Lords Sitting of 22 July 1994

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

Biological and Toxin Weapons Convention
Lord Mayhew Lord Mayhew asked Her Majesty's Government:
What proposals they will submit to the special conference on Biological and Toxin Weapons in Geneva in September.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, we shall be proposing that the special conference agrees a mandate for a group of experts to draft a verification protocol for the Biological and Toxin Weapons Convention. This should be completed in time for the 1996 BTWC Fourth Review Conference.
Lord Mayhew: My Lords, I thank the noble Baroness. Does she agree that the advance in biotechnology has made those weapons more easily available and even more dangerous? Will she say how many countries are now believed either to possess them or to be developing them?
Baroness Chalker of Wallasey: My Lords, I cannot give the noble Lord an exact answer on that. However, what is certainly a step forward is the number of countries who now agree with the initiative for a separate biological toxin weapons convention which, as the noble Lord will remember, we took many years ago. We still do not know how many countries may have them, but we believe that they are certainly in double figures. We shall do all we can, through the measures that are being worked out, to ensure that there will be mandatory national declarations, but backed up by inspections to check the validity so that we can have confidence in those countries who may have had the weapons in the past.
Baroness Blackstone: My Lords, I welcome the Government's efforts so far in seeking to devise an effective verification regime for the Biological and Toxin Weapons Convention. It is of course, extremely important to prevent the proliferation of biological weapons. Can the Minister say what lessons have been learnt from the practice compliance inspections of commercial facilities in the UK? Do the Government think that a satisfactory verification regime can be devised that will not weaken the competitiveness of the biotechnology industry?
Baroness Chalker of Wallasey: My Lords, on the last point the answer is certainly yes. As regards the companies who have been involved in the practice inspections, there are four pharmaceutical,
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biotechnology and vaccine producers who have made their facilities available. The specific inspection reports were agreed in confidence, but the general inspection report will be made available at the special conference in Geneva in September. So progress is being made.
Perhaps I may also say to the noble Baroness that while some have said in the past that biological weapons verification was impossible, we would say now that we believe it to be difficult but not impossible on the basis of the work done by the VEREX expert group. As it has now come up with a combination of technical measures and has gone through them in the practice inspections, I think that we are in a much better position to proceed in the way that I know the noble Baroness would like us to.
Lord Mayhew: My Lords, is the noble Baroness aware that her answer that she believes verification to be practicable is surprising and encouraging? May I ask whether we are satisfied that Iraq has no capability in that field?
Baroness Chalker of Wallasey: My Lords, I wish I could answer yes. But no, we are not. We know that Iraq had a biological weapons programme. We also know that Russia in the past has had a programme; but we also have the 1992 acceptance by President Yeltsin that those activities should be prohibited in future. With Russia, I hope that we shall be able to demonstrate its full compliance with the BTWC; but for Iraq I am afraid that I can give no such confident reply.
Lord Richard: My Lords, perhaps I may ask whether the Government are aware that the answers on this subject are encouraging. We hope that the Government will continue down that path. However, my real reason for getting on my feet is that this is the first opportunity that I have had of welcoming the noble Viscount, Lord Cranborne, to his new position as Leader of the House. So far as this House and Parliament are concerned, he comes with a pedigree that is notable. I was considering the other day how many "greats" should have to go before his grandfather in order to arrive at the first Cecil who came to this building. The only conclusion that I came to was that however many "greats" would have to go before Cecil, it would be infinitely more than would have to go before "Richard". We welcome the noble Viscount to his task. He will know what it is, and it is not the easiest of tasks. In some ways, this is a restive and difficult House —particularly on the other side. We do not wish him success in his task, but we wish him well. I am sure that he will carry out his duties with all the skill that he has demonstrated at the Dispatch Box since he has been a Minister. I assure him that so far as we are concerned he will get the same reception as did his predecessor.
Lord Cledwyn of Penrhos: My Lords, I offer my personal congratulations to the noble Viscount, Lord Cranborne. I wish him well in his new office. Perhaps I may remind the House that the first Cecil who came to this House came from Wales.
Baroness Seear: My Lords, from these Benches we should also like to welcome the noble Viscount, Lord

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Cranborne, to his new position. We are grateful for the way in which in the past he has always given us very detailed replies and has not been dependent on his brief, which is always a very welcome change.
The Lord Privy Seal (Viscount Cranborne): My Lords, by the leave of the House, this is perhaps one of the most undisciplined moments that I have experienced in the short time that I have been privileged to be a Member of your Lordships' House. However, since it is Friday morning, and your Lordships are disposed, I think, to break the conventions of order in this House, perhaps I may say how very touched and flattered I have been by what has been for me a totally unexpected initiative on the part of three most distinguished noble Lords.
I understand wholly the desire of the noble Lord, Lord Richard, to sit where I sit after the next general election, and that therefore he cannot, by any means, wish me success. But I certainly take in the spirit in which it was intended the remark that the noble Lord made about wishing me good fortune. I am touched by the manner in which he said it. I reciprocate all the good wishes that the noble Lord gave me —in spades.
The noble Lord, Lord Cledwyn, too, made a most charming intervention. Perhaps I may take it that the noble Lord has made me at least an honorary member of the "Taffia"! If so, I accept the nomination with the greatest of pleasure. The flattering remarks made by the noble Baroness, Lady Seear, coming from such a source, are praise indeed. Nobody has been more notorious in this House so far for her failure to look at paper or to stick to her brief. There can be no greater honour than to be called upon to lead your Lordships' House. I am all too aware of my relative youth and inexperience. I hope that, as the noble Lord, Lord Richard, said, genes will help me out.
However, if your Lordships will allow me the indulgence for one second longer, I should like to make one more remark. It is this. I am aware, more than any other, that it is the duty of the Leader of this House to be the Leader of the Whole House. I can assure your Lordships that that is what I intend to be rather than merely the leader of my party in this House. I am reinforced in my confidence that I shall be able to fulfil that role by the very sure knowledge that, if I fail to do so, your Lordships will remind me of my dereliction of duty.
Noble Lords: Hear, hear!
Lord Weatherill: My Lords, in the other place it would have been out of order to have these kinds of exchanges in the middle of Question Time. But the Cross-Benches would not wish to be left out on this happy occasion. We also welcome the noble Viscount to his post. We all wish him well in his duties.
Lord Boyd-Carpenter: My Lords, Conservatives in this House share, I know, the sentiments that have been expressed. We wish my noble friend all good fortune and welcome him in his place.

"Britannia": Future
11.18 a.m.
Lord Molloy Lord Molloy asked Her Majesty's Government:
What plans they have for the future of H.M. Yacht "Britannia".
The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Henley): My Lords, as we announced on 23rd June, Her Majesty's Yacht "Britannia" will be decommissioned in 1997. However, we will be looking for ways to allow her to continue to serve a useful purpose after this date, although she will no longer go to sea. We will make a further statement on the subject in due course.
Lord Molloy: My Lords, I thank the noble Lord for that reply. Does he agree that we in this House can now pay great tribute to the Clydeside shipworkers who created this magnificent ship, which carries all our names. Whether you are English, Irish, Scots, or Welsh, it is "Britannia" of Britain. Will the Government explore whether there are British or Commonwealth organisations which may well wish to take over "Britannia" and keep her? If there is the possibility of offers by such people as Sir Donald Gosling, can the noble Lord assure the House that those opportunities for "Britannia" to be looked after and maintained in a proper manner will not be easily dismissed but will be given thorough examination?
Lord Henley: My Lords, I join the noble Lord in paying tribute to those who built "Britannia" and all those who have served on the ship during her 40-year life. She has performed a very useful role. The noble Lord will not be surprised if I say at this stage that it is too early to speculate on what may be her future after she is decommissioned and what may be the further options which my noble friend, now the Lord Privy Seal, announced when he replied to a Written Question some time ago. I can certainly give an assurance that we shall consider all options fairly and openly.
Lord St. John of Fawsley: My Lords, does my noble friend agree that "Britannia" is much more a floating office and base than a pleasure craft? Does he further agree that its retention is important for the sovereign's discharge of her constitutional duties in the Commonwealth and abroad? As this is a very much loved ship, will he accept that the best solution may be for a refit to be carried out and for public accessibility to be given, as is the case now with Buckingham Palace?
Lord Henley: My Lords, my noble friend is right to stress the precise nature of the role of "Britannia". The ship is now very old. She is very expensive and costs some £10 million a year. I am advised that a further refit would cost in the order of £17 million and would keep her seagoing only for another five years or so. As I said, I can give an assurance that we shall study all possible options for meeting the tasks that the ship currently performs. All possibilities will be looked at.
Lord Mayhew: My Lords, will the noble Lord— whom we welcome to his new post—accept that to my

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personal knowledge parliamentary Questions about the future of "Britannia" have been asked for more than 30 years in the other place and no doubt in this Chamber? The noble Lord says that he is studying every possible option. Can we expect a decision by the end of the century?
Lord Henley: My Lords, we have announced that the ship will be decommissioned in 1997. As I made clear, it is too early to speculate on any further decisions that may be made. I would rather not do so at the moment. We shall certainly make an announcement in due course.
Lord Orr-Ewing: My Lords, is the noble Lord aware that I was an Admiralty Minister for some five years and learned the origins of this ship? The ship was ordered during the 1951 general election. Mr. Attlee said that the question would come before the Conservatives and that they would not dare order a ship which would be entirely for the monarch, because that would be highly criticised. Therefore, Mr. Attlee said that he would order it during the general election. I thought that that was a magnificent gesture and to his great credit. That fact is not generally known. Could the "Britannia" be refitted and used more widely? Might she be used again as a hospital ship? Will the noble Lord consider her being fitted out to attend disasters or where there is need? Does he agree that most people wish the ship to continue its useful life, perhaps, as has happened in the past, in export promotion or as a venue for visits by large numbers of people not only in this country but at ports overseas? Will the Government consider such proposals very seriously?
Lord Henley: My Lords, as I tried to make clear, we shall consider all options. I again stress to my noble friend that "Britannia" is a very old ship and very expensive. Some of the options mentioned by my noble friend in the way of refitting are not within the realms of practicality.
Lord Monson: My Lords, does the noble Lord appreciate that anyone who has had the privilege of going aboard "Britannia" knows that she is the most magnificent example of British craftsmanship? Does he agree that it would be a great tragedy if she were to be scrapped or, worse still, sold to the highest bidder to become some tawdry tourist attraction in Florida or California?
Lord Henley: My Lords, it is premature to speculate. I do not feel that the option of scrapping her is likely at this stage. We are certainly looking at possible future uses, but I do not think that they will be seagoing uses.
Viscount Mountgarret: My Lords, will my noble friend bear in mind that if, because of her age, the decision has to be taken that "Britannia" can no longer serve the purpose for which she was built, at least she should be replaced? We are all aware of the wonderful work that she does.
Lord Henley: My Lords, again I give the assurance to my noble friend that I and colleagues in the Government are studying all future options for meeting the current tasks performed by "Britannia".

Bank of England: Tercentenary
11.25 a.m.
Lord Campbell of Croy Lord Campbell of Croy asked Her Majesty's Government:
What part they are taking in celebrating the 300th anniversary of the founding of the Bank of England.
The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, the Bank has arranged a programme of events to mark its tercentenary. They have included a symposium on the future of central banking, held on 9th June, which involved 130 current and former central bank governors from around the world. The celebrations will culminate on 27th July with a service of thanksgiving at St. Paul's Cathedral which will be attended by Her Majesty the Queen and the Duke of Edinburgh. That will be followed by a reception at the Bank that same evening.
Lord Campbell of Croy: My Lords, I thank my noble friend for his reply, telling us that most suitable arrangements are being made for the anniversary of receipt of the Royal Charter. Is he aware that the Bank of England was founded by a Scotsman—William Paterson—and had it not been 13 years before the Union, it would no doubt have been named the Bank of Great Britain? Would not that have been a more appropriate name for the United Kingdom's central bank? Now that the mature Lady of Threadneedle Street has come of age, will she be accorded more independence to catch up with her younger cousins, the central banks of the United States and Germany?
Lord Mackay of Ardbrecknish: My Lords, let me say to my noble friend that we should not remind the English how much they depend on our fellow Scots to run their country. They might get a little jealous about it. With regard to the serious question about the independence of the central bank, Ministers have always made clear that they understand the argument in favour of it. However, they feel that there are other arguments which counteract the argument in favour of independence. Among those arguments there are genuine concerns about ministerial accountability, as Ministers would no longer be accountable to Parliament for decisions on matters of monetary policy.
Lord Ezra: My Lords, in relation to that last point, does the noble Lord agree that the more positive and transparent role of the Bank of England in recent months has been wholly beneficial? In the light of that experience, will the Government—without perhaps at this stage going to full independence of the Bank— nevertheless seriously contemplate giving it a still more positive role, particularly in regard to maintenance of the stability of the currency?
Lord Mackay of Ardbrecknish: My Lords, we believe that the current institutional arrangements are capable of delivering the kind of policies that we all want to see in the relationship between the Bank of England and the Government. As the noble Lord rightly pointed out, much has been done recently to make

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monetary policy more transparent—for example, by the publication of the minutes of the monthly meetings between the Chancellor and the Governor.
Lord Eatwell: My Lords, let me first congratulate the noble Lord on his new post. I am sure that all Members of the House will agree with the noble Lord, Lord Campbell of Croy, that we should learn from the lessons of history lest we repeat them. Does the Minister recall that at the time of its first centenary the Bank of England was an independent, non-accountable institution? Has he read the assessment from his native Scotland, expressed by Mr. Thomas Robert Malthus—yes, that Mr. Malthus!—in the Edinburgh Review of 1811, that the then directors of the Bank were:
"the instruments of much mischief to their country"?
Does he agree with the great economist David Ricardo, who argued in another place on 22nd March 1819 that an independent, unaccountable Bank had:
"involved this country in considerable difficulties"?
In the light of that lesson of history about the need for political accountability, can the noble Lord reassure the House and tell us who determines interest rates today? Is it the Governor or the Chancellor?
Lord Mackay of Ardbrecknish: My Lords, I thank the noble Lord for his congratulations. Clearly, I am on a fairly steep learning curve. This morning that also seems to include a lecture on economic policy from the noble Lord, which I shall certainly study with interest. I think that he was putting the counter-argument against the call for an independent central bank. I have already answered my noble friend Lord Campbell of Croy and we agree that accountability to Parliament is an important aspect of the relationship between the Government and the central bank. As to the question of whose is the decision about interest rates, very clearly it is primarily the role of the Chancellor to determine interest rates. Nothing that has been done to improve transparency has changed that situation.
Lord Beloff: My Lords, will my noble friend follow the arguments of the noble Lord, Lord Eatwell, a little further and agree that it is puzzling that we should want to celebrate this event at all? As I understand it, the Bank of England was founded in order that we should have a national debt. The national debt is usually regarded as a burden. Would it not be a simple matter to reduce that debt a little further if the celebrations were cancelled?
Lord Mackay of Ardbrecknish: My Lords, I appear to be sandwiched between professors this morning. I can say to my noble friend that, given the size of the national debt, the celebrations of the tercentenary of the Bank will not make much difference. But over the lifetime of this Government, since 1979, we have taken steps to reduce the national debt.
Baroness Seear: My Lords, having regard to the fact that, important though the past is, the future is even more important, does not the noble Lord agree, in view of the answers he gave in relation to the independence of the Bank, that some countries—notably Germany—
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have done rather well by having an independent bank? Indeed, it would have done better still if Chancellor Kohl had taken the advice of the central bank when he foolishly allowed an exchange rate of one for one.
Lord Mackay of Ardbrecknish: My Lords, one can always point to countries where at any moment in history the independence of their central bank is an advantage to them. But one must look at the situation over the whole sweep of time and at all the issues which face governments and central banks. I can counter the suggestion of the noble Baroness by pointing out that perhaps considerable disturbances in the currency in Europe a few years ago might not have occurred if the central bank in Germany had been more mindful of the objectives of the German Government's policy.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that few people with practical experience of running any business would accept 100 per cent. that the private conversations between the Treasury and the Bank of England should be published in the way that they sometimes are? They can be forgiven for keeping private some points that are capable of being varied if circumstances later justify it.
Lord Mackay of Ardbrecknish: My Lords, I understand the point made by my noble friend. Indeed, the same point was made when government announced that we would publish the minutes of the monthly meetings between the Chancellor and the Governor. However, in monetary policy, as in other aspects of government policy, it is important to be as transparent as one can. In that way the reasons for policy can be better understood by this House, by the other place and by the country.

DTI Inquiries: Naming of Individuals
11.32 a.m.
Lord Clinton-Davis Lord Clinton-Davis asked Her Majesty's Government:
Under what statutory authority and for what reason a particular individual was named in a statement issued by the Department of Trade and Industry on 8th July 1994 concerning the results of a preliminary inquiry into alleged insider dealing in the shares of Anglia TV; and whether there have been any precedents for such disclosures.
The Minister of State, Department of Trade and Industry (Earl Ferrers): My Lords, the information was given in accordance with stated policy and within the terms of Part VIII of the Financial Services Act. The last occasion such an announcement was made was in 1988.
Lord Clinton-Davis: My Lords, may I first welcome the noble Earl to the Dispatch Box in his new guise? We promise to give him a hard time—he would expect no less.
Why did officials at the DTI allege on the afternoon of 8th July that Anglia Television had named the noble Lord, Lord Archer of Weston-Super-Mare, and by the evening conceded that Anglia Television had not named

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him? Why did the Secretary of State or his officials not say to the media that to divulge the name of any individual based on a preliminary inquiry report alone was a criminal offence under the Financial Services Act and the companies legislation, and if the media purported to do that the Government would take the strongest action to prosecute? The Government have emerged from this matter with a great deal of discredit.
Earl Ferrers: My Lords, first, I thank the noble Lord for his welcoming remarks—so far as they went. He promised me a hard time, and I can assure him that that is nothing unusual.
The simple facts of this case—and all these matters are deeply unpleasant—is that representatives of the newspaper telephoned the press office and said, "This is the information we have received. Can you confirm that it is correct?" If we confirm it, it becomes unpleasant; if we equivocate, it is the equivalent of a cover-up, with all the row that ensues thereafter. That is the reason it was considered appropriate in the public interest to confirm the fact.
Lord Alexander of Weedon: My Lords, without going into the circumstances of why my noble friend Lord Archer of Weston-Super-Mare was named, will my noble friend the Minister agree that, if the outcome of the inquiry is that there is no hint of impropriety on the part of my noble friend Lord Archer, natural justice will require that that conclusion should be stated as early as possible?
Earl Ferrers: My Lords, I take the point made by my noble friend. I am certain that the first thing we must do is to consider the inquiry and its report. I am sure that if the facts are as my noble friend says, the opportunity will be made available for that to be known.
Lord Clinton-Davis: My Lords, who made the decision to inform the press and to make the press statement? Does not the noble Earl realise that his explanation will not suffice? It is not a question of defending any specific individual; it is a rank injustice that in a preliminary inquiry anybody should be named, because at that stage they have not had the chance to put their case. Why was the press not told that it would be a criminal offence to divulge the information contrary to Section 179(6) of the Financial Services Act?
Earl Ferrers: My Lords, it is not the responsibility of the Department of Trade and its press department to inform people whether or not they are committing a criminal offence. That is for those involved to consider. In this case representatives of the newspaper rang up and said, "We have this information. This is what we intend to publish. Is it or is it not true?" If the department had said that it was untrue, it would have been accused of a cover-up; if it had said that it was true and it was in the public interest that people should know the facts, it would be blamed for that. It was a difficult decision to take.
Lord Boyd-Carpenter: My Lords, whether or not it is a criminal offence, surely it is unfortunate that at an early stage of an inquiry of this sort an individual should be named and subjected to a great deal of what may
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well turn out to be wholly unfair publicity. Is not the lesson to be learnt from this that discretion at an early stage is in accordance with justice?
Earl Ferrers: My Lords, there is a great deal in what my noble friend says. The whole matter has been most unfortunate. I understand the concern that my noble friend expresses about the situation and for his noble friend. In these cases when public personalities axe involved difficult decisions must be taken. If we take no decision we are accused of covering up; if we make clear that the facts to be published are correct, we are also blamed for that. It is an uncomfortable position for everyone.

Sale and Supply of Goods Bill
11.38 a.m.
Lord Dormand of Easington: My Lords, I beg to move that this Bill be now read a second time. The Bill is simple and, I hope, uncontroversial. It is intended to tidy up and clarify one of the more antiquated corners of the law and at the same time update and strengthen consumer rights.
Essentially the Bill will implement the recommendations of the English and Scottish Law Commissions in their report on the supply and sale of goods published in 1987. It is an area of law which to this day remains largely untouched by statute. Instead, over centuries certain common law principles emerged. Among them were the principles that goods sold by way of trade or business must be described, must be fit for that purpose and must be of merchantable quality. Those principles were codified but not significantly altered in the Sale of Goods Act 1893. That Act was consolidated but not significantly altered in the Sale of Goods Act 1979.
The result is that the purchaser's rights when buying goods are essentially those conferred under the common law as it developed in the 18th and 19th centuries. It is not surprising, therefore, that those rights; have become a little antiquated in the light of modern trading conditions.
It was for those reasons that the Law Commissions were asked to look at the matter in 1987. While they saw no need for radical reform, they concluded that one of the central principles of present law—the doctrine of merchantable quality—was out of date, and that the definition of what constituted acceptance of goods was both untidy and unclear. They accordingly made a number of recommendations.
I shall summarise the Bill's provisions. Clause 1 implements the most important of the Law Commissions' recommendations, which was that the outdated phrase "merchantable quality" should be replaced by a phrase more in tune with today's trading conditions. The Law Commissions suggested "acceptable quality", but the present Bill follows its 1989 predecessor in preferring the phrase "satisfactory quality".
A non-complaining buyer might decide reluctantly that goods he bought were of acceptable quality, even if by objective standards the quality was not satisfactory.

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The Law Commissions then went on to list some of the aspects to be taken into account in judging whether goods were of the required quality. These included fitness for purpose, appearance and finish, freedom from minor defects and safety and durability, and those are duly included in Clause 1.
Clause 2 deals with the question of acceptable goods. Although it does not substantially modify the existing law in this area, it does clarify it and, in particular, makes it clear that, in judging whether a buyer has accepted goods, account must be taken of whether the buyer has had a reasonable opportunity of examining the goods to determine that they are in conformity with the contract. The clarification is important, as there is considerable uncertainty over the extent of a buyer's right to reject faulty goods. A tidying-up operation is therefore long overdue.
Clause 3 provides that if a buyer has accepted some of a batch of goods he does not thereby lose the right to reject the rest if they are not in conformity with the contract. Clauses 4 and 5 provide that where a buyer is not acting as a consumer, he may not reject goods if the breach of contract is so slight that it would be unreasonable to do so. Because English and Scots law are slightly different in that area, separate provision must be made for each country; hence the need for two clauses.
Clause 6 provides for the introduction of provisions equivalent to Part I of the Supply of Goods and Services Act 1982 for Scotland. There was a separate recommendation of the Scottish Law Commission which was included in the two commissions' 1987 report. It does not substantively change Scottish law in that area, but is a useful clarification and will bring Scots law relating to the supply of goods into line with that of the rest of the United Kingdom. Differences in terminology between English and Scottish law means that the new law needs to be set out in full, and that is done in Schedule 1.
Finally, Clause 7 calls up Schedule 2, which makes a number of necessary consequential amendments to other legislation, and Schedule 3, which makes some consequential repeals. Clause 8 deals with Short Title, commencement and extent.
To sum up, the Bill is intended to bring about a long-awaited amendment to an area of law which, although it does not have a high public profile, nevertheless governs every transaction that we make. The Bill is not intended to bring about a major shift in the balance of rights and obligations as between a customer and a supplier, but by updating and clarifying the law I believe it will be of benefit to both. I therefore commend the Bill to your Lordships.
Moved, That the Bill be now read a second time.— (Lord Dormand of Easington.)
11.45 a.m.
Lord Beaumont of Whitley: My Lords, I congratulate the noble Lord, Lord Dormand, on producing this Bill for your Lordships' House and I
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congratulate the noble Earl, Lord Ferrers, on having such an acceptable Bill to deal with as his first in his new job.
My purpose in rising to speak is merely to say that we on these Benches approve of the Bill and will do our best to further it and to give notice that there is one area which we will want to probe at the Committee stage. I should like to make it quite clear now that nothing I shall do is intended to or will delay or hazard the adoption of the Bill. I will want to probe the mover's views, and rather more particularly the Government's views, on the inclusion in this area of guarantees of durability, provision of spare parts and after sales service. This Bill is being introduced post-Rio. We are all committed to the sustainable economy. Much the most important part of the sustainable economy is in making certain that the goods that we have and use last as long as possible and that when they are finished with they are disposed of in the best possible way, with the re-use of as much of their material as possible.
It is not right for me at Second Reading to go further into this matter. I am merely giving notice that I intend to put down an amendment to this effect and to ask for the Government's response.
Lord Peston: My Lords, before I welcome the Bill I wish to associate myself with the remarks of my noble friend earlier in welcoming the noble Earl, Lord Ferrers, to our deliberations on industry and trade matters. I look forward to working with him. As he knows, I am always reasonable and never give Ministers a hard time, except when I am thwarted. But I am sure, especially in many of the areas with which we concern ourselves which are non-political, that we shall be able to work together to improve many aspects of our industry and economy.
As my noble friend said, this is a small measure, but it is an important one. I have one other difficulty in that I find the subject extremely interesting and therefore I shall wish to make quite a few points on it, even though it is Friday morning and there is other business which noble Lords wish to go on to debate. Perhaps I may say more generally that the whole sale of goods area is an interesting one and, in my view, much in need of legislative reform. I put it to the noble Earl the Minister that at some stage we need a new Sale of Goods Act to replace the Sale of Goods Act 1979, as there are many other areas—earlier in the year we debated the problem of markets overt—which will need to be dealt with in that Act. We could do with a new Act as all that a Bill like this can do is to tidy up a minor part of it.
I should say in connection with this subject that the Bill was debated very extensively in the other place. I say slightly sardonically that it was debated very extensively to my surprise. But it was debated overwhelmingly by lawyers. As always, I fail to understand many of their arguments.
There are several economic aspects to this matter to which I should like to refer. The starting point is the balance between buyers and sellers. My noble friend Lord Dormand of Easington said that he did not wish to do anything that would change fundamentally that balance at this stage. Car boot sales were debated in the other place and will perhaps be discussed in your

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Lordships' House. In that connection the balance between buyers and sellers is of the essence. What we have to ask about in terms of balance is the difference in information between the buyer and the seller. At some markets and sales—the car boot sale is the most obvious—the seller knows a great deal more about the product being sold than the buyer can possibly know until he or she has bought the item. That is a serious problem.
It leads to a question of which I know I should have given the noble Earl notice. I do not yet know, as regards the Deregulation and Contracting Out Bill and the various clauses to do with markets which were withdrawn in the other place, whether they may be reintroduced here. Is the noble Earl able to say anything today about markets and the deregulation Bill? What we are going to do about car boot sales and that kind of thing could be dealt with very appropriately in that Bill. I remind the noble Earl that the whole point of the market amendments was the hope that they would be dealt with by agreement. Therefore, if they are reintroduced there should not be a big problem assuming that the noble Earl and his department have agreement. It is not obvious as to the extent to which this Bill covers things such as car boot sales. It was argued in the other place that if the seller at a car boot sale or similar activity is not engaged in that activity in the course of business, then this Bill will not apply and the kind of protection one gets will not be sufficient.
The Bill as it stands—I am interested in both my noble friend's and the noble Earl's judgment on this matter—applies, I believe, to second-hand goods as well as new ones. From my reading of the Bill I am not entirely certain whether it does or not. When I rose to speak I was not certain that we would have a Committee stage for this Bill, but the noble Lord, Lord Beaumont of Whitley, has said that he will definitely be tabling amendments and therefore there will be a Committee stage. I give notice that I may table a few amendments, largely of a probing nature, in order to discover more of the Government's mind on these matters.
The main question we have to ask is whether, following what the Law Commission recommended, this Bill is at least as strong as what it replaces in terms of consumer protection. I am interested to know the Government's view. Since the original Bill was drafted with the help of the Department of Trade and Industry, I assume that it is the view that this Bill is at least as strong. I would like some reassurance.
I have several other questions, but I am not sure whether they should be put to my noble friend or to the noble Earl. Clause 1 includes the words, "there is substituted," and in subsection 2(A),the expression appears,
"taking account of any description of the goods".
The question I ask is this: does "any description of the goods" include advertising? I looked in today's newspapers for suitable advertisements to quote. I saw some for videos. One version of,
"taking account of any description of the goods",
is that a video is a video. If you go into a shop and say that you want to buy a video recorder, then that is what you have to get. But if the advertisement says that the
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video does a number of things, does that count as part of the description? And is that what this subsection of the Bill means?
Subsection (2B) refers to "freedom from minor defects". Is the expression "minor defects" well known to the law? Can it be assumed there would be no difficulty in saying what a minor defect is. On all these matters—it has dominated my contributions to proceedings on the deregulation Bill—I am not a lawyer. I have learnt slowly but surely that words which mean something to ordinary human beings do not seem to mean even remotely the same thing to lawyers. To me, a minor defect is a defect which does not matter. But a lawyer may well say, "Oh no, you have to take the advice of Queen's Counsel on what a minor defect is; it goes much deeper than that". I would like to know what "minor defect" means. Does it cover reliability and so forth?
The underlying text of my remarks relates to my own experience as a consumer. I am placing before noble Lords some of the problems I have experienced with items which do not meet what used to be called "merchantable quality". I am particularly interested in Clause 2(4) which states:
"The buyer is also deemed to have accepted the goods when after the lapse of a reasonable time he retains the goods without intimating to a seller that he has rejected them".
I have taken advice, but this is a problem which consumers —myself included—often have.
For example, you decide—I hope noble Lords will forgive the banality of the example—to have a new kitchen and to place in it a new oven. You buy it and it is delivered in a box which you do not open. The kitchen supplier says "I'm sorry, the suppliers cannot deliver your new kitchen for the next three months". Typically, I regret to say, in the case of kitchens the best suppliers are German and they seem to go on holiday for the whole of the summer. Three months go by and eventually your new kitchen is delivered. The kitchen fitter then says "I'm sorry, the original date is not possible" and so another month passes. Four months go by and eventually your new kitchen is installed. At long last you open the box containing your oven—you have been sensible and not messed around with it until installation—only to find that it does not work.
When this happened the supplier said to at least one person very close to me, namely, me, "I'm sorry, you bought it four months ago and you have accepted it". The question is this: what does "the lapse of a reasonable time" mean? If we have a Committee stage, that is a part of the Bill to which I may return with the suggestion that we do something about that aspect.
I have broken one of the rules which I always try to keep, and that is not to speak longer than the first speaker. I hope that my noble friend does not think that I am discourteous—indeed, I hope that he thinks the reverse—and agrees that I have spent so much time on this Bill because it is extremely interesting and significant and may be made slightly more significant.
I have two further questions to raise with the Minister and then I shall happily sit down. One aspect of a purchase is the question of caveat emptor. I would like to have the Minister's judgment and to be told to what

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extent he believes that in many of the areas I have raised caveat emptor should suffice. In my judgment it does not, for the reason I raised at the beginning; namely, that there is a definite difference between the buyer and the seller when it comes to knowledge of many goods and services. Therefore we need a Bill of this kind.
My second question is this. Some of the points that I raised, particularly about representations, may well be covered by the Trade Descriptions Act, and I should be interested to hear the noble Earl's reply on that.
I turn now to my last point. It was remiss of me not to say this earlier. Although the noble Lord, Lord Beaumont of Whitley, and I do not usually agree on questions relating to sustainable growth and matters of that kind, I found his point very interesting. I had not thought of it previously. It is a good one and I am intrigued by it. In addition to the question of the goods being what they are and of what we are now going to call "satisfactory quality", the provision of spare parts and/or service ought to be taken a bit further in the way that the noble Lord suggests.
My intention has been, first, to say that the Bill is both interesting and important and, secondly, to wish it very good speed. If we are able to improve it in minor ways, perhaps we might—I only say "might"—take the opportunity to do so.
Lord Tordoff: My Lords, before the noble Earl replies, I wonder whether he will enlighten the House on another matter which has been brought to my attention. Turning to the list of ministerial appointments and resignations, we have not congratulated the noble Earl on the fact that he is shown in the list as,
"The Earl Ferrers DL MP".
Midday
Earl Ferrers: My Lords, I cannot think what on earth that has got to do with the Sale and Supply of Goods Bill. As a matter of fact, I did notice that but I did not know whether or not it was flattery. In some respects, it is an error; but it is perfectly right in other respects because we are all Members of Parliament, albeit Members of the Upper Chamber.
I was grateful to the noble Lord, Lord Beaumont, for the kind remarks at the beginning of his speech. I was particularly grateful for the enchanting words of the noble Lord, Lord Peston, who said that I am a very reasonable person and that I shall not give him a hard time. That was in contrast to what his noble friend, the noble Lord, Lord Clinton-Davis, said earlier. The noble Lord, Lord Peston, said that with great charm, but he then proceeded to fire about 20 questions at me and when he got to the last one, he said, "My second question is this". I have no doubt that the noble Lord forgot the number of questions that he had asked. It reminded me of the Bishop who was preaching a sermon and after 40 minutes said, "And secondly", and his congregation just about died. Of course, the noble Lord did not speak for 40 minutes and I am not trying to make a jibe against him in that way.
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Indeed, I had great sympathy for the noble Lord when he said that he found it difficult to understand lawyers' language because they often say things that are completely different from what the normal layman would regard as an interpretation of a statute. That is something with which I have struggled on previous occasions—including fairly recently on another Bill for which I had a certain amount of responsibility only a few days ago.
Although I shall try to answer the easy questions, I shall leave the nasty ones to the noble Lord, Lord Dormand of Easington, whose Bill this is, to see how he gets on. Perhaps I may take this opportunity to congratulate the noble Lord on introducing the Bill in your Lordships' House. It represents the first major modification to the sale of goods legislation for about 100 years.
Although the Sale of Goods Act carries the date of 1979 on it, that was primarily a consolidation measure to tidy up a number of minor changes which had been made over the years to the original Act of 1893. These changes were introduced more to deal with particular difficulties as they appeared rather than to change the, overall structure of the law.
The Bill implements recommendations which, as the noble Lord, Lord Dormand, said, were made by the Law Commission and the Scottish Law Commission in their 1987 report, the Sale and Supply of Goods. The Government support the changes which they suggested and I am glad to be able to give the Bill the Government's support and blessing. I know that a number of noble Lords have expressed concern about the difficulty in finding parliamentary time to implement reports from the Law Commissions from time to time, and I am sure that the House will wish to see the Bill complete its stages swiftly, although with proper consideration.
The Bill was discussed extensively in another place and I think that in the end most of the concerns that were raised there were satisfied. There is though one aspect which had been raised when a previous Bill came before your Lordships' House on a previous occasion but which failed to reach the statute book. I would like to say just something about that.
The noble Lord, Lord Peston, asked whether this Bill is as strong on consumer protection as the previous Bill. The Bill will clarify and it will therefore strengthen, consumer rights. It will do so in this respect—this is the matter which was raised on the previous Bill which did not reach the statute book. It concerns Clause 2 of the Bill and the question of when a consumer loses his right to reject goods which are faulty or which do not satisfy the other requirements of the Act. Whenever this question is raised, the case of Bernstein v. Pamson Motors is always quoted. Every case must, of course, be looked at in the light of its own particular circumstances, but the Bill is designed to remove an ambiguity which many feel led to the Bernstein judgment.
In the Act as it stands at present the rules on examination and acceptance are contained in two sections, Sections 34 and 35. Section 34 provides that a buyer who has not previously examined goods which are delivered to him is not deemed to have accepted

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them until he has had a reasonable opportunity of examining them for the purposes of ascertaining whether they are in conformity with the contract. The noble Lord, Lord Peston, gave the example of a kitchen.
Section 35 then sets out the various ways in which a buyer may be deemed to have accepted goods and may have, thereby, lost his right to reject them. There are several such ways in which that can be done. Acceptance is deemed to take place where the buyer intimates acceptance; where the goods are delivered to the buyer and he does any act which is inconsistent with the ownership of the seller; or where after the lapse of a reasonable time the buyer retains the goods without intimating to the seller that he has rejected them.
The difficulty is that, as the Act at present stands, the interrelationship between the two sections is not at all clear. Section 35 does include a reference to Section 34, but there is certainly scope for the view to be taken that, in deciding whether goods have been accepted because of the passage of time, there would be no need to have regard to whether the purchaser had, in fact, had a reasonable opportunity to examine the goods for the purposes provided in Section 34.
This ambiguity can lead to unfortunate results. In the Bernstein case the judge certainly appears to have taken the view that there was little interrelation between the two sections. This enabled him to adopt a qualified interpretation of the word "examine"—an interpretation which amounted to the purchasers trying out the goods in general terms.
The judge expressed the view that the nature of the particular defect of the goods and the speed with which it might have been discovered were irrelevant to the concept of "reasonable time" in Section 35. He went on to hold that a period of three weeks amounted to the lapse of a reasonable time after the delivery of a new motor car so that Mr. Bernstein was deemed to have accepted the car under the terms of Section 35(1) of the 1979 Act.
It is, I think, generally agreed that this verdict, however correct it may have been as an interpretation of the law as it then stood, was unsatisfactory from the point of view of maintaining a fair balance of rights between supplier and consumer.
If the Act is recast, as it is in the Bill, the provisions which are at present in Sections 34 and 35 will be tied much more closely together. This will make it clear that a material question in determining whether a reasonable time has elapsed—and therefore whether the buyer has accepted the goods—will be whether he has had a reasonable opportunity to examine the goods in order to satisfy himself that they are in fact in conformity with the contract and are what he wanted to buy. This means examination to see whether, among other things, the implied terms of the contract are satisfied.
It is clear, therefore, that the examination must be more than just an examination in general terms. The term "examine" has to be interpreted in the context of the type of examination which it is necessary to conduct in order to ensure that the goods in question are in conformity with the contract. In the circumstances of his new oven described by the noble Lord, Lord Peston, the
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customer would not have examined the goods and would not therefore be deemed to have accepted them. I hope that that will give him at least some satisfaction.
It has been argued that it should be explicit on the face of the Bill that the word "examine" must be interpreted in the context of the type of examination which it is necessary to conduct to ensure that the goods are in conformity with the contract. But the Oxford English Dictionary definition of "examine" encompasses that type of inspection. I do not believe that it is necessary therefore to introduce into the Bill a definition of "examine". Indeed, there are good reasons for not doing so. A definition of "examine" would constrain the discretion of the courts to consider individual cases on their merits, and that could lead to results which the Bill does not intend.
The noble Lord, Lord Peston, asked all sorts of questions about markets, car boot sales, the deregulation Bill and so forth. The Government are still considering the subject of market franchise rates in respect of the deregulation Bill. He was also concerned about whether the Bill applied to second-hand goods, and the answer is that it does. With regard to car boot sales, Clause 1 will apply if the seller acts in the course of business, and that is a question of fact that a court will have to decide. He was also interested in whether the description includes advertising. He suggested videos. The answer is that it does, but again it will be a matter for the courts to decide.
The noble Lord then referred to caveat emptor, which is a legal expression, and I am sure that the noble Lord is enormously familiar with the length and breadth of it, as, indeed, are most, although possibly not all, of your Lordships. I say merely that caveat emptor is a basic rule, but there are measures designed to assist the buyer where that rule might be deemed to be harsh. I hope that that explanation satisfies the noble Lord, Lord Peston, at least temporarily. The noble Lord, Lord Dormand, has introduced the Bill and explained it to your Lordships. It has our blessing, and I hope that your Lordships will pass it in due course effectively and with approbation.
Lord Peston: My Lords, before the Minister sits down perhaps I may thank him for the excellence of his answer. He said that the Bill has the Government's blessing. Does that mean that, were we to have a Committee stage and were we to amend the Bill, time would be found to ensure that the Bill still had the Government's blessing and would become an Act of Parliament? What does "the Government's blessing" mean? Does it mean take it or leave it? 1 am sorry to introduce aspects of buying and selling here, but does it mean that it has the Government's blessing if we agree to every word on that piece of paper or does it mean that it has the Government's blessing if noble Lords, in their normal deliberate way, say, "This could improve it a little."? What does "blessing" mean for these purposes?
Earl Ferrers: My Lords, I can tell the noble Lord exactly what it means. The Bill has the Government's approval as it is. If your Lordships decide to put down a whole lot of amendments which reverse the Bill's intentions, it would not necessarily have the

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Government's blessing. If your Lordships were to put down sensible amendments I am sure that they might have the Government's blessing. The real point that the noble Lord will have to consider is whether the addition of amendments will put at risk the Bill's passage through Parliament.
Lord Peston: My Lords, I thank the Minister. As I have expressed as strongly as I can my support for the Bill, I should not dream of amending it in any way that was not in my judgment an improvement. I should seek to persuade the Minister that that was so. I was just listening for any word of warning, because I assure the Minister and my noble friend that I shall do nothing to stop the Bill from going on to the statute book. Equally, I am always frustrated if I cannot obtain an improvement when we all agree that it is an improvement. However, I proceed no further.
Earl Ferrers: My Lords, perhaps I may have the permission of the House to say that obviously Bills have to have a Committee stage and are subject to amendment. The other House rose yesterday and this House rises next week. When we come back in the spillover there is relatively little time, and I just flag up this hazard: if we amend the Bill, that obviously puts it at risk when it goes back to another place.
Lord Simon of Glaisdale: My Lords, perhaps I may intervene on that discussion. If there are amendments, will parliamentary counsel be made available to ensure that they are technically correct?
Earl Ferrers: My Lords, if I may have the leave of the House, we are getting into rather dangerous procedural waters here. Your Lordships can put down whatever amendments you desire. If they do not make sense, I am sure that parliamentary counsel would devise means of putting them right, but that is yet another hazard to which the Bill would be subjected. I just advise your Lordships to be cautious.
Lord Dormand of Easington: My Lords, I am glad that the Bill has been given a general welcome, although I note the comments made by my noble friend Lord Peston and the noble Lord, Lord Beaumont. I am sure that their intentions are benevolent. I commend the Bill to your Lordships.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Railway Pensions (Transfer and Miscellaneous Provisions) Order 1994
12.16 p.m.
The Parliamentary Under-Secretary of State, Department of Transport (Viscount Goschen)The Parliamentary Under-Secretary of State, Department of Transport (Viscount Goschen) rose to move, That the draft order laid before the House on 7th July be approved [24th Report from the Joint Committee].
The noble Viscount said: My Lords, perhaps I may express my regret that my explanation of this complex order will necessarily be full and detailed, and I hope that the House will bear with me in the course of my remarks.
When we debated the Railway Pensions (Protection and Designation of Schemes) Order 1994 and the Railways Pension Scheme Order 1994 on 26th May, my noble friend Lord Mackay indicated that a further affirmative order would be required to transfer the pension rights and assets in the BR Pension Scheme to the Railways Pension Scheme and to allocate those between the sections of the RPS.
We have long agreed with the trustees that when the time came to transfer funds from the BRPS into new schemes, that would have to be done on an agreed actuarial basis and that, unless the BRPS was in deficit, the accrued rights of all active and pensioner members should be funded adequately. Since that was agreed, we have built on the policy considerably and now have the one Railways Pension Scheme and its sections. But the original policy on transfer of funds survives in substance in the order. The order also has the effect of allocating between the sections any initial surplus there may be in the scheme. It is likely that there will be an initial surplus.
As I have indicated, we have long agreed the broad principles of the order, but we have over the past month or so had intensive discussions with the trustees and others. The trustees' officers kept the trustee board members closely informed about that process. We went out formally to consultation on that with the trustees, the employers and the trade unions on 29th June and laid the order before Parliament on 7th July. The result of all those consultations was that the Government's proposals were changed in some points of detail as we explored the issues with the trustees and others. The provisions of Schedule 11 to the Railways Act 1993 required us to consult the trustees on the provisions in the order relating to the transfer of pension rights and the pension scheme assets, and also the amendment of existing schemes, and further to lay copies of the trustees' written comments before Parliament. I am pleased to say that we have reached full agreement with the trustees, and that they do not wish to make any comments. I have placed a copy of their letter of 6th July confirming that in the Library of the House.
The trustees have a fiduciary duty to all members of the scheme, both participating members and pensioners. Both we and the trustees consider the transfer provisions equitable in the interests of all concerned and do not favour one class of members at the expense of another.
Article 2 of the order has the effect of transferring the existing members of the main BR pension scheme—that is the BR Pension Scheme (BRPS)—together with the assets and pension liabilities into the Railways Pension Scheme (RPS) on 1st October, and for the BRPS then to be wound up. Provision is made for the assets and pension rights to be allocated as appropriate to one or other of the pensioners' sections or, in respect of serving staff, into the (BR) open section. In due course,

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participants may be moved under the provisions of the scheme out of the open section into the new sections of other employers as these are established.
Schedule 1 makes detailed provision for the allocation of assets between sections on a basis which, as I said earlier, we and the trustees consider to be fair to both serving staff (participants) and pensioners, existing or deferred. Having allocated assets related to additional voluntary contributions, which are separately invested, and any contributions paid by an employer during the period of the current contribution holiday to the appropriate section the remaining assets will be apportioned between the sections on a "share of fund" basis; that is in proportion to the respective pension liabilities.
For this purpose, the existing reserves for contribution holidays or reductions will count as pension liabilities of the open section and the open section liabilities will also take account of any pay increases agreed on or before 30th September 1994 for implementation before 1st January 1995. The liabilities of the pensioners' sections will include an allowance for future administrative expenses because these expenses in respect of the pensioners' sections can no longer be met out of future contributions. The proportions of any pension rights funded under the Transport Act 1980 are excluded from the calculation of liabilities because government support payments will be made direct to the relevant section.
Provision is made for the assets to be allocated net of apportionment costs; but these costs are likely to be minimal as BR will reimburse the actuary's costs in carrying out the valuation, which is the only substantial cost of making the apportionment.
The Government's and the scheme's actuaries have agreed the detailed actuarial assumptions set out in Part III of Schedule 1. Had they not, I would have been faced with the task of explaining the differences to the House. I am extremely relieved that that is not now necessary. We have made provision for the trustees to make an initial allocation of assets, but have specified in the order certain minimum proportionate holdings of certain categories of assets in the final allocation of assets to the Pensioners' A Section, again with the trustees' agreement. This ensures that the investment policy of that section has an appropriate degree of caution from the outset, but still makes it possible to add to the initial surplus inherited by the section.
Schedule 2 makes detailed provision for the allocation of pension rights between the appropriate sections and for the members with those pension rights to be allocated to the relevant sections.
Article 3 makes drafting amendments to clarify the meaning of the Railway Pensions (Protection and Designation of Schemes) Order 1994, which came into force on 31st May, following the undertaking that my noble friend Lord Mackay gave to the House to reconsider some of the drafting. These amendments do not change the substance. I am grateful to noble Lords who took the time to discover and point out these infelicities to us.
Article 4 introduces Schedule 3, which amends the trust deed of the BR (1974) Pension Fund to enable BR staff who are transferred to new employers to remain in certain schemes which are included in that fund, and to enable those schemes to be wound up when appropriate. No effective winding-up provision presently exists.
Schedule 3 also makes a standard amendment to certain schemes other than the BRPS for which the trustee company presently acts. This amendment will give to the trustee company and its directors', officers and employees, an indemnity from the participating employers in those schemes against liability for honest mistakes but not wrongdoing, and a power with the consent of the board to take out indemnity insurance similar to the provisions contained in Clauses 2E and 2F of the RPS trust. It will formalise the existing indemnity in respect of these schemes which the trustee has from BR.
Article 5 introduces Schedule 4, which amends the schedule to the Railways Pension Scheme Order 1994, containing the pension trust and section rules of the RPS. One amendment extends the limit of liability and indemnity in the RPS trust to any liability for breaches of trust transferred from the old trustee to the new, other than due to personal conscious wrongdoing or recklessness. Another provides for the trustee of the RPS to amend the scheme before 1st October 1994 with the consent of my right honourable friend the Secretaiy of State. It is the intention to use this provision to make amendments agreed between the trustees and the Secretary of State to, inter alia, Clause 8C (transfers-out) of the Trust and Rules 13-(surplus assets), 14 (shortfall) and 16 (winding-up) of the pensioners' sections. The trustee's solicitor is currently preparing a deed of amendment for execution once this order has been approved.
Article 6 introduces Schedule 5, which designates "sections" of the RPS for the purpose of enabling or requiring the payment of government support contributions under the 1980 Transport Act. Article 7 introduces Schedule 6, which makes consequential amendments or modifications to existing legislation.
Although we have still to lay a substitution order under Section 52B of the Transport Act 1980 varying the timing of government support payments to the pensioners' sections on the basis already agreed with the trustees, the provisions to be implemented under this order complete the delivery of the undertakings given by the Government. They provide the promised security, protection and peace of mind to BR's existing staff, pensioners and deferred pensioners. With that detailed explanation, I commend the order to the House.
Moved, That the draft order laid before the House on 7th July be approved [24th Report from the Joint Committee).—(Viscount Goschen.)
Baroness Turner of Camden: My Lords, I thank the Minister for his detailed explanation of this order relating to railway pensions. I also thank him for his courtesy in providing me with a statement in advance of today's debate. I should like to take this opportunity of congratulating him on his promotion to his new post. I

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recall that we were promised that another affirmative order would be required to bring the new railway pension arrangements into operation on 1st October.
Of course, the reorganisation of railway pension funds is a direct consequence of the Government's policy of privatisation of the railway industry and the fragmentation envisaged in so doing. Your Lordships will no doubt recall the long discussions that we had in this House when particular attention was drawn to the fear of railway pensioners and prospective pensioners about the security of their pension provision. Largely due to the pressure exerted by your Lordships—and notably by the noble Lords, Lord Peyton and Lord Marsh, we succeeded in this House in obtaining a much greater level of security for pensioners and prospective pensioners than had at first been envisaged. I pay a tribute to those noble Lords for the work that they did in that respect, and I am very pleased about that. We have learnt today that the present order is not opposed by the trustees.
However, I do not believe that that is the end of the story. The trustees of course have a fiduciary duty, as the Minister said, to protect members' interests and no doubt they believe that they have done that. They were faced with a situation which was not of their making and which arose only because of the Government's privatisation policy.
As we all said at the time, the railway pension scheme as it existed was a good one, which pensioners and railway staff saw as providing for security in retirement. There was a great deal of agitation when it became clear that the set-up would have to be extensively revised as a result of the fragmentation involved in the privatisation exercise. We now have this order, which I believe is a penultimate order because another is promised. However, I wish to raise some points in connection with it.
I understand that the total assets of the existing fund are to be split in the ratio of 53:47 between the existing employees and the pensioners. There is a belief that that is quite a large slice for pensioners; but, on the other hand, we in this House made a lot of fuss about the rights of pensioners, and this "split" is not something that we would now want to challenge.
However, the more important point is that some £600 million has already been set aside to revise the pension entitlements of existing employees when grade by grade restructuring packages have been settled. The money is protected only until 1st October 1994, after which it will be split in the same 53:47 ratio which applies to the rest of the assets.
I shall probably be told that the present signalmen's dispute is not relevant to our discussions today. However, I believe that it has some significance. A delay in reaching an agreement on the restructuring package with regard to signalmen will have an effect also on pension provision. A recent article in the Independent indicated that £50 million could be lost forever to the pension fund.
I know that one must not put too much credence on articles which appear in newspapers, but I should very much welcome the Minister's comment on that. At
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present, signal workers' basic pay is low and on average they double their take home pay through non-pensionable allowances. Had Railtrack stuck with its original 5.7 per cent. offer, the basic rates for signalmen would have been considerably enhanced. There seems little doubt that government intervention has prevented Railtrack going ahead with the 5.7 per cent. offer. Of course, that has a knock-on effect on pension entitlement.
Moreover, if no settlement is reached by 1st October, as I have said, the money will be split in the same 53:47 per cent. ratio which applies to the rest of the assets.
I am informed that the result of that will be that the 47 per cent. thus transferred will delay the need for the Government's solvency guarantee upon which a great deal of stress was placed during our earlier discussions.
I certainly do not seek to oppose the order. As we know, the trustees do not oppose it. But I believe that the Government need to answer those points which I understand are causing some anxiety to the RMT union and its members. I hope that the Minister will not say that the dispute is not relevant to our discussions. The signalmen are not the most militant of workers and they have been endeavouring to obtain justice, as they see it, for at least six years. If their pension entitlement is to be undermined as well, then the Government have something to answer for since it was their idea in the first place to break up the arrangement which had existed for many years in order to bring about privatisation in that area.
Having said that, I welcome the assurance given in the statement that I received from the Government that the order provides no mechanism by which the Government can get hold of the funds. That has been stated quite specifically. I am glad that has been made clear because many fears have been voiced, as your Lordships will be aware, in various quarters that the Government were attempting to get their hands on pension fund money. I am glad that the position has been made clear to all concerned.
Having made those comments, I do not wish to oppose the order, but I should welcome some comments from the Minister on the matters that I have raised this morning.
12.35 p.m.
Lord Peyton of Yeovil: My Lords, first I join in the congratulations which the noble Baroness opposite has already offered to my noble friend on his appointment to his new office. I wish him well in it.
Secondly, I thank the noble Baroness, Lady Turner of Camden, for the remarks that she was kind enough to make about me. I was pleased to be able to make a contribution towards achieving a fair deal for pensioners. However, I am slightly surprised that it should have taken so long to do that.
Perhaps I may ask the Minister three questions. I am sure that he will be greatly relieved to know that I hope that he will not even try to answer them. The first question is why on earth this matter has taken so long. I realise that there can be no satisfactory answer to that question, and I hope that my noble friend will not even

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try to answer it. He has no reason to blush; but, nevertheless, he would have to blush on behalf of his friends elsewhere, and I should not wish to impose that painful process upon him.
Secondly, what does the order mean? My noble friend has done his best to try to explain what it means. It is no reproach to him when I say that the material in the order is way beyond the realms of explanation. I have asked what the order means and I believe that the best answer that he could possibly give me is to say that it means what he hopes it means.
Actuaries have long enjoyed special privileges. Today I am left wondering whether Humpty Dumpty was an actuary because I believe that it was Humpty Dumpty who coined that great phrase, "When I use a word, it means exactly what I want it to mean". I am sure that every word in the order genuinely means what the actuaries responsible want it to mean.
It has been my practice from time to time to read out part of the orders so that avid readers of your Lordships' proceedings can understand what we are talking about. On this occasion, I really do not believe that it would be sensible to do that. Perhaps I may draw your Lordships' attention to paragraph 4 on page 6 where there is a whole mass of equations which I do not believe can be easily understood. I do not believe that any pensioner to whom a copy of the document becomes available will find that to be at all lucid or clear.
I have been informed, as has the noble Baroness opposite, by the trustees, that they accept the order. That must be an act of faith on their part because no one could be sure of the meaning of those words, other than those who wrote them.
The third question which I wish to ask my noble friend is whether he intends to ensure that every pensioner receives a copy of the order. I notice that in what is laughingly called the "explanatory note" on page 21, there it is stated that copies of the pension schemes referred to in Schedule 3 to the order can be obtained from Railway Pensions Management Limited, Stooperdale Offices, Brinkburn Road, Darlington. I am sure that there will be a real queue of pensioners trying to get the information. The handbook and the tables referred to may be inspected or obtained from the Institute of Actuaries at Staple Inn Hall, High Holborn. It may be that more pensioners are able to go there rather than Darlington and I am sure that there will be an eager queue of people who wish to obtain copies of this valuable document.
Perhaps I may be serious for a moment. I am very glad that the business has been settled. Your Lordships will understand that I am always very anxious to ingratiate myself with the Whips of my party. On this occasion, I can pay a glowing tribute to my noble friend the Chief Whip because I am quite sure that had he not read, marked, learnt and inwardly digested the discussions that have taken place leading up to the order, exactly the same problem would have arisen in regard to miners' pensions. But in his previous office at the Department of Trade and Industry my noble friend took note of the fact that something had gone badly wrong. I
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am sure that I am not wrong in giving him the credit lor ensuring that it did not happen again with the miners' pensions.
I shall conclude on that happy note. I hope that my noble friend on the Front Bench will not fail to report my remarks to the Chief Whip because I wish to earn credit in his eyes at this early stage in his distinguished career.
Lord Tordoff: My Lords, as the public print would have it that the noble Lord, Lord Peyton, and other destructive elements on the Government Back Benches are the cause of the reshuffle in the Whips' Office, I think that those remarks might be a little rich. However, we must not believe everything that we read in the public print.
I hope that the Minister will not suggest that copies of the explanatory note be sent to all railway pensioners. I must declare an interest because my mother-in-law, who is 93, has a widow's pension. If such a document is sent to her, it will probably fall to me to explain it to her and I have not the slightest intention of doing so.
I do not need to congratulate the noble Viscount on his promotion because I did so yesterday. However, I should like to congratulate him on surviving in the post for 24 hours which in the present climate could be something of a record. I am grateful to the noble Viscount's predecessor for having written to me on 7th July enclosing the letters from the pension trustees. En passant, I notice that he signed the letter "Yours ever, John". Well, "ever" was a short time so far as he was concerned. I believe that I have now dealt with five or six Parliamentary Under-Secretaries of State for transport, one of them at least twice. Nevertheless, the noble Viscount, Lord Goschen, is most welcome. He is to be thanked for having taken us through the order so well and carefully today.
Like the noble Lord, Lord Peyton, I am extremely grateful that the matter is coming to a conclusion. We fought together last year on the Railways Bill and the noble Lord must carry the greatest battle honours for that fight because it took a long time. Indeed, it was certainly like drawing teeth at the time. Again, the noble Viscount is not to be blamed for that in any way.
Like the noble Lord, Lord Peyton of Yeovil, we have to take the matter on trust. There is no way in which mere mortals can understand the words in such orders. One hopes that the pension fund trustees have been well advised. I am sure that they have been. But again it is a question of wait and see.
Like the noble Baroness, Lady Turner, I read the article in the Independent earlier this week, I should like to refer to it because I believe that this is an opportunity for the Government, if they wish, to state their position in relation to the signalmen's strike. The article reads:
"RAILTRACK may withdraw its offer to striking signal workers with the threat that £50m could be lost for ever to their pension fund.
The Company hopes that such a tactic, which would mean the loss of up to £1,700 a head in pension entitlements, would make employees think again about management's productivity package".

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The article goes on to say:
"The basis of the company's threat over pensions is that on 1 October the British Rail pension fund will be divided up among operating companies according to a formula linked to basic pay. At the moment, signal workers' basic is low and on average they double their take home pay through non-pensionable allowances.
Under the company's offer, the basic rate would be increased by between 13 and 26 per cent, thus considerably enhancing Railtrack's share of the pension fund".
The rather startling headline to the article reads:
"Railtrack strikers threatened with £50m pension loss".
I hope that that is not a tactic by Railtrack and that the Government will offer some reassurance not just to the House but also to the signalmen themselves. I do not wish to go into the merits of the dispute but, like the noble Baroness, Lady Turner, I have considerable sympathy with the fact that they have had a difficult time over the past few years during which they have been striving to achieve an adequate remuneration.
From all accounts, it appears that the Government did interfere at a very unfortunate moment and that the matter is rapidly getting out of hand. Someone needs to use a little bit of management skill to get it back in train. As a former member of the chemical industry, I shall resist making too many comments about the chairman of Railtrack, who was a competitor of mine in another incarnation. However, suffice it to say, his handling of the matter does not altogether surprise me.
As I said, I hope that the Government will take the opportunity to state their position. But, having said that, we welcome the order today and thank the Minister for introducing it. We fervently hope and pray that this is the end of what has been a very long road.
12.45 p.m.
Lord Cochrane of Cults: My Lords, I should like, first, to thank my noble friend the Minister for his explanation of the order. He introduced it with clarity and explained an extremely obscure subject. I should also like to thank his predecessor, from whom I received a most helpful briefing. Other speakers have paid tribute to my noble friend Lord Peyton and the noble Lord, Lord Marsh, both of whom are former Ministers of Transport, for alerting the House to the difficulties which were built, very unwisely, by the Treasury into the original scheme. I believe that it was a case of more haste, less speed. Certainly the revisions and the retreats which have taken place are of immense benefit to future pensioners.
Especially valuable is the acceptance in the revised scheme of the division of assets, thereby avoiding the extraordinarily damaging state of affairs which appears to have arisen as regards Welsh Water to which we were alerted by my noble friend Lord Crickhowell. There is no need for me to say more than: thank goodness we have reached this stage. I am sure that the numerous aged pensioners will welcome the scheme. Noble Lords will recall that, when we discussed the matter on an earlier occasion, I mentioned that there were a considerable number of pensioners aged over 100; indeed, the oldest at that stage was 105½ years old. We
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must consider those old people. They have given long and faithful service and should be properly rewarded with a decent pension for all those years.
I believe that the scheme has now reached a satisfactory state, which is quite different to the one proposed but very much better for all concerned. I congratulate all those trustees, Ministers and others on their immense work in achieving that I hope that the scheme will now go forward in a satisfactory way.
Viscount Goschen: My Lords, perhaps I may, first, thank noble Lords for their kind words of congratulation. My noble friend Lord Peyton asked me a number of questions which he then advised me not to answer. However, the House may like to hear an answer from me on such issues, which I shall attempt.
On the question of delay, as we discussed earlier— and all noble Lords have highlighted this—we are dealing with an extremely complex subject. Such matters have, quite properly, required very full consideration. My noble friend also asked what the order meant. My initial remarks were extremely detailed and very full; indeed, some 10 minutes' worth of technical discussion. However, I believe that I can summarise very shortly the purpose of the order.
The order transfers the pension rights and assets in the British Rail Pension Scheme to the Railways Pension Scheme on 1st October and makes provision for their allocation between the initial sections of the RPS. It also makes amendments agreed between the Government and the pension trustees to other existing British Rail pension schemes, the Railway pensions protection and establishment orders which came into force on 31st May and existing British Rail pension legislation. It also designates sections of the RPS for the purpose of Part III of the Transport Act 1980. That is a very concise explanation of what in effect the order that we are discussing this morning actually does.
The noble Baroness, Lady Turner, and the noble Lord, Lord Tordoff, both made the connection between the order and the RMT dispute over signalmen's pay. First, I should like to make it clear that the date for implementing the pension transfer was set just over a year ago when the dispute was not even in contemplation. These events are indeed purely coincidental.
I should start by saying that the Government and the trustees agreed that we could not allocate to the open section of the new scheme a reserve for pay restructuring which was uncertain. We should divide the assets between sections only on the basis of known liabilities. This is the key to the understanding of this question. Any other method could lead to unfairness particularly to the pensioners who could rightly lay claim to their share of assets which subsequently turned out not to be necessary to support liabilities because the restructuring never took place, or did not take place to the degree anticipated. As we all know, pay restructuring is not an easy matter.
The order provides therefore that any restructuring which has taken place by 1st October, or has been agreed by that date, for implementation on 1st January next, will be taken into account when assessing

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liabilities. If the signalmen settle by 1st October—of course we all hope that they will—the increase in the liabilities in relation to them will be taken into account in dividing the assets between pensioners and active members, and subsequently informing the Railtrack section of the scheme. I think that is the full answer to the issues raised both by the noble Baroness and by the noble Lord. My noble friend Lord Peyton asked me a straightforward question: can pensioners have a copy of some explanatory documents? The trustees will be explaining the effect of the order.
Lord Peyton of Yeovil: My Lords, my noble friend must not get me wrong. What I thought I asked him was whether it was his intention that every pensioner should receive a copy of the order. I could imagine them having such an enjoyable hour or so with their wives discussing what the document meant and being bathed in relief as the significance of each word in the order became clear to them. But I think that is a question which does not require a very serious answer from my noble friend.
Viscount Goschen: My Lords, I should hate to deny anyone the pleasure of reading the order, but I feel that for their relief the pensioners should rely on the debate and the words uttered by your Lordships this morning during our discussions of this situation. The House is aware of the contribution made by my noble friend Lord Peyton in the consideration of these issues of railway pensioners. He is aware that the Government have had to play a dual role—that is, safeguarding the interests of pensioners and at the same time protecting the interests of the taxpayer. However, both the Government and the trustees consider that the compromises we have reached are fair and just to all concerned. On that note, I commend the order to the House.
On Question, Motion agreed to.

Education (Assisted Places) (Amendment) Regulations 1994
12.54 p.m.
The Minister of State, Home Office (Baroness Blatch)The Minister of State, Home Office (Baroness Blatch) rose to move, That the draft regulations laid before the House on 7th July be approved [24th Report from the Joint Committee].
The noble Baroness said: My Lords, it is my pleasant task to move these regulations. Their purpose is to make minor changes to, but essentially to update as we do each year, the main regulations of an already well established scheme. The draft regulations therefore provide for amendments to be made to the principle regulations, which are the Education (Assisted Places) Regulations 1989.
It may be helpful if I begin by referring to those principle regulations governing the administration of the scheme. Your Lordships will know that the assisted places scheme was established in 1981 for the purpose of widening the educational opportunities of able children from low income families. It provides their parents with assistance towards the fees of some of our best independent schools. The assistance is on a sliding scale based on parental income, and most of the changes
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embodied in the amending regulations are concerned simply with the annual revision of that scale. I hope your Lordships will therefore find them entirely straightforward.
I will deal in turn with each of the provisions before the House today. First, Regulation 1 of the draft regulations is a standard provision which deals with citation, commencement, application and interpretation. If approved, the regulations will come into force on 26th August 1994, ready for the school year 1994–95.
Regulation 2 of the draft regulations increases the allowance made for each dependent child, other than the assisted place holder, when calculating parents' total relevant income. The amount of the allowance is raised from £1,125 to £1,140, that is, by the same percentage which applies to the up-rating of the parental contribution scales —to which I shall come in a moment. Where parents have more than one child, this allowance reduces the contribution they would otherwise have to make towards the fees of the assisted place holder. It is helpful to parents with larger families, and up-rating it in line with inflation will maintain their position.
I now come to the main purpose of these regulations before the House today. Regulation 3 of the draft regulations sets out the income bands used for assessing parents' contributions towards fees. These bands have been uprated to take account of the movement in the retail prices index to October last year—that is, by 1.4 per cent. The income threshold at or below which parents pay nothing towards fees is raised from £9,225 to £9,352 a year. There are corresponding increases in the thresholds for income bands above that level, in which progressively higher percentage contributions become due. The effect of this amendment is that parents whose relevant income has risen in line with inflation will continue to contribute the same proportion of that income. Their contribution will remain broadly constant in real terms. Those whose income has risen faster than inflation will contribute more in real terms. Others whose income has not kept pace with inflation will pay less. So the scheme targets help where it is most needed. I hope your Lordships will agree that this is wholly equitable.
The annual up-rating arrangements build upon the scheme's essential principle that the lower the parental income, the greater the Government assistance should be. The income threshold for full remission of fees—to which I have just referred—is set deliberately so that the least well-off families benefit most. The scale then rises in a fairly steep curve so that better off families get progressively less assistance, and eventually none at all at high income levels. This is in keeping with the aim of the scheme, which is to open doors of opportunity to those who would otherwise never be able to contemplate paying fees. The scheme continues to prove highly successful in achieving that aim. Assisted place pupils come from families whose income is well below the national average, and they do better at GCSE and A Level than their peers in maintained or independent schools generally.
The annual up-rating that I have described is necessary to ensure the continued smooth and fair running of the assisted places scheme. It has long been popular with parents. The rate of take up in schools, now at its highest level ever, is proof that it is going from strength to strength. The scheme is 0now in its 13th year. Along with many parents throughout the country, the Government are immensely encouraged to see the successes—in music, the arts and sport as well as in academic subjects—which assisted pupils have recorded. Over the years since this excellent scheme was introduced, over 65,000 children have benefited from education at some 300 of our best independent schools. There are now over 30,000 pupils in the scheme in England and Wales, well over a third (40 per cent.) of whom are enjoying totally free education at these schools. That means that the parental income is well below £9,000 a year. The Government are committed to supporting them. I beg to move.
Moved, That the draft regulations laid before the House on 7th July be approved [24th Report from the Joint Committee]. —(Baroness Blatch.)
Baroness David: My Lords, I thank the Minister for explaining the regulations. But first I must congratulate her on her new appointment at the Home Office which I am sure she will enjoy and I hope she will be a civilising influence there. She must perhaps be quite glad that two very controversial Bills from the Home Office have got through this House now and she does not have to deal with those as she has had to deal with a good many very controversial education Bills in her time. I daresay she will be quite pleased that that is the end of those, for the moment anyway. I offer her my best wishes.
The Minister will know that the scheme is not popular on this side of the House. We object to subsidising private schools at the expense of maintained schools. There is no doubt that the assisted schools would for the most part be in very real difficulties if they did not receive the fees from these pupils. I understand that 21 private schools receive more than £750,000 each and seven more than £1 million. Sixty-three schools have more than 20 per cent. of their pupils on the scheme, 13 more than 30 per cent. and two more than 40 per cent. It is certain that the independent schools are glad to have those pupils, not only for the cash they receive but also because they boost their exam results. The maintained sector is the loser. This money, spread among those schools, would help with improving library facilities, equipment, field trips, upkeep of buildings and much else.
Perhaps the Minister will confirm that the cost of the scheme was £92.8 million in 1992–93 and is expected to rise to £110 million in 1995–96. I remind the House that in 1982–83 it was £8.5 million.
Will the noble Baroness tell us the intended number of places in 1994–95? I understand that there were 28,764 pupils in April 1994, although the maximum number of possible places is 33,593. I am not sure whether those figures fit in with the figures that the Minister gave when she introduced the regulations. If my figures are right, I believe that the shortfall of almost
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5,000 is due to the Government not being able to meet the costs of the scheme if the maximum number of places were to be taken up. If that is not so perhaps we may have the explanation.
Figures quoted in another place indicate that between 1988–89 and 1992–93 there was a 6 per cent. increase in participation in the assisted places scheme but the cost increased by 40 per cent. Those figures are given at col. 275 of Hansard for 19th July in another place. What are the equivalent figures for LEA maintained schools?
For reasons which have not been fully explained, private school fees have increased at a rate well above inflation in recent years. It has been suggested that those schools which have about half the pupils on APS have put up their fees even more knowing that it will be the taxpayer who will pick up the bill. Perhaps the Minister would care to comment on that. In the 1992–93 academic year fees ranged from £2,790 to £9,210. That is a very big spread. The average cost was £3,236. The average cost in an LEA maintained school is £2,741.
Why do the Government discriminate in favour of such a small minority? Have reports from HMI and Ofsted indicated that pupils in assisted places achieve better results than those in LEA schools? Have reports indicated that the quality of education is better?
I should like to ask about sixth forms in the independent sector. How many pupils move at 16 or 17 from the maintained to the private sector and how many from the private sector to sixth forms in schools, sixth form colleges or tertiary colleges? When the 1980 Education Bill was going through this House, Lord Butler had misgivings about the scheme as a whole and was in particular anxious about maintained school sixth forms being weakened by pupils moving at that stage. That is why originally the LEAs had a veto on pupils moving then, which has since been removed. The many conditions laid down in 1981 have been whittled away, making it easier for pupils to transfer at any age.
Under Regulation 19 of the principal regulations, participating schools must ensure that at least 60 per cent. of all their assisted places pupils attended state schools before taking up their places. Two years should have been spent there. Is that still the case?
I apologise for asking so many questions, but I hope that I shall get the answers.
Lord Finsberg: My Lords, perhaps I may declare an interest as a member of the governing council of an independent school which has been operating the scheme for a long time. I had intended to ask one or two brief questions, but after the speech from the noble Baroness opposite, which was a collection of the ragbag arguments of the Labour Party for the past decade, I feel that I must protest. We know that there is a hatred on the part of the other side of the House towards independent schools. They trawl whatever newspaper cuttings they can find to denigrate private independent schools. I resent that. What is more, the children at those schools resent it as well.
I now return to what I was going to say. First, perhaps I may congratulate my noble friend on her translation to another department. To whichever department she goes

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she will bring a civilising influence. She masters her brief so that those on the other side feel uncomfortable when they try to argue with her.
I had a brief word with the noble Baroness a few weeks ago because the school on whose governing council I sit is finding that the cost of running the scheme is beginning to be very heavy. We are carrying a burden which runs well into five figures. That is very worrying. My noble friend was kind enough to say that she would be happy to see me at a mutually convenient time, together with the headmaster. Having myself been a Minister who was once translated, I hope that I may assume that she will pass on that undertaking to her new colleague, whom I shall not worry until the autumn. That would be very helpful.
The danger is that it appears from the information at my disposal that we are not the only independent school which is finding a growing burden because of what I can only imagine is the Treasury's refusal to face up to the real costs which the schools are carrying.
I say no more than that today. That was all that I originally intended to say, but I was somewhat provoked.
Lord Addington: My Lords, on these Benches we are not overly happy about the scheme. We cannot help but feel that the money spent on the assisted places scheme could be better spent in the mainstream maintained sector.
I can understand if, after 15 years of government and a great deal of change in the education system, most of which has been in favour of choice and greater variety, there is still insufficient capacity within the state sector to provide children with ability from lower income families with the right degree of choice, the Government wish to go to the private sector regardless of how good a job is done there. However, I cannot help but feel that, if the sums of money which are being spent—and we have just heard from the noble Lord that apparently even more is now required—were pumped into the mainstream system, it would help more children. One would not be helping individuals but helping classes by providing better teachers and better facilities. That is the only real objection to the scheme. We are not talking about providing individual education; we are talking about helping a large number of pupils with the resources available.
Having said that, there is little more that I can say about the scheme. I hope that it assists that comparatively small number of pupils in our education system who benefit from it.
Baroness Blatch: My Lords, it is unfortunate that we repeat this debate every year. We return to the unadulterated politics of envy. These are young people from extremely low income families who are given a lifeline because their local schools simply cannot provide for them. Often it is not a question of money but relates to the performance of the school. Some young people, perhaps from inner cities, are given an opportunity to partake of a very good education.
My noble friend Lord Finsberg will know, as I know, how much the schools welcome the opportunity to make their schools and expertise available to young people
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from low income families. They are careful to make sun: that those pupils are not distinguishable in any way when one visits the schools. They add to the life and enrichment of the school. I find the debate that we are having extremely stultifying.
Baroness David: My Lords, I really do not think that envy comes into it at all. We are anxious that state: schools should be as good as possible. If as the Minister says, state schools are not adequate, the Government have been in power for 15 years and they ought to be ashamed that the schools are not better.
Baroness Blatch: My Lords, I think that the noble Baroness has taken me completely out of context. Many thousands of our state schools are highly performing, giving every satisfaction to the parental customer and the children whom they serve. That is not so for every school in the system, it is increasingly the case that they perform better, that is certainly true. But we also know that the individual needs, aptitudes and abilities of a small proportion of the children are well served by the scheme. We happen to think that it is a good scheme, it is certainly popular with the schools and children. We shall continue to support it. We already know that there is a real likelihood, if what we believe from the leader of the party in another place comes true, that VAT will be levied on independent schools. That is not just making sure that this scheme does not survive, it is taking a measure which will probably secure the demise of many independent schools. I find that definitely part of the politics of envy.
Perhaps I may give the House the background of the families from which the children come. In 80 per cent. of the assisted places in the scheme, the families have a. relevant income below the national average of £18,000. That is, 80 per cent. of the children come from families with an income below £18,000; 91 per cent. below £20,000; 99 per cent. below £25,000; 40 per cent. of the families are below the threshold of £9,225. I believe that we are serving the needs of children predominantly from low income families.
I was asked specifically about the academic performance of the schools. I am pleased to answer that question: in assisted places schools—and that includes all the children in the schools—for GCSE grades A to C the children achieve a 91 per cent. pass. The assisted places pupils only in those schools have a better record of a 92 per cent. pass rate. If one accepts the record of all independent schools, it is 87 per cent, and if one takes the whole of the state sector, it is 50 per cent.
I move to A-levels, grades A to E passes. For the assisted places schools, all pupils have a 93 per cent. pass rate; if one takes only the pupils from assisted places schools it is 92 per cent.; for all independent schools, it is 90 per cent. and for all state schools it is 82 per cent. Therefore, I am pleased to confirm that the academic performance of the young people is better than the national average and is certainly better even within the independent school average.

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The noble Baroness knows that the 60 per cent. to 40 per cent. ratio still applies, and I can confirm that. Overall, the percentage in the scheme from maintained schools is nearer 70 per cent. to 30 per cent. than 60 per cent. to 40 per cent.
As regards the participation scheme, I cannot remember the specific figures mentioned by the noble Baroness; but in the 1992–93 out-turn, the places available were 33,593. For the 1993–94 out-turn, they were 33,878, and for 1994–95 the expected and projected figures are 34,124. The projected figures for the following year are 34,332 and for the year 1996–97, they are 34,379. The first year percentage take-up in each of those years is 100 per cent.
The other point made by the noble Baroness was about cash. The voted estimates for schools assisted places schemes from 1988 started at £51 million for 1988–1989. As the noble Baroness said, it is to rise to £110 million for 1996–97. For the present academic year, it is £102 million. That is as the scheme matures and it is entirely in accordance with plans. I was asked to confirm the cost of the scheme as rising from £93 million in 1992–93 to a planned £110 million. I have already done that and given all the figures.
Going back to the incomes of families, the average income of a family on an assisted places scheme is £10,982. That is only 58 per cent. of the average national income.
The last point which I shall address in the debate is the cost of a place in maintained schools compared with the cost in assisted places schemes. The average cost of an assisted places pupil in 1992–93 was £3,405. That was made up of £3,280 on fees and £125 on incidental expenses, which include uniform and travel.
The average parental contribution towards fees was £716, which reflects the low income of the families, and the average fee was £3,996. In some areas, the average cost of an assisted place is cheaper than the cost of a maintained pupil and I can give three examples. Of three Labour boroughs, in Tower Hamlets, the cost of a secondary place was £3,920; in Hammersmith and Fulham, it was £3,630; in Hackney, it was £3,523. The higher average cost of an assisted place that I gave at the beginning reflects the higher than average cost of sixth-form provision in which a greater than average proportion of assisted places pupils participate, the effective targeting of the scheme's benefits to those on low-income families which I have already mentioned and incidental expenses for uniform and travel grants. So I do not believe that it is in any way an extravagant scheme and I believe that the benefits are there for all to see.
I thank noble Lords for their very kind remarks about my new appointment. My final comment to my noble friend Lord Finsberg is that I shall be pleased to pass on his request for a meeting to discuss this. The point which he made is important, it is causing tensions but the accusation made by the noble Baroness simply does not hold true. The rise in the fees in independent schools has no effect on the scheme because there is a capping system on the fees. Therefore, on the amount of money paid per place, whether it is the most expensive
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independent school in the land, average or below average, the amount of capping per pupil in the scheme remains the same. My noble friend is right to say that that is beginning to cause tensions because the contribution being made by the independent schools to the education of those children is now proving costly. I believe that that is the point that my noble friend wishes to discuss.
Baroness David: My Lords, before the noble Baroness sits down, she did not answer my questions about the transfer at 16. Perhaps she would prefer to write to me about it, in which case I shall be quite happy.
Baroness Blatch: My Lords, I shall of course write. There were many detailed and rather specific questions raised and with no notice it is difficult to answer them all. However, I shall write to noble Lords on any questions which I have not answered. I commend the regulations.
On Question, Motion agreed to.

Education (Inter-authority Recoupment) Regulations 1994
1.17 p.m.
Baroness Blatch Baroness Blatch rose to move, That the draft regulations laid before the House on 20th June be approved [22nd Report from the Joint Committee].
The noble Baroness said: My Lords, I beg to move that the draft Education (Inter-authority Recoupment) Regulations 1994 which were laid before the House on 20th June be approved.
I shall briefly explain the purpose of the regulations laid before the House under the affirmative resolution procedure. They concern the process of inter-authority recoupment whereby one local authority pays another for educating a child who crosses the authority's boundary to go to school.
The regulations apply to both England and Wales. They are made under Section 51 of the Education (No.2) Act 1986, as amended by Section 279 of the Education Act 1993. This provides that inter-authority recoupment should no longer be automatic and instead gives the Secretary of State power to specify in regulations the scope and nature of recoupment.
We made clear when the 1993 Act was before Parliament that we would not make any regulations until we had consulted extensively. These regulations represent the outcome of over a year of consultations with the local authorities, the Churches, the teacher associations and those with an interest in special education. We cannot fully please everyone, as is usually the case, but these final regulations reflect a broad consensus on the way forward.
Changes to the recoupment system are needed to ensure that more money goes directly to schools and other services without the present bureaucratic waste of resources. I can definitely confirm that the system at present is exceedingly bureaucratic and exceedingly wasteful of resources. The present system of authorities

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billing each other not only wastes £2 million per annum in administrative costs, but also leads to delays and disputes, some of which have dragged on for years. Some £300 million is being shuffled around the present recoupment system, and the delays in getting such large sums to where they are actually needed are needlessly disruptive.
That problem is going to get worse as more parents choose to send their children to schools in neighbouring authorities. And the expansion of the grant-maintained school sector makes it anachronistic for money to pass between LEAs for pupils educated at schools for whom the LEAs are no longer responsible.
Under the new arrangements, from 1st April 1995 local authorities will get funds directly through their standard spending assessments for all the pupils being educated in their schools, regardless of residence. From the same date, recoupment will end for the vast majority of pupils.
But the regulations retain recoupment for special school pupils, statemented pupils in mainstream schools and children educated in hospital, because these categories of pupils can be expensive to educate and the pattern of provision is uneven. There is a broad consensus that recoupment should be retained for such pupils. The regulations also allow neighbouring authorities to operate recoupment for other categories of pupils if they consider that local circumstances make this appropriate.
There is nothing in these regulations which will prevent us from targeting extra resources for children who need relatively expensive education; its very flexibility is its strength. I cannot believe that your Lordships would want to retain the current inter-authority recoupment arrangements, which have become a wasteful game of pass the parcel. That parcel consists of millions of pounds which should be spent on our children's education. I therefore urge the House to support the Motion and approve these regulations.
Moved, That the draft regulations laid before the House on 20th June be approved [22nd Report from the Joint Committee].—(Baroness Blatch.)
Baroness David: My Lords, I thank the Minister again for explaining the regulations. I have to say that the majority of LEAs regretted the Government's late decision to table an amendment to the Education Bill in February 1993 to alter the legal framework within which inter-authority financial recoupment for extra-district pupils operates. Under the amendment the Secretary of State for Education was given power to make regulations under which most recoupment would end and a compensating adjustment would be made to the primary, secondary and 16-plus elements of the education component of the standard spending assessment so that they would be based on the number of pupils attending the LEA's schools, regardless of their LEA of residence.
The objections raised at the time remain valid. First, the Government's proposals represent a fundamental erosion of the constitutional principle that LEAs are responsible for their own residents. Secondly, recoupment, in principle and in practice, is more flexible
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than the grant system and better able to cope with sudden and significant increases in the number of pupils to be provided for and with any significant demographic change. How will the Government know in advance how many children will move from one LEA area to another—and indeed in the course of the year? Thirdly, the Government's proposals are unlikely to create any significant administrative saving, especially as special education is to continue to be the subject of recoupment. Five thousand pupils educated in special schools outside their own area involve 100 education authorities. Therefore there may be a significantly larger number of LEAs involved if the present reorganisation goes ahead.
I know what the Minister said about bureaucracy; and I know what the Parliamentary Under-Secretary of State said in the Commons: he referred to the bureaucracy of the present system, claiming that removing 95 per cent of the pupils from the recoupment system will lead to a massive reduction in bureaucracy. But that is not the case, as recoupment will be maintained for the most difficult and time-consuming cases; namely, for children in special schools, for children with statements in mainstream schools, and for children in hospital schools.
In 1993, the 1986 Act was amended to allow for recoupment for children under statutory school age. Although it is a policy of the Council of Local Education Authorities to support under-fives recoupment, following consultation the majority of LEAs came out against it, although not a majority of AMA member authorities.
As LEAs receive SSA for the number of children under five in their area whether or not they are in attendance at school, there is no financial incentive to make nursery provision. That is important. Those LEAs that make nursery provision must accept pupils from other LEAs because of the Greenwich judgment, although they can expect no recompense from these pupils' LEAs.
Regulation 3 does provide for voluntary arrangements for under-fives recoupment, but that is not satisfactory. If nursery provision is to be improved, the regulation should be amended to remove this anomaly.
I have to say that these regulations represent further opportunity for the Government both to reduce local government discretion and accountability and to control spending levels because they accord yet greater significance to the revenue support grant. The Government have asserted that the expansion of the grant-maintained sector makes the operation of inter-authority recoupment increasingly cumbersome and anomalous. But it is still the case that in many LEAs there are either no grant-maintained schools or very few. GM schools do not in any event have to be funded through the LEA.
It is accepted that there is a problem in the Inner London area, where the dismemberment of ILEA created a large number of small LEAs. In some parts that has resulted in up to 60 per cent. of pupils crossing borders. The problem then is that recoupment rates effectively determine an authority's education budget. That is not changed by switching from recoupment to grant: an LEA is unlikely to increase its council tax to improve facilities in its schools if the benefit is to go to

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the children of families who do not pay the tax in that authority, whether the other income towards costs comes from recoupment or from government grant. It would though have helped had the regulations required recoupment claims to be paid within 12 months of receipt. Unfortunately, the legal advice received by the DFE is that there is no power to impose such a deadline. I would like to ask whether that is really the case, or whether the department can do anything to encourage earlier payment.
Discussions are proceeding in the Environment Department's sub-group, which is considering reform of the SSA system to accommodate the change from recoupment in respect of mainstream education to incorporation in the SSA. Even at this late stage—late because the new SSA methodology has to be agreed by the autumn of this year for the new system to be in place from 1st April 1995—there are still important outstanding questions: for example, the extent to which decisions as to the responsibility for the provision of home to school transport and education welfare services should rest with the home as opposed to the educating LEA; and whether, if such obligations are to be borne by the educating LEA, the SSA as at present calculated would be adequate—I hope that the Minister will comment on that point.
In all these circumstances it would be prudent of the Government to give serious consideration to postponing the proposed date for the coming into force of the regulations for at least 12 months; that is, for the new regulations to come into force on 1st April 1996. Such a postponement would have the additional merit of giving any new LEAs time in which to come to terms with the new arrangement. Will the Minister say whether she or the department would be willing to give proper consideration to this postponement?
Lord Addington: My Lords, I rise to speak very briefly. In the situation in which we find ourselves after the government changes, these regulations are probably necessary. They provide for resources to follow pupils to make sure that they get the appropriate teaching. Although we on these Benches are not very keen on the reduction in the role of local authorities in planning, we are prepared to welcome these regulations because they appear to address a problem.
Perhaps I may also add my congratulations to the noble Baroness on her transfer to the Home Office. She will be missed in our debates on education. I hope that she will be able to join in again from time to time.
Baroness Seear: My Lords, I have a nasty suspicion that the unfortunate noble Baroness will once again be expected to deal with education on top of her new duties.
Baroness Blatch: My Lords, again, thank you for those kind remarks. I have a horrid suspicion that the noble Baroness may be right.
I say to the noble Baroness, Lady David, that to suggest that there is no saving is simply not true. Recoupment will end for 95 per cent. of pupils, and that really must produce a saving. To invite us to postpone
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these regulations would be to delay the possibility of allowing much needed savings to be addressed to the children within the system and to allow local authorities to make better use of that money.
Since most of the recoupment exercise is unnecessary and bureaucratic, it is a role that local authorities can well afford to lose. If anything, LEAs would welcome the opportunity to stop spending money on administering recoupment and spend it on schools instead.
As to the link between local authorities and their local taxpayers, the income raised from local taxes now accounts for a relatively small proportion of local authority expenditure, and especially on education. Increasing numbers of parents are choosing to sever their links with the LEA by sending their children to schools outside their home authority areas as choice is extended to them.
There was a reference to delays in the present system. I have to say that the present system gives rise to many disputes about recoupment, especially in London, which I know has been singled out by the noble Baroness, where many pupils cross borough boundaries. Those disputes involve hundreds of thousands of pupils and hundreds of thousands of pounds. They drag on not for weeks but months, sometimes even years. Sometimes they become acrimonious. Some authorities are still in dispute about what happened back in 1989. That cannot be good for the relationships between local authorities and cannot be good for budgeting.
The price of all that is not just the £2 million that it now costs to administer the recoupment scheme. I daresay many schools would like a share of the extra resources that that represents. But I have to say that the sums involved in the recoupment system add up to over £300 million. Delays and unpredictability in the transfer of so much money can have a substantial impact on the delivery of education.
I was asked whether local authorities would be unlikely to increase their council tax to improve facilities in schools if the benefit were to go to the children of families who do not pay the tax. Income raised from the council tax now accounts for a small proportion and in a sense my answer to the previous point covers that matter.
A point was raised about the under-fives. After a good deal of thought and considering the differing views put forward by those who responded to the consultation paper, we took the view that recoupment for under-fives without statements of special needs or in hospital should be voluntary rather mandatory, for the time being at least. During the consultation exercise it became apparent that local authorities valued their freedom to adapt their own policies on provisions for under-fives. We concluded that in the absence of a clear consensus on the issue it would not be right to disturb the status quo.
As part of the annual consultations on the local government finance settlement, my officials are holding detailed discussions with the local authority associations on the best way to achieve agreement. Those discussions are still taking place and are making helpful and, we believe, constructive progress.

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On that issue, as on the regulations themselves, we are at pains to proceed on the basis of consensus with local authorities because we feel that that will achieve the best way of implementing the policy. We shall continue to do that.
I was asked whether the SSA would cover transfer. The voluntary recoupment arrangements allow for flexible arrangements for the kind of issues referred to. It is our view that the flexibility within the system will be strengthened rather than constrained. I commend the regulations to the House.
On Question, Motion agreed to.

Stonebridge Housing Action Trust (Area and Construction) Order 1994
1.32 p.m.
The Minister of State, Department of the Environment (Viscount Ullswater)The Minister of State, Department of the Environment (Viscount Ullswater) rose to move, That the draft order laid before the House on 14th June be approved [21st Report from the Joint Committee].
The noble Viscount said: My Lords, this order seeks to establish a housing action trust (or HAT) for the Stonebridge estate in the London borough of Brent to join the five already established and working to regenerate their communities in Liverpool, Birmingham, Hull, Tower Hamlets and Waltham Forest.
When the idea of housing action trusts was first mooted there was some opposition to the idea. That conflict is now behind us, and I welcome that. For the HAT idea is benefiting those who need it most. Tenants on the Stonebridge estate, like all the other areas for which HATs have been established, voted decisively in favour of a HAT as the best means of radically improving their estate and their prospects.
The estate has the reputation of being one of the worst in the country. It comprises some 1,700 dwellings in a mixture of high-rise and medium-rise blocks, with some town houses around the edge of the estate. Several of the blocks and most of the town houses have structural problems. Unemployment and crime levels are high. Fear of crime is even higher.
A prime statutory objective of any HAT is to improve the housing accommodation on the estate and to manage and use that accommodation effectively. But HATs are also charged with improving the economic, social and environmental conditions of their areas. Picking up the concerns already voiced by residents on the estate, the shadow HAT has said that it will attach great priority to improving access to jobs for the estate's residents. The major capital projects that the HAT will undertake would create jobs. The HAT will also train its residents to help them gain access to those and other jobs. It will also look to forge close links with the police, the local authority, and other agencies to tackle crime on the estate. It will seek to make the estate a better place on which to live by providing new or improved community, youth and leisure facilities. Above all, it will involve tenants in the day-to-day management of the estate.
Stonebridge tenants are keen for the. HAT to make a start and the shadow board is eager to bring the benefits of the HAT to all estate residents. I commend the order to the House. It is a crucial step towards realising the opportunities which the HAT can bring to those who live there. I beg to move.
Moved, That the draft order laid before the House on 14th June be approved [21st Report from the Joint Committee].—(Viscount Ullswater.)
On Question, Motion agreed to.

Scottish Nuclear Limited (Rateable Values) (Scotland) Order 1994 Scottish Hydro-Electric plc. (Rateable Values) (Scotland) Order 1994 Scottish Power plc. (Rateable Values) (Scotland) Order 1994 Alcan Aluminium UK Ltd. (Rateable Values) (Scotland) Order 1994 Railways (Rateable Values) (Scotland) Order 1994 British Gas plc. (Rateable Values) (Scotland) Order 1994 Caledonian MacBrayne Limited (Rateable Values) (Scotland) Order 1994 Electricity Generators (Rateable Values) (Scotland) Order 1994 Glasgow Underground (Rateable Values) (Scotland) Order 1994 British Telecommunications plc. (Rateable Values) (Scotland) Order 1994 Forth Ports plc. (Rateable Values) (Scotland) Order 1994 Mercury Communications Ltd. (Rateable Values) (Scotland) Order 1994 Water Undertakings (Rateable Values) (Scotland) Order 1994 Lochaber Power Company (Rateable Values) (Scotland) Order 1994
1.36 p.m.
Lord Lucas Lord Lucas rose to move, That the draft orders laid before the House on 14th June be approved [21st Report from the Joint Committee].
The noble Lord said: My Lords, I beg to move that the 14 orders standing in my name on the Order Paper be approved en bloc. These orders relate to the rateable

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values of certain utilities and companies connected with them. They prescribe the rateable values or the rules to be used in determining rateable values for 1994–95. The approach used in their preparation follows the pattern determined at the time of the last revaluation in 1990. The orders have been the subject of consultation with the ratepayers concerned and with representative organisations, such as the Scottish Assessors' Association and the Convention of Scottish Local Authorities. No objections to the detailed content of the orders have been received.
Later this year, new orders will be laid before the House based on a new revaluation and will apply for five years beginning 1995–96 to those enterprises remaining in formula valuation. I believe that the 14 orders represent fair and reasonable proposals. I commend them to the House. I beg to move.
Moved, That the draft orders laid before the House on 14th June be approved [21st Report from the Joint Committee].—(Lord Lucas.)
On Question, Motion agreed to.
House adjourned at twenty-three minutes before two o'clock.