Deregulation and Contracting Out Bill

HL Deb 20 July 1994 vol 557 cc324-56

8.58 p.m.

House again in Committee on Clause 58.

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.

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 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.

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 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 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: 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, 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 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 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 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 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 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 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 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 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 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.

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 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 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 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 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 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 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 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 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 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 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.

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 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 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 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 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 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 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.