, the existing and future rights of the beneficiaries under the fund.
The Minister said that there will be consultation before the Government decide to exercise the power to privatise the ports. I hope that the Government have a genuinely open mind on the merits of the enforced privatisation of the port of Belfast. I say that because if they have a genuine open mind, we are satisfied that the port can demonstrate to any objective observer that it should not be forced in the direction of privatisation.
I have taken up more than my fair share of time but this order is important for Northern Ireland. We regret that it has been introduced by the use of the Order in Council procedure and not by primary legislation. Many questions have been asked. We have listened to powerful and sobering speeches. I hope that the Minister will be able to give the assurances for which we have asked.
8.35 p.m.
Baroness Denton of Wakefield: My Lords, I really must congratulate noble Lords. From their great knowledge and experience of Northern Ireland, noble Lords have listed the majority of matters which would have to be taken into account if privatisation were considered. I assure your Lordships that all those matters will be considered fully. That is the point at which they should be discussed and taken forward. I doubt whether your Lordships missed one of those points.
I hope that the House will accept that we must agree to differ on the philosophy in relation to privatisation. I had the advantage of working for a company pre-privatisation and I watched it blossom in the private sector. Any Rover owner can see for himself the benefit of that. British Airways stands on its own two feet as a
320
success in the market place while France still tries to find ways in which to increase the subsidy to keep Air France flying. Our views on privatisation are based on firm evidence of success.
Having said that, I return to the statement which I made in my opening speech: this is not a privatisation order. It allows the matter to be considered in the future.
The noble Lord, Lord Fitt, knows Northern Ireland and its history better than I will ever do. But even from my limited recent experience, I know that Northern Ireland is not Kent or Finchley. Indeed, I know that in many areas it is better than Kent or Finchley. But it has a right to the options available to similar structures in Great Britain.
This evening your Lordships were asking to close the door on the commission if it wished to bring forward an opportunity to privatise. I agree wholeheartedly with the noble Lord, Lord Fitt, that Belfast port is crucial to the economy of Northern Ireland, but it may be that there were occasions when it needed access to share capital or partners. I should say to the noble Lord, Lord Fitt, that we cannot put a fence round Northern Ireland and say that people cannot come in. With regard to helping companies coming into the Province, I hope that Bombardier is an example of bringing support to the people of Belfast.
I believe that you have to make profits to pay wages. The noble Lord, Lord Cooke, pointed out that you have to make profits to reinvest. While I understand the depth of the feelings of the noble Lord, Lord Fitt, and other noble Lords who have spoken on this matter, I regret that the noble Lord, Lord Fitt, should question the commitment to the Province of any Northern Ireland Minister. We are all there from choice and we ask to stay.
This is an order which opens doors. Privatisation is an option to be considered subsequently. I believe that it is of interest to those of us here this evening that it was announced today that the airport at Aldegrove is to go to the management-employee group. That is a great opportunity for the people involved. The noble Lord, Lord Cooke, and others were right to praise the achievements of the port. The noble Lord, Lord Prys-Davies, said that I had not criticised it; I have no reason to do so. As I said, it may wish to move in a different direction.
But I worry about the statement that there has been no government support for the port. I wonder where noble Lords think that the EU funds come from, other than from other member states. The noble Lord, Lord Holme, referred to a Sword of Damocles and I gained the impression that the noble Lord, Lord Blease, felt that it would descend two months and two years after the order's adoption by the Privy Council. He has the dates absolutely right. That is not the case, as I stressed in my opening speech. Were it a Sword of Damocles, it has been available in Great Britain for over a year. It is the opening of doors. Laganside is of course a child of the Department of the Environment, and a very successful birth that has been.
The noble Lord, Lord Fitt, said that we should look at Northern Ireland separately and the noble Lord, Lord Blease, quoted Great Britain's experience in the area. I

321
believe that one of the advantages that we have is that we can learn from the experience in Great Britain should it be necessary to do so.
I should tell the noble Lord, Lord Sefton, who intervened in the debate, that of course there are great links between Liverpool and Belfast. However, if Liverpool were not competitive in productivity, it would not be an issue of southern ports; it would be an issue of ports such as Rotterdam and other ports on the continent of Europe to which we would lose business. That is not what we want to do. I was also unhappy to hear the noble Lord say that we should give more time to considering the efforts towards peace. I do not really believe that anyone can doubt this Government's commitment to finding a peaceful solution in Northern Ireland.
I shall try to answer the points raised by noble Lords because, as the noble Lord, Lord Fitt, said, it is important that Northern Ireland should be given full consideration. The consultation period to which the noble Lord referred ended in April 1993 and 54 submissions were received—17 made no substantive comment, but others expressed reservations about the privatisation of Belfast port, some of which have been quoted. I must stress that such matters will be considered should privatisation come onto the agenda.
The question was also raised about the harbour police force. Again, that is a group of people doing a good job. That group would not change; indeed, the same people would be involved. They would continue to be overseen and trained, with refresher training, by the RUC. However, the RUC would have the opportunity to take over if there were problems. Because of the major security issues in the port, the RUC is closely involved. The economic importance of the harbour estate requires the presence of armed police.
I should like to reassure the noble Lord, Lord Holme, and other speakers that, in the event of Belfast port moving to the private sector—and I must say that, at present, that falls into the hypothetical category—the new owners would be required to assume all statutory obligations then applying to the Belfast harbour commissioners. I hope that I have reassured noble Lords on that point.
The issue which gave concern to most speakers was the question of the ERDF grants. I can confirm that, should any trust port move to the private sector, the maximum grant rate available to it would be 50 per cent. as opposed to the maximum of 75 per cent. in the public sector. No allocations from the ERDF have yet been made for the period commencing 1994, so figures could not be calculated. However, perhaps I may suggest that a business built on efficient provision of customers' needs will always be stronger than one reliant on decisions from Brussels which, to make an understatement, can be variable. I should also point out to the House that, yes, there is the possibility of a clawback, but no repayment or clawback, as it is usually known, of grant has yet been sought by the EC as a result of a privatisation of a trust port. Obviously, it is not possible to anticipate whether that position might
322
alter in the future, but I should stress that any clawback would be levied from the Government's shares of the receipt of privatisation.
Dublin and other ports in the Republic are indeed eligible for higher grant rates than Belfast would be after privatisation. That would be a major concern to be taken into account when discussing privatisation. However, I would give enormous credit to Belfast. As the noble Lord, Lord Holme, pointed out, it has an extra edge at present and yet port charges at Dublin are some three-times those at Belfast. Trade through Belfast is now 30 per cent. to 40 per cent. higher than Dublin and the gap is increasing. We must recognise that it is people and management that make a difference as well as money. I also understand—and this may be of interest to noble Lords—that Dublin port is unlikely to receive assistance from the cohesion fund which offers up to 85 per cent. for projects which do not provide income. It is likely to be restricted to the 75 per cent. available under the ERDF.
The noble Lord, Lord Prys-Davies, asked how small firms would be protected against increased charges. As the noble Lord rightly said, I have a deep affection for the small firms; indeed, I believe that they are the future of any economy. However, the Harbours Act (Northern Ireland) 1970 safeguards against excessive charges. That legislation will remain unaltered. There is nothing in the order to change it. Moreover, the scope for appeals will remain intact.
Some doubt was expressed about the morality of the issues that we are debating; for example, the morality of privatising the port. In effect, the trust ports have no legal owners. The lack of any identifiable owner means that there is no vendor to receive the proceeds of the sale if such a port is privatised. Therefore, in the absence of a levy, any purchaser would receive back the entire proceeds of the sale along with the port itself. It really would be difficult to justify a windfall gain of such a scale going to the buyer, especially as we would aim for a level playing field between newly privatised trust ports and ports such as Larne which are already in the private sector.
When reflecting public interests, the Government should be able to participate in the benefits that flow from such privatisation. The levy provision meets that public interest requirement in a fair and acceptable way. I should like to reassure the noble Lord, Lord Fitt, who was nervous about asset stripping that the Ports Act provides—and it will continue to apply in Northern Ireland—that any disposal of land within 10 years of privatisation would be subject to clawback.
There was great concern about the question of the legislative process for the order. The order that we are considering tonight is subject to the affirmative resolution procedure. As the noble Lord, Lord Prys-Davies, pointed out, it has been brought forward as an affirmative resolution. However, the order provides for subordinate orders to be made at Westminster by the negative resolution procedure. I believe that that is where confusion arose in the minds of some noble Lords. I should point out that there is no precedent for subjecting a subordinate order of this type made by a Northern Ireland department to the affirmative rather

323
than the negative resolution procedure at Westminster. To do so would mean that, if a locally elected assembly was reinstated, then such powers would remain with Westminster. I believe that I can say without hesitation that that would not be the wish of noble Lords opposite.
Lord Holme of Cheltenham: My Lords, two or three minutes ago the Minister charged those of us on this side of the House with putting forward hypothetical considerations. Is not the instance she has just given of a reversion to the powers of a Northern Ireland Assembly, which I believe many of us devoutly hope for, exactly the type of hypothesis that she herself was describing? What we are concerned with here is whether Parliament itself will get the opportunity to debate the matter. I hope that the noble Baroness will come to that issue, because that it is the one that concerns us and I am sure will determine our attitude to this order.
Baroness Denton of Wakefield: My Lords, I quote what many of my noble colleagues have said. I was about to come to that. What I said was not hypothetical. The law is such that if a subordinate negative order is changed, the powers will stay at Westminster. But even a subordinate negative order can be prayed against in both Houses. Should such a prayer receive sufficient support in the Houses—your Lordships will understand that this is a matter for the House authorities —it is extremely likely that there will be a debate on the provisions. I have noticed that Northern Ireland Members do not fail to ensure that Northern Ireland matters get as full a discussion as possible. That is a view I support very much. Any agreements regarding pension funds that exist immediately prior to any privatisation will continue to have effect. If there is any other point that I have not considered, I shall carefully read the written report and make sure that answers are given to noble Lords.
In closing, I thank noble Lords who gave me notice of the questions that they wished to raise. I stress to your Lordships that I do not ask the House to sign up to privatisation, but simply to ensure that Northern Ireland has available to it the same open doors as are available in Great Britain. I feel that is important, and I commend the order to the House.
On Question, Motion agreed to.

Ports (Northern Ireland Consequential Provisions) Order 1994
Baroness Denton of Wakefield: My Lords, I beg to move.
Moved, That the draft order laid before the House on 19th January be approved [5th Report from the Joint Committee].
On Question, Motion agreed to.

Consolidated Fund (Appropriation) Bill
Brought from the Commons, endorsed with the Certificate of the Speaker that the Bill is a Money Bill, and read a first time.
Then, Standing Order No. 44 having been dispensed with (pursuant to Resolution of this day), Bill read a second time; Committee negatived; Bill read a third time, and passed.

Deregulation and Contracting Out Bill
8.58 p.m.
House again in Committee on Clause 58.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 201D:
Page 53, line 33, leave out ("either unconditionally or").
The noble Lord said: In moving Amendment No. 201D, for the convenience of the Committee I shall speak also to Amendment No. 201E. These appear to be minor amendments but are of some importance. Amendment No. 201D seeks to remove from Clause 58 (5) (c) the words "either unconditionally or". We object to the idea that an order under the clause can be unconditional. It is perfectly clear that the order may be made to provide that a function may be exercised by contracting out, but whether that should be done unconditionally is a matter which the Committee will no doubt wish to consider.
Clearly, the Committee will agree to the expression:
"fulfilment of such conditions as may be so specified",
but "unconditionally" does not seem to me to be appropriate in the circumstances.
Amendment No. 201E ensures that the conditions of such an order "shall" be specified rather than "may" be specified.
The Committee may feel that the amendments are not of great consequence, but they strike at the heart of what contracting out is about. Contracting out concerns functions which are the legal responsibility of persons as specified in the Bill, and the exercise of those functions is to be contracted out. Therefore, in our view it is of great importance that the conditions under which those contracting out procedures may take place—I am sorry if I intervene in conversations on the Government Front Bench.
Lord Strathclyde: We were not talking.
Lord Williams of Elvel: The noble Lords have been talking for the past 10 minutes. Come on! It is an important matter and I hope that the noble Lord, Lord Strathclyde, despite his new role, on which I congratulate him, will pay attention to the Bill in front of us.
It is important that such an order should include conditions specified by the Minister who makes the order. Therefore, it is not a trivial amendment and I hope that the noble Lord, Lord Strathclyde, will pay attention and give a responsible reply to my amendment. I beg to move.
Lord Strathclyde: I shall speak to the same amendments as the noble Lord, Lord Williams. The amendments would require an order to state the conditions under which a function may be contracted out.

325
It may be helpful if I explain the general thinking behind Clause 58(5). Clauses 58 and 59 are general provisions drafted to cater for a wide variety of functions where obstacles to the use of contractors in carrying out statutory functions occur. It will, therefore, depend entirely on the nature of the function whether it is desirable to restrict the coverage of an order and whether it is desirable to make it subject to the fulfilment of conditions.
There is no general presumption that we would expect to restrict the scope of an order by specifying the cases or areas to which it applied or by setting conditions. Equally, there is no presumption in favour of an unconditional order, and in some circumstances there could be a case for restrictions on the decisions which contractors could take. For example, if the disbursement of money were involved the responsible Minister might wish to set an upper limit on the disbursements which a contractor could decide. That would mean that decisions on smaller grants could be taken by contractors while decisions on larger amounts could be reserved to departmental civil servants. That could be done under Clause 58(5), but we might not wish to impose any such restriction. However, there are circumstances in which we would not wish to restrict an order in either or both of those ways.
That is the background to the clause, and that is why I believe that the situation envisaged by the noble Lord, Lord Williams, does not arise. I agree with the noble Lord that it is not a trivial point. However, it is one that has been carefully thought out by the Government and I hope that on the basis of my explanation the noble Lord will withdraw the amendment.
Lord Williams of Elvel: What does the noble Lord mean by "unconditionally"? Does it mean that a Minister can make an order contracting out the exercise of some function without any conditions whatsoever? Is that what the Committee is being asked to approve?
Lord Strathclyde: The point is that there may be limes when conditions are required on a contract and other times when they are not. The desire behind this particular subsection is to retain a measure of flexibility. I have tried to demonstrate how that flexibility may be used. I do not think that there is anything untoward. If we were to accept the presumption of the noble Lord, Lord Williams, we would thus remove that flexibility, and that might not be to the benefit of the contractee or contractor.
Lord Williams of Elvel: I really do not believe that the Minister has addressed the problem. Conditions are conditions. Any contract which is unconditional, which is the word used in the Bill, and has no conditions attached to it at all allows a Minister enormous power to contract out the exercise of any function he likes without any restraint on the contractor. I really do not believe that that is what the Government intend. I very much hope that the Minister will say that that is not what the Government intend.
Lord Strathclyde: My reading of the clause is somewhat different from that of the noble Lord, Lord
326
Williams. We are not talking about whether or not the contract will be unconditional but whether the order will be unconditional. That is the important aspect.
Lord Williams of Elvel: My reading of the clause is very simple. It is that:
"An order under this section may provide that a function to which this section applies may be exercised, and an authorisation given by virtue … either unconditionally".
In other words, the order may say that there are no conditions on the contract at all, or otherwise. That is my reading of the clause and that of my colleagues.
Lord Strathclyde: Perhaps I may explain. The order may set conditions. The example I used was where the order limited the contract to certain amounts of money being disbursed by contractors. It is the order which may include conditions or may be unconditional. There is no prospect of there being a contract without conditions. I should have thought that a contract without conditions would be almost meaningless. That is not the intention under this part of the clause. I hope that that clarifies the position.
Lord Williams of Elvel: The explanation has confused the situation even more. The order can say "unconditional". The contract may be conditional. I agree with the noble Lord that contracts are in respect of two people: one decides to do one thing; the other in consideration of the contract decides to do another. Nevertheless, the order can be unconditional. I find that very difficult to accept.
9.8 p.m.
On Question, Whether the said amendment (No. 201D) shall be agreed to?
Their Lordships divided: Contents, 18; Not-Contents, 57.

Division No. 1

CONTENTS

Eatwell, L.

Peston, L.

Graham of Edmonton, L.

Prys-Davies, L.

[Teller.]

Russell, E.

Hollis of Heigham, B. [Teller. ]

Sefton of Garston,L.

Taylor of Blackburn, L.

Holme of Cheltenham, L.

Tordoff, L.

Kilbracken, L.

White, B.

Monkswell, L.

Williams of Crosby, B.

Mulley, L.

Williams of Elvel, L.

Nicol, B.

Winchilsea and Nottingham, E.

NOT-CONTENTS

Addison, V.

Cranborne, V.

Annaly, L.

Denton of Wakefield, B.

Arran, E.

Dixon-Smith, L.

Astor, V.

Downshire, M.

Balfour, E.

Dundonald, E.

Belstead, L.

Goschen, V.

Biddulph, L.

Harlech, L.

Blatch, B.

Harvington, L.

Borthwick, L.

Hayhoe, L.

Bruntisfield, L.

Henley, L.

Carnock, L.

Hooper, B.

Chalker of Wallasey, B.

Howe of Aberavon, L.

Colnbrook, L.

Howe, E.

Courtown, E.

Johnston of Rockport, L.

Craigavon, V.

Kenyon, L.

Craigmyle, L.

Kimball, L.

327

Lauderdale, E.

Seccombe, B.

Leigh, L.

Shrewsbury, E.

Lindsay, E.

Shuttleworth, L.

Long, V.

Simon of Glaisdale, L.

Lucas of Chilworth, L.

Skelmersdale, L.

Lyell, L.

St. Davids, V.

Mackay of Ardbrecknish, L.

Stewartby,L.

Mackay of Clashfern, L.[Lord Chancellor.]

Strathclyde,L.

Strathmore and Kinghorne, E.

Montgomery of Alamein, V.

[Teller.]

Mountevans, L.

Trumpington, B.

Northesk, E.

Ullswater, V. [Teller.]

Rodger of Earlsferry, L.

Wise, L.

Rodney, L.

Resolved in the negative, and amendment disagreed to accordingly.
9.16 p.m.
[Amendment No. 201E not moved.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 201F:
Page 53, line 36, leave out paragraph (a) and insert:
("(a) shall be for such a period that meets the requirements of the Minister or officer-holder and which is consistent with the risks that the appointed contractor is authorised by the Minister or office-holder to include in his contractual undertaking.").
The noble Lord said: The noble Lord, Lord Ironside, is not able to be in his place. I beg to move Amendment No. 201F, the words as on the Marshalled List.
This is an important amendment tabled by a Conservative Back-Bencher. It relates to a defence matter. I am sure that the noble Lord, Lord Strathclyde, will be able to respond to defence matters, as he responds to everything on behalf of the Government.
The difficulty that the noble Lord, Lord Ironside, has spotted is that contracts which at the moment do not exceed 10 years might be—and perhaps should be—in certain circumstances fewer than 10 years, so that, in the words of the amendment, the contract should be for such a period, not only that meets the requirements of the Minister—that is clear—but is,
"consistent with the risks that the appointed contractor is authorised by the Minister… to include in his… undertaking".
In other words, there may be long-term contracts, because defence contracts are long-term, and there may be short-term contracts. So "not exceeding 10 years" could in the case of defence contracts be stretched either way. That is an important point because if, for instance, you let a contract to build a new Trident submarine, that is not a 10-year contract. If, on the other hand, you let a contract to manufacture ammunition, that is probably a short-term contract. So the 10-year period is not necessarily a desirable feature in terms of defence contracts. That is what the noble Lord, Lord Ironside, told me was the point of his amendment, and that is my reason for moving it.
Lord Strathclyde: My only slight concern about the amendment is that I am not sure what it has to do with defence. Can the noble Lord, Lord Williams, explain that?
Lord Williams of Elvel: Yes. The noble Lord, Lord Ironside, as the Minister will know, is chairman of the inter-parliamentary defence committee, and has great knowledge of defence matters. He told me this afternoon—it may have been a privileged discussion, but perhaps I may reveal what he said—that he tabled the
328
amendment purely on the defence issue. The amendment may not say that, but that is why he tabled it. Therefore I am speaking to the brief that the noble Lord, Lord Ironside, gave me this afternoon when he put forward his reasons for tabling the amendment. If the Minister understands now what I say, perhaps he will reply to the arguments of the noble Lord, Lord Ironside.
Lord Strathclyde: I certainly shall be replying not to my noble friend's arguments but to the arguments of the noble Lord, Lord Williams. I now understand that we are dealing with an amendment that does not say what the noble Lord, Lord Williams, intends it to say—that it has something to do with defence. Let us for one moment sweep aside the fact that the word "defence" does not appear anywhere in the amendment.
Ten years is the period chosen in the Bill as drafted to ensure that delegations of functions are reviewed regularly. In each case it will be for the Minister concerned to decide on the length of the relevant authorisation in accordance with the terms of the contract, subject to the overall limit of 10 years. I regard that as a reasonable maximum period for contracts to provide statutory functions which will be service contracts rather than contracts for the purchase of goods. I hoped that the noble Lord, Lord Williams, would agree with that.
Lord Williams of Elvel: Perhaps I may interrupt the noble Lord to ask, if a contract is to be let for a new Trident submarine, whether that can be under 10 years.
Lord Strathclyde: I was not prepared for this great defence argument. There was no clue in the amendment that it would deal with defence. The amendment seeks to remove the 10-year maximum period and put the matter to the discretion of the Minister. That is fair enough. I do not mind. The discretion of Ministers is normally a perfectly good thing. But my eye is drawn to the next amendment in which the 10-year period is limited to four years. That is the amendment in the names of the noble Lord, Lord Williams of Elvel, and the noble Baroness, Lady Hollis of Heigham. I should be interested to hear the arguments when we discuss that amendment.
The noble Lord asked a specific question about defence contracts and building Trident submarines. As I said earlier, defence functions are unlikely to come within the scope of the contracting out provisions as they are simply not statutory functions. Defence contracts may require special investment considerations and the contract length can be set appropriately in each case. That is true, for example, of contracts for large capital equipment and military research and development projects. None of the recommendations of the defence cost study would require use of the order-making power to implement.
I hope that that is helpful to the noble Lord, Lord Williams, and my noble friend Lord Ironside. I hope that I have explained first why we believe that the 10-year period is the required length and why defence contracts will normally be excluded from the statutory powers. I hope that on that basis the noble Lord will not feel it necessary to move the next amendment.
Lord Peston: Perhaps I may interrupt the noble Lord to obtain more clarification. As my noble friend said, the first part of Amendment No. 201F, which states:

329
"meets the requirements of the Minister or office holder",
is very straightforward. It is the second part which, in my judgment, is more fundamental; namely, meeting the risks of the appointed contractor. The Minister said that 10 years would cover that. But he will have noticed that later, implicit in subsections (6) (b) and (6) (c)—with which the amendments of the noble Baroness, Lady Hamwee, are concerned —are two specific risks. They are one-way risks.
In due course I shall be very interested to hear the arguments on subsection (6) (b), which states that the authorisation may be revoked at any time; and those on subsection (6) (c), which states that the Minister shall not be prevented from exercising the functions which the authorisation requires. So the point about risks for the appointed contractor is at least worthy of reflection.
I certainly do not want to get involved in a discussion on defence—I bear with the Minister in saying that—but I am interested in the whole question of risk. It seems to me that one could do with a rather stronger argument about the risks involved. In particular, the subsequent clauses seem to me to suggest that the contractor will be subject to quite serious risks. I know that the Minister will say that the imposition of ministerial whim or anything like that will never arise; but the fact is that the Bill seems to allow that. We will come on to that in due course so that we can look at it in detail. Basically, I should have thought that the formulation of the noble Lord, Lord Ironside, is worth reflecting on rather more than we have done so far.
Lord Strathclyde: The amendment being spoken to by the noble Lord, Lord Peston, introduces the concept of "whim" far more than anything lower down that we may discuss later on. There may have been a stage when we were drafting the Bill when we may not have had the 10-year period. But on balance we took the view that it was right for there to be a limit. It could have been seven or 15 years, but 10 years is about right in our experience for the kinds of contracts that would be let under the order-making powers.
I hope that I have dealt with the defence aspect to the satisfaction of the noble Lord, Lord Williams, and that we can now move on.
Lord Williams of Elvel: Do I take it from the Minister's reply that all defence contracts are outside the ambit of the Bill?
Lord Strathclyde: That is the wrong question. It is not a question of whether all defence contracts are outside the ambit; it is whether or not they are statutory. If they are statutory they fall under the ambit of the Bill and if they are not, then they do not. My advice is that there are very few statutory functions under the Ministry of Defence, for the reasons I explained earlier.
Lord Williams of Elvel: The Minister says that there are few statutory functions under the Ministry of Defence. Can the Minister explain what those statutory functions are that fall under the ambit of the Bill? We need to know the answer to that. It is not a minor matter.
Lord Strathclyde: With respect to the noble Lord, Lord Williams, this is continuing a debate that we had earlier this afternoon when the noble Lord, quite rightly,
330
wished to probe the Government on excluding defence risks in their entirety. I dealt with that matter to the satisfaction of the noble Lord such that he withdrew his amendment.
We do not have a definitive list—I certainly do not have one to hand—of the possible statutory functions. I explained earlier and shall explain again that the majority of contracts or functions which are carried out by the Ministry of Defence are performed under the prerogative powers of defence council and the defence council does not have statutory functions which would be affected under the Bill. The answer to the question is that there are very few.
Lord Williams of Elvel: Can the noble Lord do me this favour and provide, before the Report stage of the Bill, those functions of the Ministry of Defence which come within the ambit of the Bill? If he can do that, write to me and place a copy in the Library, I shall be perfectly happy and will move on to my next amendment.
Lord Strathclyde: I shall certainly write if I can find any.
Lord Williams of Elvel: The Minister must write to me to say whether or not there are functions. I expect a letter from the noble Lord—whichever noble Lord on the Front Bench is responsible at that point in time— specifying which functions of the Ministry of Defence come within the ambit of the Bill. If I can obtain that assurance from the Minister, which he has given me, then I am happy to beg leave to withdraw the amendment.
Lord Strathclyde: Before the noble Lord withdraws the amendment, I am advised that we have not been able to identify any defence-related statutory functions which would fall within the ambit of the Bill. Trident purchase and Trident building are not statutory functions. I shall make sure that we check again. On the basis of that assurance I hope that we do not need to have needless correspondence.
Lord Williams of Elvel: I shall be grateful if the Minister will check again, write to me and place a copy in the Library explaining exactly what he said—that there are no functions within the MoD. If he can do that I shall be satisfied. If he cannot, then no doubt he will identify certain functions. But he must not try to delude the Committee into thinking that he does not know or have the faintest idea. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
9.30 p.m.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 201G:
Page 53, line 36, leave out ("10") and insert ("4").
The noble Lord said: It may be for the convenience of the Committee if I also speak to Clause 62 stand part. Having established, or nearly established, or partially established, or perhaps established, that there are no defence arrangements within the ambit of the Bill, it seems to us that a 10 year provision is perhaps a little long. If we are not discussing ordering Trident, what are we discussing? I should like the Minister to justify why he wants the years in the Bill to be four, 10, 12, 15 or

331
whatever. It is no use throwing darts at a dart board and saying that 10 is a reasonable number. Twenty is a reasonable number; four is a reasonable number; two is a reasonable number. On what basis and on what evidence has the 10-year provision been included in the Bill? I beg to move.
Lord Strathclyde: I am very disappointed by the noble Lord, Lord Williams. I was expecting a stout defence of the figure four, but we got none. I can only assume that he cannot think of a good reason why the figure should be four years.
We considered very carefully a range of figures. Our aim is to ensure that delegations to contractors are reviewed regularly while not imposing too short a time limit on authorisations. That is why we came up with a figure of 10 years. It is about right as a long stop, though naturally we would expect contracts and authorisations normally to be for a shorter period.
I cannot help but refer back to the previous amendment moved so ably by the noble Lord where he was asking for a complete relaxation of the 10-year rule. Now he thinks it should be shortened. Increasingly I believe that 10 years is the correct figure. That is what we have settled on and I hope that the noble Lord will approve of that.
Lord Williams of Elvel: On all the contracting out arrangements that have been made since contracting out started, what is the average term of the contract?
Lord Strathclyde: I do not have that figure without notice but I shall make a point of finding out whether the figure is available and I shall write to the noble Lord.
Lord Peston: I am still very intrigued by the Minister's position. I understand that it is difficult to come up with a definite number. On the other hand, the noble Lord has been offered the amendment of the noble Lord, Lord Ironside, which says that we all recognise that it is difficult to come up with a number. I am not criticising the noble Lord. I find it difficult to come up with a number. Lots of numbers seem reasonable. Why does the noble Lord not say that a better way of doing this is to fine tune the contract to the needs of the case? It might be, as the noble Lord says, generally less than 10, but it might be mostly as little as four. Equally, it might be more.
We have all had experience of these matters. I can think of people sitting in the noble Lord's department scratching their heads and numbers being bandied around. But sometimes the sensible thing to do is not to put a number in what may become an Act of Parliament but to write it in such a way that one has room for manoeuvre. We are probing for some clarification. I do not criticise the Minister for not coming up with 10 definitely. What I am puzzled about is the logic of coming up with a number. And I think that that is what the amendment is about.
Lord Strathclyde: That is not what the amendment does. The amendment says quite firmly that we should not have 10 years and that we should have four years. I believe that four years is too short. The noble Lord, Lord Williams, shakes his head. That is what the amendment says. If I am to be asked to deal with other amendments, I shall certainly be happy to deal with them. The
332
amendment says four. I think four is too short. The noble Lord, Lord Peston, agrees with that view. These are maximum figures. Ten years is a maximum. I do not think it is reasonable that we should expect contracts to be unreviewed for more than 10 years. I think that is a reasonable figure and it is on that basis that I stand by it.
Lord Williams of Elvel: But we do not know whether my noble friend agrees with 10 years, four years or six years. This is a probing amendment. I want to know why the Government have decided on 10 years. If the noble Lord is prepared to say that he will write to me giving the average term of contracts that have been let under all contracting-out provisions, then I shall be satisfied before the next stage of the Bill if 10 years is shown to be a reasonable figure under the circumstances. If it turns out, for instance, that the average term of contracts is two years or three years, then I might move this amendment again. I rely on the noble Lord or his successor to write to me with the appropriate information so that we can decide what we do at the next stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 201H and 201J not moved.]
Clause 58 agreed to.
Clause 59 [Functions of local authorities]:
[Amendments Nos. 201K, 201L and 202 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 202A:
Page 54, line 9, at end insert:
("( ) Where a Minister makes an order under subsection (2) above, the authority concerned may, notwithstanding any regulations made under provisions as to anti-competitiveness, make compliance with requirements as to the employment of local labour an express term of any contract relating to the subject of the order between the authority and the authorised person.").
The noble Baroness said: This amendment would allow local authorities to insert a local labour condition into a contract under VCT arrangements without running foul of any criticism that that was anti-competitive. Such an amendment may be judged anti-competitive in the narrowest sense that it limits the freedom of contractors to employ whom they wish. We do not believe that it is anti-competitive in the sense that the same rules would apply to all competing contractors—in other words, there would be a level playing field.
What is the push behind this amendment? In recent years the Government have spent over £4 billion on inner city initiatives. Members of the Committee will recall some of them. There were the urban programmes of the late 1960s launched after the "rivers of blood" speech and the Watts riots. There was the initiative referring to working in the 57 poorest authorities. There was the founding of nurseries, language centres and the like and building communities bottom up. That was followed in 1980 by the UDCs and in 1981 by enterprise zones which switched from rebuilding communities to property regeneration and from there to estate action. In 1985 there were city action teams and in 1986 there were task forces. In 1991 there was Heseltine's city challenge. There is now English partnership with the single regeneration budget.
Each new initiative which, roughly speaking, coincides with the advent of each new Secretary of State for the Environment, has been funded by top-slicing the previous programme, thus simultaneously satisfying the Treasury's urge for cuts and the Minister's urge for publicity. The Government have therefore spent quite a lot of money and generated a great deal of publicity, but have such urban initiatives worked?
In the past couple of years we have had two major studies by central government. In November 1992 there was the study by the DTI of the task force initiative and in the past month there has appeared a 450-page report by the DoE on surveying urban programmes, as well as continued monitoring by the Audit Commission.
Certain inescapable conclusions follow which I hope this amendment addresses. The economic conditions of unemployment, and so on, are worsening and they are worsening in these priority areas perhaps less severely than would have been the case without these programmes. Therefore, these programmes have slowed down decline, but they have not stopped it and certainly not reversed it. Why? It is because most of that very large sum of several billion pounds has been spent not by local communities but taken outside them by contractors.
Contractors and developers have parachuted in from outside. In London Docklands, for example, 80 per cent. of the jobs went to outside labour—that is, to commuters. Where new jobs have been created in the inner cities, it is often at the expense of jobs elsewhere in the local economy. The task force report identified the fact that for every three jobs created in the task force, two were stripped out from adjoining areas. In other words, "trickle down" has not worked in urban programmes in this area, just as it has not worked in any other part of life. Only a modest proportion of those several million pounds has been retained by the local communities.
That has been worsened because in the mid-1980s the Government's switch of resource moved away from revenue programmes, which fund people, to capital programmes, which build things. As a consequence, despite the array of initiatives, it is still the case that in the inner cities half of those under 25 are unemployed. The proportion is worse for the ethnic minorities and the disabled.
I should like to quote from the Department of the Environment's latest report. It comprises 450 pages and was published three weeks ago. Page 54 of that report, which assesses the impact of urban policy, states:
"The impact of public resource has been diffuse and has been of little direct help to those living in the worst areas".
That is a pretty damning indictment. The report continues:
"Linkages between developmental programmes and distributional programmes"—
that is, the poverty programmes—
"appear not to have been very effective. The perceptions of most inner city residents confirm this. The widespread view is that infrastructural schemes may have had an impact on areas, especially those with commercial potential such as waterfront areas, but the residents themselves see little direct or indirect economic benefit from most of them".
I repeat that that was from the DoE's own 450-page report of three weeks ago. In my view, that report has damned £4 billion of urban programme money on the ground that very little of it has been retained by the local communities.
In my mind there is absolutely no doubt that social security expenditure is unemployment driven. Inner city problems are unemployment driven—
Lord Henley: Rubbish!
Baroness Hollis of Heigham: Oh yes. Inner city problems are unemployment driven. I shall be happy to swap sources and research with the noble Lord on this point at any time. Youth crime and the problems facing lone parents are unemployment driven. Homelessness is unemployment driven. Therefore, it is of crucial importance when urban programmes fail to generate local jobs for local people. If such programmes fail to generate local jobs, that means that local people cannot move off benefit, and the programmes are thus failing to give them a stake in their local community. The programmes are failing to increase local incomes which, alone, will sustain local jobs and local enterprises. They are important because they will be permanent and will not dry up when central government money again moves on and out.
That is why it is essential that urban programmes should be about people, not property; about employment, not infrastructure. They should respect the fact that the local authority should be a major player, ensuring that needy areas are not asset-stripped simply to fund the even more needy areas. Developers come and go; local authorities endure. That is why we believe that it was so stupid of the Government—I repeat that it was stupid—to outlaw clauses requiring that, where desirable and appropriate, there should be local labour specifications in the contracts —that is, contract compliance. That is not always necessary—certainly in the more prosperous areas—and it is not always even desirable, but where it is (particularly in the inner city areas which are in receipt of urban programmes) the local authorities should have the power to insert such specifications into contracts otherwise that commercial activity by a private contractor may benefit the contractor, but not the community in which he is operating.
The amendment is a way of ensuring that we complement government investment in the urban programmes. The amendment would stop private contractors asset-raiding those government programmes to export those resources outside the areas on which they were meant to be targeted. The Minister may rightly say that local labour is not always adequately trained. In that case, the contractors, the local authorities, the TECs, the education authorities and the like should encourage that training. There is nothing new about this. The Government themselves use such provisions in Northern Ireland and in some urban programmes, such as housing action trusts. While requiring them in Northern Ireland, and permitting them in HATS, the Government then proceed to denounce

335
them as anti-competitive and illegal in other equally important, equally targeted programmes, thus undermining the effectiveness of their own policy spend.
The amendment would allow local authorities to insert such a clause into voluntary contracts, without being vulnerable to judicial review on the ground that it is anti-competitive. I hope that if the Government mean to target their money on urban programmes effectively, they will allow a provision which, above all, will permit local communities to retain the benefit of those programmes. I beg to move.
9.45 p.m.
Lord Henley: The noble Baroness made a quite lovely speech. I have to say that I thought it was totally and utterly irrelevant, and I reject virtually everything that she said. Her speech was totally lacking in reality. What she failed to point out was that unemployment is coming down in virtually every region and part of the country. Interestingly, we have not had a Question from the noble Baroness's noble friend Lord Dormand of Easington on this subject for some nine months. It is interesting that unemployment has now been coming down for something like 15 months. That might go some way towards explaining why the noble Baroness's noble friend Lord Dormand of Easington has not been asking such Questions.
Let us look at the amendment. It would allow local authorities to include clauses to secure the employment of local labour in any contracts for work which they let which are subject to an order under Clause 59. As the noble Baroness will know, it is a long-standing international and national policy, translated into law in several cases, that such clauses may be discriminatory. Employers, not clients, are best placed to decide who has the necessary skills to carry out work for which they wish to contract.
The amendments would contravene provisions of the Treaty of Rome and, where EC public procurement directives apply, about which the noble Baroness no doubt knows, to the relevant contracts, those directives prohibit public purchasers from taking any action which restricts the free movement of workers, the freedom to provide services, or discrimination on the ground of nationality across the European Community.
Government policy is that public procurement should concentrate on value for money, and should not be used to achieve other aims. In addition, Part II of the Local Government Act 1988 prohibits local authorities from including non-commercial matters in their public supply or works contracts; and Section 17(5) (a) of that Act specifically defines as non-commercial the composition of a contractor's workforce. I therefore hope that the noble Baroness will be able to withdraw the amendment.
Lord Peston: I am intrigued by the Minister's response. I did not realise that he wanted to have a debate on the current state of the macroeconomy. If he
336
does, I am not prepared and, speaking entirely from memory, this is the slowest recovery from a depression that I think we have had—
Lord Henley: Will the noble Lord—
Lord Peston: I have not finished yet.
Lord Henley: Will the noble Lord give way?
Lord Peston: I thought that the Minister might like to hear the whole list of things—
Lord Henley: Will the noble Lord accept that what is rather interesting about this recovery is that unemployment in this country started coming down far earlier than any of the pundits, including eminent economists such as the noble Lord, suggested? It has come down far earlier and far quicker than even the noble Lord himself might have suggested.
Lord Peston: I do not know about other eminent economists. As I think the Minister was reminded just a year ago, I was one of the first economists in your Lordships' House to point out what was happening to unemployment. It is falling, by any past experience, rather slowly. The recovery from the depression is slow. Again, I am speaking entirely from memory, because I did not think that we were going to have this debate, but so far as I know the rise in employment is minuscule, and I think the rise—
Lord Henley: Will the noble Lord—
Lord Peston: Why does not the Minister let me finish all the points?
Lord Henley: Will the noble Lord give way, because I think that this is important? As he knows, we have two counts for unemployment and two counts for employment. Let us take the Labour Force Survey which is the ILO agreed one. That has shown that unemployment has come down by about 180,000 over the past year, and that employment has gone up by about 155,000. I cannot remember the precise figures. Under one of the counts, we have seen an increase in employment as well as a decrease in unemployment.
Lord Peston: We might as well go through this step by step. I believe that the Minister will agree that on the other count we have not. I am speaking entirely from memory, which I know is silly and I ought to have rushed out and obtained economic trends before proceeding, but I did not know that the Minister was interested in the matter at this time. I believe that the rise in what are called "full-time jobs for employees" is zero. I am speaking entirely from memory; but the Minister may remember that.
If that is the background, the Minister should be a little less confident about what we are discussing. It is background to the amendment and the only reason that I have responded is that the Minister wanted to make those comments. Two matters are interesting, and this is where one wishes to probe where the Government stand. The first is the Treaty of Rome. The Minister appeared to be saying that because we signed that treaty, we cannot in the case of contracted-out functions

337
discriminate in favour of the local labour force. It was not clear whether he was saying that because of the Treaty of Rome a local authority could not discriminate in favour of its own area. I believe that that is not right. Therefore, the Treaty of Rome would limit us to what one might call "employment discrimination" in the case of a contracted-out function.
I do not speak with total confidence; but if that were true, it would be a strong case against contracting out. It would suggest that we ought not to contract out because we can do what it is legitimate for elected local people to do —that is to say, "In carrying out our function, we ought to give more than zero weight to the people who are in our locality and who vote for us".
The Minister said that the Government are committed to value for money, whatever that means. However, he did not include in "value for money" as a pure benefit the employment of people in the locality who would otherwise be unemployed. The question of value for money is itself a debatable matter and that is why the amendment has been tabled.
It may well be that the Government say they do not care about that. They may say that all they are concerned about is value for money defined in a narrow commercial sense. Local people may say that in their area there is considerable unemployment and they would like to gear their functions towards helping those people. However, within the traditions of the Minister's party—and I go back certainly 60 years to his former noble friend Lord Stockton, whose concern with these issues was enormous—
Lord Henley: Which one?
Lord Peston: The one, if I may say so without any disrespect to our current noble friend. The concern with local employment matters and with the erosion of local unemployment was a matter to which his party was at least as sensitive as ours.
There has been a certain amount of ill temper in these exchanges, in which I have not involved myself, but the slightly cavalier dismissal of these considerations is less than attractive. I was hoping that the Minister would say something a little more encouraging to my noble friend rather than taking the line that he has been handing out. I have intervened because I am rather anxious. I stand second to no one in my desire for efficiency in the provision of services. But within my definition of efficiency, concern for the employment of people who would otherwise be thrown on the scrapheap is a plus factor in the account.
Lord Henley: It is slightly unfair of the noble Lord to suggest that we are not concerned about unemployment. He should recognise, as I stressed earlier, that unemployment is coming down sooner than the pundits suggested that it would, and it is coming down as a result of government policies. I refer in particular to the great changes made by my noble friend Lady Thatcher; that is, the various reforms made to the labour market in the early 1980s. The noble Lord ought
338
to be grateful for that and it is about time that we heard from the party opposite a few words of thanks for those changes—
Lord Peston: I am sorry to interrupt, but the noble Lord interrupted me. We may as well carry on because this is much more interesting than some of the other issues that we have had. He will be aware—and I am sure that his officials have advised him—that the issue is extremely problematic. I stand second to none as regards certain aspects of the behaviour of his former right honourable friend, now his noble friend Lady Thatcher. She did have an impact. But the suggestion that labour market deregulation, which is what I believe the noble Lord has in mind, has been conducive to the reduction in unemployment is not supported by economic evidence. At the very least, it is controversial. If the noble Lord looks at the famous OECD report which has only just appeared, it seems to think that it is fairly problematic.
Of course, this is my subject and I should much rather discuss that than some of the other matters that we have discussed today. However, we should not continue with a general economic debate, much as I know that the noble Lord and I would enjoy that. I certainly do not wish to be disrespectful to his noble friend, and perhaps we can discuss that in more detail on another occasion.
Lord Henley: Obviously, I am under pressure from my advisers who suggest that we should move on to other amendments.
Perhaps I may conclude by mentioning one other OECD report which stressed that we had the best job creation record of all the OECD countries in the late 1980s and early 1990s. Other than that, I totally and utterly reject, refute and disagree with every point which the noble Lord made.
Lord Simon of Glaisdale: Perhaps I may venture to deprecate the use of this amendment to have a general debate on unemployment, treaty obligations, Thatcherism and general economic policy Much as we enjoy the wide views of the noble Lord, Lord Peston, this is an unsuitable occasion for such a debate. I very much hope that it does not mean that we shall have a general debate on the next amendment on the employment of women and after that, a general debate on the employment of disabled persons. That is an unsuitable way in which to deal with the Bill.
We already have five pages of extra amendments tabled between the fourth and fifth Committee days. That is why we are so far behind time now. I speak feelingly because the last two amendments on the Marshalled List are in my name. Nevertheless, discounting that, it seems to me that we are ranging too wide.
I should say in relation to the amendment that I hope that the Minister will not accept it because it seems to me to pander somewhat to local prejudice against workers from outside, all the more because that prejudice is likely to be focused on immigrant groups of workers coming in.
Lord Peston: I agree entirely with the noble and learned Lord, Lord Simon of Glaisdale. I was trying to

339
say, "Please sir, it wasn't me, sir". I did not introduce any of those topics. In his reply the Minister referred to the economy, the Treaty of Rome and various other matters. I intervened only because he raised those topics and I felt that it was my duty, as the person in charge of the Bill on this side of the Committee, to reply to him.
I agree entirely that it is inappropriate to raise those matters. I hope that I have not goaded the Minister into making yet another intervention.
Lord Henley: I agree totally with the noble Lord. He made one valid point. He referred to the Treaty of Rome. That point is, strictly speaking, relevant to what I said. Everything else was perhaps not totally relevant; but then 99 per cent. of the noble Baroness's speech was also totally irrelevant.
10 p.m.
Baroness Hollis of Heigham: In that case, perhaps I may try to respond to the four points which the Minister sought to make, of which I suppose about 2½ of them were relevant to the amendment.
First, the Minister spoke at some length about general levels of employment and unemployment. That is not what was being argued. We are not talking about the general level of unemployment in this country compared with anywhere else, and therefore the efficacy of government policies. Clearly in this country we are dividing into work-rich and work-poor households. Increasingly, those who are marginal in their attachment to the labour market are concentrated in inner cities. That is a fact. If the Minister has not read the research from the Department of the Environment, then I recommend that he do so. If he does, he will find ample evidence to that effect.
Secondly, the Minister made the point that the DoE report on the assessment of urban policy is somehow all fantasy language. The point we were trying to make was that the noble Lord, as the Minister, was emphasising that what we should be concerned about was value for money "and not other ends". Those "other ends" have attracted £4 billion-worth of spending from other government departments. I repeat, £4 billion. Those are the "other ends" about which the Minister was so cavalier.
The amendment was seeking to highlight that the good intentions—and I believe that they are good—of other areas of government policy in urban renewal are being subverted by other aspects of government policy; that is, not allowing local labour contracts to ensure that jobs go to local people so that the benefits of such programmes are retained in the local community. The Minister may regard that as fantasy, in which case I feel sorry for the narrowness of his vocabulary and his vision. However, the point is that such policies are subverting other useful policies in trying to revivify the inner core of our cities. As the latest research has shown, while the peripheral areas, as DoE research calls them, have gained, the inner-core situation has worsened and continues to decline.
340
The Minister said that it was for contractors—he was speaking very quickly at that point, so perhaps he did not really mean what he was saying—to decide the necessary skills required of their labour. That is exactly the point. If you leave it to contractors, they will pursue their own legitimate but narrow interest of adding to their profits.
It is clear from all the history of inner-city areas that you cannot leave it to the market to regenerate such areas. If you could, £4 billion-worth of government programmes—both Labour and Tory—would not have been necessary. If that is valid for those mega-programmes of urban intervention, it is certainly true that you cannot leave it to contractors to decide which labour they will employ. If you want to use public money to fund urban regeneration, it must be retained in the local community. It cannot be left to contractors' decisions.
I turn now to the Minister's final point. I accept that there is an area of genuine difficulty here which we need to probe, and I hope that we shall return to the matter on Report. The Minister spoke of the implications of such an amendment for the Treaty of Rome as regards European programmes. Is the Minister saying that any programme in this country or in any member state of the EC that targets on poverty and, in doing so, seeks to target on urban development and so enhance local job creation is illegitimate and illegal? If that is so, I have to tell the Minister that it was only three weeks ago or thereabouts that we had a debate in this Chamber on the poverty programme in Europe; indeed, I obtained the report from the Printed Paper Office. The report mentioned several dozen initiatives funded by the EC and targeted on poverty of which many were local labour job creation schemes—in fact, the very schemes that the Minister told us 10 minutes ago were illegal under the EC. He cannot have it both ways.
As I said, I accept that there is an area of difficulty here. I do not know what the answer is, but it cannot be black and white. If it was, everything that the Minister said makes the initiatives in the report funded by the EC illegal. I have to put it to the Minister that any country —whether it be Italy, concerned about its southern region, Greece or Spain—has areas of extreme deprivation, unemployment, and seeks to target those areas in terms of local job creation. I believe that the Minister is saying that all such programmes are illegal; if not, then the contract compliance that we are seeking to pursue here, which would ensure that urban programme benefits were retained by the local community, must fall within that remit, must be legal, must be beneficial and must enhance the very £4 billion-worth of programmes which his Government have invested in those areas.
We have put forward a probing amendment at this stage, but I hope very much that the Minister and his staff will take some of the arguments away to ascertain whether we can explore them further. There is a real

341
point at issue here. I hope that the Minister will not dismiss it in a cavalier fashion just because it is late at night.
Lord Henley: I respond as briefly as I can by saying that it will depend very much on the facts of each particular case.
Baroness Hollis of Heigham: With the leave of the House, I withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 202B:
Page 54, line 9, at end insert:
("( ) Where a Minister makes an order under subsection (2) above, the authority concerned may, notwithstanding any regulations made under provisions as to anti-competitiveness, make compliance with requirements as to the employment of women an express term of any contract relating to the subject of the order between the authority and the authorised person.").
The noble Baroness said: Amendment No. 202B is the second in a series of amendments that seeks to allow into voluntary competitive tendering what in the past has been called contract compliance. Whereas the previous amendment tries to retain the right to insist on local labour as a way of retaining the benefits of urban programmes, this amendment concentrates on the employment of women.
During the 1980s many local authorities improved access and opportunities to disadvantaged groups, especially women and ethnic minorities. Compulsory competitive tendering has had an especially severe effect on their employment prospects and conditions since women, the disabled and ethnic minorities are heavily concentrated in local authority manual services. Local authorities are major employers of women. I remind your Lordships that at the moment local government employs full-time about 600,000 men and 600,000 women. However, it also employs part-time 94,000 men and 820,000 women; in other words, it employs very many more women than men and they are disproportionately part-time. Part-time women workers, especially when their work has gone out to private contractors by CCT, have experienced reduced pay and conditions, loss of earnings and loss of employment rights, since many are now on contracts of less than 16 hours. They have lost rights to statutory sick pay, maternity benefit and pensions, though one hopes that recent EOC victories that extend pro rata rates to part-time staff may mitigate some of this.
It is also the case that on average women earn only 78 per cent. of male rates. TUPE has been quoted in earlier amendments, but it is of little help to women. As women are very often unskilled and have a high turnover in employment they are unlikely to be retained in employment and subsequently to continue their work. Without contract compliance, women in local authority contracts are likely to be corralled into segregated labour markets where they experience conditions of low pay, part-time work and often exploitative hours.
Contract compliance ensured that employers properly shared the social obligations on all of us in regard to the labour market. It is not anti-competitive provided all
342
employers are faced with the same conditions, are up front and all play by the same rules. It has been applied in the United States and it has worked. Between 1974 and 1980 in government contracts where contract compliance operated women formed 15 per cent. of the labour force. In non-govemment contracts where there is no such contract compliance women represent only 2 per cent. for similar services.
Government itself asks employers to observe contract compliance for high-flying women. It is called Opportunity 2000. We ask that for women in low paid part-time work the same respect for their rights and opportunities should apply. I beg to move.
Lord Henley: I will try to respond briefly and not incite the noble Lord, Lord Peston, to make another intervention. I will not repeat what I said about European law. What has been said in relation to previous amendments still stands.
I make a couple of observations to assist the noble Baroness. First, I believe that the employment rates for women in this country are the second highest in the European Union; in other words, we have a far greater percentage of women in the workforce than most European countries.
Baroness Hollis of Heigham: Will the Minister accept that we have a far greater proportion of women in the labour force and also one of the lowest proportions of women in full-time employment in the labour force? We have a much higher proportion of women in part-time work, where conditions of exploitative pay, poor hours and lack of rights exist.
Lord Henley: Rubbish, nonsense, and all that! Obviously we have a large number of women in part-time employment. What the noble Baroness forgets is that some 84 per cent.—or is it 75 per cent?—or something of that order, of those in part-time employment are in part-time employment because they want part-time employment and do not want full-time employment.
No, I shall not take another intervention from the noble Baroness. Let me continue, because we are not having an economic debate.
I accept the figure quoted by the noble Baroness that the average earnings for women are some 78 per cent. of average male earnings. However, the noble Baroness should also have pointed out to the Committee—and it would have been useful had she done so—that that figure has been steadily narrowing. I am sure that the noble Baroness will welcome the most recent figures which brought it up to 78 per cent. from whatever it was before. In other words, the gap between the two is narrowing and no doubt in due course we shall see no gap there at all.
The amendment itself seeks to allow local authorities to specify in contracts made to carry out work subject to orders under Clause 59(2) that their contractors should employ women. Section 77 of the Sex Discrimination Act 1975 renders void any term in a contract which is

343
unlawful by virtue of that Act. A term which requires women to be employed irrespective of whether they are the best candidates is positive discrimination which is made unlawful by Section 6 of the Sex Discrimination Act. Therefore, the amendment, if accepted, would be unlawful on those grounds.
Apart from those legalistic grounds, I think that even the noble Baroness will accept that most women do not want special treatment of that sort. They want level treatment which allows them to compete with men on equal terms. That is exactly what the Equal Opportunities Commission is working towards. It is unlikely that the commission would feel that it could offer support to the noble Baroness on such an amendment. I hope, therefore, that the noble Baroness will feel able to withdraw the amendment.
Baroness Hollis of Heigham: Oh dear! The Minister's speech suggested that he had learnt nothing and forgotten nothing since the 1970s before the EOC existed.
I have two points. First, the Minister made a point about women's choice of part-time work. It is true that many women do indeed choose, prefer and want part-time work. That is not in dispute. It is equally the case that the percentage of women in work who are in part-time employment in this country is much higher than in the rest of the world. For example, something like 25 per cent. of lone parents in work are in full-time work in Britain while the figure is double in the United States.
Lord Vinson: If the women who are currently in part-time work are to go into some other jobs, and recognising that in the labour market there are both part-time and full-time jobs, presumably if women are to do those jobs, men will have to do the part-time jobs. Is that what the noble Baroness wants?
Baroness Hollis of Heigham: No. I am grateful for the noble Lord's intervention. Perhaps I may return to it in a moment. I was trying to take up with the Minister the point that I entirely accept that for many women part-time work is a choice because they can integrate their work around their family life.
Lord Henley: There are no part-time jobs in most other European countries.
Baroness Hollis of Heigham: The trend in women's work over the past decade has been the separation between jobs which are genuinely full time and others which are peripheral jobs. For example, in the retail trade there are zero hours contracts in which staff are available or required to work 10, 12, 15 or 18 hours at the employer's discretion in the name of flexible working conditions. However, that may be at any hours which the employer may wish, thus making it impossible for women to brigade that part-time job with any other.
All the evidence on what has been happening to women in the labour market shows that women's part-time work has provided an opportunity for
344
employers to gain flexibility by casualising the labour force. I believe that that is undoubtedly true. The position has been worsened by the loss of the wages councils.
The second point that I want to take up with the Minister—and this is where the vocabulary of the 1970s came in—relates to positive discrimination. Nowhere in the amendment is there mention of positive discrimination. I do not believe in positive discrimination. I do believe in affirmative action, which is what the EOC has promoted and has been the experience in the United States and so on. One tries to ensure that one removes the obstacles to women, ethnic minorities and disabled people to enable them to compete properly and adequately in the labour market. One removes the obstacles which stop them competing on a level playing field. That is what we seek.
I am very unhappy about the Minister's response. I thought that it was fairly unhelpful. I wish to test the opinion of the Committee.
10.15 p.m.
On Question, Whether the said amendment (No. 202B) shall be agreed to?
Their Lordships divided: Contents, 12; Not-Contents, 58.

Division No. 2

CONTENTS

Eatwell, L.

Peston, L.

Graham of Edmonton, L.

Rodgers of Quarry Bank, L.

[Teller.]

Russell, E

Hollis of Heigham, B.

Taylor of Blackburn, L.

Monkswell, L.

Tordoff, L.

Morris of Castle Morris, L.

Williams of Crosby, B.

[Teller.]

Williams of Elvel, L.

NOT-CONTENTS

Addison, V.

Kenyon, L.

Annaly, L.

Kimball, L.

Arran, E.

Lauderdale, E.

Astor, V.

Leigh, L.

Balfour, E.

Lindsay, E

Biddulph, L.

Long, V.

Blatch, B.

Lucas of Chilworth, L.

Borthwick, L.

Lyell, L.

Carnock, L.

Mackay of Ardbrecknish, L.

Chalker of Wallasey, B.

Mackay of Clashfern, L.[Lord

Clark of Kempston, L.

Chancellor.]

Colnbrook, L.

Mersey, V.

Craigmyle, L.

Montgomery of Alamein, V.

Cranborne, V.

Mountevans, L.

Cumberlege, B.

Northesk, E.

Denton of Wakefield, B.

Rodger of Earlsferry, L.

Dixon-Smith, L.

Rodney, L.

Downshire, M.

Seccombe, B.

Dundonald, E.

Shrewsbury, E.

Ferrers, E.

Shuttleworth, L.

Goschen, V.

Simon of Glaisdale, L.

Harlech, L.

Skelmersdale, L.

Harvington, L.

Strathclyde, L.

Hayhoe, L.

Strathmore and Kinghorne, E

Henley, L.

[Teller.]

Hesketh, L.

Trumpington, B.

Hooper, B.

Ullswater, V. [Teller.]

Howe of Aberavon, L.

Vinson, L.

Howe, E.

Wise, L.

Johnston of Rockport, L

Wynford, L.

Resolved in the negative, and amendment disagreed to accordingly.
10.23 p.m.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 202C:
Page 54, line 9, at end insert:
("( ) Where a Minister makes an order under subsection (2) above, the authority concerned may, notwithstanding any regulations made under provisions as to anti-competitiveness, make compliance with requirements as to the employment of disabled people an express term of any contract relating to the subject of the order between the authority and the authorised person.").
The noble Baroness said: I rise to move Amendment No. 202C standing in the name of my noble friend Lord Williams and myself. This is the third in a sequence of amendments which seek to insert into local authority contracts, voluntary competitive tendering, what we have long known as contract compliance.
All these amendments—the first on local labour; the second, on which we have just voted, on women; and this one on disability—seek to make sure that economic development in local communities most benefits the disadvantaged and those who are least attached to the labour market. The fit, the healthy, the white and the skilled will usually find employment. These amendments seek to make sure that those who are only marginally attached to the labour market—they may be long-term unemployed; they may be discriminated against; they may be disabled—also have access.
I do not think that any in this Chamber doubt that the Government wish to ensure fair and proper access to employment for disabled people. Indeed, I do not always, or even usually, or even occasionally, pay tribute to the noble Lord, Lord Henley, but he was involved in his previous capacity in the Department of Employment in reviewing access to work and aid from the Department of Employment to employers to make that possible. Possible changes which would put a burden on employers and would have encouraged them not to help disabled people were reviewed by the Minister together with his right honourable friend, David Hunt. It is welcome that the Government were willing to do that. That commitment to access to employment by the disabled was reinforced by the Statement made last Friday.
Yet the experience of disabled people in reality is that they are twice as likely to be unemployed as able-bodied people; they are six times less likely to be called to interviews for jobs as are able-bodied people; most disabled people lose their jobs because their employer will not adapt the working conditions in which they find themselves, even though for perhaps a quarter of them the disability will have been incurred during work itself; and having lost their jobs and often going on to what used to be invalidity benefit, they cannot subsequently re-enter the labour market because of the stereotyped view held by employers and their reluctance to make even modest adaptations to the workplace. Employers are also suspicious that the disabled take more time off
346
for sickness and that that will cost employers dear because they will have to foot the bill for statutory sick pay.
We know, and the Government accept, that such a stereotype is not true. The employer's stereotype is inaccurate. We know that most disabled people in work have less time off for sickness than able-bodied people. We know that most disabled people in work have fewer industrial injuries and accidents at work. We know that many disabled people offer higher quality of work; and we know that the cost on employers to make it possible for disabled people to work by adapting premises and the like is in fact very modest. In the United States in 95 per cent. of all firms it costs less than 5,000 dollars to adapt the workplace to make it accessible to disabled people.
In that context we support the Minister in trying to encourage employers to offer equal opportunities for disabled people. The Government have attempted to encourage employers to honour obligations to disabled people by supporting the quota system of 3 per cent. Again, we accept with the Government—there is not very much between us here—that very many disabled people are reluctant to register. Therefore, most of us accept that the quota system does not work very well, especially as the traditional jobs of the quota system are disappearing—the car park attendant is disappearing with pay and display; the lift attendant is disappearing due to cuts; and the petrol pump attendant, which is another job that is very often reserved for disabled people, is disappearing with self-service. Even the best local authorities seldom meet the 3 per cent. quota.
Earlier this evening I checked the figures in the Employment Gazette for April 1993. No county council, as of April 1993, met even a 2 per cent. quota for disabled people; only 53 metropolitan and non-metropolitan districts out of 360 met the 2 per cent. figure. Only 14 out of nearly 400 had more than 3 per cent. of disabled people in their labour force. Therefore, the traditional way of encouraging disabled people back into the labour force and keeping them attached to the labour force by operating the quota system has failed to deliver what I am sure the Government want—and what we certainly do.
We need alternatives. The Government accept that we need alternatives to encourage disabled people back into the labour market and employers to accept them.
The Government have recently rejected a civil rights Bill. They are putting out for consultation a paper requiring employers not to discriminate. Let me quote from Annex C of that paper, headed "Compliance Cost Assessment":
"We have assumed for the purposes of this CCA—
this is the Government's intention—
"that legislation would be introduced to prevent unjustifiable discrimination against disabled people".
We would welcome that.
The consultation paper goes on to say,
"Employers would need to do what is reasonably practicable to avoid discriminating against disabled people who work for them or who apply to work for them".
We support that also. It continues—a point we may wish to query—
"Firms in all sectors will be covered but those with fewer than 20 employees would be exempt".
We may want to press the Minister at a subsequent point on that figure. But we accept that for small companies, with a handful of staff, it would be unreasonable to expect them to make expensive adjustments. The paper goes on,
"There will be a right to make a complaint to an industrial tribunal with similar remedies to those for racial discrimination".
That is a strong, helpful and positive set of proposals. It falls far short of the civil rights Bill we should like to see; but, nonetheless, it is a serious attempt by government to make employers recognise that they may not discriminate unfairly and unreasonably against disabled people. Only where the cost will be excessive in adapting the workplace, or where the disabled person's skills are such that they do not render them employable in that specific job, would such discrimination be reasonable.
The Government accepted that approach. What I do not understand is why they have therefore been so hostile to an alternative, parallel and complementary route offered by local authorities over the past decade; that is, to include a clause in contract compliance again encouraging affirmative action for disabled people as part of a condition of a contract going out to a private contractor. No private contractor will take on disabled people if he sees them as the stereotype that the Government and the Opposition Benches are trying to challenge. Employers wrongly believe that disabled people are burdensome and do not wish to employ them unless they are required to do so.
Over the past decade local authorities, through contract compliance, have been trying to ensure that employers are required not to discriminate against disabled people; to take in a reasonable number of disabled people and to address the problems of access that they face. That is exactly what the Government are doing in this legislation. Yet when local authorities do it and it is called contract compliance, the Government have forbidden it as being anti-competitive. When the Government do it in the Bill it is regarded as helping the disabled.
What I am asking the Minister to guide the Committee on is this. In the light of the Government's commitment to encouraging disabled people back into the labour market—a commitment we all share throughout the Chamber—does that mean that the Government have changed their mind about permitting local authorities to include a clause to support the disabled as part of contract compliance, and will allow them to impose on contractors the same obligations as the Government are seeking to impose on employers in terms of their own White Paper?
It is a probing amendment but it would be helpful if the Minister could give us his response to those questions. I beg to move.
Lord Henley: I am grateful to the noble Baroness for her little plug for the work that certainly I have put into
348
the access to work scheme. She may also add my predecessor in the Department of Employment, my noble friend Lord Ullswater, who is very much the one who developed it and brought it all together.
I wish to make two brief points to correct certain misapprehensions that the noble Baroness may raise. I accept that most employers are unable to meet the quota—that is rather sad—because of the fact that so many disabled people are not prepared to register. I want to stress that the Department of Employment—of which I am rather proud—manages to meet the quota, along with one or two other government departments.
I want to correct one other error of fact in the remarks of the noble Baroness. Under the 1944 Act or orders produced under that Act there were two reserved occupations. One was lift operators, but they were only lift operators for specific kinds of lifts; and the others were car park attendants, and that was only in special individual circumstances. I am not aware that petrol pump attendants were ever in that category.
As with the earlier amendments to which we both spoke and on which we voted, this amendment suffers from the same basic flaw of conflict with both European and domestic law, and it is not necessary for me to repeat those points. As I think the noble Baroness is prepared to concede, the Government, through a range of measures, already encourage employers to consider the skills and abilities of disabled people. Up and down the country I have been trying to get over the message that employers should be looking at people's abilities and not at their disabilities. Each person's disability needs to be considered in relation to that person and in relation to the job he or she is applying for. So a condition in a contract requiring contractors to employ disabled people could possibly be counterproductive.
I was grateful that the noble Baroness mentioned our Green Paper, or whatever one refers to it as, on government measures to tackle discrimination against disabled people which, as the noble Baroness is aware, was published last Friday. In fact, I think that she responded to the Statement made by my noble friend Lord Astor when he repeated the Statement made in another place by my right honourable friend the Minister for Disabled People. That document seeks views—I must stress that it is very much a consultation document—on proposals to prevent discrimination in the labour market. The document includes the Government's preferred option of repealing the quota scheme for the reasons we give—that the quota scheme is not seen by a large number of people in the disabled world as necessarily the right way forward, and is seen as not necessarily appropriate.
Baroness Hollis of Heigham: It has served its time.
Lord Henley: As the noble Baroness puts it, it has served its time. That may be as good a way of expressing it as any and I would be prepared to accept the noble Baroness's words.
As we went on to say in the consultation document, we are seeking—I have to stress the word "seeking"— a way of replacing it with a statutory right not to be unjustifiably —I stress the word "unjustifiably"— discriminated against in employment. I appreciate the

349
anxieties of the noble Baroness; but I hope for that reason that she will be prepared to withdraw her amendment at this stage.
Lord Peston: I notice that paragraph 2.10 of the Green Paper, as the noble Lord called it, although it is more a Pink and Blue Paper, uses the expression,
"to be underpinned by a statutory right for disabled people not to be unjustifiably discriminated against in employment".
Those are the words the noble Lord used so I assumed he was quoting from the document.
Will the noble Lord clarify in particular the Treaty of Rome aspect of this matter? It is rather intriguing. None of us doubts that the employment of disabled people must be more expensive.
Lord Henley: No!
Lord Peston: Yes, because one has to have vehicle access and things of that kind. There must be costs involved in employing disabled people as is the case in your Lordships' House. There are costs when we have ramps and things of that kind. I am not suggesting for one moment that we should not do it, but the notion that no costs are involved is quite mistaken.
If we accept my view—the noble Lord shook his head so I look forward to hearing him on that—that, other things being equal, there are costs involved in employing disabled people, and if the Treaty of Rome says what I thought the noble Lord said its meaning is, the only way disabled people can be employed is either by being more productive and able people to offset the cost or by paying them less. I find it very difficult to believe that the Treaty of Rome could possibly mean that. I simply do not believe it. In other words, if employing disabled people involves some costs and therefore the compliance requirements, as my noble friend pointed out, involve those costs, I find it hard to believe that that is incompatible with the Treaty of Rome. It makes no sense to me that whoever wrote that treaty would wish to argue that way. I shall sit down immediately so the noble Lord can clarify that part of where we stand.
Lord Henley: I feel very sorry for the noble Baroness sitting next to the noble Lord. She must be cringing with embarrassment at his remarks. The very message that we in the Government, and I think the noble Baroness herself, have been trying to get over is that very often there are no added costs to employing disabled people. You must take a positive attitude and look at their abilities and not their disabilities. Very often there are not added costs, but on occasions there are. I was grateful to the noble Baroness for stressing the matter. That is why we introduced the scheme Access to Work to provide help on those occasions when there are added costs.
It is true that there will be other occasions when disabled people in work have to be supported in one way or another. The noble Lord will be aware of such companies as Remploy. Occasionally there can be problems in relation to unjustifiable subsidies going to a particular employer. Obviously, we shall take all these factors into account to make sure that we are not in breach of the Treaty of Rome. The noble Lord should
350
be very worried about the attitudes he is expressing. I do not believe that his noble friend Lady Hollis would necessarily smile on them.
Lord Peston: The noble Lord has made me quite terrified. I promised myself that I was not going to wear my nasty mantle this evening. I am not going to reply in the same tone as the noble Lord. If there are no costs in employing disabled people there would be no problem in employing them and there would be no issue here. The reason we single out this matter is because there is a problem.
Lord Henley: But—
Lord Peston: This time let me finish. The noble Lord will then have another chance to argue. He may argue that there is built into our society and economy a kind of antipathy towards disabled people. That is the nature of the problem which I do not believe dominates the issue at all. There are a large number of disabled people: for whom there is no problem, which is what the noble Lord is saying. There are some for whom there are costs. That must be the case. If the noble Lord does not believe me, he should go downstairs and see the ramps we have built. They were not built for nothing but because it was the right thing to do, which is also true of many other things.
I am asking the noble Lord about a purely technical matter. It we were to insist that employer incur those costs, would we be infringing the Treaty of Rome? The noble Lord seemed to be saying that we would. That is all I wish to know. I have no difficulty where disabled people are not a problem. But there would not be this massive government document if there was not a problem with the employment of disabled people. I do not believe that it is just because employers are prejudiced.
Perhaps I may give the noble Lord some advice since he has been giving me some. He should not go around saying that it is all a question of nasty employers who are viciously anti-disabled and that the Government are going to expose them. I do not believe that for one moment. If we are exchanging advice let the noble Lord consider what I have said.
Lord Henley: The noble Lord's attitude has quite simply come out of the Ark. He is basically saying that the disabled are a problem and that employers do not want to help. There are some who take that attitude. We are trying to get over the message that they should not be doing that. But if we are to hear speeches of the kind which we have just heard, it will take a long time to do that. For most disabled people there are no added costs in employing them. People have their own abilities and there are no added costs. Not all disabled people are in wheelchairs. However, for those where added costs do arise, we have a scheme introduced on 6th June this year. Access to Work in no way breaches our obligations under the Treaty of Rome and nothing which we are suggesting under the consultation document will do so.

351
The noble Lord is barking up the wrong tree. I am trying to persuade him to adjust his attitude in a manner which might possibly please the noble Baroness, Lady Hollis.
Lord Peston: I really do not want to prolong this matter. If there are no added costs at all with the employment of disabled people, the noble Lord says that there is no problem. If there is no problem for many disabled people, why is there a problem? The noble Lord must believe one of two things: either people are prejudiced, which I do not believe, or there is a problem. If that is so, it would not be against the Treaty of Rome to try to solve it. I do not have to be accused of living in the Ark if I raise matters of this kind.
I am totally on the side of disabled people. I simply do not want to be told by the noble Lord that the Treaty of Rome prevents my doing something about it. That is what we are trying to get at.
10.45 p.m.
Baroness Hollis of Heigham: The debate has gone somewhat differently from what I had expected and some odd role reversal has been going on. While clearly there is a problem with employers' attitudes and with costs, as far as I can recall over the past month or so some of us on these Benches have been trying to tangle with the Government on their figure of £17 billion, which is the entirely fake figure that the Government—
Lord Henley: No!
Baroness Hollis of Heigham: It certainly was! I am very happy to spend half an hour explaining to the Minister line by line why that figure was a fake. I can assure him that it was. It was not only double counting; it was treble counting on the one hand and forgetting all the cost benefits on the other. Nonetheless, I am sure that the Minister will recall that that figure of £17 billion was the reason that the Government were using for not going ahead with the Berry-Ashley Bill and instead substituting a series of targeted one-off proposals. The Minister cannot have it both ways. He cannot now tell my noble friend that there is no cost when three or four weeks ago he suggested—
Lord Henley: I have to intervene because this is jolly important. At no point have I said that it does not cost to employ disabled people. I have said for a large number of disabled people —this has been accepted by all people, even politically correct people such as the noble Baroness, but obviously not by politically incorrect people such as the noble Lord, Lord Peston— for most disabled people, there are no added costs of employment. The noble Baroness is politically correct and she would agree with me on that. Politically incorrect people—
Baroness Hollis of Heigham: But the Government gave a figure for costs—
Lord Henley: Obviously, there are those costs, yes, but for most disabled people there are no added costs of employment. That is all that we are talking about. The compliance cost assessment, to which the noble
352
Baroness referred, of £17 billion did not relate to the costs from my department, the Department of Employment. As the noble Baroness knows perfectly well, the extra costs from my department in that £17 billion were actually rather a small figure.
Baroness Hollis of Heigham: The Minister is quite right to dissociate himself and his department from the figure of £17 billion—
Lord Henley: No. The noble Baroness must give way now. I have not dissociated myself from that £17 billion. I fully agree with that figure—
Noble Lords: Oh!
Lord Henley: What I have said is that the portion made up by the Department of Employment was a relatively small amount. I shall sit down now before the noble Baroness misinterprets what I have said yet again.
Baroness Hollis of Heigham: The Minister has said that he fully supports the figure of £17 billion. Does he still do so on reflection and after the debate in the House in which we found that the Department of the Environment had, first, counted not only its own figures but also those of every other department so that it counted them twice; secondly, when it had put in no figures at all for work that had already been done to buildings; and, thirdly, when the Department of Transport's figures, which were £10 billion, assumed that all vehicles had to be replaced within five years whereas the Berry-Ashley Bill allowed up to 25 years for compliance? Does the Minister still hold to that figure of £17 billion?
Lord Henley: Yes.
Baroness Hollis of Heigham: Then I suggest that the Minister takes a basic course in statistics before he has to defend the Armed Forces otherwise the front line forces might find themselves extremely vulnerable.
Perhaps I may try to respond to the three particular points that the Minister made. On the first point, we come back to a point raised previously, which is the relationship of contract compliance clauses to European legislation. There is a real problem here because the Minister has told us that each of these amendments is inconsistent with the Treaty of Rome, yet at the same time the Treaty of Rome is permitting its member states to go for a series of programmes. This comes from Poverty Programme 3:
"The European Community is expecting to go ahead on a fourth programme which will be concerned with the problems of social exclusion, including deprived minorities".
In all seriousness, I should like help on this from the Minister's aides over the next few months. It cannot be the case that the Treaty of Rome so overrides the domestic legislation of Britain and other member states that no home government can target pockets of deprivation, whether they be unemployment, ethnic minorities or the disabled. That cannot be right. We shall need some help on this. It is obviously appropriate for individual member states to try to address problems of deprivation, unemployment and disadvantage in their

353
own member states. Surely nothing that the EC says can override that. I should be grateful for the Minister's response to that point, if he heard it.
The second point that the Minister made was that such a contract-compliance clause would be counter-productive for contractors. The Minister asserted that. But assertion is not argument, and argument is not evidence. Will the Minister say why it is counter-productive? I accept that contractors may not like it, but so long as all contractors play by the same rules, it is clearly not anti-competitive. So why would it be counter-productive? The Minister merely asserted that but gave no evidence to support the assertion. The House is owed evidence to support such a statement. We are trying to ensure that contractors observe and do not subvert their social responsibilities.
Thirdly, I wish to return to the main point of the amendment which the Minister did not do me the courtesy of seeking to answer. That may be because the brief was written in advance of knowing what the argument was going to be. That is understandable, but we think higher of the Minister than that. We expect him to be able to think on his feet. The Government say in paragraph 2.10 of the document which has already been quoted by my noble friend:
"There is now widespread support for the voluntary system to be underpinned by a statutory right for disabled people not to be unjustifiably discriminated against in employment".
In other words, in that document, for the first time—we welcome the sinners who have converted—the Government accept that in employment the voluntary principle of persuasion and education is not enough. It has to be underpinned by a statutory system. That is right, and we welcome it. I am delighted that the Minister, speaking on behalf of the Government, as we have been told all evening, also accepts that.
If the Government accept that principle for themselves, why will they not allow local authorities to accept it for themselves? Why is it right and proper to underpin the voluntary principle with statutory legislation in central government activity and not to allow local authorities to do the same when it comes to their contracts? Will the Minister please address that point for me? I should like to know the answer.
Lord Henley: I do not believe that I can take the noble Baroness any further. I have made clear that we have produced our consultation document. We shall no doubt take note of everything the noble Baroness said, at length, this evening. It will be taken on board in our consideration of that consultation document over the next three months. The Government will then no doubt respond to the noble Baroness.
Baroness Hollis of Heigham: The Government's response may coincide with our addressing these issues again on Report. I know that there has been a certain amount of knockabout, but this is an area in which the Minister has some considerable expertise, having been in the DSS and being now in the Department of Employment. What startles, surprises and saddens me is that he has not employed that expertise in seeking to
354
address the real issues that we have tried to raise tonight. I promise the Committee that we shall return to them. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 203 and 203A not moved.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 203B:
Page 54, leave out line 16.
The noble Lord said: Under the Bill, the Minister is entitled to consult local authorities in England and Wales, or, in the case of an authority in Scotland, such associations of local authorities as he considers appropriate. This is a simple amendment. I believe that a Minister shall not make an order under this clause unless he has consulted those bodies. It should not simply be for him to decide who, or when it would be appropriate. It is a very simple amendment, but I believe that it would improve the Bill. I beg to move.
Lord Henley: As the noble Lord puts it, it is the most simple of all amendments. I believe that it is the most extraordinary amendment. It would remove the ability of Ministers to make an intelligent decision—and Ministers do make intelligent decisions—about the bodies to be consulted in respect of proposed orders. As it is currently framed, the clause would require the Minister to consult such representatives or associations of local government as he or she, I should stress, considers appropriate. It reflects the well-established, sensible and practical formula for determining consultation.
The effect of the amendment would be to require Ministers to consult all representatives of local government—self-proclaimed or otherwise—without any regard to the need for or relevance of that consultation. The fictional "Association of Local Government Strawberry Growers", for example, would have to be consulted about a proposed order in respect of revenue collection. I am sure that that is certainly not the intention of the noble Lord, Lord Williams.
My right honourable friend the Secretary of State for the Environment has also made it consistently clear that he regards the quality of relations between central and local government as most important. To this end, he is committed to consultation with local government about the use of the proposed order-making power. The discretion that he would have with regard to identifying those bodies with which he would consult is not intended to provide a means to avoid the full and proper exercise of the commitment to consultation but simply to ensure that the scope of consultation is appropriate to the particular circumstances.
I hope that with that reassurance, the noble Lord is able to withdraw his amendment.
Lord Williams of Elvel: The Minister has been kind enough to give me a response. He said that Ministers were intelligent. That is a matter for Members of the Committee to decide—
Lord Henley: Some of us.
Lord Williams of Elvel: "Some of us", whoever it is. I do not believe that Ministers have a monopoly on

355
intelligence. I believe that my amendment is suitable and I hope that the Minister will consider it at the next stage of the Bill. Unless there is full consultation—not decided by intelligent, sub-intelligent or non-intelligent Ministers—these orders will carry no legitimacy. Having said that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 204 not moved.]
Clause 59 agreed to.
[Amendment No. 205 not moved.]
Lord Williams of Elvel: I was under the impression that there had been an agreement that we would not consider Amendment No. 205A and I was expecting a Member of the Government Front Bench to adjourn.
Lord Strathclyde: I am sorry that there has been some confusion. If there is an agreement to stop at this hour I am more than happy that we should do so. I am happy that we should continue consideration of the amendments in Committee tomorrow afternoon and deal
356
with the remaining amendments speedily. If that is the agreement reached with the noble Lord, Lord Peston, who is looking after this Bill, I am happy to do that.
Lord Peston: I am slightly confused because the noble Lord used the word "if. I had understood that this was agreeable to both sides of the Committee and therefore we do not need to debate the "if. What the noble Lord said, ignoring the "if, is entirely acceptable to Members on this side.
Viscount Goschen: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Greater Nottingham Light Rapid Transit Bill
Returned from the Commons with an amendment to one of the Lords amendments, and with the remaining Lords amendments agreed to; the Commons amendment to the Lords amendment was considered and agreed to.
House adjourned at eleven o'clock.