Lords Sitting of 15 June 1994

Preamble
The House met at half-past two of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Ripon.

Grey Squirrels: Population Control
Lord Campbell of Croy Lord Campbell of Croy asked Her Majesty's Government:
What action is being taken to prevent grey squirrels spreading within Great Britain, with consequent threat to the survival of red squirrels in such areas as northern Scotland.
Viscount St Davids: My Lords, so far it has not proved practicable to reduce the number of grey squirrels over the whole of their range in Great Britain. Control of this species is particularly important in areas where grey squirrels are causing significant damage to broadleaf trees, or where red squirrels are present.
Lord Campbell of Croy: My Lords, I am grateful to my noble friend for his reply. Is he aware that grey squirrels, imported from America many years ago, do not attack red squirrels, but that their presence and pressure on food resources make it very difficult for the reds to survive? Will the Government encourage the schemes, besides that at Thetford, to prevent the eventual extinction of red squirrels in most of Britain?
Viscount St. Davids: My Lords, my noble friend is indeed right. Although they are larger, there is no evidence that grey squirrels physically attack reds. The primary cause for the decline in the number of red squirrels is not known for certain. It is thought that the grey squirrel can out-compete the smaller and more timid red squirrel where they co-exist. Studies so far suggest that the red squirrel will disappear from a woodland within six years of its colonisation by the grey. The Government, through the Forestry Commission and English Nature, will do all they can to promote schemes to preserve the red squirrel.
The Duke of Buccleuch and Queensberry: My Lords, is my noble friend aware that since the grey squirrel started to spread from the Lothians into the Borders of Scotland over the past seven years, vigorous action groups have been formed there and subsequently in Northumberland and south-west Scotland to try to combat this invasion? Will he be able to pledge government support and encouragement to these action groups to carry on their good work and perhaps investigate the possibility of using some form of birth control substance which can be offered to grey squirrels in selected hoppers which are inaccessible to red squirrels?
Viscount St Davids: My Lords, the Government have a considerable interest in these matters through English Nature and the Forestry Commission. They
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also, in part, fund the wildlife trust partnership of the Royal Society for Nature Conservation. I also draw your Lordships' attention to the valuable work which is also undertaken by the National Trust and wildlife trusts.
Lord Taylor of Gryfe: My Lords, is the Minister aware that £22 million was paid to the private sector last year, of which I approve, in order to encourage new planting, and that more than 50 per cent. of that planting was in broadleaf woods? Can the Minister confirm that it is particularly broadleaf woods which are affected by this pest? It seems that we are spending money to encourage the planting of broadleaf trees at the same time as there is an expansion of the grey squirrel population. Will the Minister encourage the Forestry Commission in the experiments which it is undertaking at the moment with feeding hoppers whereby the grey squirrel will be poisoned if it eats food from them and the red squirrel will survive? Will he encourage the Forestry Commission to progress the experiments in this field?
Viscount St. Davids: My Lords, the Forestiy Commission has set up a red squirrel prcrtection area in Thetford Forest where grey squirrels will be discouraged and red squirrels will be supported by supplementary feeding and the release of captive-bred animals. Similar measures are under consideration for Cannock Chase. However, control is likely to be more effective where landowners and occupiers join together to form squirrel control groups or squirrel management groups. Two such squirrel management groups have been formed in key areas of Scotland where both red and grey squirrels are present. The Forestry Commission is a member of both groups. The objectives of the groups include the conservation of red squirrels and the control and limitation of damage by grey squirrels.
Lord Hailsham of Saint Marylebone: My Lords, from the admirable brief which my noble friend has with him, can he inform the House in which parts of the country, other than the Isle of Wight and the northern part of Scotland and any areas which he has already mentioned, the red squirrel still survives?
Viscount St. Davids: My Lords, the red squirrel will survive in all areas of coniferous trees because it is only in the deciduous woods that the grey squirrel lives.
Baroness Nicol: My Lords, is the Minister aware that the remaining population of red squirrels amounts to only 30,000 in England, 9,000 in Wales, but 121,000 in Scotland? Is he also aware that the tests which are being carried out on controlling grey squirrels are inevitably limited by the availability of money? Will he ask his department to encourage sponsors to take up the question of controlling grey squirrels? That would be a commercial proposition which might appeal to a number of sponsors. I believe that it would certainly be much more commercially attractive than the control of the wart biter cricket which the Government have also put on their list for sponsorship.
Viscount St. Davids: My Lords, of course I shall bring the most helpful suggestion of the noble Baroness, Lady Nicol, to the attention of my right honourable friend.
Lord Montagu of Beaulieu: My Lords, is my noble friend aware that time was after the war when, in return for grey squirrel tails, cartridges and cash bounties were given? Would it not be a good idea to find a good incentive to encourage people to kill more grey squirrels?
Viscount St. Davids: My Lords, I well remember the scheme which my noble friend has mentioned. I used to use it as a way of supplementing my pocket money. But with today's thoughts on guns and the distribution of firearms, I believe that it may be unwise to put a money bounty on the tail of the grey squirrel.
Lord Stoddart of Swindon: My Lords, is the noble Lord aware that I am sure that many of us in this House, and certainly many animal lovers throughout the country, will be horrified at some of the suggestions which they have heard this afternoon, particularly the collection of squirrel tails? Is he further aware that the grey squirrel is a very intelligent and entertaining animal? I was certainly horrified to hear on Meridian Television that people were being recommended by the Forestry Commission to shoot and poison them. I sincerely hope that that advice will be withdrawn and that the grey squirrels which play in my garden and give a lot of pleasure to my family and myself will not be shot or poisoned by my neighbour.
Viscount St. Davids: My Lords, the Forestry Commission's annual survey and the 1991 survey of the Timber Growers' Association both show that grey squirrels are causing serious damage to a wide range of tree species by stripping the bark from the trees, and that they are threatening the success of the Government's policy for maintaining the existing broadleaf woodlands and establishing new ones. Landowners report that they may have to stop planting trees in certain areas because grey squirrels make it impossible for the trees to become established.
Lord Williams of Elvel: My Lords, can the noble Viscount expand on his remarks about squirrel control groups? How does one set up a squirrel control group? Is it related to the suggestion of the noble Duke that there could be birth control for grey squirrels, in which case, will there be a government subsidy for squirrel condoms?
Viscount St. Davids: My Lords, means of stopping the breeding of grey squirrels have been investigated but, unfortunately, have not met with much success.
Lord Campbell of Croy: My Lords, is my noble friend aware that at present in northern Scotland we have only red squirrels because the greys have not yet crossed the Grampians? Is he aware that unofficial voluntary schemes, appropriately named Red Alert, have been started in various parts of Scotland and England to try to stop the advance of the greys?
Viscount St. Davids: My Lords, the Department of the Environment has not had any direct discussions with Red Alert but English Nature has had regular contact and is fully conversant with that organisation's aims and objectives. The organisation is chaired by the noble Viscount, Lord Ridley. Although he is not in his place today, I am sure that all noble Lords would wish to put on the record our appreciation of the major contribution that the noble Viscount has made to our understanding of the means of conserving the red squirrel.

Special Needs Providers: Scotland
2.45 p.m.
Lord Laing of Dunphail Lord Laing of Dunphail asked Her Majesty's Government:
Whether they will ensure that special needs providers in Scotland have both the funds they require and the assurance of continuity essential to the effective performance of their functions.
The Minister of State, Scottish Office (Lord Fraser of Carmyllie): My Lords, the resources allocated to the local enterprise companies to deliver government training programmes for 1994–95 took account of the additional costs involved in providing training for people with special training needs and were based on costs submitted by local enterprise companies in their business plans. It is for each local enterprise company to negotiate contracts with training providers which suit local circumstances.
Lord Laing of Dunphail: My Lords, I thank the Minister for that answer. Does he accept that the new method of funding seriously erodes the cash flow of providers and, more seriously, that it ensures that the most disadvantaged in our society fall through the net because they are not taken on due to the possibility that there might be a lack of full funding for the provider?
Lord Fraser of Carmyllie: My Lords, I am aware that there is some criticism in Scotland that output-based funding should not be the basis that is followed when we are dealing with the training of those with special needs. I do not know whether the noble Lord has any particular case in mind, but perhaps I may advise him that local enterprise companies in Scotland may deem output-based funding arrangements inappro-priate for providers who are concentrating on special needs training. Alternatively, they can agree outcomes at a reduced level.
Lord Carmichael of Kelvingrove: My Lords, the Minister will recognise that this is a very important Question which will almost certainly be dealt with more fully when we get to the Committee stage of the Local Government etc. (Scotland) Bill. As well as the point raised about training by the noble Lord, Lord Laing, I suggest that our educational system ought to provide a good enough basis to enable those with special needs to go on to take up the positions that may be available to them. After what Scotland has done following the Warnock Commission—we still have a long way to go but we have made good progress—I hope that in

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Committee the Minister will provide reassurances that there will be enough money to provide a service for those children who will ultimately require the special needs training to which the Question refers.
Lord Fraser of Carmyllie: My Lords, as the noble Lord will appreciate, particular duties are imposed on local authorities with regard to this. As I am sure that he appreciates, the issue raised in the Question is the training of children with special needs once they have left school and of those adults who have special needs requirements. Business plans are required from the local enterprise companies, which are required to fix within those plans the arrangements that they propose to make for those with special needs. It is a priority that ought to be observed.

Freshly Dipped Sheep: Handling Precautions
2.48 p.m.
The Countess of Mar The Countess of Mar asked Her Majesty's Government:
What advice they are giving to people, other than farmers, who may be handling freshly dipped sheep in confined spaces.
The Parliamentary Under-Secretary of State, Department of Employment (Lord Henley): My Lords, the Control of Substances Hazardous to Health Regulations lay on the employers and the self-employed the responsibility of assessing any risks from such substances and taking the necessary precautions. The Government do not aim to provide specific advice for every situation found in the workplace. Our guidance sets out the general approach people need to adopt in controlling risks, including from handling dipped sheep.
The Countess of Mar: My Lords, I thank the Minister for that Answer. Is he aware that at the moment there is a certain amount of confusion over the definition of a "freshly dipped" sheep? The Minister's noble friend Lord Howe said that it is a sheep that is still dripping when it comes out of the dip. Furthermore, neither the Health and Safety Executive nor the Veterinary Medicines Directorate will specify the period of time after which a sheep can be deemed safe. My concern is for people who may be working in covered markets or at shows. Many shows still require sheep to be dipped before they can be taken to a show. When working in enclosed spaces, people who are sensitive to chemicals might suffer adverse effects.
Lord Henley: My Lords, the noble Countess is right to point out that my noble friend Lord Howe provided a definition of freshly dipped sheep when he stated in a Written Answer:
"A sheep is regarded as being freshly dipped for the short period which follows immediately after dipping, when the sheep is still wet from the dip bath".—[Official Report, 26/5/94; col. WA57.]
The noble Countess is right in saying that dangers are still attached to contact with sheep during the weeks immediately following dipping. That is why we provide
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a booklet to farmers, about which the noble Countess will know, to give them advice on the kind of precautions to take when handling such sheep. Similarly, people working in an auctioneer's show ring, and others whom the noble Baroness gave as examples, will know that, in the light of the COSHH regulations, they must make the appropriate assessment of the risks and then provide the appropriate protection to their employees if they are handling sheep in such circumstances.
Lord Williams of Elvel: My Lords, the Minister has spoken of a booklet which is sent specifically to farmers. Is he prepared to circulate that booklet also to the people to whom the Question refers? They are not farmers yet they must handle freshly dipped sheep, whatever the definition.
Lord Henley: My Lords, as the people to whom we are referring are part of the agricultural community, they will be well aware of the booklet and will be able to obtain it. It is not easy immediately to direct the booklet to them, whereas it is easy to direct it to all registered sheep farmers. I believe that they will be aware of the booklet. In addition, the COSHH regulations provide directions as to how to make the appropriate risk assessment. The first step is to gather information about the substances, the work and the working practices. From that, they can make the appropriate decisions about the precautions that they should take.
Lord Bruce of Donington: My Lords, will the Minister assure us that we shall not receive from the Commission a directive on this subject with about four preambles and 20 recitals? I know from my own personal experience of handling sheep in Lincolnshire in my youth that it is best not to take them into a confined space.
Lord Henley: My Lords, the noble Lord has shown remarkable restraint in waiting until the third Question to raise the subject of Europe. I cannot give him the assurance that he seeks; it is a matter for the Commission as to what directives it proposes. No doubt we shall resist any unsuitable directives, should they come forward, and we shall discuss any suitable directives with the appropriate authorities to make sure that they are exactly the right kind of directives.
Lord Monkswell: My Lords, bearing in mind the Minister's comments on the possibility of sheep being dipped prior to going to agricultural shows, and bearing in mind the presence of the public at such shows where sheep may have been previously dipped, what steps will the Government take to alert the general public to the risk that they might run in association with this problem?
Lord Henley: My Lords, I did not refer to sheep being dipped before going to agricultural shows and the like; that was the noble Countess. If the authorities are asking for sheep to be dipped before they attend agricultural shows, using OPs, the substances about which we are particularly worried—or about which the noble Countess is particularly worried—it is fairly obvious that they will not be dipped that morning. The

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sheep will not be wet and only those in immediate contact with them will have to take the kind of precautions about which I am talking. I do not believe that that will affect the general public.

Further Education: Objectives
2.53 p.m.
Lord Judd Lord Judd asked Her Majesty's Government:
What are their objectives in the provision of further education and how far those objectives are intended to extend both the age and social range of those participating and the range of educational opportunities available.
The Minister of State, Department for Education (Baroness Blatch): My Lords, further education provides a diverse range of opportunities to young people and adults to improve their knowledge and skills, whether they are progressing to further study, entering the workforce for the first time or learning new skills later in life. The Government's objective for further education is to increase participation and attainment still further in order to help to achieve the demanding national targets for education and training. Age and social background are no bar to participation.
Lord Judd: My Lords, I thank the Minister for that helpful Answer. Will the Government refine their expansion targets by setting specific targets for young people, working adults, unemployed people, ethnic minorities and, most importantly, older people and others not currently in the workforce? At the same time, will the Government reaffirm that, whatever the unquestionable merits of vocational courses, education in its fullest sense is an essential ingredient of civilised life for everyone and must never be seen as an adjunct of the economic production line alone?
Baroness Blatch: My Lords, the noble Lord is not generous in recognising what is being done for young people from socially or economically deprived backgrounds or for young people with special needs. The Further Education Funding Council and its approach to its duties has been widely welcomed. It has established a specialist committee to review the range and type of further education available to students with learning difficulties and disabilities and those from economically disadvantaged groups and to recommend how it may best fulfil its statutory duties towards them.
The funding council system has been designed to take into account the particular needs of students with learning difficulties and disabilities and, of course, the growth of access courses to make sure that young people are prepared to take advantage of further education. In particular, the aim is to fund the students rather than the type of programme that they are studying. Therefore, a great deal is being done on all these fronts, and I hope that the noble Lord will see fit to encourage that.
Baroness Seear: My Lords, will the Minister confirm that the Government support the desire that the national vocational qualifications should include an
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adequate basis of knowledge and understanding and not merely the competence in performing an immediate task? Will she confirm that that is the Government's policy in supporting national vocational qualifications which, so understood, we all support?
Baroness Blatch: My Lords, I am grateful to the noble Baroness for making that point. National vocational qualifications are indeed a route for making sure that young people not only understand what they are doing but have a competence in doing it. We want to go as far as we can down the road of making that a real success. I believe that we still have some way to go but a great deal of work is being done to progress that.
Viscount Tonypandy: My Lords, will the Minister look again at the question of the extramural activities of universities? I am beginning to receive correspondence from people who are most anxious that a side effect of the present policy will be that organisations such as the WEA, which have survived for a century, are now in danger by virtue of the system of fees that is being introduced.
Baroness Blatch: My Lords, some of the work to which the noble Viscount referred will be the responsibility of the higher education institutions themselves. Of course, the WEA is continuing its important work. I hope that everyone will agree that where people are unable to meet the fees some consideration is taken to help them to have access to the courses, but that where people are in a position to make a contribution, that should also be considered.
Baroness Hooper: My Lords, in the light of the success of a variety of initiatives, including the Pick-Up Programme with which I was personally involved during my time at the Department for Education—it involved the participation of a wide variety of age groups and social backgrounds—and the development of the NVQ programme, to which the noble Baroness, Lady Seear, referred and which is now a recognised and acceptable qualification for employment, does my noble friend agree that the structures are in place to allow for development in this area and that it is important to encourage greater participation in these programmes?
Baroness Blatch: My Lords, my noble friend makes an important point. The national targets are academic and vocational and all employers are asked to become involved. One of the targets is to make sure that 50 per cent. of all young people in work are working towards NVQs, and we hope that that will have been achieved by 1996. We also hope that by the year 2000, 50 per cent. of the workforce will have qualified at the NVQ level 3 or equivalent and that, by 1996, 50 per cent. of medium to large organisations will be involved in Investors in People. That is another way of auditing the skills of young people and the workforce and ensuring that they are making progress. Obviously, the training and enterprise councils are also key in the process, working together with the schools, unemployed young people and industry and commerce.
Baroness David: My Lords, could the Minister ask the Further Education Funding Council for England to

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organise its funding by rewarding recruitment from certain areas so that underprivileged communities are targeted? I understand that the Further Education Funding Council for Wales uses postcodes to identify those areas and the Scottish FE colleges have areas of priority treatment for that purpose. Will the Minister look into that please?
Baroness Blatch: My Lords, it really depends to which group of people the noble Baroness refers. Of course, all young people under the age of 19 have free access to further education. If they are still in school, it is for the school to make sure that there is a continuum between leaving school, especially for those leaving school with very low qualifications, and the training and enterprise councils or whichever organisation the young people make contact with after leaving school. With regard to people aged over 19, the training and enterprise councils will be responsible for directing young people to further education and training. That includes basic skills' training in which many further education colleges are now engaged. It is important to reach out to young people and persuade them of the value of improving their basic skills. The Further Education Funding Council is making sure that it rewards recruitment in that area so that there is a reward for the institutions which manage to recruit to their numbers young people who are starting on the ladder of further education.
Baroness David: My Lords, perhaps I may explain that I am talking about underprivileged communities, and not just young people. It is the whole community which may be underprivileged that should be helped.
Baroness Blatch: My Lords, perhaps I may switch to my other hat. I am a sponsor Minister for an inner city area which is involved in City Challenge. There are three city challenges for which I am responsible for overseeing that the policies are working in those areas. I cannot think of another government this century who have done more to target their efforts on areas of greatest need.
Lord Dormand of Easington: My Lords, is the Minister aware that a number of groups of people have never been touched in any way by further education and that the largest group consists mainly of working class people who left school without any, or very few, qualifications, who never return to the education system? In those circumstances, will she urge the Further Education Funding Council to look at the problems facing people in that situation? Perhaps she will instigate some research into the matter because I believe that detailed examination of that problem is required.
Related to that, has the Minister seen the statement made yesterday by the chief executive of the Association of Colleges who stated:
"The association's mail box is weighed down by tales of students who have had their benefit removed, despite the fact that they were studying less than 21 hours"?
Baroness Blatch: My Lords, assistance into further education was never a substitute for benefit for people to both work and study. If they are working for fewer than
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21 hours, they are helped. If they are working for more than 21 hours, it is not a pot into which one can tap because at the end of the day—and even noble Lords opposite will realise it one day —resources are absolutely finite. We need to target resources on those in greatest need.
I need to return to what the Government have done for the areas of greatest need in this country; for example, the urban programmes and the City Challenge programmes. So much is going on and education is a part of that. The institutions, the funding systems and the Government are doing everything possible to make sure that young people are being prepared for what will be an increasingly complex and technical world in the 21st century. We are trying to do what we can to convince young people of the value of staying on the educational ladder. We have done more than any prior government.
Lord Glenamara: My Lords, is the noble Baroness satisfied with the way in which some FE colleges in rural areas are changing their character? They are becoming affiliated to a local university in some cases and are changing over from agricultural studies to business studies. That is a real loss to the local agricultural community. Will the noble Baroness keep a very close eye on those developments?
Baroness Blatch: My Lords, it is extremely important that we keep a close eye on developments. However, what is happening in further education is very exciting. In rural areas in particular, where young people cannot get to higher education institutions, colleges are becoming agents for doing the preparation work for sub-degree courses. Having done that work, the students then need to go away for only a limited amount of time to top up the work and perhaps receive a degree or go on to higher education. We need to make sure —and I believe this underpins the noble Lord's anxiety—that that is not done to the exclusion of the lower level work, which is the basic skills work. As far as we can see, there is no evidence to suggest that the lower level work is being neglected while work is being done with the higher education institutions to help young people who have distance problems.
Lord Judd: My Lords, having listened to those exchanges, will the Minister agree that liberal adult education going back over a century is one of Britain's finest traditions, serving all ages in all parts of the community? At the same time, in meeting new vocational priorities, will the Government take great care not to damage the wider educational approach which is central to that tradition? Will they recognise that everybody participating is not necessarily seeking a qualification?
Baroness Blatch: My Lords, that is absolutely essential. We must not do one at the exclusion of the other. But I make no secret that I support the Government's attempt to target resources on making sure that young people have the skills that are necessary to move into the workforce and to face the challenges of the 21st century. That must be. a priority for government. That is why we have taken the view that we should

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engage nationally and that the local authorities should be charged with the business of making sure that the other needs of local people—if I am referring to the Further and Higher Education Act 1992, that is the non-Schedule 2 work—are matters for local discretion. I believe that that is the education to which the noble Lord refers.

Business of the House: Debate this Day
3.6 p.m.
Viscount Ullswater: My Lords, on behalf of my noble friend the Leader of the House, I beg to move the Motion standing in his name on the Order Paper.
Moved, That so much of the order of Monday last as limited the debate on the Motion in the name of Lord Judd set down for today to 3 hours be discharged, and that the debate be limited to 3½ hours.—(Viscount Ullswater.)
Lord Hailsham of Saint Marylebone: My Lords, will my noble friend remove the grammatical misprint in the third line of the Motion as it appears on the Order Paper before it goes into the journals of the House?
Viscount Ullswater: My Lords, my noble and learned friend will need to point out what the grammatical mistake is.
Lord Hailsham of Saint Marylebone: My Lords, it is the word "to".
Viscount Ullswater: My Lords, with that proviso, I commend the Motion.
On Question, Motion agreed to.

Overseas Aid
3.8 p.m.
Lord Judd Lord Judd rose to call attention to the overseas aid and development policies of Her Majesty's Government in the light of the growing needs of the third world; and to move for Papers.
The noble Lord said: My Lords, this debate takes place against the background of disturbing contrasts. On the one hand, there is the excitement and hope of the new democracies in South Africa and Malawi; on the other, there is the sickening nightmare of Rwanda, with genocide on a scale that we have not seen since the killing fields of Cambodia.
In South Africa, after decades of racial oppression, there is now the challenge to work effectively with the courageous leadership of that country in achieving the responsible objectives set for housing, education, health, land and employment and for which the £100 million so far promised from our own aid programme —considerably less than half of what has been found for just one highly questionable dam in Malaysia, Pergau —is for many of us a disappointingly minimal start. In the Middle East, Gaza and Jericho have already indicated how a bright new dawn can be jeopardised by lack of sufficient practical international backing.
In the third world as a whole during the past 40 years, the number of children dying before the age of five has fallen from 28 per 100 to 10. In the past 30 years, the percentage of children enrolled in primary schools has risen from 48 per cent. to 78 per cent. In the past 20 years, life expectancy has increased from 53 to 62. In the past 10 years, the percentage of families with access to safe drinking water has risen from 38 per cent. to 68 per cent. is South East Asia, from 66 per cent. to 78 per cent. in Latin America and from 32 per cent. to 43 per cent in Africa. All that demonstrates what can be done. Yet every year an additional 26 million people—equivalent to almost half the population of the United Kingdom —are still falling into the cesspit of absolute poverty.
Add to that the escalating environmental crisis worldwide, with 70 major international disasters in the 1980s as compared with only 16 in the 1960s, or the prediction that there may well be 100 million refugees and displaced people in the world by the end of the decade, and where in such statistics is there any hope of a stable, decent and secure future for our grandchildren? Of course, there is a major population crisis. No sane Member of this House could possibly deny that. But there is also a consumption crisis, with 80 per cent. of the world's resources being consumed by 25 per cent. of the world's population. We need more effective population policies, but such policies depend upon adequately resourced health, education, gender and other social policies. We need sound sustainable environmental policies, but those policies depend upon greater equity and justice in the distribution of resources and upon the transfer of technology from the industrialised world to the developing world.
What of our United Kingdom response? In replies to Parliamentary Questions, the Government still sub-scribe to the modest UN target of 0.7 per cent. of gross national product for overseas aid expenditure. But, it must be said, they also staunchly refuse to set a timetable for achieving it. Worse, they move disastrously in the opposite direction. From more than 0.5 per cent. of gross national product in 1979, the UK has come down to little more than 0.3 per cent., and it is predicted on the Government's own figures to fall still further to 0.26 per cent. by 1995–96. If the Government are genuinely committed to reaching the UN target, they should obviously timetable a planned expansion of the aid budget to achieve it.
Then what of the division of the aid budget that there is? Some is spent multilaterally and some bilaterally. But by what rational criteria are the funds apportioned? On the one hand, we have the expertise, the experience, the dedication and the professionalism of our own ODA personnel —no mean accumulation. But, on the other hand, we have the powerful case for a co-ordinated, multilateral approach, avoiding confusion imposed upon struggling administrations in the third world as they endeavour to cope with uncoordinated and, frankly on occasion, competing inputs. Surely the objective should be to use our perhaps unrivalled expertise to ensure that bilateral and multilateral aid is never in competition but always well co-ordinated, complemen-tary and, above all, effective and accountable.
Despite all the past assurances that there would be no robbing Peter to pay Paul and that aid to Eastern Europe and the former Soviet Union would be additional and not at the expense of the third world, we now—all too predictably—have one budget, one pot, for the two purposes. Frankly, the additionality is conspicuous by its absence. The amount of aid going to the former Communist world is planned to rise from £188 million in 1992–93 to £331 million by 1995–96. How far will that trend be allowed to go? What will be the eventual cost to the third world?
At present, 66.7 per cent. of British aid is tied to the purchase of British goods and services. We on these Benches would never suggest that all tied aid is bad per se; indeed, that would be absurd. If Britain can combine genuinely assisting the third world with promoting British industry and jobs, so much the better. The difficulty lies in the inherent conflict of interests which can too easily arise between commercial and economically and developmentally sound priorities.
The tying of aid can result in developing countries paying prices above the market rate because of lack of competition. Recent estimates suggest an average of 15 per cent. It also leads to the purchase of inappropriate goods dependent upon availability in the donor country, rather than what may really be needed for sustainable development. Aid tying can also hold back the development of a range of industries in the developing countries themselves. Improving the quality of commercial aid—so that, unlike Pergau, it is always primarily justified on convincing developmental grounds—will bring enhanced value for money to the British taxpayer as well as having a greater impact in reducing poverty.
Sometimes, even on the same day, I receive a number of press releases from the ODA about the aid that it is distributing. The Minister works herself commendably hard in her national and international travel programme, speaking about her latest concerns. But a speech here and a press release there is not enough. The ODA is central to the future of humanity. Many of our domestic preoccupations fade into relative insignificance against the crucial issues; in fact, the very survival of humanity with which the Minister has regularly to deal. Yet we still have too little sense of collective government strategy—of how they see the coming together of Treasury policy, environment policy, defence, trade, agriculture and the rest with aid; of what should be the strategic interrelationship between, on the one hand, the private and particularly effective voluntary sectors and, on the other, the government programmes; and of what should be the right balance between bilateral and multilateral commitments.
Why all the plethora of White Papers on tactical domestic issues but none on the absolutely fundamental issue of the UK's strategy for global survival, let alone development? It is 19 years since we last saw a comprehensive White Paper on ODA matters. That, it must be said, was produced under a Labour Government.
In its recent outstanding human development report, to which my noble friend Lord Desai has made an important contribution—and I look forward to hearing
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from him in the debate—the UNDP has suggested that industrialised countries should enter a 20–20 compact with developing countries whereby 20 per cent. of their aid budgets will be committed to human development priorities such as health and education on condition that recipient countries put 20 per cent. of their budgets to the same priorities. The UNDP estimates that currently most donor countries spend only 7 per cent. of their aid budgets on such human development priorities. It calculates that the figure for the UK is 6.6 per cent. Does the Minister endorse the UNDP proposal? How would she reorientate the existing aid budget to accommodate it?
Trade flows, which dwarf aid in developmental significance, fall under the DTI. Political comment on the conclusions of the latest GATT round has tended to concentrate on the benefits to Britain resulting from the expansion of world trade. But what of the significance of GATT in terms of global, sustainable development? Sub-Saharan Africa alone, home to 300 million people barely existing in absolute poverty, is likely to lose £1.7 billion a year, while countries of the European Union, whose citizens on average enjoy incomes 37 times as large, are expected to gain £40.8 billion per year. That is mainly due to a loss of preferential export agreements with the European Union. How do the Government reconcile that injustice with their development priorities?
Meanwhile, debt remains a Treasury responsibility. The Prime Minister likes to recall the lead which he indeed gave to the Group of 7 with the Trinidad terms initiative on bilateral debt. But that initiative will do little to help countries like Uganda which owe over 60 per cent. of their debt to multilateral institutions—debt which the standard Treasury line insists cannot be considered for rescheduling or cancellation. Instead, Uganda is compelled to ask donors for still more bilateral aid to make repayments on debts to multilateral institutions. As a member of those institutions, we are in effect giving with one hand and taking away with the other. How does the Minister intend to break that vicious circle?
In 1992, the developing countries repaid £100 billion in interest on their debts; that is well over twice the amount that they received in aid. Between 1988 and 1992, it is true that OECD countries—of which we are one—cancelled £6.6 billion worth of debt, but they received £318 billion in debt repayments; in other words, 48 times as much. Where does the development priority begin to be in that situation?
Nowhere is the need for policy co-ordination greater than in our response to conflict resolution. The resources devoted to such work and to pre-emptive diplomacy are pitifully small. We agonise over the additional resources needed by the United Nations High Commissioner for Refugees, but we spend less than peanuts on preventing the crises that lead to the pressures on UNHCR.
ODA expenditure on emergencies has increased five-fold since 1987, inevitably diverting funds from long-term development. In Angola, Somalia, Bosnia and Rwanda the world has been confronted with the dual requirements of humanitarian relief and military intervention. In each case the United Nations has been

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criticised, but surely it is the member states, especially the permanent five members of the Security Council, who should accept the responsibility. The UN has no separate existence from its member states. In the case of Rwanda it was after all—and we must never forget it —the Security Council which took the shameful decision, now belatedly reversed after God knows how many have been slain, to reduce the UN presence at the outset of the current crisis. No UN force could possibly have stopped all the killing, but a strengthened force could have offered protection to groups of civilians seeking refuge in safe areas.
When tragedy occurs on such a horrific scale it may be that it takes a little while for the sheer awfulness of the situation to sink in. But that such disregard for humanity can happen diminishes the humanity in us all. It demands that we face up to unpalatable truths, for example that 86 per cent. of the world's arms are supplied by the permanent five members of the Security Council; the fact that two-thirds of these are sold to the poorest countries of the world; and the fact that the United Kingdom continues to sell arms to countries whose citizens live in abject poverty and gives aid to countries with high military expenditure. Similarly, we must face the issues of international crime, corruption, Swiss bank accounts and the indispensability of integrity in government and public service of both donors and recipients alike.
This year sees the 50th anniversary of the Bretton Woods institutions—the World Bank and the IMF. Next year sees the 50th anniversary of the United Nations itself. All of these institutions were born of a vision of a new world order in the aftermath of World War II. But the security issues which confront us today are not the same as those of 1945. A relevant Security Council will be more representative and one dedicated to arbitration, conflict resolution and pre-emptive diplomacy; but it will also be one with a key strategic role to play in policy formulation on the economic and environmental challenges to world security.
Far from a new world order, we are experiencing a new world disorder. The time for a comprehensive review of our national policies and our international institutions is long overdue. Such a review would enable us to develop a global strategy for meeting the destabilising humanitarian challenges of hunger, disease, poverty and conflict. It would help us to take seriously the very survival of humanity on our crowded, overstressed and tiny globe as it vulnerably hurtles through the intimidating vastness of space. I beg to move for Papers.
3.23 p.m.
Lord Redesdale: My Lords, I must thank the noble Lord, Lord Judd, for initiating this debate this afternoon. I hope he will forgive me if I do not make such a full speech as he made and limit myself to sub-Saharan Africa. I would particularly like to talk about sub-Saharan Africa as I recently had the privilege of visiting that area to monitor the elections in South Africa and Malawi.
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I have to admit that I went to South Africa with a degree of trepidation knowing that the group that I was with—the Awepa delegation—which also included my noble friend Lord Tordoff, had been assigned to Natal and KwaZulu. It was suggested to me on a number of occasions in this House that I should take a bullet-proof jacket with me when I visited that area. However, it turned out that my fears were unnecessary as the Inkatha Freedom Party joined the election just in time. The elections themselves were peaceful. In fact one of my abiding memories of the election was of arriving in the Ndeleni township, which is known for its violence, at six o'clock in the morning for the opening of the polling station at seven o'clock and finding 1,000 people queuing quietly and waiting to vote. Many of them had walked 10 miles to get there and many of them had walked through the night.
I also wish to mention the election that I then attended in Malawi as an observer. The way in which that election was carried out was immensely impressive. It was carried out efficiently. However, I have a story that I wish to share with the House which may illustrate some of the lessons that we could learn from Malawi. I turned up at one polling station to find that the voters had divided themselves into two queues, one for women and one for men. We intended to discuss this matter with the presiding officer and as we walked to the polling station an old man said to me, "I am glad that you are here to help us". I thought that he was referring to our helping them with the election, but when we reached the front of the queue it turned out that he meant that he was glad that we were there to help the men vote as the women had quite happily blocked the doorway and were all voting first.
I now wish to discuss one of the major problems that is facing sub-Saharan Africa. Although there has been a peaceful transition to democracy in southern Africa and the peaceful manner in which this was done shows that there is a great desire for democracy, the new democracies that are coming into existence in much of southern Africa face a crippling legacy from the past; that is, debt. As the UN Secretary-General has pointed out,
"External debt is a millstone around the neck of Africa. Easing the continent's debt burden must be a priority for the international community".
If this problem is not addressed in such a way that African countries are able to pay, development in Africa will fail to materialise. While there has been an improvement in the economic situation in the developing countries, particularly in Asia and Latin America, the position in sub-Saharan Africa has deteriorated. One of the major reasons for this is the inability of sub-Saharan Africa to service its debt repayments. The scale of the problem can be shown by the amount disbursed by Africa between 1985 and 1992–81.6 billion US dollars to repay debt. To show the effect that this has had on social expenditure, one can cite the case of Tanzania. Since the mid-1980s interest payments on debt have absorbed a greater share of that government's budget than either health or education. Indeed, according to the World Bank debt tables, during

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the 1980s the region's debt increased from the equivalent of 28 per cent. of its GNP to 109 per cent. in the early 1990s.
Extensive default on Africa's debt has been prevented only by repeated rescheduling operations, in which official creditors, meeting in the Paris Club, have allowed interest and future debt charges to accumulate by deferring payments. More than 30 African governments have been forced to reschedule, many of them repeatedly. Paradoxically, however, these rescheduling exercises have fuelled rather than alleviated the debt crisis, by contributing to the unsustainable build-up of arrears. Over 40 per cent. of the non-concessional debt owed by sub-Saharan Africa to the industrialised countries in 1993 represented deferred interest payments capitalised by the Paris Club and added to the total debt stock.
One area of concern that is being increasingly expressed is the high multilateral debt to the World Bank and IMF, as the noble Lord, Lord Judd, pointed out earlier. The argument for the principle of full repayment will have an increasingly negative effect on the African debt burden. If the debt trap in Africa is not addressed in a comprehensive manner, it threatens to destroy any hope of development in the emerging democracies. Democratic governments in Africa which fail to reverse the decline in living standards and to deliver basic health and education services are unlikely to enjoy more than a temporary stay in office. That may mean that the democratic experience is a failure.
It would be churlish of me if I did not congratulate the Minister on the role that she has played in debt relief. I realise that £1.1 billion worth of debt has been forgiven by Britain, and I commend the lead role played by the British Government in the G7 summit in Tokyo last July. I hope that the Minister can give the House some assurance that the British Government will continue to play a lead role in lessening the debt burden, especially in the area of multilateral debt.
3.30 p.m.
Lord Deedes: My Lords, I should like to add my thanks to the noble Lord, Lord Judd, for enabling us to take a look at our policies on aid and development.
I am not sure whether we shall improve those policies unless we recognise one or two mistakes that we have made in the past. Like the noble Lord, Lord Redesdale, I relate my remarks mainly to Africa, where my principal interests lie.
I believe that there have been two main failures so far in our aid policy. First, we in the West have somehow contrived to leave the poorest people in the third world worse off than they were before. Secondly, we seem to be without means for anticipating disaster, whether famine or conflict. We lack an early warning system for situations such as that in Somalia, which has cost the international community something like 2 billion dollars and a sorry lack of face.
Taking the first point, I doubt whether we have yet fully grasped the damage inflicted on Africa and parts of Asia by what we call the Cold War. For much of Africa and Asia the legacy of 45 years of East-West tension was hot Cold War but hot and bloody wars, some of
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which continue, as in Angola. In my view both East and West treated much of the third world, particularly Africa, as front line agents in an ideological struggle. We judged the ruler, however despotic, by whether he was on our side. If he was on our side we were sometimes all too happy to prop him up with aid with no strings attached and without much regard for the consequences for his own people. That is when the rot set in. That is when some of the aid began to go down rat holes —into follies for the ruler and Mercedes cars for his entourage. That is when, throughout that Cold War, the poorest on earth began to become poorer.
We have survived the Cold War, but it has wrought havoc in Africa and in parts of Asia. Now what do we find? I travel a number of these countries, usually under the auspices of the international aid organisation CARE. In those countries I see a more realistic economic policy taking shape. I see more concern for human rights and democracy. The Cold War over, we find that we can afford concern for the moral dimensions. But nowhere do I see much material improvement in the condition of the poor. In my experience, in many instances it has become worse. As the World Bank applies its economic restructuring, as the economic screws tighten, as food subsidies come off, as welfare services are cut, the poorest suffer most.
On top of that we have revised our policies, as I am sure my noble friend Lady Chalker will tell us later. We have been moving our long-term development assistance from the poorest nations towards those with a better return on investment. That is where dams come in so useful. So be it. I believe that we should invest some of our aid more profitably. But we should not delude ourselves that we are relieving poverty in the third world. If we are going to take the poor more seriously then in my view there will have to be a modest shift in humanitarian aid from the ODA towards some of the voluntary agencies, which work at micro level among the poor on health, education, water, sanitation and above all on helping people to set up on their own.
I find the work of those people in the field impressive —a good deal more impressive and cost effective, bluntly, than some of the UN agencies. I am persuaded that for humanitarian aid we should depend more than we do on some of the non-governmental organisations.
However, aid and development policies are barren in countries where conflict persists. As I have seen in the Sudan, Mozambique and Cambodia, and as we witnessed last year in Somalia and we witness now in Rwanda, conflict reduces aid and development to dust. An urgent task in the world today is to find ways of anticipating and, if possible, averting some of those bloody struggles.
We must learn to read the signs better. Where there is food and economic insecurity, where human rights are being violated, where ethnic or religious minorities are being persecuted, where there are unequal rights to basic services, where there is high military spending, there you will find the likelihood of national breakdown. In my view our aid and development policies should be more closely related to reducing the risk of those symptoms developing. They should be conditional on more equitable economic policies. They should

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positively encourage local communities to take more responsibility for their own lives. And they should encourage cohesive rather than divisive policies. They should weigh on the minds of governments which flout human rights and which persist in the persecution of ethnic minorities.
What we have just witnessed in Rwanda is beyond any doubt genocide. Are those responsible being brought to book? Are we interested in them being brought to book? If we are not we are sending out a terrible message to some of the world's tinpot dictators.
In short, I think that we need a shift in our criteria for aid. We no longer have to buy friends in the Cold War. We are, or we should be, in the business of bringing some order into the wilder reaches of the third world, because that is, above all, what the poor, the oppressed and the persecuted are crying out for.
3.37 p.m.
The Lord Bishop of Lichfield: My Lords, it is difficult to avoid a doom-laden atmosphere when thinking about Africa. I should like to pinpoint my remarks on two African countries where I have lived and worked and with which I am still in close contact —Rwanda and Uganda.
As other speakers have said, it is difficult to find words adequate to describe the tragedy of Rwanda at this time. One estimate suggests that 500,000 people have been ruthlessly slaughtered in the past few months, while many thousands have fled to refugee camps in neighbouring countries. I am sure that all of us have been horrified by the TV pictures of men, women and children macheted to death as they sought refuge in churches and other supposedly safe sites in that country.
I should like to make two points about that country. First, I remind your Lordships of the long-standing and very deep-seated ethnic hatred between Tutsi and Hutu which, I submit, may be of far greater and more durable power than anything that United Nations pre-emptive strikes can accomplish. However much this hatred has been exacerbated, as it has in part in the past by colonial policies, and however much it is exacerbated still by grinding poverty—when there is very little cake, conflict about that little which is available is always exacerbated—that hatred must be recognised.
My wife and I had the privilege of being guardians for some years of a teenage Mututsi boy whose parents had been killed in massacres in Rwanda as long as 30 years ago. Let us just remember that for 30 and more years there has been a refugee problem, with refugees streaming into Uganda and neighbouring territories. Each year my son goes on a work party rebuilding and building new primary schools for Rwandan refugees. No United Nations peace-keeping force can itself heal the problem of the deep-seated ethnic root of that tragic conflict.
I should like to dream a dream. It is the second point on Rwanda. In a recent debate in your Lordships' House on the great future potential of the Commonwealth, reference was made to the vital role of African leaders from within Africa making substantial contributions to the healing of those essentially African conflicts. There
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has been reference to the trusted personal contacts among government leaders within the Commonwealth. Much was said in your Lordships' debate about the informal usefulness of the Commonwealth, in which people can meet behind scenes and establish trust and new visions. Much was said about the way in which the Commonwealth could become a catalyst for peace-making, in which a Museveni, a Chikane or, dare I add, a Mandela or a Buthelezi, who have deep and long experience of dealing with conflict, could themselves become peace-makers in their own Continent.
In particular, I wish to thank the Minister for the trouble which she personally takes behind the scenes in this field. She recently made time to see the Archbishop of Rwanda at very short notice and the Provincial Secretary of our Anglican Province there. I wish to ask her this. Is it possible that she could gather a team of African leaders who would give a lead with her, and with our long experience, in mediating in essentially African conflicts?
That brings me to some final words about Uganda. We think of the darkness in Africa, but let us just remember for a moment the light. I lived through Amin's Uganda when it was full of killing fields. People were executed below my house each morning. However, under the leadership of President Museveni, Uganda is making splendid progress. Inflation has been reduced from over 200 per cent. to 5 per cent. Economic growth is running at about 5 per cent. per annum. Widespread demobilisation of the armed forces is taking place—that is a key point. The Asians expelled by Amin have now been encouraged to return. In that situation perhaps I may encourage the Minister to continue to give a lead in keeping the Government to the Trinidad terms, and beyond them, as the noble Lord, Lord Judd, said. Far be it from us to give with one hand and to take away with the other.
However, I draw your Lordships' attention to the fact that Uganda's success, brave and strong as it is, is now deeply threatened by a debt of 2.6 billion dollars which drains Uganda of 100 million dollars annually which could be spent on those primary schools and easing tension with the refugee problem from the neighbouring Rwanda. As Museveni said to a recent delegation, money spent on servicing such debts is money which cannot be spent on the needs of health and education in his country. Uganda is struggling on, using one third of its annual budget to service an unpayable debt burden.
I have seen the effectiveness, as many noble Lords have, of our Government's aid to Uganda. I have seen our ODA technical co-operation officers—paediatricians and consultant surgeons—teaching young African doctors in the African medical schools. Never let us back-track on that. I applaud the fact that the ODA is contributing £1.13 million to the AIDS prevention programmes in Africa and even more money to the MRC's work on AIDS research. But at Harare in 1991, as we have been reminded, the right honourable Gentleman the Prime Minister, then Chancellor of the Exchequer, proposed wiping off two-thirds of the debts owed to our Government—not to the multilateral agencies —while pressing on with our aid programmes.

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A final word would be this. Prevention of that kind is always better than cure. Money spent in support of such recovery today is a much better investment than any money spent on conflict resolution tomorrow.
3.48 p.m.
Lord Greenhill of Harrow: My Lords, the noble Lord, Lord Judd, has been energetic in seeking recruits to participate in his important debate. He spoke with his usual eloquence and intensity; and most of us would like to help him. I certainly would. But we must not diminish our sympathy with the noble Baroness, Lady Chalkei, who daily deals with extremely difficult problems both domestic and international. Your Lordships will recall how she steadfastly protected her budget when it was brought under threat in the past year.
I shall be brief because I think that many noble Lords will not agree with what I have to say. I cannot pretend to be an expert in these matters, but I was struck by a document recently produced for the ODI by Dr. Howell and Adrian Hewitt, for whom all those of us who know them have great respect. The document states:
"There is little evidence of diminishing support for overseas aid in the UK".
That is not quite the positive assertion that many of us would like to see. I imagine that support varies in different age groups. But personally I doubt whether their opinion still holds true. Much depends on the way in which the question is presented to the general public and the identity of the recipients of our aid. Possibly the terrible events in the third world have renewed public sympathy. However, they have also created antipathy, disgust and a feeling that it is too much to expect that we can help.
However, as one who attends this House regularly, I cannot dismiss from my mind the theme that has been incessantly reiterated by noble Lords for many months —not only Members of the Opposition, colleagues of the noble Lord, Lord Judd, but throughout the House and across parties. That theme is that the Government are not giving sufficient funds to health, welfare, housing, training, research, education, homelessness, defence and many other vital domestic areas which greatly affect large numbers of our population. The complaints are for the most part justified —unhappily justified. If they are to be met even partially, where will the funds come from?
On reflection, I find myself regretfully taking the old-fashioned view that some of our domestic needs which I have mentioned should take priority over attempts substantially to increase overseas aid. I would ask the Government to face this possibility when they are considering the great pressure that may increasingly be put upon them.
I recognise that much overseas aid brings economic and political benefits to the country, not always immediately but in the long run: for example, assistance in third world countries as regards population control and so on. There are, of course, many other types of aid.
However, what worries me is the lack of support for many of our own domestic activities which are so often
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referred to in this House and which lack funds Rather than widely expanded overseas aid, many here would prefer more of our charity to increase at home.
3.50 p.m.
Baroness Lock wood: My Lords, I should like to thank my noble friend for giving us an opportunity to look, I hope in a positive way, at some of the problems which affect the world as a whole. It seems to me that there are two levels to the problem. There is the crisis level, the crisis issues with which we are all familiar and which gain much publicity in our media and call for an immediate response. Then there are the long-term fundamental issues which are often exacerbated by the crisis problems. Those long-term fundamental issues themselves require a long-term strategic approach. I wish to deal with the latter.
Aid programmes are rightly concerned with trade and with economic affairs, attempting to build up the economies of third world countries. But they are also concerned with social problems and the two need to be in balance. It seems at present that the two are not in balance. Factors such as adequate health services, including reproductive health care, education and access to safe water and sanitation all support successful economic development. A lack of those services detracts from successful economic development.
My noble friend referred to the report which has been prepared for the UN 1994 Human Development Programme. This, too, suggests a shift in emphasis. It recommends that 20 per cent. of aid would be an appropriate figure to devote to human development projects. It advocates compacts whereby developing countries, wherever possible—accepting that some of them are too poor even to do this—should match that by allocating 20 per cent. of their public spending to human development resources.
A 10-point target programme has been developed for the next 10 years. This covers 10 very important issues, including: everyone to have access to basic education; everyone to have access to primary health care, clean drinking water and sanitation; all willing couples to have access to family planning services; adult illiteracy to be reduced to half the current figure; and female illiteracy, which is much higher than male illiteracy, is to be put on a level with that of men; and world population moves should be towards stabilisation at 7.3 billion by 2015. That is the lower projection target for world growth.
It is an important programme requiring additional spending in terms of aid, to the point of some 30 billion to 40 billion dollars a year. But the report suggests that it could be done by making better use of existing resources. It would certainly be more easily achieved if all countries were to devote the UN target of 0.7 per cent. of GDP to aid.
I should like to ask the Minister what percentage of UK aid is devoted to these areas of human development. Are there plans to increase it? In particular, I would like to ask the Minister how much of the aid is allocated to population matters. Population growth is one of the most fundamental problems that must be tackled if we are to establish a world at peace with itself.

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The preparatory meetings for the United Nations International Conference on Population and Development, to be held in Cairo in September this year, have increased the target percentage of development aid to population activities from 2 per cent. to 4 per cent. Has the United Kingdom achieved the current 2 per cent. target and does it accept the new 4 per cent. target?
The issue is crucial. We cannot go on for ever adding 90 million people a year to the world's population. There are finite resources and there is finite space in the world. Once the present hump of such a large proportion of the world's population being of reproductive age is overcome—in some countries over 50 per cent. of the population is between the ages of 15 and 35—we must secure a more sustainable age profile. It is an enormous task, but it is not an insoluble one.
Progress can and is being made. For example, in Kerala in South India, the fertility rate has now come down to 2.3 children per woman. In Thailand, average family size has fallen from 6.14 in 1965–70 to 2.2 in 1987. In Bangladesh, it fell from 7 in 1979 to 4 in 1990. This fall in family size has been achieved through an interacting process, a chain reaction, if you like, of increased use of contraception; better education for women; improved status for women, both in the home and in society as a whole; later marriages for girls and better spacing of children. This continuing process is something which we must aim to achieve in all developing countries.
Over the past few decades, contraceptive use in developing countries has increased fivefold and contraception is now used by 55 per cent. of married couples. But access to family planning has developed unevenly and in most of sub-Saharan Africa it is still below 15 per cent. In many areas, there is still a large unmet demand for contraceptive supplies and access to reproductive health care.
The International Conference on Population and Development to be held in September this year gives another opportunity to tackle these problems on a global scale. I should like to ask the Minister for an assurance that the British Government will support the draft action programme that has been prepared and that they will do all in their power to ensure that there is no compromise on that.
3.58 p.m.
Lord Blake: My Lords, I too am grateful to the noble Lord, Lord Judd. Indeed, if it had not been for a very persuasive letter which he wrote to me, I am not at all sure that I should have been here this afternoon. He persuaded me, and I should also like to say how lucky we are in this House that the Minister responsible for the subject is sitting with us and in a position to answer the questions that have been and no doubt will be raised.
Many noble Lords who have spoken and who will speak this afternoon are far more expert in these matters than I can ever hope to be. My direct experience is limited to sub-Saharan Africa, and to a limited part of that. I have, however, been for many years a trustee of a charitable trust which now disperses something like £2
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million a year in the countries of the old central African federation: Zimbabwe, Zambia and Malawi. The trust gives its main priority to health and education. It has always made a point—I believe that this is important (it is one of just two points that I want to make this afternoon)—of giving money directly to the relevant institutions which we can contact, and of never doing so through governments. To say this may be unpopular in some quarters, but the fact is that until very recently a great many of the governments in sub-Saharan Africa have been inefficient, corrupt and greedy, and have been by no means competent at using the aid that they have received. So far as is possible—I appreciate that it may not always be possible—aid should be given directly to institutions—to hospitals, schools or whatever it may be —and not be funnelled through governments, which may for all sorts of reasons misuse it, sometimes for ideological reasons, sometimes through sheer greed, and sometimes because they want to line their own pockets.
I should emphasise on behalf of the trust with which I am concerned that this policy goes back a long while. It has nothing to do with the fact that most of the territories about which I am talking are now black-ruled. They were white-ruled, but we did just the same then. I hope that the noble Baroness, Lady Chalker, will not mind my saying this, but I am afraid that that has to do with a general mistrust that we happen to have of governments in general. Of course I am sure that the noble Baroness would not be the sort of person whom we would have in mind at all. Nevertheless, in Southern Africa there has in the past been very good reason to be doubtful about funnelling any money through govern-ments. The misuse of some of the funds is notorious.
Without the use of some of that aid, it would not have been possible, for example, for some of the countries to build brand new capitals, at enormous expense and quite unnecessarily. Why waste an enormous amount of money on building Lilongwe in Malawi, when there was a perfectly good capital in Blantyre? A lot of money has been wasted in the past. I commend to the House a book on this subject which some noble Lords may already have read. It is Reality and Rhetoric, by my noble friend Lord Bauer, in which he analyses some of the things that have gone wrong with aid in the past. They are well worth bearing in mind. It may well be that we are moving into a new and better world of government in Southern Africa. But I remind noble Lords that democracies, as well as dictatorships, are capable of inefficiency and corruption. The whole situation needs watching.
My second point, which arises from my experience as a trustee, is that one wants to supervise what is done with aid and to do it on the spot. One wants to have people who can go out there and see that the money that is allocated is being rationally and sensibly spent. That is by no means always necessarily the case.3
As a trust, we have made a point of having two people in each of the territories with which I am concerned whom we call correspondents; they look at what is happening on the ground and report to us. Furthermore, we make a point of having each trustee in turn take a few weeks to visit the countries concerned to see what has been done with our money. That may

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sound somewhat Gradgrind-ish in spirit. But we must remember that there will never be enough money for these purposes. Therefore the money that is allocated —and perhaps it should be more than we do allocate —must be efficiently spent and targeted at people who deserve it and need it. That is very important.
So far as the Government are concerned, if they can make sure that the moneys which they generously give are being properly spent, so much the better. That is the only moral that I can draw from my own, admittedly limited, experience.
4.5 p.m.
Lord St. John of Bletsob: My Lords, a few noble Lords may be aware that the main cricket ground in the township of Alexandra, just outside Johannesburg, is known locally as the John Major Oval. That lush, green oasis in a bleak landscape is named after the Prime Minister because it was made possible by a £25,000 grant from the British Government in 1990. Since then it has become a centre of hope, activity and advancement for hundreds of youngsters in Alexandra.
I am grateful to the noble Lord, Lord Judd, for giving us the opportunity today to debate this extremely important and topical issue. In my seven-minute time allocation, I wish to concentrate my remarks on how Her Majesty's Government might best support the ongoing progress in South Africa and shed some more general light on the issue of overseas aid and development.
The new South African Government are starting to address the immense expectations that were aroused by the euphoric election and inauguration of President Mandela. Their needs are vast, with so many imbalances born of apartheid still to be addressed. Hopes are high; but time is short.
What sort of aid do the South Africans themselves think that they require? I would contend that it is not just a matter of monetary assistance, but also one of more practical assistance: in education and training; in developing skills and technology; in health care; and also in administration. One specific area where concessionary finance and grant aid is sought in South Africa is in the area of electrification. Almost two-thirds of the population are without electricity, particularly in the rural areas.
Many would argue that generous cheques from overseas are not the only answer. That is not just because cash can easily disappear into mischievous hands—a point that was made by the noble Lord, Lord Blake. It is also because South Africans are determined not to fall into the same debt trap from which so many African nations have struggled to escape. Obviously that latter point applies more to IMF loans than to overseas aid, which is in the main grant aid. The noble lord, Lord Redesdale, has already raised the need to alleviate the debt burdens of many African countries whose economic growth has, to say the least, been crippled by those debt burdens.
British aid to South Africa, I understand, currently runs at around £45 million a year, with over three-quarters of that in the form of bilateral aid, much of which is directed at improving the quality of
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education. As many noble Lords have mentioned, the noble Baroness, Lady Chalker, rightly deserves praise for much of what has been achieved in South Africa.
There is a perception that multilateral aid is less effective. Often, the aims of multilateral aid projects have become muddled, or even lost, within the machinery of vast organisations. Clearly the less space between the giver and the receiver the better.
I would have liked today to have touched on the definition of aid, more specifically whether it is a charitable donation from our taxpayers to the world's poor or whether it is intended often as a subsidy to our export initiatives, but I am sure that this will be raised by other noble Lords who will be speaking today. It has already been raised in part by my noble friend Lord Greenhill.
The noble Lord, Lord Deedes, spoke about the rot that set in in many African countries, particularly Angola and Mozambique, during the Cold War years. However, since the end of the Cold War there has certainly been an explosion of conflicts and violence right across the globe—from the tragic events recalled by the right reverend Prelate the Bishop of Lichfield in Rwanda, through what has been happening in Somalia, to Bosnia-Herzegovina—which have all resulted in the ODA's expenditure on emergencies increasing fivefold since 1987. This has obviously led to concerns by Oxfam, Christian Aid and other aid agencies that the quantum of monetary aid by Britain to developing countries has fallen.
I would like to touch on just one final issue in the Government's stated seven key objectives of overseas aid, namely helping developing countries tackle environmental issues. Taking care of the environment does not always rank high on the priority list of poorer countries confronted with problems such as famine and civil war. But it should, and initiatives such as the funding of forestry management experts in Nigeria and the £25 million project for the conservation of the Western Ghats forest in India are essential in the effort to preserve natural resources.
The new South Africa could benefit from environmental guidance and similar aid, but let that aid be clear and focused. A report published last week by the British charity, Action Aid, outlined a global crisis of such proportions that the efficacy of aid strategies becomes ever more important.
So in conclusion I would urge your Lordships to assess British aid not only on the quantity as a percentage of GDP but also on the specific quality. It may be true that the £25,000 spent specifically and practically on the John Major Oval in Alexandra had a more positive impact on the daily lives of under-privileged Africans than many of the large American cheques, many of which remained in the pockets of such individuals as President Mobutu of Zaire. "Bilateral aid for a clear purpose"—that should be the motto which rules Britain's overseas aid strategy.
4.14 p.m.
Lord Kennet: My Lords, I hope that in time this House, the whole country and successive governments will increasingly look upon our aid expenditure as part

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of our overall economic relationship with the poorer part of the world. That global focus seems a bit lacking at the moment. It is particularly important to do this as a greater and greater proportion of our aid becomes tied aid; we have heard today that that figure is now two-thirds. So two-thirds of British aid overseas can now be described as a special kind of export trade, a subsidised export trade.
Today I want to concentrate on that part of the special kind of trade (which is also known as aid) constituted by the arms trade. I believe I am right in saying that, after drugs, by value that may now be the second largest trade in the world. My noble friend Lord Judd has just told us that 86 per cent. of the world's arms' exports come from the five permanent members of the Security Council, and that two-thirds of those exports go to the third world.
Of course arms' exports and military aid, under a separate heading, are sold within the global envelope that I outlined. There are publicly visible and publicly justified sales of arms to the third world, and there are also clandestine sales. It is enough to mention the names Matrix Churchill and Pergau to establish that point.
I shall give a sketch of reasons for thinking that the export of arms—whether or not in the form of aid—is bad national economics and harms this country's economy. I can think of three reasons why it is good for the British national economy. First, it increases foreign exchange earnings; that is, if it is a sale. Secondly, it increases employment and, thirdly, it enables our arms industry to achieve longer product runs.
However, I believe that there are seven reasons why it is bad for our national economy. First, it impoverishes the poor countries, thereby making them less able to trade with us in the normal way. Secondly, it destabilises their governments and makes them less suitable trading partners. Thirdly, it leads to conflicts between third world countries, which obviously has the same effect. Fourthly, it increases the call on us for aid because of the devastation that those third world countries inflict upon one another. Fifthly, the military capacities of the recipient countries to which we have contributed may be used against us directly on the battlefield, and there are plenty of examples of that. Sixthly, when that happens, or when we fear it may happen, it tends to increase our own defence expenditure—to the distress of the Treasury. An example of that is the current planning phase to establish ballistic missile defences in this country to protect ourselves against, particularly, Libya and Iran. Seventhly—this one is so obvious that I put it last—it directly impoverishes this country by the export credit guarantee payments which have to be made when the purchasers of our arms, especially in the third world, default.
I am not talking about the difficulty of stopping the arms trade in the world; that is obviously enormous, and we have to face the fact that we have not yet really begun to try. The Prime Minister made a welcome and unusual statement in that direction about three years ago, and there has been an attempt to produce some sort of register; but the surface has not yet even been
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scratched. It is simply that the fingers that would scratch the surface are perhaps getting nearer to the surface each year. I have suggested that we might try to analyse the economic effect on us of these arms shipments, and to encourage the other great arms' exporters —France, Russia, the United States and China—to do the same.
4.19 p.m.
The Viscount of Falkland: My Lords, I too had an invitation from the noble Lord, Lord Judd, to participate in this debate, and I never knowingly refuse a good invitation. I have not spoken on these subjects for some time, although just over 10 years ago I made my maiden speech in a debate on roughly the same Motion. In those days there were some great figures in this House—there are still great figures in this House, and I see some of them here today who speak on these matters—and I think in particular, when I spoke all those years ago, of Lord Brockway, Lord Hatch and my noble friend at that time Lord Walston. We did not all agree with everything that Lord Hatch said on these subjects, nor indeed with what Lord Brockway said, but they were always passionate and sincere advocates for the oppressed people of Africa—a continent in which I have had a particular interest during my working life and which I have continued to follow closely in these latter years.
During the past 10 years a number of enormously important events have taken place which have affected Africa and the attitude to it of the rest of the world. In turn, that has affected the attitudes to aid. Some of those events were described very effectively in the speech of the noble Lord, Lord Deedes. I do not disagree with a single word in his speech. That is a rare position to take in this House. Indeed, some of the points that he made I also have attempted to make in the past.
I was rapped over the knuckles one day by the late Lord Hatch because I related much of the corruption in the African countries in which I had worked to the situation engendered by the Cold War and what he called the lack of the moral dimension in those times. He said that he agreed with me but that I should not say that because all that it would do would be to play into the hands of the Government, who would have a further excuse to reduce the amount of aid. I did not entirely agree with him, but that was his view. After that, I desisted, but I am glad that the noble Lord, Lord Deedes, put his finger on the point.
In my view, some good has come from the most important political event that has taken place; namely, the collapse of the Soviet empire and the removal of Africa as the battlefield between the two great powers. We have seen that happen. It was reflected in the excellent speech made by the right reverend Prelate the Bishop of Lichfield who spoke to us of Uganda. It is a country which I too know well. He said that enormous progress had been made in that country. It is a country which is one of the most fertile in Africa, although it has the disadvantage of being landlocked. It was the show place in colonial times of British educational expertise, as a result of which Makerere University produced some of the best educated Africans on that continent—a legacy which continues to this day. During the horrifying years of Amin and Obote we saw in London

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the number of highly educated Africans from Uganda who came here as refugees and, not surprisingly, did not want to go back in a hurry, thus impoverishing further that poor country.
It is an absolute miracle that that country has recovered. It had collapsed to the point of anarchy and where the kind of massacres that we witness today in Rwanda might well have taken place. The massacres of those appalling years from the early 1970s to the early 1980s were bad enough, although they were less publicised. Since then, it has gained a president who has the interests of the whole country at heart. It is a country which, like a lot of African countries, has arbitrary borders which were drawn in early colonial times and as a result has all the attendant problems of different races and different tribes. In that country he has managed to create a stability which none of us thought possible. I must give credit to the Government and the ODA because they have contributed most valuable training in that country, most particularly for the police and the armed services.
Africa is a very unpredictable country. Had anybody told me 10 years ago that the events that have taken place in South Africa could have occurred, I should not have believed them. I always thought that they would happen eventually; but at that time in my view the Cold War, which was mentioned by the noble Lord, Lord Deedes, in a way put a brake on the kind of progress that could be made toward seeing that problem clearly. I believe that there is a connection between the quite rapid changes that have taken place with the resulting position in South Africa and the breakdown of the Soviet empire.
As a result of what has happened in South Africa, provided that everything goes well—I do not see why it should not since it has the good will of most of the world —the other countries in Africa to the north of South Africa should benefit in fairly quick time. After all, it is in the interests of South Africa. It has natural customers on its borders to the north. It is has no interest in seeing tribal warfare and upheaval. So I take an optimistic view about that and with all my heart I hope that progress in South Africa will continue. That matter has been referred to by other noble Lords this evening.
In the meantime, countries other than Uganda have the same problems. The problems of debt have been mentioned by other noble Lords. The debt in Uganda is largely multilateral debt, which is very difficult to deal with. I hope that when the Minister comes to respond to the debate she will mention that issue. There is very little bilateral aid in Uganda because of the terrible history of that country. It has not benefited from all the good work done by the Government and by the noble Baroness and her right honourable friend the Prime Minister in helping to arrange for writing off debt in bilateral areas. It is a country which, like many African countries, wants to progress. Again, I shall take Uganda as my example—and time is running short. To enable it to progress, it is absolutely vital and important that we as a nation (and I hope other nations too) encourage it to develop its agriculture and produce crops with added value. It is no good producing raw materials, as such countries have been encouraged to do. That simply moves the economy out of the control of the area. We
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must encourage them and can only do so with the removal of the debt burden. I hope that that, too, the Minister will address when she winds up the debate.
4.26 p.m.
Baroness Macleod of Borve: My Lords, the number of noble Lords who have put down their names to speak this afternoon shows how very important the third world is to us in this House. I thank the noble Lord, Lord Judd, for initiating the debate. When my late husband was Secretary of State for the Colonies from 1959 to 1961, he and I had a great deal to do with the third world and Africa in particular, although my husband also had a lot to do with the West Indies. I discovered a great deal of love for Africa and the Africans. I suppose that in those two years I cooked more meals for 16, 18 or 20 people every day of the week than perhaps anybody else in this Chamber has done.
Certainly more needs to tie done to help developing countries. Those of us who know some of the countries involved can always find reasons and more ways of contributing to those who are less well off. But the United Kingdom is the sixth largest aid donor, with an overseas aid programme of £2.2 billion from 1994 to 1995. Personally, I believe that we can be very proud of that fact.
Over the past four years the aid budget has averaged 0.3 per cent. of the GNP. As we all know, the Government are working towards a 0.7 per cent. target. I understand that the increase will be targeted primarily towards the poorer countries, of whom, as we heard this afternoon, there are a great number.
Financial aid is bound to play a big part in our Government's programme. We must not forget the two other important parts of UK aid. First, there are the people who go to various countries to give material assistance, of which VSO is a prime example. But many people go to give their time and knowledge to peoples who need and will benefit from their expertise. I have in mind school teachers, medical staff, agricultural experts, foresters, and scientists—the list is very long. All are welcome. The other day I was told—with a little hilarity—that a woman scientist was sent from this country to start water bore holes. I understand that she got rather wet and dirty and the Africans could not understand why a woman scientist should be sent from here to do that job. Of course, she was an expert and did it brilliantly.
The voluntary organisations and charities are well aware of the deprivation suffered in some parts of the world. I was interested to hear what my noble friend Lord Blake said about the part of the world that he has been helping in a financial capacity. I am sure that everybody there is grateful for the work that he and his trustees perform. The charities and organisations raise money locally and nationally for much needed equipment, food, clothing and so forth. But it is the people on the ground—as my noble friend Lord Blake said—who see the suffering and the need; they are the carers.
I want to say a few words about a country which I know and love well. I am glad that the noble Lord, Lord Redesdale, had a happy sojourn there during the last

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general election. I refer to Malawi. For 30 years the former Nyasaland struggled to overcome poverty, drought, lack of money and the many necessities of life which the western world takes for granted. For 30 years Dr. Hastings Banda led his tiny country towards education. It now has a university, a beautiful sixth form college, which I have visited, and both secondary and primary schools. There is a better standard of living with improved medical care. Its economy was, and I am hoping will be in the future, sound.
Malawi has 8 million inhabitants but three years ago —and this caused the economic problems—2 million people fleeing from Mozambique came over the borders and had to be fed, watered and housed from its scarce resources. This they did with a charm that is characteristic of the people. Dr. Banda has led his people all these years and is known as the "grand old man of Africa". Having known him and his people all these years—since my husband made him President literally at half-past five one morning—I should like to pay my tribute to him.
Finally, we, and indeed all the third world countries, owe a deep debt to my noble friend Lady Chalker. Her work on behalf of the UK is recognised everywhere and I thank her for her enthusiasm and her expertise. We are indeed fortunate to have her as our Minister representing the United Kingdom.
4.34 p.m.
Lord Ashley of Stoke: My Lords, we have heard some distinguished speeches this afternoon but I feel that I must express my disagreement with some of them. A large number of controversies exist about many aspects of overseas aid, but in my view the main requirement is that we should keep our sights on the actual amount we give, its quality and allocation.
The last ministerial Statement I read about the amount of aid being given was made by the noble Baroness, Lady Chalker. She is rightly admired for her work and received many compliments today from the noble Lord, Lord Greenhill —who spoke of his sympathy for her—and the noble Baroness, Lady Macleod of Borve. The Minister deserves those compliments. However, I hope that when criticisms are levelled at her she will feel that they give her some kind of support in her efforts with the Chancellor and others with whom she may find difficulty.
Her Statement about the amount of aid was a deep disappointment. When the noble Baroness was challenged in this Chamber on 2nd March she said that people who are critical of the real term decline in our aid programme should examine the detail. Fine, we will all do that. But what will we find? Will a rabbit be pulled from the hat? Was the decline really an increase in aid? What happens when we examine the details? I am afraid that there was no increase at all. Although tribute was paid by the noble Baroness, Lady Macleod, to the amount of aid that we are giving, I find that, on the contrary, the trend is extremely disturbing.
The noble Baroness, Lady Chalker, went on to claim credit because our aid was targeted better than others. That was her response to the criticism about the amount
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of aid. We are all in favour of targeting. But that is no answer to the charge that this Government failed to keep the commitment to the target of 0.7 per cent. of the GNP. Those are the facts. I know that there are extenuating circumstances, grave national problems, economic difficulties and so forth. But this Government made that commitment and have not achieved it.
The reality is even worse than that. The Government have actually moved in the opposite direction. The way that the noble Baroness, Lady Chalker, put the figures makes it seem that we are doing well. It is an unwitting way of misleading the House. The fact is that the amount of aid that we give is decreasing. Aid, as a proportion of GNP, was 0.51 per cent. when this Government took office in 1979 —the year of Saint Francis—but last year it fell to an all-time low of 0.28 per cent. Given the freeze on the next two years it is expected to fall to 0.26 per cent. in 1995–96. That is almost precisely half of the level that this Government inherited. By any standards—certainly by the standards of abysmal world poverty—that is a tragic dereliction, no matter how it is presented.
I am sorry that the noble Lord, Lord Greenhill, has been forced to leave his place. He put forward the view that domestic need should take priority over the needs of developing countries. I cannot share that view. I cannot see how that claim can be put forward at a time when one fifth of the world's population goes hungry every night, one quarter lacks access to safe drinking water and one third lives in abject poverty. I cannot see how anyone can say that domestic need should take priority.
Apart from the question of amount, the question of allocation is of paramount importance. The noble Lord, Lord Deedes, was exactly right when he said that money has been wasted; that governments have wasted it and that the money should go to the NGOs. That is precisely the point on which I hope the Minister will focus when she winds up the debate. We should give the money to the NGOs. They know the problems; they have practical experience and the various crooks around the world who are in power would be robbed of the ability to misuse the funds. I warmly endorse the point made by the noble Lord, Lord Deedes.
As regards commerce or arms sales, when we become involved in those matters we tread on egg shells. The main question arising from the Pergau Dam —I am not going to detail that in my remaining one-and-a-half minutes—is whether it was an isolated incident or part of a pattern. We do not know, but I hope that it was only an isolated incident.
I conclude by saying that no one can avoid the realities of exports, strategic and trade interests and political considerations. But none of these should influence or affect our aid to the developing world. We need to ensure that our aid is not unduly affected by commercial and military considerations and that it should be increased to these desperately poor countries. We should ensure that it goes to the poor people of those countries. I hope that the noble Baroness will continue her marvellous work in her department—it is marvellous work despite my criticisms. I hope that she will help to achieve the target of 0.7 per cent. of GNP rather than allow the Government to move away from it.
4.41 p.m.
The Lord Bishop of Ripon: My Lords, I too would like to thank the noble Lord, Lord Judd, for introducing this debate and to share the disappointment which has just been expressed by the noble Lord, Lord Ashley, about the performance of this country as regards aid. I listened carefully to the words of the noble Lord, Lord Greenhill of Harrow, and I am sorry not to see him in his place. I thought he was claiming that as there was less money around it should be targeted to this country rather than overseas. I find that a very difficult argument in days when our gross national product is steadily increasing. I should have thought that we were growing into a wealthier nation as indeed many other nations are in the developed world. It seems to me that at a time when our wealth is greater we are prepared to share a smaller proportion of it with those who are in great need. I therefore find it very difficult to accept the argument that there is less money available than there was in previous decades. As the noble Lord, Lord Ashley, has made clear, the proportion and absolute amount which we give to overseas aid has diminished.
I wish to take up a point made so well and eloquently by the noble Lord, Lord Deedes. I share with other noble Lords the sense that he was making points of enormous importance in talking about the poorest of the poor and the way in which they were not being helped by present aid programmes. I share the points that he made about the importance of non-governmental organisations in distributing aid to the poorest of the poor. They are individuals.
There has been much talk in your Lordships' House this afternoon about Africa and perhaps a little less about Asia, which I know to some extent. Those of your Lordships who have trod the streets of Calcutta will know the incredible poverty to be found in that city. However far down you press in Calcutta there always seems to be a level of people living below any level which is imaginable to us as westerners. People make a living out of what seems to be an intolerably small amount of material—a small stretch of pavement and a tap at the end of the road. I find it almost impossible to imagine what life is like for many people in Calcutta and elsewhere in Asia.
NGOs are well used to targeting aid to the very poorest. I hope that the noble Baroness the Minister will give us some assurance that an increasing proportion of it will be given to those who are most in need; not just to the poorest countries, but to the poorest people. It is not only a question of aid programmes. NGOs are well aware that within each country there are complexities which give rise to poverty within that country. As one example, I mention the carpet industry in India about which Christian Aid has been concerned recently. In the carpet industry in India there are large numbers of boys —some as young as six years of age—working in appalling conditions for what is almost entirely an export industry. That is bound to perpetuate poverty not only because the employees receive very little for the work that they do, but also because in later years they will suffer ill health as adults having been overworked
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and underfed. That is perhaps a good example of how something which is occurring in a particular country can perpetuate poverty in that country.
Both the Indians and Christian Aid are arguing that the most effective way to solve this abuse would be to ensure that carpets are stamped with some kind of guarantee proving that they were not made with child labour. I give that illustration just to indicate something of the difficulties which surround helping the very poorest of the poor.
I am aware, as other noble Lords have said, of the part which is played by civil disorder. I know Sri Lanka at first hand as I have lived there myself for some years. I wish to reinforce the points made in your Lordships' House during the debates on asylum—that is to say, that the effects of civil disorder are so frequently felt most profoundly by those countries that immediately border the disorder. In the case of Sri Lanka the country is, of course, India. We in this country have done our best to ensure that it is not our problem; to ensure that Tamil refugees should not be allowed access to this country. Millions of them find their way to India which then has to provide for their needs and make provision for them as refugees. So often it is the poorer countries in our world that are coping with the problems created by civil disorder which, as has already been said, are in part due to poverty and the lack of proper aid in those countries.
I believe that the primary argument for aid has to be the moral one; that there are individuals whose lives are stunted and thwarted. We must do what we can to ensure that there is some kind of fulfilment for them. I am well aware of compassion fatigue. I argue that it is not so much compassion as obligation. My family has served in India for nearly 200 years. I am aware of what we have received from the Indian sub-continent. I believe that as a country we have an obligation to make some kind of return to that country and to others in Asia.
But if that argument is not sufficient then I put forward an argument from self-interest; namely, that at the end of the day if we do not help countries in Asia and Africa to have a proper, developing economy to enable their people to lead fulfilling lives, then the bitterness, the sense of stunted growth and being thwarted, which many people feel, will eventually overflow in the shape of anger and conflict. We might like to think in this country that we can stand apart from that and protect ourselves from it, but at the end of the day we shall not be able to do so; there is an argument as regards self-interest also.
I believe that we should take account of the public mood in this country. Like other noble Lords, I am grateful to the noble Baroness the Minister for the splendid way in which she has attempted to defend the aid programme. But there is perhaps collusion between the Government and the public mood to say that this is not our problem; it is all happening far away. That mood should be resisted. I encourage the noble Baroness in her efforts to do so.
4.48 p.m.
Lord Selsdon: My Lords, in the noble Lord, Lord Judd, and in my noble friend Lady Chalker, we have two people of complete integrity and sincerity. The

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differences between them can be measured only in minor percentage points. The debate today is on a subject about which I am perhaps a gifted amateur. I love the whole scene of development. It is not on aid that I shall concentrate today, but on the development aspects of the Motion before us.
I think that we are missing a trick or two, perhaps living in the past, and failing to recognise the break up of empires which have caused many of these problems. We can really divide the issue into two aspects. There are the disasters brought upon us by God or by acts of God, on which the world must be ready to react instantly and with all the necessary financial support which is required. We cannot budget for disasters. If, as the noble Lord, Lord Judd, says, they are on the increase, resources must be made infinitely available from any country that has them.
My second question relates to the whole purpose of aid. I do not like the word "aid". I think that "development" is a much more acceptable word to use, as is the phrase "assistance in development". Development is a good thing and it is possible. By very definition, today we have developed countries and developing countries. I think that we should get rid of the term "third world"; I have never liked it. As I have said before, it sounds rather like the old third class on British Rail. We must concentrate on where development is possible and on how it can be achieved, because development creates added value and wealth. I am afraid that the problem is man's inhumanity to man. The problem is political.
As the break-ups of empires have continued, so we have seen the spread of that terrible disease—I use that phrase again and again—called "tribalism". It is the tribalism that has emerged in many countries that causes conflict, breakdown in progressive economic development, persecution and poverty.
The Government's policy is, to use one of their little phrases, that they "seek to promote good government". "Good government" is a very simple phrase, but it is perhaps impossible to achieve good government when one seeks only to throw money at things. It is a matter of persuasion, not coercion. It is not a matter of bribery or corruption. It is only when there is stable government within the countries concerned that any form of progress can take place. We should be devoting as many human and other political resources to the creation of good government as we can. It is not so much a question of money; it is often a question of providing the people who, on the ground, can point out the error of ways. Administration is no problem. We should be proud to recognise that in the ODA we have what is probably one of the best administered development organisations. It has a history and knowledge that is unparalleled. Those are not the problems; the problems are political.
If we say that a problem is political, we may be accused of beginning to seek to interfere in other people's sovereignty. That is dangerous. So the problem is how we can persuade people to have good government. That is no easy task. It is not a matter on which I can offer conclusions or make recommendations today.
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However, there are areas of hope, many of which I find interesting. Like the right reverend Prelate, I have spent a considerable part of my life involved in India. Indeed, I was an adviser to the Indian Government on the increased production of carpets. There was a very simple problem. Because they could not produce enough carpets during daylight hours, people ruined their eyesight by working at night and they were going blind. One simple Coventry climax generator im-mediately increased production. We then wanted to improve the quality of the wool. With the help of the ODA, we found a couple of merino rams from Australia. They were shipped over to India. That was a great event and all the people from Delhi came up to Srinagar to visit and to see the new farm. We even thought that we might introduce artificial insemination. We had a great party. Your Lordships can imagine what we had for dinner on the barbecue that night—one of the merino rams. It was a considerable embarrassment to me to try to justify that in the budget.
However, we are talking about economics. Several things have caused the problems. The first was inflation in the West. That led to high interest rates, compounding the problems of debt service. Interest rates and inflation are now down in developed countries and the impact of that is just working through the system. The low rate of interest is equivalent to, and in many cases below, the potential growth rate of the countries concerned.
The second cause was the high cost of energy. Many developing countries had no natural energy resources and had to import energy at inflated prices due to the 1974 oil price rises and to the rise in the dollar. In real terms, oil prices are now lower than they were in 1974. Imagine the scenario, my Lords, when suddenly we saw the solution to the political problems in countries such as Iraq, Iran and Libya. Imagine oil prices coming down to seven dollars a barrel. That could be the price if production in those countries came on stream. That would have a further impact on the world.
Then we come to food. The world can produce enough food. It is a very simple matter. One does not even have to talk to some of the Israeli experts with their new technology to realise that, with even one quarter of the land mass of the earth, we could, with the right organisation, produce enough food at lower prices to be able to feed everyone.
We are not facing major development problems. We are facing political problems. I believe that it is in terms of contributing political stability and helping to establish good government that this country can play the greatest role.
4.55 p.m.
Lord Ennals: My Lords, we have listened to a most interesting speech. The only point on which I should like to touch is my agreement that the term "third world" should be dropped. I shall not say anything further about that, but I sense that the Minister agrees.
I welcome the very broad scope of the Motion which was moved by my noble friend Lord Judd. He did so in

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what I thought was one of his best speeches. We have had several very good speeches from my noble friend in the past two or three years, but this was one of his best.
In recent weeks, as a member of Dr. Boutros Boutros Ghali's advisory committee on the 50th anniversary of the United Nations and as an officer of the United Nations Association, the staff of which I joined 48 years ago, I have been involved in many meetings about UN50—not so much relating to the celebration of 50 years of achievement, although there is much achievement, but in considering how the UN's tasks can be better fulfilled in the next 50 years. I greatly admired the speech of the noble Lord, Lord Deedes. The only sentence with which I disagreed was that concerning his dismissal of the work of the UN. I have worked with UNICEF and UNHCR. Those agencies have done some outstanding work, usually in close association with the voluntary organisations to which I shall refer.
I think that this is a time when there should be the most fundamental review of the shape of our aid programme to prepare us for the next decade or 20 years and a review of the priorities that we should assume in our national and international policies. Like my noble friend Lord Ashley, I profoundly disagreed with the noble Lord, Lord Greenhill, who I am glad to see has returned to his place. The noble Lord missed two or three other criticisms from noble Lords who were not prepared to go along with what we felt was a rather nationalistic point of view about our priorities in terms of resources.
Therefore, I want to advocate that Her Majesty's Government should carry out a very careful review of the aid programme. Obviously it will take some time. I hope that it will be completed by the time that we reach the 50th anniversary of the UN and that it will make the fullest possible use of the experience of the network of non-governmental organisations to which other noble Lords have referred. The Minister has always paid tribute to the work of the NGOs in fulfilling the aid programme. A good deal of her department's resources have been channelled through some of those aid organisations. We should feel very proud of the contribution that they have made in terms of innovation. We should also encourage them in some of the assignments that they have to take on in some of the world's most dangerous situations. Rwanda is one example and Bosnia is another. The House should feel a great, sense of pride in the work of the non-governmental organisations. If I mention par-ticularly Oxfam, Save the Children, Christian Aid, CAFOD, the Red Cross, Action Aid, the World Development Movement and the UNA, it is not because I do not think that the others are greatly deserving of congratulation. I believe that that view is held across the House.
So I want the Government to decide on an aid review. There should also be a defence review and a foreign policy review, but this is not the time to go into those. It is interesting to note that in all those three areas, in particular in aid, although there are political differences, the issues are not primarily party-oriented disagree-ments. It is clear that the respect in which the Minister is held comes from all parties in your Lordships' House.
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Except for the injection of contentious issues—for example, the link between aid and the arms trade which is currently under examination by the Foreign Affairs Select Committee in another place—most of the issues are not ones of party political disagreement. Such an aid review would have as its basis much evidence of programmes carried out during the past few decades by the ODA, for which I also have a great deal of respect, and the voluntary agencies.
It is not the case that everything has gone wrong. We must recognise that there have been many great achievements in the field of aid. Oxfam has reminded us in its briefing that the share of the world's population enjoying satisfactory levels of development measured against the UNDP's human development index rose from 25 per cent. in 1960 to 60 per cent. in 1992. That is the result of a great deal of co-operation During the past 50 years, global income has increased sevenfold, from 3 trillion dollars to 22 trillion dollars. Since the world's population has more than doubled, from 2.5 billion to 5.5 billion, per capita income has increased threefold. We can record many achievements of the UN agencies, governmental action and non-governmental action. Between half and three-quarters of the world's population now live under pluralistic and democratic regimes. Oxfam has reminded us that last year elections were held in 45 countries; in some for the first time. Like the noble Lord, Lord Redesdale, I am thinking of South Africa, whose election was perhaps the most notable of those held in the past year.
But there is also a negative side. I wish to conclude by touching on the points that were made by my noble friend Lord Ashley and the right reverend Prelate the Bishop of Ripon, who I thought made an outstanding speech. I am deeply concerned by the level of aid that is being made available to the department run by the noble Baroness, Lady Chalker. When the Government took office in 1979, aid as a percentage of GNP was 0.51 per cent. Now, as my noble friend Lord Ashley said, it is about half that figure and is decreasing. If one imposes a freeze, inevitably the figure decreases. This House cannot be satisfied with that. I hope that we shall have some assurances from the Minister about the future as she sees it. Without enough money, however well directed, the job cannot be done.
5.3 p.m.
Lord Beaumont of Whitley: My Lords, it goes without saying that we thank the noble Lord, Lord Judd, for initiating today's debate. Indeed, it always goes without saying because, whenever anyone rises to speak, it is because the person initiating the debate has given them the opportunity to do so. It is not only we who are speaking who should be grateful to the noble Lord but the country as a whole. It is important that we continue to hammer away at this problem.
A theme that has run through the debate is the affection and respect which Members on all sides have for the noble Baroness, Lady Chalker. From time to time it must be a considerable embarrassment to her to be so liked and admired by all parties in this House. If ever she wants some diversionary tactics I hope that she will let us know so that we can change the situation—
Lord Ennals: Or even if she wants another job.
Lord Beaumont of Whitleyb: God forbid that she should be taken to another job.
Lord Ennals: Or promotion.
Lord Beaumont of Whitleyb: My Lords, there is no promotion from this job; it is the most important job. It is as high as one can get in the political spectrum. That may not be conventional wisdom but I am sure that it is true.
We learn from history that people who can control resources try to make profits out of them. That is not at all surprising. Usually they use protectionism in order to keep their profits up. In order to counter that the doctrine of free trade was invoked. It was designed to help the poor, and to a certain extent it worked. That is to say, it helped the rich, overcrowded manufacturing countries such as our own to keep their industrial masses happy by importing cheap food and paying for it by manufactures, thus keeping employment up, wages down and food cheap. That was so obviously to our benefit that, with the aid of fairly selective quotations from Adam Smith and Ricardo, we managed to persuade ourselves that it was to the advantage of everyone else.
But it has not been to the advantage of everyone else. The fact is that free trade has helped to destroy native agriculture and rural life in many countries, including in Europe. Economic liberalism has done a very great deal of harm. It has spread from early days on these Benches to take over the Tory Party. Now it has taken over the world, with the almost universal approval of everyone for GATT. The trouble with GATT is that in the agricultural area it has the effect of turning large parts of the third world into the producers of cash crops at ever lower prices, with low manpower requirements, resulting in migration to ever burgeoning crime-ridden conurbations. We heard from the right reverend Prelate about Calcutta and other major cities of that kind.
GATT has played an unhelpful part in this, but these days the real villains are not the nation states but the transnational corporations (the TNCs). Their weapons are not tariffs, or the lack of them, but the modern equivalent in an information economy of intellectual property. The US-based Intellectual Property Coalition —which consists of, among others, IBM, Du Pont and Unilever—wishes to establish monopoly intellectual rights. It wishes to patent gene engineering and agricultural seeds and to lengthen the lifespan of all patents. Under the new regime, which is advocated by the US and the EC, entire species of crops and animals, and their seeds and offspring, will be up for grabs as private property. Patenting will mean that farmers lose the right to save and re-use seeds from their harvest, since those too will be corporate property. The World Bank has referred to the genetic world of the South as "fields of gold", and guess who is going to want to get their sticky fingers on all that gold!
No one—and I genuinely mean no one—wants to stop inventors obtaining fair rewards for their inventions. But "fair rewards" are not the same as "the price the market will bear", and certainly not the same as "the price the market will bear artificially reinforced
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by various protective devices". The new imperialism of the TNCs must be stopped if we want a world that will have a sustainable economy and, above all, a world which will be at peace because it is felt, if not to be fairly organised, at least to be moving in that direction.
Although what I have been saying is not entirely along the lines that other noble Lords have been talking about, it is not merely an eccentric view from a Back-Bencher. It is what Oxfam and the World-Wide Fund for Nature are saying. They have enormous experience and expertise and it is important that the Government join the battle on the right side. They should not join it, as all their current philosophies might prompt them to do, on the wrong side.
I believe that I have been opposed to almost anything that the Government have privatised or are going to privatise but in the field of intellectual property we are talking about the property of the human race and to privatise it becomes obscene.
5.10 p.m.
Lord Soulsby of Swaffham Prior: My Lords, I too wish to congratulate the noble Lord, Lord Judd, on introducing the debate. Many noble Lords have said that it is both timely and important; and I certainly agree with that. The noble Lord, Lord Judd, pressed his case with his usual eloquence and forcefulness on those issues.
As someone who has worked at what one might call the coalface of aid delivery in a number of under-developed countries, with UNDP, FAO, USAID and, of course, the ODA, I cannot over-emphasise the importance of such aid with regard to the needs of the developing world, the third world or, as perhaps one should call it, the under-developed world. From my experience, I am happy to comment that the efficacy and efficiency of British aid, through the ODA, is second to none in the developing world. I believe that the most effective form of that is the bilateral system whereby the recipient country and the donor country—namely, the United Kingdom—work together at the local level with acknowledged experts helping local individuals to undertake developments which will lead them to a much fuller comprehension and an ability to stand on their own feet.
It is extremely important that it is seen that the available funds are disbursed in a satisfactory manner so that the British taxpayer can see that his money is wisely, efficiently and effectively disbursed. While all noble Lords in the debate this afternoon believe that the amount of aid is important, I believe also that we must remember that it is not the only measure of the efficacy of overseas aid. The efficiency of how that aid is administered at the local coalface is also particularly important.
Not all aid programmes reach their full potential. In fact, some do not work at all. That is a major problem in some areas. I do not believe that it is a major problem in relation to ODA projects—at least none has come to my mind—but when programmes do not work, it is important that some degree of analysis is undertaken so

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that the mistakes that have been made both by the donor and the recipient agency are understood and can be avoided in the future.
To my mind and from my experience the regionalisation of administration, and aid programmes in particular, is important because it provides a local level of understanding. I hold up the relatively new ODA regional office in Pretoria, South Africa, as an example of what is good administration. It is staffed by experienced individuals and has, through modern communication systems, a ready access to central offices in this country and in London.
The Minister will be well aware of the major input that ODA has made to the new South African Government through various advisers on the needs of the new government of that country. It is a country with enormous potential but it also has enormous problems to solve.
Therefore, British aid, through ODA, is well applied and very much appreciated. But there are certain areas in which I believe greater emphasis is needed. The first question is: is there enough of it? I fear that there is not. I do not believe that there will be enough at our present rate with the growth in human population that we shall see over the next few decades. The world population is projected to grow at a massive rate to produce a doubling of the population to 12 billion people by year 2020 and, as has been quoted in this House in a previous debate, in the next 30 years we shall have to produce as much food as has been produced in the past 10,000 years. While it may be theoretically possible to do that, in present circumstances there are many constraints on that food production.
Therefore, apart from major projects such as irrigation and desalination plants, there is a need to provide at local level a means of bringing know-how to the peasants about agriculture, livestock management, health delivery, education and so on. There is a need also to apply what has been termed "sustainable development" and a proper appreciation of plants, soils, man and his livestock because some aid programmes have gone sadly astray and they have led to greater problems than they have solved. A good example of that is the Aswan Dam in Egypt. Again in South Africa, it has been estimated that every tonne of human food that has been produced has resulted in 12 tonnes of topsoil being eroded through poor management and poor appreciation of the synergy required between animals and their herbage.
The second need is the increased need for training of individuals. We need to train individuals from overseas in this country, but we need to train them also at regional centres in their own countries. It may then be possible to train other people, via those regional centres, in the basic aspects of delivering aid to their countries.
Finally, there is a need for increased research along those lines in order that we may deliver our aid more effectively and efficiently with the long-term aim that those countries may eventually reach the point at which they can stand on their own feet. Surely, that must be the long-term effort and aim of overseas aid.
5.18 p.m.
LordMonkswell: My Lords, I must join with others in thanking my noble friend Lord Judd for introducing this debate. As we all recognise, he is an unrivalled expert on the subject.
While I join with others in making a plea to the Government to increase the aid, development and support which we give to the third world, I wish to take this opportunity to argue for something rather more fundamental.
First, I should like to tell a couple of little stories which may help to illustrate my theme. Shortly after I started work, I was approached by a shop steward about joining the union. He explained to me that as he was reaching the end of his apprenticeship, he was approached by his boss who said, "I will pay you a little bit extra because I know that you are a hard worker but do not tell anyone else or they will all want extra". That went on for a few years until my colleague suddenly discovered that he was in fact being paid less than everybody else. He forthwith joined the union and thereby ensured that he was paid the proper rate for the job. I have been a union man ever since I heard that story.
The second little tale is of Henry Ford. He was showing the leader of the American auto workers' union round a new car plant. He said, "In a few years, cars will be produced entirely by machines and I shall not need your members". The response was, "If my members are out of work, then who will buy your motor cars?"
We live in an interdependent world. If we beggar our neighbours, we all suffer. In the past 20 years of monetarism and beggar-my-neighbour policies, we have all been impoverished. As the terms of trade of the producers of raw materials mainly in the third world have seen their incomes fall, they have been unable to buy the products of the industrialised first world. We have over the past 20 years seen a rise in poverty and famine and the breakdown in social order in the third world. The most recent devastating example is Rwanda. We have also seen the inexorable rise in unemployment that has so disfigured our society and caused devastating, soul-destroying anguish for millions of our fellow citizens. We must recognise that no one benefits by driving down the incomes of already poor people; on the contrary, we all lose.
So how can we do something about our joint problems? Yes, we can give more aid; indeed, any funds transferred from rich to poor will help, but it is no substitute for paying the rate for the job. In Britain we have some of the most significant commodity exchanges related to world trade. The suggestion that I am making is that we use those exchanges to say to producers, "Instead of driving your prices down, we want to work with you to help you work with your fellow producers to agree a reasonable price for your produce"; in effect, to recognise the trade unions of producers: to abolish the secrecy that enables consumers or purchasers to gain a short-term advantage by playing off one producer against another and to develop a fair system that balances the advantage of producers with the advantage of consumers and, on the basis of free exchange of

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information, of prices and costs, to arrive at a system of exchange that is fair. That will involve a radical change in the way business is done. It should involve a radical shift in resources. But what we must accept is that in the process of dealing fairly with our neighbours on the world stage they will deal fairly with us. In my experience, if you treat people reasonably, they will treat you reasonably in return. Let us treat our neighbours on the world stage in the way in which we would like to be treated and, in the process, create a better world for us all.
5.22 p.m.
Viscount Craigavon: My Lords, in the second half of my speech I was going to deal with the subject of population. However, I should like, first, to refer to a few words that the noble Lord, Lord Judd, used in his speech to highlight his concern with the population problem. I believe that he said that there is a major population crisis. For those who have not been in the field, it is interesting to hear such words from the noble Lord; it is an alarm to which we should pay attention. I believe that he then asked for more effective population policies, a request with which I obviously agree. But, to be fair to the noble Lord, he went on to put in context what he was saying by talking about relative resources as among this country, the West and the third world and the situation as regards social justice. That is a balance which we should all try to achieve when discussing the issue of population.
The noble Lord, quite rightly, managed to involve many NGOs in the debate. Indeed, we all received very interesting briefing which has allowed us to understand wider and more detailed concerns than can be expressed in today's short debate. I should especially like to pay tribute to the quality and standard of the briefing material from Action Aid. As I said, I shall talk later about population. But, first, I should like to say that I agree with the thrust of many of today's contributions; namely, that development aid should be targeted more towards reducing real poverty.
I know that that is one of the main considerations of the aid organisation CARE of which I happen to have particular knowledge. I know that the organisation currently believes that one of the best ways to encourage social and economic development is the promotion of female education. That is obviously not a new idea, but it is part of a sustainable human development which provides a number of important socio-economic benefits in the most cost-effective way. Incidentally, and as is well known, it also has a marked effect on the number of children that women choose to have. I also share the view of CARE that further moves of the balance of funding away from bilateral funding would lead to less control and accountability for the ODA.
I hope that some of the NGOs which read the report of today's debate will accept that many of us at Westminster think that the health and population division of the ODA is perhaps the most important. If I may say so, both the Minister and her department have a good record on population matters. I hope that they
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will feel able to take the lead and seize the opportunity now before us which has been presented by two particular events.
The first, as mentioned by the noble Baroness, Lady Lockwood, is the 10-yearly conference organised by the UN; namely, the UN International Conference on Population and Development at Cairo in September, for which there have already been three preparatory meetings. Secondly, we have the effects of the enormous change of attitude brought about by the new American Administration.
I was slightly surprised to see the other day in a main news programme broadcast on television covering the meeting of President Clinton with the Pope that the only subject which was reported on in their discussion was their total disagreement on population. That reflects the importance of the subject. However, that agreement to disagree in such a public encounter clearly shows the evident gap which exists.
As is well known, the Vatican is lobbying for its position in the dialogue which is taking place in the run up to the UN Conference in Cairo. As I understand it, the conference will be setting a framework within which reproductive health assistance may be given to those countries and people who want it. No government or people are to be forced to accept assistance or practices against their will.
As is widely known, population services are now much more integrated with other medical services, and the direction in which we are now going, encouraged by the ODA, is to emphasise the policy of "Children by Choice". If I may say so, it was encouraging to hear the words of the noble Lord, Lord Soulsby, which put the problem in a wider context. In terms of the Motion of the debate, the words "growing needs" are reflected in the extent of the unmet need for family planning services—the extent of which has been confirmed in preparatory documents for the UN Conference.
We have heard much moving talk today of emergency aid and desperate levels of poverty; that is a vital and immediate concern. We have also heard about the longer-term concept of sustainable development. It is vital that, where appropriate, that includes contraceptive services offered in as wide a range as possible.
Perhaps I may ask the Minister a similar question to that posed by the noble Baroness, Lady Lockwood, regarding her position at the Cairo Conference. Can the Minister indicate whether she is optimistic at present about the outcome? Can she say whether, if, as seems likely, there is an impasse in prior discussions with the Vatican about wording, she will be prepared to stand up for her present position, together perhaps with the Americans? Further, can the Minster indicate what discussions she has had with the Americans on the subject?
Finally, given the context of the debate, I do not want to ask now for greater funding for this one area; but does the Minister accept in principle that to achieve what is possible and desirable in stabilising world population a considerably higher level of funding will be required over the coming years?
5.30 p.m.
Lord Beloff: My Lords, I think that the invitations from the noble Lord, Lord Judd, were rather widely spread. If he gives a strawberry party, the guests will only get seven strawberries each. In my case I did warn the noble Lord in replying that I might not say things which he would altogether welcome. In fact the debate has gone along slightly different lines from those that I expected. In particular I am glad that there was indeed universal tribute paid to my noble friend the Minister and her department, and a fairly general conviction that the more that was done through her and her department bringing into partnership the voluntary organisations, and the less that was done through multilateral agencies, the more efficient the use of aid would be.
The debate was given an unexpected twist perhaps by the noble Lord, Lord Greenhill of Harrow, but I do not altogether subscribe to the criticisms that had to be made in his absence because I have a feeling that we ought to take seriously the question of how aid fits into public policy generally. There may well be, as he indicated, some lack of enthusiasm for foreign aid among sections of the public in which case any government of any party which is bound to want popularity is bound to take notice of that.
One can say that those who take that view are mistaken, but it is undeniable that such feelings are held, and the reasons, I think, are fairly obvious. One of them is simply that the whole problem is so vast that it is difficult to take in. I think that the primary answer was that given by the right reverend Prelate the Bishop of Ripon; namely, that one cannot dissociate the fate of this country or of other western countries from what happens in the rest of the world. I would rather, in my crude way, say that one reason for the problems in those parts of the world that we are dealing with is simply premature decolonisation. That is something for which public opinion in the West was largely responsible and which put into power for a generation, as has been agreed, a number of people who not only did not do their best for the people whom they were ruling but who also built up in respect of totally unnecessary projects—civil and military—the debt which now hangs around the necks of their better and more competent successors.
Therefore we have been in this from the beginning and, after all, the historical view is not a terribly optimistic one because the times of troubles that have followed the break-up of empires have in the past lasted for centuries. Indeed we can see most recently in the break-up of another great empire—the Soviet empire —that very much the same kind of thing is happening in the outlying countries which are, if you like, joining the third world. I think that the noble Lord, Lord Judd, gave the current expectation of life in the third world as it is now defined. It is the same as the current expectation of life in what was the Soviet Union, even in Russia itself.
One consequence of such things has been the movement of population. If there is poverty, people will, if they cannot cope with it on the spot, seek to cope with it by flight. As all of us, even with the seas to protect us, are vulnerable to uncontrolled movements of population on a vast scale, the idea that putting a little more money
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in the pockets of one or other disadvantaged group in our own countries is anything like the equivalent of saving the world from mass anarchy and the mass movement of populations is, I think, a view difficult to defend.
It is not, I think,—listening to the noble Lord, Lord Soulsby, and others—difficult to see that we have within our grasp the techniques to make something of aid programmes and to help in averting these disasters. The difficulty is often—here again I shall offend—that we have to cope with long-standing prejudices that are difficult to eradicate. The most important one is, I think, the one mentioned by the noble Viscount, Lord Craigavon, and that mentioned in the important speech of the noble Baroness, Lady Lockwood; namely, that of the Vatican which has considerable clout, particularly in the Democratic Party in America. The Vatican has shown irreducible opposition to any serious measures to curtail population growth which, if unchecked, would probably undo all the rest of the good that we could do.
There are, of course, other prejudices. There is the tribalism to which the right reverend Prelate referred in relation to the conflict in Rwanda. There is also—this is a matter of great concern—the fact that countries which have stable and to some extent efficient governments ought to be able to deal with these problems very largely without aid. In India, for example, there is an indifference on the part of the superior castes to the sufferings of those on the pavements of Calcutta. There needs to be a major change in the outlook of India and other countries before those problems can be dealt with internally, as indeed they should. Good government has been listed on the ODA's list of priorities. Everything that we know suggests that this is a correct priority. The important thing is to give people the chance to reap what they sow and that may mean an investment of human resources beyond anything which we in the west have so far been willing to contemplate.
5.36 p.m.
Lord Desai: My Lords, first, I thank my noble friend Lord Judd for introducing this topic. I apologise to him for not being in my place when he began the debate. It is tempting to respond to many of the remarks which have been made during the course of the debate I shall begin by saying something about the relative importance of spending resources at home and abroad. That topic was referred to by the noble Lords, Lord Greenhill of Harrow and Lord Beloff.
I quite see that it would be politically suicidal for any political party to argue for parity in treatment between its local citizens and people abroad. But the contrast is rather stunning. OECD countries spend on average about 15 per cent. of their GNP on the poor. The figure may be higher or lower for the UK but I do not wish to go into that. Therefore the total of that expenditure would be £90 billion to £100 billion. If that expenditure was spread over all the people, it would be worth £2,000 per head. We give one-third of 1 per cent. of our GNP —about £2 billion—for the three billion or so people of the third world. That works out at about 65p per head. I realise that one cannot do too much but one has to remember that we are not a poor country. Indeed, if we

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are to believe the Government, we are getting richer and we are experiencing growth. Therefore there is no excuse for saying, "We are all short of money and therefore we should not be profligate". We have not been profligate at all.
Many attributes have been paid to the noble Baroness this evening. She will no doubt tell us that, although we spend only 0.3 per cent. of GNP, we spend it very well. I would say to that, "Good. Let us spend more money equally well". That would make me very happy. Across all the political parties there seems to be a reluctance openly and boldly to query the problems of international fairness. To that extent, the idealism that was prevalent in politics after the Second World War has disappeared. That is paradoxical, since we are several times richer than we were at that time.
One major change in the world, in addition to the fact that the Cold War has ended—and I must say how much I appreciated the comments of the noble Lord, Lord Deedes, on that subject—is that our own view of development has changed greatly. In the 1950s and 1960s, when I was studying and teaching development, it was thought that it was all about having money to invest in capital, growth rates of income, and so on. There were target growth rates, for example. We now realise that development has to be in the form of education, clean water, sanitation and so on. The basic needs which had to be fought for in the 1970s have now arrived centre stage, and quite rightly so. We no longer believe that having per capita income growing at X per cent. is enough. We want to make quite sure that people's lives improve in a substantial sense, in terms of life expectancy, infant mortality, clean water, sanitation and so on.
It is pleasing that there have been improvements in the world in that respect. Many noble Lords have cited the UNDP human development report. One important aspect of that report is that, again in contrast with the 1950s and 1960s, we no longer think that the poverty of the so-called third world is all the fault of the first world and the third world is a helpless victim. The human development report criticises equally the poor countries which find money to spend on armaments when that money should be spent on education and health. It makes its point on a case-by-case basis. In the case of India and Pakistan the money spent on Mirage jets or MiGs is enough to pay for education or clean water.
One has to recognise that often poverty is not so much a case of lack of resources or the level of resources but of the distribution of resources among different priorities. We should be able increasingly to argue boldly that priorities are wrong and have been wrong, both in our policies in the past and in the practices and policies of the poor countries. It is changing those priorities and shifting attention from the more glamorous spending to the more humble and development-inducing spending that is important.
Since time is short perhaps I may comment briefly on a point raised by the noble Lord, Lord Beaumont of Whitley. I do not believe that TNCs are the great villains of the world. Nor do I agree that GATT is about to do all the horrible things that he suggested. I do not have
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time to go into detail, but I should like to say this on the topic. It is surprising that people who press the idea of free trade strongly on the third world do not at home reform their own agricultural subsidies. The common agricultural policy remains; the vast subsidy to American farmers remains; the subsidy to Japanese farmers remains, to the detriment of third world agriculture. Nothing is said about that. When it comes to the multi-fibre agreement there is great reluctance on the part of developed countries to follow their beliefs and opt for free trade.
I believe that we have to overcome the asymmetry. To the extent that it is possible, we should correct the aspects of our policy—not necessarily concerned with aid as such—which are obstacles to development abroad.
5.44 p.m.
Lord Bonham-Carter: My Lords, it is with great pleasure that I follow the noble Lord, Lord Desai, and the noble Lord, Lord Beloff, both of whom in their speeches identified areas of policy in the deployment of aid which are essential to its effective use. My noble friend Lord Beaumont of Whitley said that it went without saying that we all thanked the noble Lord, Lord Judd, for initiating the debate, and then proceeded to say it. I say so too, and so say all of us. We are grateful to the noble Lord and it has been an interesting debate.
Perhaps it would be useful if I said what I am not going to say. I do not propose to talk about the percentage of GNP which we devote to aid, nor to rehearse the arguments about multilateral and bilateral aid. Nor do I propose to engage in controversy about GATT. Nor do I propose to talk about debt, crucially important though that is in the whole spectrum of the third world.
The noble Lord, Lord Deedes, talked about certain failures in our policies towards aid in the past which flow into the present. I should like to concentrate on where there has been success. I believe that in identifying the causes of those successes we may learn lessons which are of application above all in Africa, which has been the continent about which most noble Lords have spoken.
When in December of last year we discussed European Union policy towards aid I asked two questions: first, what was the most effective use of aid; and, secondly, why had certain East Asian countries taken off whereas that had not happened in general in Africa. On the basis of no very sophisticated evidence, I concluded that one factor stood out. That factor was literacy, which in the East Asian countries way back in 1960 was of the order of 80 per cent. and in Africa was, and is, of the order of 40 per cent. I therefore concluded that aid should concentrate heavily on education and, in particular, on the education of women, as the noble Viscount, Lord Craigavon, mentioned.
I shall return to the first of those two topics today. I do not think that I shall have time to deal with the topic of the education of women, but the noble Baroness, Lady Chalker, does not need any encouragement to take that aspect of aid seriously.

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I have been looking at certain studies of the East Asian miracle, and in particular at the World Bank's report The East Asian Miracle: Economic Growth and Public Policy and a critique of that report entitled Miracle or Design? published by the Overseas Development Council of Washington DC. Those two documents seem to me to be of outstanding importance in developing policy in this particular area because they provide an analysis, often highly controversial, of the factors lying behind the East Asian miracle. In the time at my disposal I can only summarise the conclusions I draw from those two documents.
The documents confirm the importance of primary education and literacy. Before take-off, all the countries in question—the East Asian countries; the "four tigers" and those which have joined them—had high primary enrolment and high literacy rates. That confirms my original intuitive conclusion that we should concentrate heavily in our aid programme on education, and above all on primary education rather than secondary education, higher technical education or university education.
That is not the case. This year's ODA report, as I interpret it, reveals that £106 million, or 17 per cent., of the bilateral budget was spent on education, but the majority went to universities, technology centres, secondary education and teaching English. Therefore, a relatively small proportion went to primary education, which I consider the most important. The World Bank survey for 1989–91 shows that in 15 of the 25 countries covered there had been a decline in expenditure on education and that that expenditure was still focused on secondary and higher education. In Bangladesh the 10 per cent. of students who reach university receive 72 per cent. of the educational budget. It is very important to learn and act upon that information.
Secondly, a crucial prerequisite is related to institutional arrangements—what the noble Lord, Lord Beloff, and the ODA call good government. If I have time I may return to that subject.
Thirdly, a degree of economic equality which existed in East Asian countries was an important factor. In both Taiwan and South Korea radical land reform has made a substantial difference to income distribution. The existence of large landowners, your Lordships will be alarmed to hear, would appear to be an obstacle to economic progress.
Fourthly, what is known as shared growth is an important factor—that is to say, a wide distribution of the benefits that growth brings. In most of those countries that takes the form of universal education, a massive programme of public housing in Hong Kong, land reform and the encouragement of small and medium-sized businesses. Underpinning all those factors were economic stability and governmental institutions capable of carrying out consistent policies over a period of time. Hence the most controversial conclusion into which these reports seem to lead one ineluctably was that in almost every case the governments who had presided over the economic takeoff had been, first, according to our standards,
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authoritarian, and, secondly, had pursued an industrial policy involving systematic government intervention in the market over an extended period of time.
That is contrary to popular doctrine in this country but it is difficult to avoid the conclusion. The studies by the World Bank were initiated under the initiative of Japan because the Japanese said that their take-off had not been according to the rules followed by the World Bank: there had been consistent government interven-tion, government subsidisation and government industrial policy throughout the crucial years.
The Anglo-American theory, if I may so call it, is based on the proposition that economic and political reform march hand in hand. I have long argued in connection with Central Europe that there seemed to be no empirical or historical evidence to show that that was true. Historically it was almost always the case that economic reform had been introduced by authoritarian regimes, whether they were colonial, as in the case of Singapore and Hong Kong, oligarchic, as in the case of Taiwan, or by an occupying power, as in the, case of the United States in Japan.
Furthermore, it has always seemed to me unlikely that people would vote twice in a democratic constitution for the immediate consequence of economic reform which simply leads as an immediate consequence to high unemployment, high inflation and a sharp drop in industrial growth. Recent elections in Central Europe seem to confirm that that is the case. In every case they swung away from the rather doctrinaire. laissez-faire governments to more conservative/ socialist governments, if I may so describe them.
Let me make clear that those conclusions are my own and have had to be expressed extremely crudely in the time available. However, I emphasise that the conclusions of the two documents—they are often in disagreement with each other—seem to me to represent the result of an exercise which is extremely important and worth while. We need to identify the factors which lie behind take-off. We need to know what has happened where that has been achieved successfully and whether those lessons can be applied elsewhere, such as in Africa.
Two things need to be said: first, important though primary education is, it does not produce quick results. One has to wait 10 or 15 years before it feeds through the system. Secondly, if one looks at the establishment, the market or capitalist economy, in these countries, it is also an extremely slow process. In one of the books that I have read, it has been argued that the foundations of a quasi-capitalist market economy in India were laid in the 19th century. In Africa, where primary education is very poor and where the traditions of a market economy are almost non-existent, we cannot expect rapid change even if we pursue the most imaginative and well-found policies.
5.55 p.m.
Lord Rea: My Lords, the impression that has emerged from today's interesting debate, for me at least, is that nearly all noble Lords who have spoken are fully aware of the complexity, size and importance of world development. However, most speakers were concerned

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that the Government were not giving the issue a high enough priority. I think that the only major dissenter from that view was the noble Lord, Lord Greenhill. I hope that the weight of the arguments of the other speakers, in particular of the noble Lord, Lord Beloff, and perhaps my remarks, will persuade the noble Lord otherwise.
The criticism that the Government do not allow enough finance for aid is not a criticism of the noble Baroness's department as such, which has deservedly come in for a good deal of praise this afternoon. Rather, the criticism is of the diminishing share of the cake which her department receives. I might add that that is indicated by her exclusion from the Cabinet—a wrong which a Labour Government would put right when her successor takes office.
We are also very concerned about how the noble Baroness's control over her share of the cake is diminishing, as multilateral and European Union agencies take an increasing share, and Eastern Europe appears also to be receiving increasing aid from the budget of her department although originally, as my noble friend said, it was understood that it would be additional money.
Like my noble friend, I should be grateful if the noble Baroness could make quite clear what impact aid to Eastern Europe will have on the funds that she has available for other overseas development. I can perhaps accept that as an investment there may be a more rapid return on money spent in Eastern Europe because, to follow the argument of the noble Lord, Lord Bonham-Carter, the educational level of those countries is extremely high. Literacy is almost 100 per cent. When they get their house in order, I think that we shall see some good markets for our industries and those of other countries opening up there.
On the topic of aid money passing from her control, I fully realise that much of the money going to multilateral agencies is well spent and essential. I should just like to know that Britain plays its full part in the administration of those multilateral agencies and in the decision-making process, and, as my noble friend said, this is co-ordinated with the bilateral programmes of this country and others. It is a little disturbing that one multilateral organisation which does exceptionally good work in meeting basic human needs, UNICEF, has had its core funding from the United Kingdom reduced by £1 million this year when in fact the demands on the services that it gives, in particular in emergencies, has greatly increased.
Several noble Lords, particularly my noble friends Lord Judd and Lord Desai, have quoted from the United Nations development programme report which has just come out. One of the rather disturbing figures it gives (which was quoted by my noble friend) is that the UK gives a lower proportion of its aid budget to human priorities such as basic education, primary health care, safe drinking water, adequate sanitation, family planning and nutrition than many other countries. Perhaps the noble Baroness could tell us why the figure is so low when other countries spend twice as much; a higher proportion of their aid is in this category. That
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figure differs rather from the ODA's own figures which were given last autumn, simultaneously with the lecture by the noble Baroness at Chatham House, when the ODA introduced a new system of monitoring the allocation of aid according to priority objectives, known, I gather, as PIMs, policy information markers. Last year, according to the ODA, the sector promoting human development, including education, health and children, by choice received 26 per cent. of the ODA budget, not 6.6 per cent., as reported by UNDP.
The noble Lord, Lord Bonham-Carter, put his finger on it, when he said that the ODA's figure is somewhat misleading. As he said, from a total education budget of £115 million, only £5.4 million was spent on primary education. Perhaps the noble Baroness could look at the discrepancy between the figures.
The UNDP report calls for a new and better reporting system of aid, giving more details of the distribution by target groups in human priorities as well as the military spending of both the donor country and the recipient country, linked to aid flows. That would be helpful for those planning aid programmes. I hope that the noble Baroness agrees.
I am sure that in her reply she will refer to emergency aid which other speakers have mentioned and to which this country has made a sizeable contribution, quadrupling or quintupling its contribution in the past four or five years. How is the noble Baroness protecting development aid money from the inroads which the increasing number of emergency claims must make on it? Like her noble friend Lord Deedes, I know that the noble Baroness would like to be able to anticipate emergencies and intervene, if possible before a serious crisis occurs. But that is not easy, as Rwanda and Somalia have shown.
Can she report any progress in the creation of the much discussed early warning system for the United Nations? It should allow early intervention if it is to function properly. I know that we are discussing aid and not peacekeeping, but conflict is more often than not the cause of humanitarian crises. Can the noble Baroness say whether there is any prospect of the standing United Nations contingent suggested by Boutros Boutros Ghali in his Agenda for Peace ever being formed? It might have saved hundreds of thousands of lives in Rwanda if it had been in existence and ready for immediate dispatch there.
Moving from the humanitarian aspects of aid, I should like to consider aid from the point of view of Britain's self-interest. It is essential for our continued survival as a developed industrial nation that we export, and that markets are found for our products. At present many countries—especially in Africa—are unable to buy their proper share of goods on the world market. As has been pointed out by noble Lords, there are two main reasons for that. First, their chief export commodities are now falling to rock bottom prices. Secondly, their international debt has reached levels which, in effect, have made many countries bankrupt. I think that all noble Lords would agree that aid cannot take the place of trade, and even in very poor countries the value of trade greatly exceeds aid flows. But properly directed aid should surely be able to help less developed

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countries to diversify their economies so that they are not dependent on single commodities, usually unrefined products, for foreign exchange. Our aid should be directed to allowing them to export an increasing proportion of value added products—chocolate instead of cocoa, furniture instead of timber—and to manufacture more of their own basic tools which they need for agriculture, transport, water supplies or housing, instead of importing them.
I am not sure that GATT will be helpful to developing countries. Nor are many non-governmental organisations and my noble friends Lord Judd and Lord Desai, that GATT will be helpful to developing countries. Tariff barriers to semi-manufactured goods entering Western industrialised countries will remain high for a number of years. The Multi-Fibre Agreement will only be phased out slowly and the main benefits will not occur until nearly a decade after GATT comes in. All less developed countries will be expected to lower their tariffs so that locally made products will have to compete with cheap imports. Nevertheless, I am sure that our aid—especially our technical assistance which is so valuable—must be aimed at allowing less developed countries to take off in the way discussed by the noble Lord, Lord Bonham-Carter, as the Far Eastern tigers have done. I follow the noble Lord in saying how important it is for basic education and basic human priorities—i.e., investment in human resources—to be part of that process, before they reach the stage of taking off.
Sadly, World Bank loans have so far too often been directed to increased production of basic commodities to service debt, which has accentuated the first problem of low commodity prices. I am glad to read that the World Bank now says that it recognises that the alleviation of poverty and the investment in human capital—for example, health and education—give extremely good returns. We shall be watching the results of the new attitude.
I should have liked to examine much more fully the impact of debt not only on the developing countries but its boomerang effect on our economy, which was discussed by my noble friend Lord Monkswell. It is slowing our recovery from the recession and keeping unemployment at a higher level. To cancel or forgive debts is not a new concept; it played a major part in the recovery from the recession in the 1930s.
I wonder whether the United Kingdom and other members of the European Union and G7 can bring stronger pressure to bear on Japan, who appears to be the main objector to a liberal debt reduction policy— Trinidad and beyond, as other speakers have called it. It has been suggested that the sale of surplus gold stocks of the International Monetary Fund could be a possible source of finance for this. But even if debt were reduced to manageable levels, large amounts of capital will still be required by the poorer nations.
Finally, I wish to make a suggestion as to how this problem might be faced. A number of authoritative figures, starting with Willy Brandt in the early 1980s, now a former president of the World Bank, as well as the late right honourable John Smith, have suggested that the time is now ripe for a carefully targeted new
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tranche of special drawing rights to be allowed, of some 10 billion to 12 billion dollars, to finance the recovery of the poorest nations of the world. The last time I suggested that the noble Baroness turned it down, but there is now surely enough accumulated capital in the financial centres of the world to allow for that transfer., which would act not only as a means of hoisting several nations out of poverty and bankruptcy, but also would act at the same time as a boost to the whole world economy, as it is fed back in terms of trade and export orders.
6.10 p.m.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, I welcome this important, fascinating and highly committed debate. I thank the noble Lord, Lord Judd, for initiating it, and all noble Lords who have contributed to it. I thank all those who have given generous praise to the ODA, and I thank particularly my noble friend Lord Soulsby; given his experience, to make the remarks that he did make was a double plus for the ODA. I also thank so many of your Lordships for your very kind personal remarks. I shall only say that I do my best with what I can get.
The problems of developing countries and how we respond to them are issues which rightly demand a concern that goes far wider even than this debate. Nevertheless, I hope that the debate will be widely read. I shall respond in a moment to the issues that were raised. But, first, I should like to make two underlying points.
The first is that the circumstances and needs of developing countries vary very greatly. Secondly, our assistance must therefore be tailored to the conditions and priorities of each individual country. The whole of our overall aid strategy, the way in which we pursue the seven priority objectives that I set out in our debate on 2nd March, seeks to reflect this point.
The noble Lord's Motion that is before us talks about,
"the growing needs of the Third World".
I do not suggest that the needs of developing countries are anything other than essential. But I firmly believe that it would be better to describe them, as many noble Lords have done in this debate, as changing needs.
There is increasing differentiation in the experience of developing countries. There is no longer a single third world. As my noble friend Lord Selsdon and the noble Lord, Lord Ennals, said, it is high time that we stopped using that phrase. The developing countries have a great range of experience, from the enormous success which the right reverend Prelate the Bishop of Lichfield described in Uganda to continuing and tragic failure —repeated failure—in too many countries.
It is also wrong to think of the developing world solely in terms of needs, or of decline and difficulty. That does not reflect the reality. Overall conditions in developing countries have improved. Their people are better educated and they live longer, as the noble Lord, Lord Judd, said. But, my goodness, there are so many

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big, big problems. After all, AIDS was not the problem 10 years ago that it now is. It is ravaging countries in many parts of the world.
We know that the picture is not uniform. There were countries in East and South-East Asia that were poor 30 years ago by any measure, as the noble Lord, Lord Bonham-Carter, said; some now have incomes as great as those in OECD countries. In South Asia there has been considerable progress, with a growing commitment to economic reform. Even in Africa the picture is not uniformly bad. Over the past 25 years Botswana has had the highest per capita growth in the world. At independence it was the second poorest country in sub-Saharan Africa. Now it is the third richest.
Aid has played a vital part in these successes, supporting key areas of development. But some of those countries have now graduated out of needing our aid. That is a good thing. For instance, aid is less than 1 per cent. of the income of the Asian developing countries. The growing flow of private finance to developing countries is a significant and welcome change that has taken place in recent years. At a time when most donors face constraints on their aid budgets, these private flows play an increasing and important role in financing development. In India, for example, foreign investment has increased eightfold in the past financial year.
The noble Lord, Lord Judd, referred of course to many of the very dark sides of this particular picture. I agree with him that there are countries where poor people are in a really desperate situation. Over 1 billion people in the world are in absolute poverty. They are poor in the sense that they cannot attain even the most basic standards of life which we had 40 years ago and earlier. Many suffer not only from desperately low incomes but also from natural and man-made disasters, on which many noble Lords have spoken tonight. Many rely heavily on aid, but want to rely on trade. So we have a moral duty, as the right reverend Prelate the Bishop of Ripon said.
For that reason I regret that I cannot agree with the noble Lord, Lord Greenhill, in what he said. We have a development budget that is less than 1 per cent. of all government expenditure in this country. As the noble Lord, Lord Desai, put it, our £2.1 billion budget is very tiny compared with the £90 billion that we devote to needy people in Britain. I am not saying that they should not get it. Of course they should, and we should be helping them. But let us see the figures in true comparison.
Our strategy to help the developing world must reflect the changes and the different experience of developing countries. A central factor in our strategy is to focus on where and how to achieve the maximum impact. Here I want to turn to a remark that was made by the noble Lord, Lord Judd. He commented that there had been no White Paper for 19 years, and asked why we were not going to publish one. I ask the noble Lord whether he will please read the ODA departmental report and all our other publications. I think that he will find that the Government's strategy is very succinctly laid out and that it explains in detail just why our policies to support and encourage good government and
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economic management in developing countries are so important. As he said, I set out that strategy in my speech at Chatham House last October. I give anything up to 50 speeches a year, and I know that the noble Lord does not like ploughing through them. But we are trying to make sure that people know where we are going and why we are going in that direction. Therefore, I think that the noble Lord has a little more reading to do. It is not necessary, I believe, to go to the expense of a White Paper. However, enough has been said. I shall go on publishing information, because I happen to believe that it is right for the aid programme and its recipients that others who are far better off should know just what the problems are.
When I set out the priority objectives last October, I said that they were all aimed at focusing our aid on the key factors for sustainable development. It is one thing to devise a list of objectives; what is important is to turn them into action. That is why, as the noble Lord, Lord Rea, said, we have a computer-based system to help us measure our performance against our seven key objectives. The outcome of that exercise will be made public.
Another element in our strategy is focusing our resources where they are most needed. Many noble Lords referred to the poorest countries and the poorest people. Over 80 per cent. of Britain's bilateral aid goes to the poorest countries, which have little or no access to private finance. That is a higher proportion than for any other G7 donor. But I am working on the others to improve the proportion of their aid that goes to the poorest. Britain's 10 largest aid recipients are low-income countries in Asia and sub-Saharan Africa. All our aid to them is on grant terms. So Britain avoids adding to their debt burden.
Our primary concern is the reduction of poverty. I shall comment in a moment on the wider picture of trade and debt relief to which my noble friend Lord Selsdon and so many other noble Lords referred and which is of great importance. We need direct action in favour of the poorest, but that is not enough on its own. Britain's strategy consists of action at many levels: targeted projects and safety nets which raise the living standards of poor people; making sure that there is support for health, education and other services which benefit the poor—and I shall return to education and literacy in a few moments; and help with reforms that help the poor to earn more in agriculture, manufacturing and trade. The sort of reforms that show them how to make a success of business are all part of the programme, as are the reforms which make the whole economy healthier and faster growing.
We try to provide well-targeted emergency aid to relieve the immediate plight of those suffering from natural or man-made disasters. I could not agree more with what my noble friend Lord Deedes said when he talked about prevention, and we have been very active in encouraging others that more should be devoted to disaster prevention.
An example of where our aid—as the right reverend Prelate the Bishop of Lichfield and the noble Viscount, Lord Falkland, mentioned—has been very effective indeed is in Uganda. There has been substantial balance

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of payments support since 1986, amounting to £18 million for the last financial year for which we have full figures, 1992–93. We have helped support their economic reform and we have helped finance the purchase of essential imports. We are providing capital aid and advice to help rehabilitate the system of power generation and distribution. We are providing technical co-operation to help improve the quality and accessibility of health care, including the all-important reproductive health care and contraceptive services, as well as a major programme to help them with their enormous AIDS problem. We help with civil service reform, training and technical assistance for the judiciary and with the demobilisation of the armed forces. So we have made a pretty major contribution to help the remarkable recovery that Uganda has made under President Museveni after a decade or more of dictatorship and mismanagement that had brought the country to its knees.
The better off developing countries have greater access to private and semi-concessional finance to help with their development. Here our strategy is carefully to target our interventions, to provide advice and know-how and to fill skill gaps in areas central to further development. We try to be flexible and effective in the help that we give to support the transition to market economies and plural democracies, whether it be in Africa, Eastern Europe or anywhere else. These interventions are low-cost, but they are very effective.
We seek to tailor how we deliver our aid, in some cases using bilateral channels—for example, working with British consultants and companies—in others, working with multilateral agencies, recognising their ability to mobilise the critical mass of finance. As so many of your Lordships have done—particularly my noble friend Lady Macleod of Borve—I want to pay a particular tribute to the work of the non-governmental organisation community. My confidence in the work of NGOs is reflected in the growing amount of aid that we channel through them, which has more than doubled in just three years—from £65 million in 1989–90 to £147 million-plus in 1992–93—and it will be even greater when the 1993–94 figures come out. They have done some of the best work under the most difficult circumstances, and they are involved in a growing number of fields, including family planning, education and all the very basic things that these poorest countries need. It would be easy to make a speech for 20 minutes just about the excellent work of the British NGOs, but I think they know that they have my confidence, and it is clear from the debate tonight that they have your Lordships' confidence.
Our support for development is much wider than just the aid of which so many have spoken. This country has been the most active of all in pushing for further action to relieve developing countries of their burden of debt —a matter mentioned by the noble Lords, Lord Judd and Lord Redesdale, the right reverend Prelate the Bishop of Lichfield, the noble Lord, Lord St. John of Bletso, and many others. The Trinidad terms, which my right honourable friend the Prime Minister developed in 1990, have so far benefited 22 of the poorest, most heavily indebted countries. I can assure noble Lords that
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we are taking every opportunity to press other creditors to improve these terms and to provide more substantial debt reduction for the deserving countries so that they have the opportunity to graduate from the rescheduling process.
The United Kingdom, of course, was also in the forefront of working for a satisfactory outcome to the Uruguay Round. This is critically important. I believe that, while the Uruguay Round represents opportunities to all countries, we have to make sure—as the OECD/World Bank report concluded —that the developing countries should benefit from this round. That in turn means making sure that those developing countries do not have their situations worsened by continued protectionism, or an intensification of protectionism, among developed countries. There is a lot of work to be done. The OECD/World Bank study concludes that the proposed liberalisation of trade in manufactured and agricultural products will raise incomes in non-OECD countries by over 78 billion dollars per year. I believe that figure to be an underestimate.
My noble friend Lord Selsdon spoke about the wider picture, and the noble Lord, Lord Rea, asked for help to enable business to start up, which we provide in a whole variety of ways. One of the things that the United Kingdom does better than many other countries is the provision of private investment. In 1992 British private investment was about £1.7 billion, more than half the overall European Union total. Only the United States and Japan do more than we do. This is essential if there is to be increased trade and trading opportunities for the developing countries.
This has been a very interesting debate Many, many issues have been raised, and I hope that noble Lords will forgive me if I cannot touch upon all of them. I seek to touch upon those which have been mentioned most frequently and which seem to me to be the most important.
When noble Lords were speaking with pride of the improvement in Uganda, several noble Lords raised the big problem that Uganda has with its multilateral debt. We have of course sought to take as much action on bilateral debt as we can, and full Trinidad terms would be of great help to Uganda because Uganda would be one of the first beneficiaries if full Trinidad terms were agreed, and that would then release more money for it to service its multilateral debts and its other needs. There is a lot to be said on this issue, and we are working with the Ugandans. I hope that the second ESAF, under the enlarged facility to which we have contributed quite generously, will be a possibility because Uganda is following its adjustment programme. We hope that it will continue to do so, and I shall be visiting there next month to discuss all these items.
Another issue that has been raised in this debate— most notably by my noble friend Lord Blake—is whether we get value. Do we evaluate? Do we learn? This is a most important point because every NGO and trust working in the developing world knows how critical it is to get full value from what it spends. We have an evaluation department—quite independent from spending departments—which makes use of

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external consultants to produce studies and to learn lessons. Our success ratings are quite good. We still make mistakes, but, my goodness, the feed-back of evaluation results are most important and very valuable. Certainly we will go on doing this, and I can assure my noble friends Lord Deedes and Lord Soulsby of Swaffham Prior that we have no intention of letting up on the quality of the projects we undertake, or indeed of the needs of these people.
We have had an interesting bash again about the UN 0.7 per cent. Just let me say this. We do not have a timetable, but we retain it as a target. We have been averaging 0.3 per cent. over recent years; in 1992 it was 0.31 per cent. I must say that I noted very carefully that in the recent Socialist European manifesto there was no commitment by a future Labour administration to move towards 0.7 per cent. Perhaps they think it will be less difficult for them, given the rate at which GNP might fall under their ideas for economic management. I tease slightly, but the underlying point is there, as the right reverend Prelate the Bishop of Ripon said, because the smaller the total, the greater the percentage may be.
The noble Lord, Lord Rea, asked me about the impact of Eastern European spending. Most of that is in forms of education, as I am sure he knows. Indeed, it is a plus for Britain and a plus of which we should not be ashamed. We are doing our very best to make sure that, when we allocate funds, Africa and Asia continue to be our major priorities. There is no lessening of our commitment to the traditional developing countries; nor is there any conflict between our aid objectives in the emerging countries as opposed to the developing countries.
As the noble Lord, Lord Bonham-Carter, said, there is need for increased attention to the primary sector of education. We are already actively pursuing this in Zambia and some other countries. We are switching attention from the secondary to the primary sector. It means in-service training for up to 15,000 teachers in Zambia in the primary sector. We are working on a major new primary education package, which I know that my noble friend Lady Macleod will be glad to see, in Malawi. In Andhra Pradesh we have another major programme. We are working with the countries concerned to get the inputs into primary education as effectively as possible.
The noble Viscount, Lord Craigavon, my noble friends Lord Soulsby and Lord Beloff, the noble Lord, Lord Bonham-Carter, and, if I may say so, in her first-class speech the noble Baroness, Lady Lockwood, made reference to population, family planning and its essential nature. In 1992–93 we spent over £100 million on health and Children By Choice programmes. We have increased that substantially already and we hope to go on doing so. I shall be making a series of announcements on further help for population and our help for the Cairo conference at a specially convened meeting at the Royal Society on 11th July. I can confirm to all those who asked that we are actively working with others to ensure wide support for the Cairo action plan. While I am not always an optimist, I can assure noble Lords that we are working with, and on, the Vatican, if
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I may so put it. We understand the problems and hope to achieve a good, united outcome. But that underlines the essential nature of education for women. Where women are better educated, it is easier to enable them to control their family size and spacing.
The right reverend Prelate the Bishop of Lichfield asked me about the role of Africans in solving conflicts. We are already doing all that we can to support such initiatives. Some of them are being led by the Africans themselves. Presidents Mandela, Museveni, Moi and Mubarak are all involved in such initiatives. These initiatives are going quite well. I shall see what more can be done.
My noble friend Lord Deedes and the noble Lord, Lord Desai, talked about disaster preparedness. It is not quite so bad as my noble friend thought. Long-term development aid is helping to put countries into a better position to deal with the effects of natural disasters, such as the southern African drought. As many have said, the disaster in Somalia was, for example, the result of civil war and conflict and certainly not the result of the lack of an early warning system. Disaster preparedness is a situation which has improved greatly. As a department we are also deeply involved in the Decade of Disaster Reduction and attended the recent conference on that project.
In the end the policies of developing countries themselves are what make the real difference in determining whether those countries develop success-fully. They have to create a framework in which their families and communities can work to improve their lives. We have to help them to do it. We are making a substantial contribution to the process in helping those countries and their peoples to help themselves. We shall continue to do so.
6.34 p.m.
Lord Judd: My Lords, I should most genuinely like to thank all those noble Lords who participated in the debate. It has been a good debate and I warmly agree with the Minister that we should all hope that it will be widely read.
There have been some differences of opinion. But how on earth can we deal with the universal affairs of humanity and not have differences? But obviously in all parts of the House there is a genuine conviction that the issues that have brought us together should be on the central political agenda. There are no differences about that. I hope that this debate will have assisted in ensuring that they are given higher consideration in the future. Let me just assure the Minister that I always put her reports at the top of my priority reading list. I find them irresistible. It is because of the exceptionally good showing that she makes of a difficult situation that I should like to be behind her in projecting into the future what we ought to be doing together. That is the relevance of a White Paper.
In thanking everybody concerned, it would be very remiss of me—I am sure that all noble Lords who participated in the debate will endorse my remarks—not to thank the non-governmental organisations who have done so much to brief us for the debate. They carry the banner most valiantly and work in the front line all the

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time, bringing back the insights and experience in a way that perhaps nobody else can do and sharing them with us.
I have detected only one dissenting voice in the debate tonight. Again, there seems to be a coalition between the Minister and myself. That voice was that of the noble Lord, Lord Greenhill. I hope that, having heard this debate, he will cheer up and, having taken on board so much positive thinking about the importance of the issues and what can be done, that he will reconsider his rather gloomy conclusions. Poverty is not a British issue or an overseas issue. Poverty is an evil whether it is in Britain or overseas. We want to fight poverty and injustice wherever they are. The challenge is to get the act together overseas and at home.
Again, I am grateful. I hope that we shall be able to return to the subject before long. I always have immense difficulty in this particular role because I genuinely have the deepest admiration for the Minister and what she does. I hope that we in this House can get together and help her do still more, winning her colleagues to a real strategy for the future in the interests of humanity.
Motion for Papers, by leave, withdrawn.

Pensions
6.37 p.m.
Lord Jay Lord Jay rose to call attention to the losses which may be incurred by pensioners who have transferred from the state earnings-related pensions scheme to occupational pension schemes or to personal pensions; and to move for Papers.
The noble Lord said: My Lords, in the past few years the Government's pension policies and their failure properly to regulate private occupational or personal pension schemes have caused a great deal of anxiety and done some real damage to a very large number of pensioners, present and future. Ministers owe it to the House to explain how they propose to avoid more future damage and to compensate those who have suffered from government policies.
First, in the 1980s, the Government set out—or so it appeared—deliberately to undermine the state earnings-related pensions scheme, or SERPS as it has come to be called. That scheme was the second step in the development of universal contributory pensions after the state contributory pension was introduced by the National Insurance Act 1946 which, incidentally, then raised the retirement pension by 160 per cent. in one stroke.
However, by the 1960s and 1970s, a dilemma had become apparent. With a single contribution and single pension either the contribution was too large for the poorest contributors or the pension was negligible for the better off. Therefore the earnings-related contribution and pension were introduced in the 1976 legislation which, let us remember, at that time was broadly endorsed by all parties. In that form SERPS had many benefits: the pension was contributory and therefore partly earned and not charity; it allowed for different levels of income; it enabled people to change jobs as often as they wished without risking their pension; and
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it was both guaranteed by the state and index-linked. That is not just my view. The Financial Times, in an article by Michael Prowse—one of its expert writers —said,
"The original SERPS had all the virtues of a good pension scheme. It offered exceptionally low administrative costs, job mobility and maximum security in old age. Nothing: in the private sector can match this combination of virtues".
How right he was, as it turned out. But what have the present Government done since the mid-1980s? They have set out to undermine SERPS, apparently for only two reasons: first, the Government's obsession (now amounting almost to a feud) against any kind of collective provision for anything; secondly, a largely illusory scare about the prospective army of idle old people who are supposed to threaten us in the coming century. On the latter I would only say this: as better health and fitness raise by 10 per cent. the length of life, so they lengthen by the same proportion the years of fitness to work. Here is an opportunity for more productive work and it is surely the business not of pension policy, but of general economic and employment policy, to see that there are jobs for all those able and anxious to do them.
One settled long-term strategy should be to raise gradually the age of retirement proportionately to the average length of life; the age of 65 is already largely out of date. The Government however, whether or not misled by those perverse motives and, incidentally, with the help of an advertising campaign, proceeded to bribe as many contributors as possible to leave SERPS and take their chance with private personal or occupational pensions. Incidentally, there was nothing to prevent members of SERPS supplementing their state pensions, if they so wished, with private pensions.
The "bribe"—as it generally came to be called—took the form of a tax concession known as a national insurance rebate which made the simple pensioner believe that he or she would gain somehow by contracting out of SERPS into either personal or occupational pension schemes. But the Government offered that bribe at the taxpayers' expense, without either ensuring that the private, personal or occupational pension schemes acquired were at least as favourable as SERPS or that expert independent advice was somehow available to ordinary contributors on this extremely complex subject.
The result was dramatic and one might say illustrates all the joys of deregulation. Up to the present date, according to the financial press, around 5 million people took the bribe and opted out of SERPS. It now turns out that many of those 5 million—some say half—will be worse off than if they had remained in SERPS. One independent actuary states that 1.8 million of the 5 million people will be worse off. No wonder large numbers of those who have been misled are opting back into SERPS. The Securities and Investments Board advises that large numbers of people have been misled. Indeed, only this past weekend the Financial Times said,
"In tens of thousands of cases, policies are thought to have been against the best interests of customers".
Can the Government say whether those figures are correct as regards the number of people who have opted

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out and the number of those who are worse off as a result? If my figures are wrong, can the Minister give us the correct ones? If the Government cannot give us more accurate figures, most people will assume that the independent expert estimates are not far from the truth.
The reason why so many pensioners, on balance, have lost out is partly due to Government pressure to opt out; partly due to the absence of expert independent advice and partly also, I am afraid, due to the behaviour of some of the private insurance companies themselves in selling personal pensions. First, a sum amounting to up to 13 per cent. of the bribe handed on by the opter-out to the insurance company was swallowed up in commissions and administrative charges; and, even worse, in some cases, by what the industry calls mis-selling—that is, false promises by the companies' employees, sometimes acting on commission, in order to sell such policies. The taxpayer lost; the prospective pensioner lost and only the insurance companies gained. Some of the more famous insurance companies no doubt acted wholly scrupulously throughout. But some remarkable names have been quoted in the catalogue of mis-selling.
Equally remarkable as the number of people affected in the exercise are the amounts of taxpayers' money poured out by the Government in the whole proceedings. According to the Financial Times analysis, the Government paid out gross £10.5 billion in the past five years by way of rebates to encourage people to opt out of SERPS. The National Audit Office, in an earlier report, gave an estimate of the gross cost to the National Insurance Fund as being £9.3 billion—pretty close to the other estimate. After allowing for the presumed saving on the fund's future obligations as a result of people opting out of SERPS, we have a net cost of £5.9 billion. That was the estimate given by the Audit Office. Can the Government say whether those figures are correct and, if not, will they tell us what the correct figures are?
Whatever the precise total, those are enormous sums of money, particularly when we compare them with the results in terms of pensioners who have suffered. The whole escapade is the most wasteful and reckless disbursement of public money that I can remember. At the same time, the mis-selling of policies by the insurance companies extended not merely to those who opted out of SERPS into personal pension schemes, but also to those who opted into occupational schemes both of which hamper changes in jobs and about which, though many are responsibly managed, much anxiety has been felt by many people since the Maxwell fiasco.
Some months ago the independent Pension Law Review Committee, headed by Professor Goode, made a series of recommendations to restore confidence in the occupational schemes which at present cover 11 million people—it is not a trifle we are discussing this evening —in the public and private sectors together. These detailed recommendations cover the rights and duties of trustees and the companies. They cover compensation for the members of the scheme where there has been
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mis-selling and so on and recommendations for fund management and the safeguarding of assets. They are all designed to protect employee members of the scheme.
The all-party Select Committee of the other place which considers social affairs has also broadly endorsed the Goode Committee proposals including stronger representation of members on trustee boards, compensation in the case of fraud, and the appointment of a regulator by the Secretary of State. Surely it is now clear that this branch of pension and trust law ought to be strengthened and clarified. And as this needs legislation, it surely cannot be left to the SIB or the PIA (Personal Investment Authority) whose own responsibilities could respectively do with a bit of clarification.
We have two thorough reports from the Goode Committee and the Select Committee. I understand that we have been promised a White Paper. However, it has been postponed again. Perhaps the Government can tell us the position as regards this presumed White Paper. I hope that the Government will tell us tonight what they propose to do about the committee's recommendations; that they will give the House the figures that I have asked for, particularly as regards the number of people who have opted out of SERPS and the number who are worse off as a result. I hope that the Government will also tell us the gross and net loss to the National Insurance Fund.
In addition, how will the Government compensate those who lost through being persuaded to opt out of SERPS, of which there are certainly many? I would also like to know what plans Ministers have for providing ordinary citizens in future with expert and impartial advice on their future pensions? As we are here discussing the future fortunes of a huge proportion of our working and retired fellow citizens, I also devoutly hope that the Minister can now assure us that the Government firmly support the principle and preservation of SERPS for the future as an essential core of provision for old age in this country. My Lords, I beg to move for Papers.
6.53 p.m.
The Earl of Clanwilliam: My Lords, I rise in lonely glory on this side of the House. When I saw the weight of expert names on the list of speakers I wondered whether I had the courage to put myself forward to speak on behalf of the Government. But I have taken up the challenge.
I support the Government. They have reacted to the demographic effect, which is a fact of life. We all know that it is going to happen; namely, that there is going to be an insupportable number of old age pensioners in future. Something should be done seriously to relieve the problem. The Government and the party opposite —if they believe that they are going to be in power for the next 30 years—should be extremely glad that arrangements are being made so that people can make their own provision and relieve the Government of the guarantee which the noble Lord has pointed out is the responsibility of the Government. It is going to be too great a charge on the Government. Alternative arrangements have to be made. The problem is not so

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much arguing about how many millions of pounds have been lost here and there, but how to reorganise the whole system in future so that it can work.
There has been some debate on the effect of transfers from SERPS to occupational schemes. As I understand it, an occupational pension scheme is either contracted in or out of SERPS. If you are in an occupational scheme you are extremely unlikely to contract out of SERPS if the scheme that you are in is contracted in. A person would be very ill-advised to do so. I cannot believe that many people have actually done so. People in SERPS have contracted out altogether into personal pensions. A personal pension is the means whereby this country is going to be able to provide pensions in future.
The occupational pension scheme is excellent. Many people are in it and, as the noble Lord said, 11 million people are involved. When people leave an occupational pension scheme they probably have to go into a personal one, otherwise they get left every time they move with some tiny guaranteed minimum pension plan which is left on the books of the company. The company may have responsibility for looking after it for the next 30 years. Then that person leaves the next company five years later and there is another guaranteed minimum pension to be looked after for perhaps 25 years by another company. Additional costs are piling up in the occupational pension scheme which would be relieved if everyone had their own personal pension.
I know that the KPMG survey commissioned by the industry in 1993 produced some fairly horrific figures. But I believe that the jury is still out on the matter. I have no doubt that my noble friend on the Front Bench has many more figures to give us which we shall no doubt all want to hear. Yesterday on the Terrace I was at an industry meeting with insurance brokers and the noble Baroness. They were recommending that the only way to improve SERPS was to ensure that, with increasing age, the Government offered an increasing incentive to contract out of it. They would say that, wouldn't they? It indicates the complication of deciding whether to be in SERPS or out of it. For women it is for a period of 33, 35 or 38 years and for men 40 to 45 years. Different sections of the industry give different figures. It depends on the estimate made by the experts as to which is the right figure.
It is extraordinarily complicated and difficult and of course people have made mistakes. Companies with tied agents have sent them into the field to sell the exchange, which is their job. Some of them have made a good job of it and others a bad job. The problem is that a great many of the companies were ill-advised and certainly did not advise their agents properly. They, together with the insurance brokers, are the people responsible for making good any damage that has been done. It is not the responsibility of the Government to look after that matter.
As the noble Lord said, there are 11 million people in occupational pension schemes. There are 5 million people in private schemes, and 23.5 million people who are employable in this country. We have an enormous record of success in the provision of pension arrangements for private individuals. The state pension is not enough for anybody and no one has suggested that
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it is. Private provision has to be made in addition. Therefore I believe that there should be more transfers from SERPS into private pensions where one can make better contributions, with better benefits.
There is the argument as regards a defined benefit as against a defined contribution. The defined benefit cannot be defined; it is a purely notional figure based on what someone is going to get in future. That therefore puts an enormous charge and cost on the provider, who has to make the provision for the future, whereas in the defined contribution system the private individual knows what he is putting away and can readily and immediately find out how much he has in the kitty. He can decide whether he wants to put in more or whether he does not need to put in so much. He has the control. To that extent, I think that personal pension schemes are very much to be recommended.
I should like to hear the actual figures from my noble friend the Minister. I do not believe that they are quite as bad as the noble Lord, Lord Jay, suggested, but no doubt we shall hear. In the meantime, I feel strongly that there should be as much opting out of the various schemes as possible into personal pensions. That is the way of the future.
7 p.m.
Lord Eatwell: My Lords, this evening we are discussing what is, by any stretch of the imagination, a disaster. Of that there can be no doubt whatsoever. As far as the best actuarial skills can judge, certainly hundreds of thousands of our fellow citizens—perhaps millions, as my noble friend Lord Jay has argued—have been persuaded to take financial decisions which will mean that their pensions will be significantly less than they might reasonably have expected. If nothing is done, many will suffer significant hardship in old age.
Those hardships will be a direct result of the Government's pensions policy. It is a fact that if, in the Social Security Act 1986, the Government had not created the option of opting out of SERPS into personal pensions, the disaster which now faces so many of Britain's future pensioners would not happen.
Yet in your Lordships' House on 13th January this year, the noble Lord, Lord Henley, declared:
'The Government's personal pensions policy has been a striking success".—[Official Report, 13/1/94; col. 231]
That remark was an insult to all of those who have seen their pension entitlements decimated. I hope that the noble Lord will take the opportunity today to withdraw that statement and to apologise.
What we are debating is not just a disaster; it is a scandal. It is a scandal not merely because insurance companies and pension funds have wilfully mis-sold personal pensions, often to the most vulnerable people in our society; it is a scandal because the most active, enthusiastic and irresponsible salesman of all was the Conservative Government.
Unfettered by any apparent sense of responsibility, it was the Government who made the hard sell for personal pensions. It was the Government who used £4 billion of taxpayer's money to fund the 2 per cent. bribe for people to opt out of SERPS, plus another £ 10 billion or so in national insurance rebates. It was the

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Government who squandered £1.2 million on a prime-time television campaign which portrayed SERPS as a straitjacket from which the British people were to be liberated. And it is the Government who are now spending a miserable £100,000 on a low-key advertising campaign to warn of the pitfalls of the personal pensions policy that they created. Will the noble Lord tell us just how many of the 5 million people who have opted out of SERPS have telephoned the number contained in the Government's new warning advertisement to ask for advice?
When this issue was debated in another place on 30th March this year, the Secretary of State, Mr. Peter Lilley, argued that the problems which have arisen with the opt-out from SERPS have become evident only with hindsight. The excuse is simply not credible.
In September 1985, the National Association of Pension Funds stated that:
"It is our firmly held view that a collection of money purchase personal pensions can be no substitute for the security of a defined benefit final salary scheme".
In 1986, commenting on the Government's backing of their hard-sell with the 2 per cent. bribe, the Consumers' Association argued:
"We are concerned that the use of such incentives may encourage people to switch from…SERPS to a personal plan without giving adequate consideration to the benefits forgone. The individual carries far greater risk of ending up with inadequate income by contributing to a money purchase plan than by contributing to a defined benefit scheme".
On the same theme at the same time, the CBI declared:
"This incentive is likely to make employees shortsighted about their pensions. They may be tempted to take the subsidy without understanding the long term implications…relying solely on personal pensions could leave people and their families less well off, if not inadequately provided for".
The CBI was exactly right. "Inadequately provided for" is exactly the position in which millions of people find themselves today.
And yet the Government went ahead despite all the advice. Why did they do it? Was it really just, as Joel Joffé, the former deputy chairman of Allied Dunbar, has argued that this was:
"a government which was ideologically blind to any objections…that the only people it was prepared to listen to were its own supporters"?
That is, of course, self-evidently true. But the Government's policy is based on something more than ideology. It is based on false analysis as well.
The central fallacy in the Government's pensions policy was demonstrated by Mr. Peter Lilley in another place on 30th March. Mr. Lilley said:
"Private provision is good for the individual and for the economy. When the state finances pensions, nothing is saved or set aside for the future. This year's contributions are used to pay this year's pensions. It is pay-as-you-go. By contrast, in private schemes this year's contribution is saved and invested. It goes into British industry to build up the assets that will pay for the pensions in 10, 20 or 30 years' time, when people retire".—[Official Report, Commons, 30/3/94; cols. 968–69]
That is absolute nonsense. Mr. Lilley is displaying with remarkable frankness that he does not have the faintest idea of how the economy actually works. It is simply not true that the savings of "private schemes" are invested in British industry. For example, since the boom in private pensions began in 1988, investment in
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British industry has fallen every year, year after year, and is now at an all-time low. The savings in private pensions go into the purchase of financial assets. Whether there is investment in the real economy, building up real goods and real services to sustain the real incomes of the pensioners and of everyone else in the future, is determined by completely different economic forces, upon which the savings of future pensioners have only very indirect, and very uncertain effects.
The Earl of Clanwilliam: My Lords, where is the pension money invested on a daily and monthly basis other than in the stock market?
Lord Eatwell: My Lords, investments in the stock market are not translated into real investment in real capacity in British industry. They simply raise the prices of stocks and shares. The noble Earl will know that less than 8 per cent. of investment in British industry is funded through the stock market. More than 80 per cent. of investment in British industry is funded by retained profits. I am afraid that the noble Earl has been misled by Mr. Lilley's total misunderstanding of how the economy actually works.
The correct way of understanding the economics of pensions is to characterise the economy as a cake, a share of which, say 15 per cent., will be consumed at any one time by pensioners. The question is: how do they get their entitlement to that 15 per cent. of the cake? They may receive it as a political entitlement, a commitment made by government to provide a pension —whether a standard state retirement pension, or SERPS. In this case, the 15 per cent. will be extracted from the rest of us by taxation and transferred to the pensioners. Exactly the same process, taking the 15 per cent. from the rest of us and passing it over to the pensioners, takes place with privately funded schemes, but by another far less visible and circuitous route. In the case of a funded scheme, the entitlement to the 15 per cent. is not a political entitlement, but a financial entitlement, the result of the accumulation of financial assets over preceding years. But the rest of us still have to be persuaded not to consume that 15 per cent., and that is done either by persuading us to save—not to consume—or, if we refuse to save, by raising taxes.
In both cases the issue is: who gets what share of the cake at any one time? How much do pensioners as a whole get, and which pensioners get a better deal? Who gives up part of the cake today, so that the pensioners can have it today? And most important of all, can pensioners be confident that they will have sufficient entitlements to a reasonable share of the cake, and can they be sure that their entitlements will be honoured?
The great virtue of SERPS is that those on lower earnings can have some confidence that when they become pensioners they will have a real entitlement, guaranteed by the Government, to their share in the output of the economy at that time.
Lord Northbrook: My Lords, surely the problem is that as the population is getting so much older, in 2010 any government will have a big crisis in funding SERPS. That is one of the reasons why the opportunity

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to opt out and to buy a personal pension was introduced. Whichever government is in power will have that funding problem.
Lord Eatwell: My Lords, the noble Lord has been misled by talk of the demographic time bomb. Recent assessments of demographic profiles have considerably reduced the problem that he described. Indeed, the Government's figures which portrayed this problem were incredibly pessimistic about the overall growth of the economy. I can assure the noble Lord that the higher growth of the economy which will be achieved under a Labour Government will make the funding of these pensions much easier.
The great virtue of SERPS is that there is a guarantee. The great weaknesses of personal pensions are that not only are the smaller contributions of low earners swallowed up by the fees and commission charges of the private pension companies, but also that savers have no guarantee whatever that they will actually accumulate any significant entitlements at all.
The Conservatives claim that the SERPS had to be reformed because it costs too much. Did they mean that it costs too much to run? Did they mean that the administrative costs were too high? Of course not. They meant that the transfer to pensioners would be too high. So the pensions of poorer pensioners who relied on SERPS should be cut—cut so that everyone else could have a bigger share of the cake. That is what their so-called pensions reform was all about.
The Government's pensions policy unites choice with insecurity. What is needed is choice with security. Some potential ways forward were outlined by my honourable friend Mr. Donald Dewar in a speech delivered in March of this year. He has examined a variety of routes by which, using perhaps a modernised form of SERPS, a minimum pension income could be combined with a flourishing well-regulated private pensions sector so that those who choose to do so can make extra provision. If there is to be choice with security there must also be an effective mechanism for providing people with accurate and disinterested pensions advice.
It is simply not good enough for Mr. Lilley to argue that:
"no one is better placed and or has greater interest in monitoring the progress of pension arrangements than the individual to whom they belong".—[Official Report, Commons, 30/3/94; col. 971.]
How is the ordinary person, who is busy earning a living and bringing up a family, expected to understand all the complexities? Mr. Lilley is paid £40,895 a year to spend all his time understanding pensions and his speech demonstrates that he does not understand them at all. Ordinary people need clear, honest advice and the Government should ensure that they get it.
My honourable friend's proposals are for two or three years' time. Our immediate problem is what is to be done about the millions of people who face hardship in old age because of the Government's behaviour toward SERPS. In the past few months, the Government's strategy has become clear; do not apologise, blame everyone else.
The noble Lord, Lord Henley, told your Lordships' House that, with respect to SERPS, there is:
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"no evidence of systematic compliance problems",—[Official Report, 13/1/94; col. 231]
but,
"where non-compliance with regulations has damaged individual investors, those responsible will take remedial action".—[Official Report, 13/1/94; col. 233.]
What he failed to admit, what is staring everyone else in the face, is that the source of the systematic compliance failure is the Conservative Government who created the structure in the first place. The Government cannot now wash their hands of the SERPS pensioners.
Will the Minister give a firm undertaking today that the procedure for contracting back into SERPS, using DSS form APP2, will be widely publicised, and that those who have contracted out of SERPS will be able to contract back in without loss of benefits as if they had never contracted out?
Will he also categorically reject the arguments of the curious organisation, Conservative Way Forward, an organisation of which Mr. Lilley is, I believe, a member, which proposed in April that:
"ministers should announce the abolition of SERPS … those who remain in SERPS threaten to place an intolerable burden on the state"?
It is exactly that kind of thinking which created the disaster in the first place.
And will he now declare that the Government accept unequivocally the Goode Committee proposal that there should be a pensions regulator with overall responsibil-ity for the prudent operation of the pensions industry?
Finally, will the Minister accept that it is vital to rebuild the broad all-party consensus which used to exist on pensions before the sorry episode of the 1986 Social Security Act? Pensions are too important. They must not be political footballs.
Unless he gives those four assurances, it will be clear that the Conservative Government have every intention of continuing their practice of reneging on their promises to pensioners. They have remorselessly cut the state pension as a proportion of earnings. They have cut the value of SERPS in half. And they have ruthlessly sold potential SERPS pensioners the idea of inappropriate personal pensions, which will leave so many of them impoverished in old age. If there is one lesson to be learnt from this sorry episode it is that the Conservative party can never be trusted on pensions, ever again.
7.16 p.m.
Lord Monks well: My Lords, one of the advantages of a two-hour debate with a relatively limited list of speakers is that we can get some fantastic contributions. The noble Lords, Lord Jay and Lord Eatwell, gave masterly expositions of the problem. The speech of my noble friend Lord Eatwell was the finest that I have heard him make in this House. It demonstrates the value of real experts in their field being able to contribute at reasonable length to advise your Lordships.
The debate highlights the horrendous mistakes made by the Government in creating a climate of fiscal, legal and other circumstances which have caused large numbers of people to lose thousands of pounds in pension rights. The problem goes to the heart of this

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Government's philosophy: that individuals must stand alone without any reference to the collective benefits that accrue to people working together.
When in the early part of this century the Government of Lloyd George introduced old-age pensions, it was in response to a wide-ranging public campaign by individuals, church groups, community groups and trade unions to meet the needs of people who could no longer support themselves. In effect, it was the recognition by society that it had a duty towards those who could not support themselves.
It is sad that many people do not realise that our original national old-age pension provision was based on popular pressure as a result of the circumstances of the day and was forced on that Liberal Government. The Liberals could not let things develop in that way. Under the Beveridge proposals, their philosophy that things had to be bought and paid for in monetary terms was included in the National Insurance provisions of those proposals of the 1940s. At the same time, large companies developed occupational pension schemes in which the deferred pay of workers was held under the control of company management to deliver pensions for the workers.
As a result of that and in recognition that some workers, while earning higher wages, were not covered by occupational pension schemes, the Government of the 1970s, with all-party support and under the leadership of Barbara Castle, introduced SERPS; the state earnings related pension scheme. But in the climate of the Thatcher Government and in an era of "There is no such thing as society", that concept of good collective provision was too much and it had to be done away with.
I suspect that there was another reason why it had to be done away with. That accords with the experience that I have had in the private sector. Throughout the 1980s one of the spin-offs of companies making workers redundant because of economic circumstances was that the commitments of occupational company pension schemes diminished, as did the need to fund them. A number of companies effectively either took pension holidays or took money out of pension funds because it was surplus to requirements. That practice had been going on for years before the Maxwell situation. I wonder whether part of the Tory Government's reason for their introduction of the old personal pension plan philosophy was to get people out of SERPS and to leave the money in the pot for them to spend in other ways.
The excuse which they used was that people lost their pension rights on transferring from one job to another. The other excuse was the wholly fictitious scare which they raised about the cost of SERPS in the future. Therefore, instead of requiring the harmonisation of occupational pension schemes, the Government devised the concept of personal pension schemes. That effectively broke the links between pensions and collective provision and instituted a regime of personal savings instead of collective pension provision.
When people retire and are unable to work, they are dependent upon their fellow citizens who can work for
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the provision of the goods and services which they need to sustain life. To try to translate the provision of those goods and services into a monetary amount at the start of retirement, beset by evils such as inflation and low income during one's working life, is more than society can really bear because of the complete instability of future pension provision.
The problems have manifested themselves in the tragedies which have unfolded before our eyes. Decent people have been persuaded by untrained and unscrupulous salesmen, with government assistance, to surrender a good guaranteed pension under SERPS, underwritten by the state, or a good occupational pension scheme, underwritten by fellow employees, in favour of a personal savings plan. That cannot be called pension provision. It is subject to the vagaries of the stock market, the insurance company or the personal pension fund which is organising it. We have now learnt that the stock market can go down as well as up, which obviously creates a source of instability and lack of assuredness with regard to one's pension provision.
I hope that the loud and clear message to go out from this debate will be that when we retire, we cannot depend on our savings for our future pension provision; we must depend on our fellow workers.
As has been said before in the debate, we are discussing a scandal. The result of the evil excesses— and I choose my words carefully—of this corrupt Government has been that those in our society who are least able to make provision for themselves have opted to go on their own. Low paid teachers, nurses and coalminers have been persuaded to leave good occupational pension schemes. It is sad that those are the very groups of people in our society whom the Government have seen fit to pillory, to attack, to reduce their living standards, and to throw them out of their jobs. Now a number of them will suffer poor pension provision when they retire because the Government have attacked them again in another way.
7.25 p.m.
Baroness Seear: My Lords, first, I apologise to the noble Lord, Lord Jay, that I was not in my place when he opened the debate. Not to put too fine a point on it, I was busily lobbying the noble Baroness, Lady Chalker, in a good cause. I know that she goes overseas so often and if I had not collared her then, I might not have seen her in time. I am sure that the noble Lord will understand that I was as speedy as I could be, but I felt that that was something that I had to do.
Old age has many advantages. One of them is that one cares so much less about what other people think. That will enable me to make the speech which I wished to make this evening. However, one of the difficulties of old age in comparison with other stages in one's life, and one which makes the issue of pensions particularly important, is that when you are younger, if you fall on hard times and lose your job or your circumstances change, there is, in normal times, although not so much recently, a reasonable hope that you can start again and make up for some of the losses. There is still an opportunity to improve your purchasing power.

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The dread which haunts many old people is that if the security for which they have looked in old age is undermined and they do not receive the income which they expected to receive, there is no way in which they will be able to make good that loss. Most old people do not require high incomes but they want security. They want the certainty that they will have a reasonable income to maintain a reasonable standard of life and, perhaps even more important, they wish to maintain their independence. The fear of poverty, the fear of the loss of independence and being dependent on somebody else for the basic necessities of life, or the inability to maintain something like the standard of life to which they have been accustomed, haunts many old people. That puts the problem of pensions in a rather different class from the problems of other kinds of benefits which we discuss so often in your Lordships' House.
Therefore, I agree absolutely that this is one of the most important subjects for discussion. I regret that there is such a poor attendance at a debate of such importance, although I know that there are many other events taking place which will attract the attention of noble Lords.
I echo one sentence—and almost only one sentence —in the speech of the noble Lord, Lord Eatwell; namely, that we should try to reach a consensus on the subject of pensions. We did achieve that once and it is a great pity that we have lost it. I am bound to say that some of the speeches that I have heard this evening were a rather odd prelude to the development of consensus. But no doubt that is something with which we can deal later.
I make it absolutely clear that on these Benches we do not applaud or support the continuation of SERPS. I do not accept the point made by the noble Lord, Lord Eatwell, that we can brush aside the difficulties of a pay-as-you-go scheme in view of the population changes which will take place, and in view of the expectations with regard to standards of living which exist and which will continue to exist both among the employed population and the retired population. My party's policy has always been to advocate a higher basic pension for everyone of which they can be certain. As the noble Earl, Lord Clanwilliam, said, anyone who attempts to live exclusively on the basic pension today is in a very difficult position. It is desirable that that basic pension, secured in whatever way you will, should be available for everyone.
With the rising standards of living which we have experienced throughout the century—and most of us, certainly those of us of my age, have observed a change in standards and expectations in all sections of society —people in old age expect and will want something very much more than any basic scheme will be able to give them. In my view, and in the view of my party, it is not reasonable, or a practical possibility, to expect that future generations (and one expects there will be some increase in the younger generation) will be maintained at a standard of living which they expect constantly to be improved. Indeed, there will be many people around because we are all living much longer. I am a real offender in that respect. I know that a great many of us are living long beyond what is reasonably expected. But
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here we are, and most of us intend to stay. I see that the Minister seems to be looking for my birth date. If that is the case, I can tell him what it is.
Lord Henley: My Lords, I can assure the noble Baroness that I was not looking for her birth date; indeed, I was referring to other matters relating to demographic changes which might be likely according to the number of children that different Members of the House might have.
Baroness Seear: My Lords, be that as it may, we see no prospect that the reasonable expectations of people in retirement, given the number of people in retirement and the rising expectations through all sections of society, will be maintained simply by transfer payments. Therefore, we say that the basic pension should be raised. It is reasonable and proper that that should be done. But then we should encourage additions to it through a variety of different ways. I agree that appalling things have happened in connection with personal pensions. However, the fact that a particular personal pension scheme has gone wrong does not mean that all such pension schemes should be rejected; on the contrary.
There are many people for whom personal pensions are the best option. We are faced with a labour market in which there is wide acceptance of the fact that a large number of people will change their jobs a considerable number of times in the future. The maintenance of continuing employment throughout one's lifetime will not be the pattern for many people. That has always been the position with women. Indeed, one of the reasons why so many women in old age are living in considerable poverty is that they have never been in continuous employment long enough to acquire through any scheme the kind of pension which they need and ought to have.
There is a great deal to be said for the personal pension if it is handled properly, especially at a time when people will be changing their jobs and when there will be an increasing number of people working part-time or dropping one job and moving on to another. It is something which we should try to develop properly. That is not to say that I support the scheme put forward by the Government. However, I believe that the personal pension programme should not be abandoned: it should be reformed.
There are many criticisms that could be made; for example, the whole system of selling pensions on commission needs to be looked at most carefully. If a recent article in the Economist is to be believed, some horrendous returns have been made by salesmen selling pension schemes. If people are paid on commission— and it applies to anyone selling on commission—they will obviously be biased in the direction of getting a quick sale and increasing their number of sales. I must question whether the commission system is at all appropriate for the way in which personal pensions are being disposed of. I would argue that what we need to do is not to abandon the scheme but to look at it extremely critically to see what changes ought to be made, what selling practices should be prohibited and the ways in which selling practices could be improved.

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At present, for the great majority of people the alternative to the personal pension is the occupational pension. The latter has developed very considerably over recent decades. In my view, it is the greatest pity that we did not start on occupational pensions earlier. I remember visiting the TUC some 40 years ago—I am playing on the old-age card—and hearing speakers say, "Oh no, we don't negotiate occupational pensions; that is the responsibility of the state". That has been a great weakness. If the trade unions had negotiated then for occupational pensions, a considerable amount of today's poverty among old people could have been avoided.
However, that is in the past. We need good occupational pension schemes. We should ensure that they are better run and more reliable. After all, we have had the hideous example of Maxwell. But, against that, it is only fair to say that there are many schemes to which one could refer which are paying very satisfactorily as regards occupational pensions. We need to bring the level of occupational pensions up to the standard of the best.
In view of the recommendations that it put forward, the Goode Report should be taken seriously by the Government. Indeed, it is long overdue. We must have new pension legislation on a consensus basis which is based on—though, not necessarily, word for word—the recommendations of the Goode Report, so that we can ensure that we are achieving the right mix of state-based pension, plus personal pensions, plus occupational pensions which gives the flexibility that a rapidly changing labour market requires if people are to have confidence. As I said at the beginning of my remarks, that confidence is so essential to peace of mind in old age. People must know that they will have an adequate income and that their independence can be maintained.
The Earl of Clanwilliam: My Lords, I should just like to say that I thoroughly agree with everything the noble Baroness said. However, I have one point to make with regard to the promotion of occupational pension schemes. I believe it is true to say that the cost of those schemes is such that no new occupational pension scheme has been started by any company in the past three years.
7.37 p.m.
Baroness Turner of Camden: My Lords, I am sure that the House is most grateful to the noble Lord, Lord Jay, for raising such an important issue for today's debate. Back in the 1970s, I and many others believed that we had found a solution to the problem of retirement provision. As several speakers have already said, there was all-party agreement to the pensions framework then introduced, including the noble Baroness's party. At that time, the Liberal Party supported that framework which covered the notion that there should be a two-tier pension—the basic flat-rate state pension linked to the earnings index, which I stress —plus a second-tier pension provided either by the state through SERPS (the state earnings related pension scheme) or by a good occupational pension scheme
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which could then contract out of participation in SERPS, provided that it met certain standards, including the provision of a guaranteed minimum pension.
SERPS in particular was seen as an enormous advance for people in low paid employment—for people with a chequered work pattern—and especially for women, the majority of whom still earn less than £10,000 a year. Entitlement in SERPS was to be based on the best 20 years' earnings revalued—in recognition of the fact that, for many people, their best earning years are not immediately before retirement but some years earlier.
It was the first opportunity that many working had had to qualify for a pension related in some way to their earnings while at work—an entitlement which many middle-class and professional people in good occupa-tional schemes had long taken for granted. The legislation in the mid-1970s also led to an increase in and an improvement of occupational pension schemes. There was a significant increase in the number of occupational pensions, based on the final salary formula, and funded by employers on a "balance of cost" basis.
Clearly, that was enormously beneficial to the employers who belonged to such schemes. The employees' contribution was often, and still is, set at around 5 per cent. of salary. But in order to meet pensions promises, especially in times of inflation, employers would frequently have to pay double or even three times the amount of the employee contribution.
It is quite true that the set-up was not perfect. In particular it tended to favour in occupational terms those who stayed a lifetime with the same employer, or else those in public service. Those who moved around the labour market were clearly grossly disadvantaged compared with those who stayed put and the Government, looking from the 1980s onwards towards labour mobility, tended not to look on this with favour. But remedies were available, and one of them was actually suggested by the Occupational Pensions Board when I was a member. We suggested that deferred pensions should be uprated in line with inflation to a maximum of 5 per cent. per annum, and while this did not entirely solve the problem it went some way towards doing so.
Those who remained in SERPS, of course, did not have a transferability problem. It would also have been possible to do something about transfer values, generally seen as too low, but the Government preferred —instead of simply legislating in line with the OPB recommendations (although they eventually did so in regard to the uprating of deferred pensions)—to tear down the structure which had only so recently been agreed. So we had in 1985 the so-called Fowler Review.
I well remember the debates on the legislation that followed the Fowler Review because that was the first debate of consequence with which I was involved in your Lordships' House. The clear intention of the Government was to move away from collective pension provision in favour of individual, personal pension provision. In the beginning there seemed even a desire to scrap SERPS altogether. There was much talk of the demographic time-bomb—we have heard some more of

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that this evening—awaiting us in the next century when the working population would not be able to support the large number of pensioners. SERPS, we were told, could not be afforded, and that argument has again surfaced.
Moreover, the Government had almost as little liking for collective occupational schemes as they had for SERPS. Clearly they wanted to encourage money-purchase schemes, which had largely begun to disappear following the introduction of the mid-seventies pensions legislation. But the benefits of the Government's stance were always illusory. A good final salary occupational pension scheme is just about the best "fringe benefit" an employee can get and good employers have always recognised this and have understandably seen the provision of good pensions as a way of retaining valuable employees.
Despite the occasional concerns about occupational schemes, such as the doubts about contribution holidays by employers and scandals like that of Maxwell, in general employees lucky enough to be in them are very well served by final salary occupational schemes. They have the great merit that the employee knows precisely what his entitlement will be as it is based on the number of years service, and in a good scheme is capable of producing a pension equal to two-thirds of the employee's final salary at retirement, in the case of an employee who has spent a working lifetime with that employer. That of course goes for people working in public service as well as in a number of previously nationalised industries.
It is not so with money-purchase, where you simply get what the money has been able to obtain over the years by way of investment. If the performance has not been good, the benefit will be that much less. So it is a gamble, which final salary schemes are not, and nor, of course, is SERPS, provided that the Government do not actively seek to wreck it of course. But that is precisely what they have done. They wanted to get rid of SERPS, but there was such an outcry that they could not do so —at least not immediately. So they embarked upon another, less frontal attack. The best 20 years' provision in SERPS was abolished and the accrual rate was worsened. Then people were actively encouraged to leave SERPS and, incidentally, occupational schemes. People who took out personal private pensions were given a national insurance rebate—in other words, a bribe—to persuade them to take out private personal pensions. The Government's attitude gave the green light to the insurance industry to go out and sell private personal pensions. And sell it did: after all, its staff are in business to sell insurance. There was an enormous campaign. There were posters on the Underground which stated, "When did the Government ever give you money?" (referring of course to the national insurance bribe and urging people to take it up) and "Don't be a SERPS" and similar slogans. The implication was that people should rush to pick up this wonderful bargain being offered by the Government.
But we know now—as the noble Lord, Lord Jay, and my noble friend Lord Eatwell have said—that it was not wonderful after all. People in good occupational pension schemes were persuaded to leave those schemes
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in some instances and to take out private personal pensions when that was clearly not to their advantage. The same is true of SERPS. People who would have been better off to have stayed in SERPS have been encouraged onto the private personal market. Now the Securities and Investments Board is holding an inquiry. The whole thing has become quite scandalous. People have discovered that in order to get the kind of pension they feel they will require, they will have to pay quite large sums of money—the amounts they have been paying are not likely to buy them very much. There clearly has been mis-selling and it is easy of course to blame the sales persons working in the industry. Some companies are already taking steps to do what they should have done anyway and are retraining their sales staff.
But the whole environment in which all this became possible was created by the Government and was ideology-driven by a government who are anti-collective. I know that sales staff were put under terrific pressure to sell. Some of them are members of my union. In some companies commission is a very large element—sometimes the only element—in the salary package. In some companies it is customary to set targets, and sales staff who do not reach those targets are liable to lose jobs. And it is cold out there. There is now a lot of unemployment in the financial services sector and salesmen and women have mortgages and families like everyone else. No, whatever SIB's inquiry reveals, and whatever is done about compensation, the greatest share of blame for this disaster—it is a disaster and I agree with my noble friend Lord Eatwell on that—for many people largely lies with the Government.
The Government have forgone money in the shape of national insurance contributions in order to get private personal pensions off the ground. According to the Financial Times, which my noble friend Lord Jay has already quoted, the Government have forgone £10.5 billion in order to persuade people into private personal pensions. A large number of these would have been better off staying where they were. About 60 per cent. of the nearly 5 million people who took out personal pensions since 1988 were making no provision other than the refund paid out by the Government after they opted out of state pensions. Clearly, this was never going to be enough to buy them pensions of a satisfactory level on the private market. The whole thing has been a quite scandalous folly. The Government should never have sought to undermine the consensus on pensions agreed in the mid-seventies. They should have sought to build on it and improve it.
The argument that private provision had to be encouraged because future generations would not be able to afford SERPS was, in my view, always a false one. Whether the money comes from a state scheme, or via private insurance, the community as a whole still has to pay. If the private market does not produce a reasonable level of pension, then it will have to be supplemented by social security benefits. And it was always unlikely that the poorest section of the population could ever be properly catered for on the private market in any event. Poorer people are simply not a commercial proposition for the industry.

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The Government have got a large number of people into an awful mess. A Labour government—which I hope we will have in the not too distant future—will have the task of trying to unscramble what has been done and to return to the fair and reasonable framework devised earlier, but with some updating to take account of some developments since then. Meantime, if a vote of censure were possible in your Lordships' House, this is eminently the kind of issue on which it would be fully warranted.
7.48 p.m.
Lord Henley: My Lords, the noble Lord, Lord Eatwell, spoke about an alleged betrayal by the Conservative Government of pensioners since 1979. I would like just to start with a few facts to put the matter in perspective. Since 1979 we have seen pensioners' average total net incomes grow by something of the order of 42 per cent.
Basic pensions have more than kept in line with inflation. Most pensioners now have income on top of social security benefits—some 88 per cent. of recently retired pensioners and 85 per cent. of all pensioners. Some 61 per cent. of all pensioners and 69 per cent. —in other words the figure is growing, and will continue to grow—of recently retired pensioners receive income from an occupational pension, and that has grown from a mere 43 and 55 per cent in 1979.
The average amount received by occupational pensioners increased by nearly half between 1979 and 1990–91—to over £60 a week. Further, the number of pensioners with saving income has increased dramatic-ally since 1979. The amount of money that pensioners have received from savings now averages some £40.10 a week, again up by 120 per cent since 1979. It fell between 1974 and 1979.
Lord Eatwell: My Lords, the noble Lord really must not claim credit for the legislation of the Labour Government on occupational pensions. The figures which he gave relating to the growth in occupational pensions are the result of Labour legislation. Does the noble Lord agree that as a share of male average earnings the pension has fallen from 20 per cent. in 1978 to 15 per cent. now, and, if the Government's policy of uprating only with prices is continued, it will fall to about 6 per cent. by the year 2030?
Lord Henley: My Lords, I should be very interested to know whether the noble Lord is making a commitment from his own Front Bench to restore the link with prices or earnings, whichever is the higher. If the noble Lord is so doing, I wonder whether he has the permission of the leader of the party opposite and whether that is a commitment for the next election.
Lord Eatwell: My Lords, the noble Lord is aware that one cannot make financial commitments these days when the Conservative Party has wrecked the economy to such a degree. If only we have a Labour Government which restores the productivity of the British economy, then decent pensions can be paid again.
Lord Henley: My Lords, I note the noble Lord's commitment.
If I may, I shall now return to the subject matter of the debate. It may help if I provide some background on the state scheme, SERPS, and on the objective of recent government reforms, and correct some of the misconceptions of the noble Lord, Lord Jay, and his colleagues.
As the House is perfectly well aware, SERPS operates on a pay-as-you-go basis. Contributions made today go towards paying the pensions of today. During the 1980s, whatever noble Lords say, it became clear that without reform the costs of SERPS would become unsustainable. In the mid-1980s the costs of SERPS were something less than £200 million a year. It was recognised that those costs would escalate rapidly to something around £4 billion a year by the end of the century, rising to some £30 billion by the year 2050. I do not believe that that is a wholly fictitious scare, as the noble Lord, Lord Monkswell, said. At the same time, whatever the noble Lord may say—
Lord Monkswell: My Lords, I am sorry to intervene. I know that the noble Lord wants to move on. However, the figures that he quoted of absolute amounts of money do not give a clear indication of the effect on the economy of the proportion of economic output spent on pensions and the proportion of economic output going to the rest of the community. Therefore the figures are rather misleading.
Lord Henley: My Lords, I do not believe that they are misleading. Perhaps I can put them in simpler, demographic terms. Obviously the proportion of people in work financing the scheme compared with those out of work who are beneficiaries of the scheme—the pensioners—will change. Roughly speaking, at the moment we have something of the order of three workers per pensioner. Roughly, by the time I retire —and I imagine that the noble Lord will retire at about the same time as myself (I have not managed to look up his date of birth)—there will be approximately two workers for each pensioner. It is quite obvious to the meanest intelligence that that will require a 50 per cent. greater contribution from those in work, whether by means of a funded contribution or on a pay-as-you-go basis.
Lord Monkswell: My Lords, I am sorry to intervene again, but surely the Government are proceeding on the basis of projections of their own handling of the economy. It is quite possible that if a Conservative government stayed in office for the next 30 or 40 years we would continue to have the economic problems that we have at present in which approximately 25 per cent. of the productive capability of the economy is effectively idle. If we have a Labour government, as we hope to have fairly shortly, a large proportion of that quarter of the productive capacity of the economy will be put back to work. Therefore the figures are again misleading.
Lord Henley: My Lords, they are not misleading. Obviously it is very difficult to make any long-term prediction of the economy to the year 2030, and no one

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would do so. What we can say is what SERPS would cost on the old basis. We can also say what we think the demographic changes will be.
It may be that, like the noble Lord, Lord Jay, who I understand has four children, or the noble Lord, Lord Eatwell, who has three, and myself who have three, everyone might do the same. The noble Lord, Lord Monkswell, also has three children. As the noble Baroness puts it, we have been highly productive. It might be that the average number of children per family rises from the present 1.9. However, it seems that throughout the Western world there is a general fall-off in birth rates. Therefore, we can predict that there will be those demographic changes. That means that, whatever the state of the economy, those in work will be paying roughly 50 per cent. more to pay for the contributions of tomorrow than they are paying now.
Baroness Turner of Camden: My Lords, I am grateful to the noble Lord for giving way. Does he not agree that, whether or not the resources come from the private sector of the economy or the public part of the economy, it still has to be paid for from the same pot? Therefore, whether the funding is private or public does not matter. One has to pay it or people will be starving in the streets.
Lord Henley: My Lords, I accept the point that the noble Baroness makes. One cannot make a total distinction between something that is funded and something that is unfunded. Obviously it all has to be paid for by the economy tomorrow. However, there is still an important distinction between unfunded pensions and funded pensions. I think that the noble Baroness will accept—as I shall go on to show—that the fact that in this country roughly speaking some 50 per cent. of our pension arrangements are funded and 50 per cent. are pay-as-you-go is a considerable strength compared with most of our European colleagues, where pensions are completely unfunded and are all on a pay-as-you-go basis. If the noble Baroness will bear with me I shall go on to set these things out in somewhat greater detail.
As I was trying to make clear, we believe that, unreformed, SERPS looked set to make promises which those future generations—our own children and grandchildren—simply could not afford. That is why we introduced the Fowler reforms in the Social Security Act 1986. We modified SERPS and made it sustainable into the next century. We introduced measures to encourage the growth of funded pension provision, which I have been talking about, where contributions made today are invested to provide pensions in the future.
The Government's objectives on pensions are rooted in that 1986 Act. We wish people to have a choice of pension arrangements which are flexible, portable and appropriate to their needs. We want people to be able to plan for their retirement securely, with confidence in those providing pensions. And we want to see a thriving pensions industry which continues to be the strongest in Europe.
We have made much progress towards those objectives. Before our reforms individuals had
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relatively few options. They were compelled to rely either on SERPS or they could be required to join an employer's pension scheme as a condition of employment, even when that particular pension scheme was clearly unsuitable. We gave the choice back to the individual.
Today the individual can choose the pension which best suits him or herself. It could be a state or non-state pension, a personal pension or, if available, according to the firm he or she works for, an occupational scheme. There was relatively little mention of occupational pension schemes, but I have to stress to the House that something of the order of 11 million people are in such schemes, opted out of SERPS. That figure has stayed broadly the same since the 1986 reforms.
Before those reforms no one had a right to move his pension if he changed jobs. Now everyone can transfer the value of accrued pension rights if they choose. If they choose not to transfer, we gave people the right to have the pension they leave behind protected against inflation.
Before, if an individual wanted to save more for retirement, choices were limited. Now everyone has the right to make top-up payments to boost their pension, either to their employer's scheme or by making free-standing contributions.
The success of our reforms in encouraging people to plan for their retirement has been dramatic. I repeat what I said before, which the noble Lord quoted when he demanded my apology. We now have something of the order of eight million personal pension investors—five million of them contracted out of SERPS—in addition to the around 11 million people in various employers' schemes. I simply do not accept the numbers that the noble Lord, Lord Jay, claimed had lost out. Much of the recent coverage in that report has been due to a misunderstanding of the figures and remarks produced by the firm of accountants. I understand that it issued a press notice following the recent articles which, in its own words, aimed to
"set out the background to the reports which have appeared in the press in recent days which have misrepresented our views. There must be a real danger that unnecessary distress could be caused to those people affected".
The newspaper articles demonstrated a misun-derstanding of what DSS statistics on appropriate personal pension investors showed. For example, figures referred only to a single year. They represent only a snapshot of the profile of appropriate personal pension holders. It is earnings over a lifetime which determine an individual's pension. Just because an individual does not receive a DSS contribution in any given year, does not mean that that policy has necessarily been mis-sold. An individual may have become unemployed suddenly, having started the policy while in work. As soon as the individual began working and paying national insurance again, DSS contributions to his personal pension obviously would resume. If he is not earning, or if he is earning below the lower earnings limit, he would not anyway be building up any pension entitlement, had he remained in SERPS.
I am grateful for the remarks of the noble Baroness, Lady Seear, about the advantages of personal pensions in particular for those who are likely to move jobs

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frequently during their career. With the changing nature of the job market, that is a matter for which we have to plan, in particular for women. Although the noble Baroness did not refer to them, one should mention the strengths of such pensions for those who are self employed and who do not have the advantage of benefiting from SERPS.
Furthermore, since those reforms we have seen some 16,000 more occupational schemes. More people than ever before are committing more of their income to save for a pension.
Last year individuals and their employers contributed £2.5 billion towards personal pensions—almost a tenfold increase over 1988 when contributions totalled just £260 million. And members of occupational schemes have been saving more for retirement too.
Contributions to top-up pensions—known as free-standing AVCs—have grown more than twenty-fold, from just £20 million in 1988 to £420 million last year in 1993. In total, employees and their employers contributed nearly £30 billion in 1992. We believe that, together with the pay-as-you-go scheme, that strong foundation of privately funded pensions built up in this country leaves us well placed to face the challenges of the next century. The noble Lord, Lord Eatwell, seemed to suggest that it would be far better for the Government to retain all the money. Perhaps I misrepresent him. However, I believe that a balance between both a pay-as-you-go scheme and a funded operation, with the City being able to invest that money, is a far more satisfactory solution than all the money being retained by the Government.
Few European countries have developed any significant level of funded pension provision—and none can rival the strength of the United Kingdom pensions industry. Over £500 billion are invested in pensions and life insurance schemes in the United Kingdom; and that figure, as I said earlier, is more than the rest of the European Union put together. I believe that only now are other countries facing up to the problems we addressed a decade ago and are seeking to emulate British success in building up funded private pension provision for the future.
There was some reference to the problems of Maxwell, which I do not think it would necessarily be appropriate to say anything about this evening, other than that by taking the appropriate action that the Government have taken we have ensured that no Maxwell pensioners have suffered loss of SERPS entitlement; and in fact all pensions have been kept in payment thanks to government action. However, as it obviously raised very serious issues concerning the regulation of occupational pension schemes, as the noble Lord, Lord Jay, mentioned, we set up the committee under Professor Goode to give detailed scrutiny to these matters. The noble Lord, referred to it. That committee presented its report last September. I am afraid that at the moment I can only say that we are considering its recommendations most carefully and are undertaking further consultation. My right honourable friend the Secretary of State for Social Security intends
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to publish a White Paper soon setting out his proposals for the future regulation and governance of occupational pension schemes.
The Government are equally determined that there should be effective regulation of personal pensions. The House will be aware that the Securities and Investments Board has recently uncovered evidence—the matter was referred to—of what, regrettably, can only be described as poor compliance with rules on selling practice involving the sale of personal pensions to people transferring from employers' schemes. That was in fact the subject of the original Motion of the noble Lord, Lord Jay, although not, strictly speaking, the subject of today's Motion, although it is a matter that we ought to address this evening.
The chairman of the SIB has made it quite clear that there is no evidence of fraud or theft. Nor is it clear to what extent investors' interests may have been damaged. Nonetheless, we believe that it is a highly serious matter and the Government have made their position clear. Concerns about compliance must be thoroughly investigated by the regulatory authorities to determine the extent of any problems. Where investors have lost out as a result of mis-selling, it must be put right. And anyone whose pension arrangements have been jeopardised must have a remedy.
The Securities and Investments Board is undertaking a major investigation into pension transfer sales. It has already taken action to prevent and to deter future mis-selling. Last month the SIB published new guidance for raising future standards of business, with new requirements for companies undertaking pension transfers.
The SIB has already ordered pension providers and independent intermediaries to begin to identify pension transfer business for clients who may have suffered disadvantage. Those measures will start to take effect from the beginning of July. Within the next few weeks, we expect the SIB to complete its investigations, and to make a full report.
The SIB will tell providers and intermediaries how they should review their pension transfer business for clients who may have suffered disadvantage. It will provide guidance on how firms should contact their clients. And it will lay down a framework by which firms should calculate redress in cases where investors have suffered harm and not been adequately protected by the regulations. So no personal pension investor need be alarmed. Nor should they take precipitate action. If investors have any questions about their policy, they should contact their personal pension provider.
The SIB's current investigation does not extend to the sale of personal pensions used in place of SERPS —known as "appropriate" personal pensions, more properly the subject of today's debate. The chairman of the SIB has indicated that he has no evidence of systematic non-compliance with rules covering the sales of schemes used in place of SERPS, despite what the noble Lord, Lord Jay, said. Nevertheless, the SIB will be conducting a review of these sales in due course. As in the case of pension transfers, if the SIB finds evidence of bad advice and mis-selling of appropriate personal

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pensions, the Government will expect those firms responsible for the bad advice to provide suitable remedy.
The Government will continue to take action where necessary to provide security for pension entitlements. We recognise that people must be able to rely on the highest standards of advice when choosing a pension. Again, it seems a pity that the noble Lord, Lord Eatwell, seemed to be of the opinion that most people are not able to understand such advice. We want those pension consumers to be able to make informed choices based on sound information. That is why my right honourable friend has published a number of booklets offering advice to those desiring to contract out or make the most of their personal pension. I can give assurance to the noble Lord that the booklet published in January 1994 makes quite clear at page 4 that, if in the future you no longer want the DSS to contribute to your personal pension, ask your personal pension provider for Form A PP2, which I believe was the form to which the noble Lord referred. That form is to be completed and sent to the address on the form.
That is why my right honourable friend the Chancellor directed the Securities and Investments Board to prepare rules to give greater transparency to personal pension charges and commissions. In future, illustrations of personal pension benefits must reflect the actual charges levied by a provider so that investors can compare the cost of different products. And anyone selling personal pensions must reveal to potential investors how much they stand to gain in commission by making a sale. We believe that effective disclosure of charges and commissions is the best way to protect consumers from overpriced products and the dangers of biased advice. I hope that that will go some way towards meeting the concerns of the noble Baroness, Lady Seear.
In addition, as I made quite clear, my right honourable friend the Secretary of State for Social Security has also published three new guides, one of which I referred to, providing information to people who are thinking about, or have just started, a personal pension. These guides advise people to assess all their options before finally choosing a pension and to take expert advice. I can also advise that we have a special telephone ordering service which has been set up so that people can order their own copy. We have also published guidance for employers who want to give advice to employees about pensions. That new guidance for employees sets out some straightforward do's and dont's to help employers assist their staff to make more informed decisions about pensions.
Lord Eatwell: My Lords, will the noble Lord accept that we on this side of the House regard all this remedial action as very worth while; but will he explain why it is being taken now, six years after the introduction of the scheme, when so many respectable bodies—for instance, the Consumers' Association and the CBI— argue that that information should have been available in 1988? If it had been available then, the serious losses which we discussed this evening would not have been suffered by so many pensioners.
Lord Henley: My Lords, as I said, we regret those losses and they are unfortunate. That is why we set out what the noble Lord referred to as the remedial action. I do not believe that such mis-selling as has happened was to the extent that the noble Lord claimed. I do not believe that it was as extensive as the noble Lord will claim. I do not believe that it was possible to predict that there might be that degree of mis-selling.
In the main, I believe, and I repeat what I said earlier, that those 5 million personal pension investors, plus the 3 million over and above, who are not necessarily contracted out of SERPS, have gained from taking out their personal pensions. I think that we have seen dramatic growth in the entire pensions world. We have also seen the number of those in company schemes, in occupational schemes, remain static at round about 11 million. In other words, the 5 million plus the 3 million on top are a growth in the number who have taken out pensions. I think that they have all positively benefited from it.
Baroness Turner of Camden: My Lords, is the Minister aware that the KPMG analysis, which is very detailed, says that overall some 83 per cent. of files of the cases reviewed were classified as unsatisfactory and lacking in evidence of compliance or unsatisfactory and suspect? I think that that is a quite desperate piece of evidence against the selling of personal private pensions to people already in pension schemes.
Lord Henley: My Lords, I go back to what I quoted, what the chairman of the SIB said. First, he indicated that there was no evidence of systematic non-compliance with rules covering the sale of schemes used in place of SERPS; no evidence of systematic non-compliance. Nevertheless, he said that it would be conducting a review of those sales in due course. As in the case of pension transfers, if the SIB finds evidence of bad advice—and I think that it should be a matter for the SIB—and mis-selling of appropriate personal pensions, obviously the Government would expect those firms responsible for that bad advice to provide a suitable remedy.
I am not taking any more interventions. I intend to end now. I have been speaking for some 24 minutes and I feel that I have taken quite enough in the way of interventions.
We believe that the benefits of our strategy are clear. Through greater flexibility we have encouraged a healthy and, more important, diverse pensions industry. Through wider choice we have encouraged more people to plan for their own retirement income. The end result has been an increased reserve of funded pensions providing a flow of investment for industry today and affordable security for individuals in the future.
8.13 p.m.
Lord Jay: My Lords, I cordially thank all those who have spoken in the debate this evening. The quality of the speeches has fully made up for any paucity in the audience. I wish to say, first, to the noble Baroness, Lady Seear, that I think that she not only did not hear my speech but she also misunderstood it.
Baroness Seear: My Lords, that would be a remarkable feat: to misunderstand something that I had not heard. My capacity for misunderstanding things is considerable, but it does not go to that length.
Lord Jay: My Lords, the noble Baroness misun-derstood in this respect. She appeared to think that I and others on this side of the House wished to abolish occupational personal pensions altogether. Not at all. I have always believed and still believe that one may have a basic state pension on which people can rely and in addition to that allow individuals to join personal pension schemes and become members of occupational schemes. So there is a considerable consensus between the noble Baroness and myself.
I would only comment on the speech of my noble friend Lord Eatwell that I fully endorse the strong language which he used in the course of it. The only reason I did not use it is not that I did not think it justified but because of natural bias towards moderation.
In commenting on the Minister's speech I would only say that in the first case the fallacy of his figures relating to the terrible burden ahead is that they are all based on the assumption that the retiring age remains at 65. That is a fallacy. The retiring age must rise as length of life and fitness to work also rise.
Lord Henley: My Lords, if the noble Lord will accept an intervention at this stage, it is important to get this on the record. I accept that there is probably a need for the retirement age in due course to creep up. What has been happening over the past few years, as people have become richer and richer, is that they tend to retire much earlier than they used to. Whether one can reverse that trend is a difficult question. If the noble Lord is offering the support of his party for increasing the retirement age, I shall be interested to know. But I heard no commitments of that kind from his noble friends on the Front Bench.
Lord Jay: My Lords, the reason why the retirement age has been falling is that the Government's economic policies have caused such heavy unemployment. That we intend to alter. The noble Lord filled his speech with a great deal of information. If I heard him aright, he did not answer some of the most crucial questions. He told us that 5 million opted out of SERPS, but he did not answer my question as to what proportion of those were worse off as a result. If he is not prepared to give a figure, I think we must naturally accept the almost universal figure given in the financial press that about half of them were worse off as a result.
I understood from the Minister that the Government are considering the Goode Report. If I heard him aright, they propose to adopt many of the proposals made. What I think the past five years have shown is that, although we ought to have personal pensions, it is clear that if we do they ought to be regulated far more efficiently than they have been in the past. I understand that in spirit that is what the Minister meant.
Lord Henley: My Lords, again the noble Lord will not mind me intervening. He would not expect any major announcements on Goode to be made by a junior Minister from a different department in a debate of this
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nature. What I simply said—and this did not imply any total acceptance of Goode, or total rejection of Goode, or anything; I made no commitment whatsoever other than that my right honourable friend will be publishing a White Paper shortly. The noble Lord will have to wait for that. I would rather he did not put any interpretation into what I said and my words.
Lord Jay: My Lords, at least we have discovered that there will be a White Paper shortly. Perhaps the Minister can tell us how shortly. I presume that the White Paper will require legislation, because if there is to be really effective regulation, there must be legislation to back it. Therefore, my parting comment to the Minister is that we shall watch things extremely carefully and come back again if he does not give a more convincing answer than he has given tonight. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Land Drainage Bill [H.L.]
8.20 p.m.
The Earl of Lindsay: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(The Earl of Lindsay.)
On Question, Motion agreed to.
House in Committee accordingly. [The LORD AIREDALE in the Chair.]
Clause 1 [Duties with respect to the environment]:
Viscount Addison Viscount Addison moved Amendment No. 1:
Page 1, line 13, at end insert:
("(aa) to have due regard to the needs of agriculture and forestry and to the economic and social interests of rural areas;").
The noble Viscount said: I have been involved in matters on water all afternoon. Members of the Committee may be pleased to hear that we again beat the Commons in the annual yacht race!
Noble Lords: Hear, hear!
Viscount Addison: This amendment would require an internal drainage board, each of the Ministers and the NRA,
"to have due regard to the needs of agriculture and forestry and to the economic and social interests of rural areas",
in formulating or considering any proposals relating to any functions of an internal drainage board.
The duties placed on internal drainage boards, each of the Ministers and the NRA in relation to the land drainage activities of internal drainage boards can be summarised as: to further the conservation and enhancement of natural beauty; to have regard to the desirability of protecting and conserving buildings; and to take into account any effects on the beauty or amenity of any area. These environmental duties are explicit. In contrast, the extent to which all those involved should take account of the needs of agriculture and forestry, and of the economic and social interests of rural areas, is far less clear.

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On page 1 of the Bill lines 14 to 25 state that the duty to further the conservation and enhancement of natural beauty is to be exercised
"so far as may be consistent … with the purposes of any enactment relating to the functions of … [an internal drainage] board".
It is not clear what that requirement means in relation to the needs of agriculture and forestry and the economic and social interests of rural areas. Moreover, that requirement appears to apply only to the duty to further the conservation and enhancement of natural beauty, not to the additional duties to have regard to the desirability of protecting and conserving buildings and to take into account any affects on the beauty or amenity of any area. It may be helpful to note that this amendment parallels a provision that already exists in other legislation.
Section 37 of the Countryside Act 1968 places a duty on every Minister, the Countryside Commission, the Nature Conservancy Council and local authorities, in exercising their functions under that Act, to
"have due regard to the needs of agriculture and forestry and to the economic and social interests of rural areas".
A parallel provision is needed in the current Bill in relation to the duties that it would confer on the Minister, the National Rivers Authority and internal drainage boards. Otherwise, there may be a risk that, in seeking to honour their environmental duties, internal drainage boards may neglect the needs of agriculture and forestry and the economic and social interests of rural areas. Providing such a duty towards agriculture, forestry and economic and social interests would be entirely consistent with the tenets of sustainable development. It would emphasise the need for an integrated approach to be taken in this area, as elsewhere.
The noble Earl, Lord Lindsay, may in part have dealt with that concern in his response to the debate at Second Reading, when he said that, the legislation under which … [internal drainage boards] act,
"rightly gives precedence to flood defence considerations, and that will not change".—[Official Report, 26/5/94; col. 891]
It would be helpful if the Minister could confirm that all the environmental duties established by Clause 61A of this Bill will indeed be exercised only in so far as they are consistent with, and have due regard to, the needs of agriculture and forestry and the economic and social interests of rural areas. I beg to move.
Baroness Nicol: These amendments are rather similar to amendments that were moved by the noble Earl, Lord Lytton, on the National Parks Bill. But there is a difference in this case: the internal drainage boards already act in the interests of agriculture and forestry, and indeed the economy. The reason for the provision in this Bill to further conservation is to provide a check on just those activities. Therefore I feel that this particular amendment and the following one are probably unnecessary. I hope that whoever is to wind up can confirm that. The constitution of the internal drainage boards ensures that local agricultural interests are well represented.
While I am on my feet, perhaps I may take this opportunity to say to the Minister and to the noble Earl, Lord Lindsay, that I am very anxious that the arrival of
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these amendments should not delay the progress of the Bill. I should like to ask the Minister this question: if the Bill should collapse as a result of delays in this Chamber now, will he assure us that its provisions will be included in the next possible vehicle which is available to the Government; and that if that happens the wording of this Bill as it stands will be unchanged?
Lord Beaumont of Whitley: Perhaps I may say a general word on the amendments as a whole. This Party is very much in favour of the Bill going through, and we very much hope that it will. We hope therefore that, as a result of the replies that will be given by the noble Earl and by the spokesman for the Government, the noble Viscount and the noble Earl, Lord Lytton, will be satisfied and will not cany these amendments on. It would be a very great pity if a Bill which is already in danger of running out of time were to run into the ground. I have to say yet again that it is a great pity that so many good Bills which should be government Bills have to come to us under private patronage —although we admire the masochism of the noble Earl, Lord Lindsay, and others who undertake them. It is important that good Bills which basically have no opposition should go through. It is my advice, as it is the advice of the noble Baroness, that these amendments as a whole are unnecessary. I have a whole sheaf of arguments which I could produce to try to reinforce that point. But I have placed my trust in the noble Earl and in the Government Front Bench, and in the good sense of the proposers of these amendments that they will in due course withdraw them.
The Parliamentary Secretary, Ministry of -Agriculture, Fisheries and Food (Earl Howe): I believe that I can help my noble friend Lord Addison by confirming that the conservation duties in Sections 61A and 61B apply only so far as they are consistent with the flood defence functions of internal drainage boards and local authorities. That simply carries forward the present position under Section 12 of the Land Drainage Act 1991 so far as IDBs are concerned; and new Section 61B, although we have not yet come to that, would apply that also to local authorities.
We should not lose sight of the fact that, under the 1991 Act, the prime function of boards and local authorities is to provide for land drainage and flood defence. There should be no doubt about that. Conservation duties are subject to that, and my noble friend's Bill would not alter that emphasis. I therefore do not believe that the amendment is necessary, particularly when one considers—to take up a point that was made by the noble Baroness, Lady Nicol,—that internal drainage boards are governed by a combination of agricultural drainage ratepayers and local authority nominees who will be well versed in agriculture, forestry and rural matters generally. I hope that what I have said provides the reassurance that my noble friend needs.
The noble Baroness asked whether, if this Bill were to fail in this Chamber, the Government would reintroduce these measures as now drafted. I naturally very much hope that this Bill will not fail. It carries the full support of the Government. For that reason it would

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not perhaps be helpful to speculate about unfortunate eventualities of that kind. I would reiterate that the Bill carries the full support of the Government.
8.30 p.m.
The Earl of Lindsay: The effect of my noble friend's amendment, as he has explained, would require internal drainage boards specifically to take account of the needs of agriculture and forestry and economic and social interests of rural areas in carrying out their functions. I should make clear, however, that the new Section 61A does not tilt the duties of internal drainage boards towards conservation; in fact it does not do anything new at all. It simply carries forward the existing provisions of Section 12 of the Land Drainage Act 1991 to the new Part IVA of the Act, which my noble friend the Minister has explained. This brings together all the environmental provisions that affect boards and local authorities.
The main function of an IDB under Section 1 of the 1991 Act is to carry out land drainage and flood defences within its district. My Bill does not change that. Internal drainage boards already have to balance the needs of flood defence and conservation—and that is quite clear despite my noble friend feeling that it was not. The present legislation carried forward in this Bill makes clear that action for further conservation must always be consistent with action that is necessary on flood defence grounds. The economic considerations and the needs of agriculture and forestry are taken into account, one would almost say, automatically, in the way that the boards are constituted and in the way that they actually function. As the noble Baroness, Lady Nicol, described, boards are governed by a combination of agricultural drainage ratepayers' representatives and local authority nominees. Socio-economic factors are an integral part of the boards' flood defence considerations, and I do not think that it is necessary or appropriate to use this Bill to seek to change the existing general provisions on flood defence.
I would like to thank my noble friend the Minister for the assurances that he has given on the points raised so far, but in the light of what has been said, I hope that the noble Viscount will withdraw his amendment.
Viscount Addison: I too thank the Minister for his assurances, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Viscount Addison Viscount Addison moved Amendment No. 2:
Page 3, line 24, at end insert:
("(aa) to have due regard to the needs of agriculture and forestry and to the economic and social interests of rural areas;").
The noble Viscount said: Again this amendment would require a local authority, each of the Ministers and the NRA to have due regard to the needs of agriculture and forestry and to the economic and social interests of rural areas in formulating or considering any proposals relating to any functions of a local authority under this Bill. Clause 61B places new duties on local authorities, each of the Ministers and the NRA in relation to the land drainage functions of local
1780
authorities. These can be summarised as to understand further the conservation and enhancement of natural beauty, to have regard to the desirability of protecting and conserving buildings and to take into account any effect on the beauty or amenity of any area.
In contrast to the duties that are imposed on internal drainage boards, each of the Ministers and the NRA under new Section 61A in the Bill, these are entirely new duties; they do not already exist in the Land Drainage Act 1991. It is therefore particularly important to ensure that these new duties are properly balanced as regards all the interests that are affected by them. The amendment would have the same effect as that proposed in relation to new Section 61A but in relation to local authorities rather than to internal drainage boards. The same arguments apply and there is no need to repeat them in this context.
This particular concern in relation to local authorities was not addressed by either the Minister or the noble Earl, Lord Lindsay, in replying to the debate. I note, however, that in lines 25 to 35 on page 3 of the Bill it is stated that the duty to further the conservation enhancement of natural beauty applies only so far as may be consistent with the purposes of this Bill. It would appear to mean the land drainage purposes of the Bill. It would be helpful if the Minister could assure me that, in exercising all their new environmental duties under this Bill, local authorities will have due regard to the needs of agriculture and forestry and the economic and social interests of rural areas. I beg to move.
Baroness Nicol: The arguments that we made on the earlier amendment also apply to this one. The local authorities are there to represent the views of their electorates, and the electorate in this case have strong representations from forestry, agriculture and other interests. The sole purpose of placing this duty on the boards is so that the economic, forestry and agricultural interests will not be solely considered; they will also have to consider the needs of conservation. I am sure that the arguments still apply, and I hope that the noble Viscount will not press his amendment.
Earl Howe: I hope my noble friend Lord Addison will not wish to press Amendment No. 2 having now withdrawn Amendment No. 1. The duties applying to IDBs and local authorities do, as I am sure he will acknowledge, need to be kept in line. In any event, local authorities will have—and indeed do have—a wide range of duties and functions, and they will be well aware of the social and economic interests of rural areas. For these reasons I do see this amendment as unhelpful. I hope that the reassurances I gave on the last amendment as to the prime functions of IDBs under the Land Drainage Act 1991, which carry forward into this Bill and apply also to local authorities, will assist my noble friend once again as he considers what to do with this amendment.
The Earl of Lindsay: The new Section 61B applies the same conservation duties to local authorities when carrying out their flood defence functions under the Land Drainage Act 1991 as already applied to IDBs. Like IDBs, the conservation duties apply only in so far

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as they are consistent with local authorities' flood defence functions. As my noble friend the Minister has outlined, local authorities are very experienced in balancing various needs, including those of a socio-economic nature. I also think that it is sensible for corresponding provisions relating to different drainage bodies to keep in step. I hope therefore that my noble friend will withdraw his amendment.
Viscount Addison: I thank the Minister for his assurances and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Viscount Addison Viscount Addison moved Amendment No. 3:
Page 4, line 17, after ("features") insert: ("and that Council has notified that fact, under section 28 of the Wildlife and Countryside Act 1981 —

(i) to the local planning authority in whose area the
land is situated;

(ii) to every owner and occupier of any of that land;
and

(iii) to the Secretary of State for the Environment or for Wales, as the case may be").

The noble Viscount said: The amendment would make it clear that the reference in new Section 61C(1) to,
"any area of land … [which] is of special interest",
excludes any such areas which have not already been notified as sites of special scientific interest under Section 28 of the Wildlife and Countryside Act 1981. If the nature or conservation agencies wished to notify any internal drainage board or local authority whose work might affect any other area of land, the agencies would first have to notify that land as a site of special scientific interest under Section 28 of the 1981 Act.
Subsection (l).of new Section 61C requires the conservation agencies to notify internal drainage boards and local authorities where the agencies consider that any area of land is of special interest by reason of its flora, fauna or geological or physiographical features and that it may be affected by works, operations or activities of an internal drainage board or local authority. The reference to,
"any area of land … of special interest",
is not qualified in any way, although the note against new Section 61C in the margin of the Bill refers to the duties with respect to sites of special scientific interest. The explanatory memorandum makes a similar reference. It can be presumed that the sites of special scientific interest involved are those identified by the agencies under the Wildlife and Countryside Act 1981, but there is nothing in the Bill to suggest that this presumption is correct.
The situation needs to be clarified because of the potential for confusion between sites of special scientific interest identified under the 1981 Act and other sites given credibility by county wildlife trusts and local authorities but not formally recognised as sites of special scientific interest under the 1981 Act.
Many county wildlife trusts are currently drawing up scheduled sites of local nature conservation importance. They may also be known under a range of other names. Often the owners of such sites are not told that they have been identified in that way. Those schedules have been presented to local authorities and local authorities are
1782
being requested to protect the sites listed on them; for example, through the town and country planning system.
The lists may also be made available to statutory conservation agencies and also be sent to internal drainage boards. Unless the Bill specifically refers to formal sites of special scientific interest, the statutory conservation agencies may notify internal drainage boards of other sites of less value. Works affecting those sites will then be subject to consultation procedures which would not necessarily have applied otherwise. That would be of particular concern where, as is often the case, the owners of such sites were not aware that their land had been identified in that way. The problem does not arise in relation to SSSIs because land owners and occupiers are notified directly that the site has been formally notified by the statutory conservation agency.
In the debate on Second Reading, the Minister, responding to the anxieties raised by the noble Earl, Lord Lytton, maintained that the relevant provision of the Bill had been on the statute book in that form since 1989 and that it had not created problems. He added that there was no reason to believe that it would do so in the future. At that stage therefore, the Government had no plans to amend the clause in the way suggested by the noble Earl—I refer to the Official Report, 26th May 1994; cols. 888–889.
The fact that the provision is merely being re-enacted and problems have not so far arisen in respect of it is no defence for imprecise drafting. Perhaps in 1989 little concern was expressed about sites of local conservation importance. The situation today is quite different. County wildlife trusts take every opportunity to seek protection for such sites, notably through local authority development plans. Sites of local nature conservation importance are therefore gaining a credibility which they did not have five years ago. The potential for confusion between such sites and sites of special scientific interest is that much greater and, accordingly, so is the need for clarification.
It would be helpful if the Minister could explain why the provision has not created problems and why it is not expected to do so in the future. For example, it would be helpful to know what consultation arrangements generally exist between IDBs and local authorities, and the statutory agencies and local authorities. I beg to move.
Lord Graham of Edmonton: In the absence of my noble friends Lord Carter and Lord Gallacher—who have been down more drains than I have had hot dinners and therefore understand these issues far better than I do —I have been asked to say that this is a Private Bill and they take no powerful or direct interest in it. It is up to the supporters of the Bill to persuade the Committee and obtain the support of the Government. We know from the history of this Bill that the Government were not only in at its conception and birth, but are very well versed in every stage of the passage of the Bill. The two Members on the other side of the Committee are acting as eloquent midwives, trying to get the Bill from this Chamber to the other place.

1783
Amendments Nos. 4 and 5 lay duties upon other bodies. Of itself that carries implications not only so far as acceptance in this Chamber. Between this Chamber and the other place other bodies may be persuaded to take a greater interest in the matter than they might otherwise have done. My kindest advice to the two Members of the Committee who very eloquently—I am in no way being patronising—explained their purpose to me (which makes good sense) is that the progress of the Bill will not be aided by making it better at this stage. It will be aided by enabling it to reach the other place with the support of the Government.
Even then, with a private measure, with the best will and the best ministerial support in the world, it is still possible for someone—perhaps someone unknown to me or perhaps someone who, it is suspected, might have an interest —simply to shout the one word "object" and the Bill is finished. Unless the Minister can say that not only does he support the amendments but that he will use his best endeavours to ensure the Bill's passage through the other place, the Members opposite would be well advised to listen carefully to what the Minister has to say. If it means that the Bill, with the full support of the Government but devoid of the amendments that they are moving, is the best that can be done, I feel that it is the best offer that they will get tonight.
8.45 p.m.
Baroness Nicol: This amendment and the subse-quent amendment would defeat the whole purpose of the Bill. What we are trying to do is to put a general duty to further conservation. The effect of these amendments would exclude areas of importance, as the noble Viscount said, outside those already notified. That could lead to the destruction of animals and plants ahead of designation, which would be unfortunate.
The noble Viscount suggested that there might be a rush by the statutory bodies to notify sites under the provisions of the Bill. I cannot see them doing that because they are too short of resources and money to want to act unnecessarily. What we are seeking to do is to establish a general duty.
I suggest that if land owners and farmers are anxious about the possible operations of new Sections 61C and 61D, there might perhaps be drawn up a code of practice which would relieve their anxieties. I am sure that it is not the intention of the Bill that extra anxieties should be caused.
Earl Howe: I can understand the concern expressed by my noble friend that there should not be a proliferation of sites notified to IDBs and local authorities, perhaps without landowners being aware of this. However, I would remind him that under the present legislation, which my noble friend's Bill carries forward unchanged, it is only the statutory conservation bodies who may notify sites to IDBs and not voluntary bodies. There is a corresponding provision in the Water Resources Act 1991 relating to notification to the NRA. My officials have been advised by English Nature that under the current legislation IDBs and the NRA are in
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fact only notified of SSSIs under the Wildlife and Countryside Act, and that English Nature intend this practice to continue in the future.
In addition, I should point out that the consequence of a statutory conservation agency notifying a site to an IDB or local authority is simply that the board or authority then has to consult with the statutory agency before undertaking work in that area, except in an emergency, when prior consultation is not required. I suggest that such consultation is no more than good practice, and that nowadays no IDB would consider carrying out works in an area of environmental interest without consulting the main conservation bodies. My noble friend Lord Addison asked what consultations there were between IDBs and local authorities. Local authorities are represented on IDBs, and in the normal course of events there is a great deal of regular consultation between the statutory and voluntary conservation groups as well as IDBs and local authorities. In fact, before flood defence capital works are approved for grant aid by the Ministry or Welsh Office, the drainage body concerned—be it internal drainage board, local authority or the National Rivers Authority—already notifies the relevant statutory conservation body, normally English Nature or the Countryside Council for Wales. Moreover, neither the notification of the site to IDBs nor the consultation by IDBs with statutory conservation bodies affect the legal rights of landowners. The existing legislation, which the Bill will not change, reflects all that and poses no problems for internal drainage boards in practice. It does not affect the activities of landowners directly at all. In view of that, I hope that my noble friend will not wish to press his amendment.
The Earl of Lindsay: In case there should be any confusion, I stress to the noble Lord, Lord Graham, that I am the promoter of the Bill rather than the noble Earl, Lord Lytton, who tabled some of the amendments. The noble Earl may be disappointed to think that we have been confused, though I certainly would not be.
The new Section 61C, to which the amendment relates, carries forward the present duties of IDBs with respect to sites of special scientific interest as contained in Section 13 of the Land Drainage Act 1991 and extends those duties to local authorities. It would require IDBs and local authorities to consult the statutory conservation bodies on proposed works in areas that had been notified to them as being of special interest. The effect of my noble friend's amendment would be to limit the sites which statutory conservation bodies could notify to IDBs and local authorities as being of special interest to those formally notified to landowners or others as SSSIs under Section 28 of the Wildlife and Countryside Act.
I do not believe that that is either necessary or desirable. I say that as a farmer who farms around an area of wetlands which includes almost every variation. We have designated ground; we have ground which is not nationally designated but is in the care of the local wildlife trust and there is a further area which has no

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designation and is of no interest to anyone locally. I stress therefore that I do not believe the amendment to be desirable or necessary in that context.
First, I understand that MAFF has been advised by English Nature that in practice only formally designated sites of special scientific interest have been or will be notified to IDBs. Secondly, the effect of the present legislation—which my Bill would not change—is simply to require IDBs and in future local authorities to consult with the statutory conservation bodies about proposed works in areas of special interest. Nowadays all IDBs do that anyway as a matter of good practice. It is not an onerous imposition. Thirdly, nothing in this section of Clause 1 directly touches on the activities of landowners, only of IDBs. There is nothing to suggest that the provisions in Section 13 of the Land Drainage Act 1991, which have existed in the current form since 1989 and are simply carried forward unchanged in my Bill, have adversely affected landowners' interests. I hope that in the light of the helpful explanation from my noble friend the Minister, my noble friend Lord Addison will withdraw his amendment.
Viscount Addison: I thank the Minister for assuring us of the good practices that take place between the various bodies in question. I am glad of the clarification. I can assure the noble Baroness opposite that I am not here to try and do damage. I therefore beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Viscount Addison Viscount Addison moved Amendment No. 4:
Page 5, line 27, after ("interest") insert: ("existing on land which-—

(i) has been notified as a site of special scientific interest' under section 28 of the Wildlife and Countryside Act 1981; and

(ii) has been declared under section 19 of the National
Parks and Access to the Countryside Act 1949 or
under section 35 of the Wildlife and Countryside
Act 1981 to be a national nature reserve; or

(iii) is subject to an order made under section 29 of
the Wildlife and Countryside Act 1981; or

(iv) has been designated as a Special Protection Area for birds under European Community Directive 79/409; or

(v) has been designated as a Special Area of Conservation under European Community Directive 92/43; or

(vi) has been designated as a wetland of international
importance under the Ramsar Convention").

The noble Viscount said: Amendment No. 4 clarifies a situation in which the relevant Minister may give directions to drainage boards in relation to flora or fauna or geological or physiological features of special interest which are likely to be destroyed or seriously damaged by any works, operations or activities which are being or about to be carried out by an internal drainage board. The amendment would allow such directions to be given only where such flora or fauna or features exist on land which has been notified as being a site of special scientific interest under Section 28 of the Wildlife and Countryside Act 1981 and which is, in addition, a national nature reserve or subject to a nature conservation order, or a special protection area, or a special area of conservation, or a wetland of international importance under the RAMSAR Convention.
As currently drafted, subsection (1) of Clause 61D places reliance simply on the opinion of the Minister in assessing whether any flora or fauna is of national or international importance. There is no reference to sites of special scientific interest which are selected on the basis of strict criteria as sites having acknowledged importance for flora and fauna. Nor is there any reference to the procedures which already exist for determining whether flora or fauna exists on land of national importance. Those include the provision of making a nature conservation order under Section 29 of the Wildlife and Countryside Act 1981 and the positions for declaring national natures under the National Parks and Access to the Countryside Act 1981.
Equally there is no reference to the procedures which already exist for determining whether flora or fauna exists on land of international importance. Those include the provisions for designating special protection areas under EU Birds Directive 79/409; special areas of conservation under EU Habitats Directive 92/43 and RAMSAR Sites under the RAMSAR Convention on Wetlands of International Importance. It seems strange to rely solely upon the opinion of the relevant Minister when procedures exist or, in the case of the Habitats Directive are shortly to be introduced, for the careful assessment of whether specific sites of special scientific interest are also of national or international importance and for officially recognising that importance through a formal order-making or designation procedure. To do so could suggest that sites of special scientific interest and the additional national and international designations are meaningless.
In responding to concerns raised by the noble Earl, Lord Lytton, during the debate on Second Reading, the Minister stressed that the power of direction is to be used as a last resort. Three conditions would have to be met before Ministers could intervene. First, the environmental asset at risk must be of national or international importance, and there should be no intervention in matters of purely local importance. Ministers would give weight to the views of their statutory conservation advisers in determining what is of national and international importance. Secondly, the environmental asset in question would need to be at risk of destruction or serious damage. Weight would again be given to the advice of the statutory bodies and judgments would be made on the basis of expert advice and sound science. Thirdly, the Minister should consult the IDB in question before issuing a direction. Full and frank discussion should be sought, were such circumstances to arise. It is hoped that such discussions would result in changes being made voluntarily without the need for recourse to a formal direction. Again I refer to what was said in Hansard on 26th May at cols. 887 to 889.
Those assurances are helpful but still leave considerable uncertainty for all interests about the circumstances in which flora or fauna will be deemed to have national or international importance. The proposed amendment would reduce the uncertainty considerably. It would be helpful if the Minister could confirm that the power of direction in relation to flora and fauna is to be exercised only in relation to SSSIs which have also been

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formally acknowledged through one of the procedures outlined in the amendment as having national or international importance. I beg to move.
Earl Howe: As I explained to the House during the Second Reading debate, the Government's intention with regard to the proposed ministerial power of direction is that it would be used only very sparingly, in exceptional circumstances and as a last resort; that its use would be considered only on the basis of sound scientific advice, from both within and outside the department—both as to the importance of the environmental feature and the nature of the threat to it; and—as stated in the Bill—that there will be prior consultation with the internal drainage board in question with a view to resolving the matter through discussion.
That consultation process should help to bring out the range of factors to be considered. In the end it is the Minister's responsibility to make a decision based on the best available information.
In response to my noble friend Lord Addison, let me say that the environmental features of national or international importance referred to in new Section 61D of the Bill are indeed very likely to be found in formally designated sites such as those listed in the amendment he proposed. However, I do not believe that it would be appropriate to attempt to list those designations on the face of the Bill as he suggests and thus circumscribe the way in which the powers of direction may be applied. I should like to explain to the Committee why I take this view.
First, from a purely practical viewpoint I think it is unwieldy and undesirable to try to list the designations in primary legislation. An exhaustive list would be extremely long, and a partial list could throw up anomalies. Subsequent changes to the list resulting from new international agreements, EC directives or UK legislation, for example, could then require amended primary legislation on land drainage.
Secondly, while I am happy to assure the Committee that in normal circumstances directions are only likely to be issued in respect of IDB works, operations or activities within sites formerly designated as SSSIs or the equivalent, it remains the case that flora, fauna and archaeological features are no respecters of administrative boundaries.
Let us suppose, for example, that an historical or biological find of major international importance was made, located in an IDB area, but just outside an SSSI boundary. If the Bill were to define the scope of the ministerial direction too narrowly by reference to geography rather than to the intrinsic importance of the environmental asset in question, we would risk being unable to avert damage to that environmental feature. But I stress that this situation will be extremely rare, and in the unlikely event that a ministerial direction is considered, that will almost certainly involve an SSSI or an equivalent designation.
To sum up, the Government consider that the power of direction proposed would be a useful longstop to be used only with care and very sparingly. The words "national or international importance" appear in the Bill
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to avoid the possibility of ministerial intervention in matters which are rightly for local decision. My noble friend asked why there was no reference to the criteria for importance in existing directives, and so forth. It would not be appropriate to duplicate the provisions in other legislation. The intention in this Bill—if I read my noble friend's intention correctly—is to complement other provisions by providing a mechanism of last resort over IDBs, as already exists for the NRA.
The procedure will provide a quick and precise remedy to what we expect will be very isolated but potentially serious environmental problems. I hope that this explanation will assist my noble friend.
9 p.m.
The Earl of Lindsay: While I can understand the thinking behind this amendment, I do not believe that it is practical or desirable to list all the types of sites that might be the subject of a ministerial direction in the new section, Section 61D. For one thing these designations can change from time to time, as my noble friend the Minister has suggested.
The list in my noble friend's amendment, long though it is, is by no means exhaustive. Moreover, some are of greater importance in relation to flood defence activities than others. The Bill therefore states in simple but express terms, that the ministerial direction can only be used in cases of national or international importance. That wording is intended to ensure that directions are used sparingly and cannot be used in matters of purely local importance. In arriving at a judgment Ministers will need to weigh up scientific and other evidence as to the relative importance of the feature at risk as well as consult with the internal drainage board in question beforehand except in an emergency.
In view of the assurance given by my noble friend the Minister on a number of points and in view of the impracticality of listing all the possibly relevant environmental designations, I hope that my noble friend will not press this amendment to the Bill.
Viscount Addison: I thank the Minister for his most helpful and welcome assurances and clarification. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 1 agreed to.
Remaining clauses agreed to.
House resumed: Bill reported without amendment.

Homeless: Assistance
9.5 p.m.
The Countess of Mar The Countess of Mar rose to ask Her Majesty's Government whether they will amend the Social Security Contributions and Benefits Act 1992 to introduce a regulated payment for the purchase of essential items of furniture and household equipment, payable to those homeless people who are setting up house and who do not possess such items.
The noble Countess said: My Lords, this Question was originally tabled by my noble friend Lord Henderson of Brompton. Unfortunately, he is unwell and unable to be with us tonight. I am sure that all noble

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Lords will join me in wishing him a speedy recovery and that I will not be wrong in saying that we shall all miss his contribution.
Noble Lords: Hear, hear!
The Countess of Mar: My Lords, it is the Government's intention that beggars should be removed from the streets into their own homes; that families in bed and breakfast accommodation should be permanent-ly housed, and that those who are recovering from drug or alcohol dependency be encouraged to be independent and living in suitable accommodation.
We know that the Department of the Environment, together with local authorities, housing associations and voluntary organisations, have worked together at the cost of many millions of pounds to provide suitable housing for the homeless. Why then is it that the Department of Social Security does not support the initiative with sufficient funds to provide essential furniture and household equipment for prospective tenants?
My Question is specifically about grants to homeless people who are being resettled or settled in accommodation of their own. Most will have no household possessions. They will have an inability to save from their social security benefits and they will have no means of obtaining credit with which to purchase essential goods. The failure of the Social Fund to meet Ministers' often-stated objectives of concentrat-ing help more effectively on people facing the greatest need with specific, exceptional and large expenses has been debated and questioned in your Lordships' House on many occasions since the Social Fund replaced the supplementary benefits single payment scheme in 1988. I assure the noble Lord the Minister that I am not asking for a return to that system. I ask him not to resort to comparisons between the old scheme and the Social Fund as he and his predecessors have been prone to do when challenged about the effectiveness of the Social Fund and its ability to meet its objectives. What I am asking for is a grant which is deliberately designed to fit into the Social Fund. I remind the noble Viscount that one element of the fund allows for non-discretionary maternity payments which at present are £100; funeral payments to cover the basic cost of a funeral; and cold weather payments which are currently £6 a week.
CHAR, Homeless Network and the London Homeless Forum in their report The Bare Necessities, published last month, list the four areas giving rise to the greatest concern about the operation of the discretionary element of the Social Fund as the inconsistency of the decision-making, the preponderance of awards of loans over community care grants, the lack of an independent right of appeal, and cash-limiting.
In March 1992, the Social Security Advisory Committee, in its report The Social Fund—A New Structure, concluded that:
"The present structure was aimed at producing flexibility and a response to local needs, but in practice, has produced inequality of provision and availability."
In July 1992 the Government, in their own research into the Social Fund, stated:
"We cannot show that those who got [Social Fund] awards were in greater need than those who did not; nor can we conclude
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that the Social Fund is meeting its objective to 'concentrate help on those applicants facing greatest difficulties in managing their income"'.
The Social Security Advisory Committee also found that although the scheme,
"provides flexibility, it also creates a situation that has been described by some critics as a 'lottery', in which applications may be accepted or refused according to the state of the local budget. An application may be refused in one area which could succeed elsewhere or be refused in a given month but may be accepted by the same office at some other time of the year".
In response to the Social Security Advisory Committee's criticism of the inconsistency of the Social Fund, Mr. Nicholas Scott, the Minister for Social Security and Disabled People, said:
'This is the price to be paid for flexibility".
That remark is a damning indictment when one considers that in 1992–93, 85 per cent. of applications for community care grants were refused together with 46 per cent. of applications for budgeting loans and 16 per cent. of those for crisis loans. Three-quarters of the applications for grants were for basic furniture and household items.
Criticism comes not only from the Social Security Advisory Committee and the voluntary organisations; 77 per cent. of Benefits Agency staff (from about 100 offices) who are responsible for administering the fund stated that the fund had got worse recently, according to The Bare Necessities report. The new "Directions and Guidance" are causing particular difficulties for Benefits Agency officers when they are assessing applications from single people. Direction 4 states that applicants must show that they have received,
"a significant amount of care or supervision"
for the first part of the direction to be satisfied. That is particularly difficult when they move from high to low dependency hostels as part of a rehabilitation programme. As single people, they also tend to be low on the list of priorities.
Staff are frustrated by the inconsistencies, mainly those inherent in the cash-limited and discretionary scheme. The problems are widespread. Recently commissioned research by the Department of Social Security found that, although Social Fund officers tried to be fair and to apply the relevant directions and guidance,
"their discretionary decisions are shaped not only by the needs and circumstances of the applicants but also by their own personal perspectives and by certain aspects of local office administrative practice and constraints".
Administration of the Social Fund is both cumbersome and complex. A high proportion of applications go to review after being turned down initially. Very few applicants are awarded the full amount for which they apply. The process is stressful for both the applicants and the officers who must decide who gets what. It is the most expensive benefit to administer. Administration costs in 1992–93 were 45.2 per cent. of benefit expenditure. The evidence shows that instead of reaching their target, Social Fund community care grants, crisis loans and budgeting loans are failing to help those at the bottom of the ladder. In simple language, the scheme is not working.
There is a viable alternative. Both the Social Security Advisory Committee and the voluntary organisations which work with the homeless agree that there is a

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crying need for what they term a "start-up grant". That would be a non-discretionary payment based on the needs of the applicant. It is recognised that a single person moving into an unfurnished bedsitter would not need the same furniture and household equipment as a couple with children moving into a house.
In 1992 the Social Security Advisory Committee suggested that there should be a single grant of about £900 payable to all homeless applicants in receipt of income support who are offered permanent accom-modation of their own. Although I recognise that that would greatly simplify the administration of the Social Fund, I believe that a system of item-based payments would be seen to be fair and would provide the necessary flexibility. I have not costed those proposals. I know that the noble Earl, Lord Russell, will speak about the costs, particularly the hidden costs.
If we are to get people out of their cardboard boxes, bed-and-breakfast accommodation and hostels, we must ensure that the alternatives, their own homes, are provided with the bare necessities. Too many homeless people offered accommodation either move into a house with bare boards and very little furniture or get themselves into the downward spiral of debt and despondence in their efforts to make a home. If they are to regain their confidence and self-respect, we must accept that they need some help to start them off, and that the help should be adequate.
The visible costs may be a little greater but the savings from the current hidden costs may very well balance them. I ask the noble Viscount the Minister to ask his right honourable friend the Secretary of State to consider seriously all the reports which I have mentioned and which other speakers will mention. Will he conduct a proper cost-benefit exercise accurately to determine the most effective and efficient way to provide the bare necessities for those homeless people who are offered permanent accommodation? This could well be their first step towards reducing benefits dependency.
9.15 p.m.
The Lord Bishop of Ripon: My Lords, I join the noble Countess, Lady Mar, in wishing a speedy recovery to the noble Lord, Lord Henderson. I am grateful to her for speaking to this Question most ably.
Since the Social Fund was set up, clergy and congregations, in particular in large city areas, have had opportunities to have direct experience of its effects. Indeed, as long ago as February 1989, the General Synod passed a resolution stating:
"That this Synod, conscious of the concern of many clergy and lay people at the likely effects of the Social Security Act 1986, and in particular … the burden of extra debt which will be borne by those in receipt of loans from the Social Fund … the strain that will be put upon national and local charities; and … the increasing work-load upon debt counsellors and other voluntary agencies, asks the Government to review the workings of the Act after twelve months".
A number of reviews have been made and the noble Countess has referred to them. Reading those reviews, it seems to me that, broadly, there are two difficulties with the Social Fund. The first is that it is cash limited and the
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second is that loans and not grants are made available. The difficulties have already been outlined by the noble Countess, but perhaps I may repeat them.
One difficulty is that there is no evidence that those who receive awards from the Social Fund are necessarily in greater general need than those who are refused. The noble Countess used the word "lottery" in relation to this. The whole intention of the fund was to focus help on those applicants facing the greatest difficulties in meeting exceptional expenses. It is clear that the operations of the fund have not enabled this to happen.
A second difficulty is that the Social Fund applicants are not treated equally, irrespective of where they live or the time of year at which they seek help. There are differences. I do not lay any blame at the door of Social Fund officers, who work extremely carefully to ensure that the fund is fairly administered. However, it is very difficult to apply criteria across the country when individual discretion is being exercised. An experiment in which 15 Social Fund officers assessed six identical applications under identical conditions was carried out. There was no application on which all 15 officers came to the same decision. That underlines the point that has already been made about the fund being something of a lottery.
The other basic criticism is that the money comes in the form of loans and not grants. That is bound to produce a great difficulty for those who are already on a basic income. Those who are given loans accept that the rate of repayment is not unreasonable, but the difficulty is that it does not leave them enough to live on. According to the report, more than one-third of loan recipients, including pensioners and families with children, had to cut back on their spending in order to repay the loan by going without other things—most often food and clothing—or by failing to pay other bills.
The General Synod Board for Social Responsibility supports the recommendations made by the SSAC, in particular that there should be an extension of mandatory grants to cover needs relating to setting up home, taking up work, domestic emergencies and the provision of a bed for a young child. The Board for Social Responsibility believes that provision should go beyond this towards a progressive move to give grants for all high priority items.
As the resolution to which I referred hinted, it is clear that the charities cannot now cope. There are in Leeds, which falls in my diocese, two Church-sponsored furniture stores which have been operating with an enormous amount of local voluntary support. They provide some needs, but a recent survey showed that they provided nothing by way of electrical goods—what are now being termed white goods —and there is a great difficulty in that respect. Clearly, those are essential items, but if they are not provided through the Social Fund, and if it is not possible for charities to provide them, there is clearly a risk that faulty or possibly dangerous equipment will be used.
Often those who are in this situation looking for help are people who for one reason or another have left home. Many of them end up in our big cities. The charity Night Stop in Leeds has a particular

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responsibility to try to provide help for those who are homeless, giving them overnight accommodation and helping them to set up home. Such people have no natural social network from which they can receive help. Indeed, we have a further project in order to provide some kind of friendship support for them. But it is clear from the support that they have around them that essential equipment is simply not available. In those circumstances, it seems right that we should look to the Government to provide that which simply cannot be provided from other sources.
I should like to raise one other matter; that is, the problem of tenancies. As your Lordships know, in order to take up a tenancy you are required not only to pay rent in advance but frequently you are required also to put down a deposit. It is clear that homeless people in the sort of situations that we are talking about are not able to find that kind of money. In the light of that, much work has been done on rent guarantee schemes to enable money to be found immediately, which will in due course be repaid by those involved. I understand that the Government have funded a number of those rent guarantee schemes. Perhaps I may ask the Minister whether on the basis of that experience the Government are willing to consider funding such schemes on a national basis or perhaps introducing a national scheme.
It is clear that poverty is on our doorstep. In your Lordships' House this afternoon we are discussing the problems of poverty worldwide and we were not unaware of those more immediate problems. The arguments used earlier this afternoon apply also in this case: this is a moral situation which requires a humanitarian response; but it is also a situation which, if it is allowed to continue and fester, will produce much bitterness, anger and quite possibly conflict.
Much local work is being done. I am full of admiration for those charities which are working in that field. But it is clear that they need help from the Government to enable such support to be effective. I hope that the Minister will consider providing that help.
9.22 p.m.
Lady Kinloss: My Lords, I would like to join my noble friend Lady Mar in sending best wishes for a speedy recovery and a return to this House of my noble friend Lord Henderson of Brompton.
Now that we have, hopefully perhaps, a few weeks of warmer weather, it might be a good time to study the needs of homeless people—a single person or a family —in helping them to move into a house or a flat. Having, with luck, arrived at a position of having been awarded a house or a flat, there is the question of furniture, just even the basic needs: such items as a bed or beds and a cooker. I am often told that an important item such as a cooker is a basic necessity. I agree entirely with that, but no one has ever said at the same time to me that they need saucepans and hopefully a kettle at the very minimum, and of course plates, cups and cutlery as well. Can the Minister imagine trying to boil water in, for example, an old Coca-Cola tin for a family?
The Social Security Advisory Committee, in its 1992 report, recommended start-up grants for those setting up
1794
a new home, or moving from institutional care, or in domestic emergencies. It recommended the payment of non-repayable grants. Perhaps if those asking for a start-up grant were asked to itemise their needs, it would help them to get a grant for those necessities which they really need.
Setting up home is an expensive task, and even more so for homeless people. Many of those homeless people, some of whom have come out of care, have no furniture or other household essentials. A young person who has been in care is unlikely to have either furniture or other basic necessities. Many of those people are reluctant to accept a loan in the realisation of the hardship that they are likely to face due to the high repayment rate of Social Fund loans. Therefore, those who have no basic household goods should receive a non-repayable grant as soon as possible.
Although it is often difficult, and not really possible, to pinpoint the precise cause of family breakdown or placing someone at risk, the inability to set up a home with basic necessities has been found to exacerbate existing difficulties and can lead eventually to a total breakdown of family life.
This is the International Year of the Family. All recent social policy has been underpinned by an emphasis on the importance of family life. The aim of the Children Act 1989 is to ensure that children and young people in need are provided with the necessary support, preferably within the family, or, otherwise, in an alternative appropriate environment. Too often, the stress that can be caused by making do, or doing without, triggers family tension and strife. Does the Minister agree that an adequate grant to purchase basic necessities is essential to help prevent family breakup, and so ensure that children have a healthy environment in which to live?
The National Association of Citizens Advice Bureaux reports cases of great distress. I should like to mention just one case of an elderly woman who was offered a loan to replace a heater and a cooker condemned by British Gas. She did not take up the offer as she knew that she would not be able to live on her remaining income after repaying £6.67 per week for the loan. Let us think of the disaster that could have been caused by the condemned cooker. Surely that sort of offer is a case that needs looking into if a future disaster is to be avoided. I cannot think that the Department of Social Security would want such a disaster on its hands.
There are some private individuals in this country who are buying up surplus Army supplies, such as an armchair for £2, a sideboard or desk for 50 pence and other things needed in a home. Perhaps I may ask the Minister whether he will inquire into the matter, and see whether the Ministry of Defence and his department can come to an agreement whereby surplus furniture, cutlery, china, glass and other household items can be obtained at a special low rate? Those items could then be allocated to the correct authorities for distribution at a low cost to those people who are in receipt of grants for setting up home for the first time, especially where there are small children. If the noble Viscount is unable to answer tonight, perhaps he will write to me on the matter.

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I should just like to mention that citizens advice bureaux in Scotland report much the same problems as are found in England. In one case, a report by a CAB in Scotland tells of a single parent on income support. Following the birth of her baby, she has been rehoused by the local authority. She applied for a community care grant to furnish her home and was refused on eligibility rules. She was eventually awarded a crisis loan. Somehow she will have to repay that loan. That seems to me to be a complete waste of money. The local authority rehouses the single parent with her baby, but the Benefits Agency refused her a community care grant. What, I wonder, does the agency expect this young mother to do with her baby? This would seem to me to be a situation which is very tragic and high in human suffering; it is also high in financial terms. I look forward to hearing the Minister's reply.
9.27 p.m.
Earl Russell: My Lords, in thanking the noble Countess, Lady Mar, for introducing the Unstarred Question, I am sure that I speak for every person in the House save one. However, in agreeing with the noble Countess in offering our sympathy to the noble Lord, Lord Henderson of Brompton—and I regret that he is not present on this occasion—I am sure that I speak for every Member of the House, not excepting one. In his speech to the Carlton Club, the Prime Minister said that the purpose of the social security system was a hand up not a hand-out. We on these Benches might want to qualify and elaborate that statement here and there; but we have no quarrel whatever with its basic message. We accept the objective, but we think that the benefit system is at present a long way short of meeting the Prime Minister's objective. Accepting that proposal might make the benefit system a little closer to the Prime Minister's aim.
I am concerned—though not, at present, quite as concerned as the Government—about the size of the social security budget, but I will plead that I have been concerned about it for a great deal longer than them. I have been concerned about it ever since I took over this brief in 1989. The right way to reduce the social security budget is, as the Prime Minister suggested, by giving people a hand up, and by helping them over the effects of misfortune so that they can be restored safely to the world of work and get over whatever misfortune or trauma has put them in the position they are in, and get back to business as usual. The wrong way of reducing the social security budget is to kick people off the ladder back into the water.
It is, I think, true for most of us who are trying to recover from misfortune that there is a tide in the affairs of men, but to catch that tide we need a fair wind. If we do not get the fair wind and we drift in shallows all our life, then we tend to do it, in one way or another, at great expense to the state—not only to the Department of Social Security but to a good many other departments as well. In particular, if we get pushed back into the cycle of recurring homelessness, we create costs all the way along the line. Therefore one reason why the Government might consider this proposal very seriously
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is that if they look at the costs in the round, I think they will find it a great deal cheaper than any likely alternative.
I will be referring in due course to a number of individual cases. I will not do so merely as an appeal to the emotions. I will ask the Minister to consider in each of those cases: what is the alternative, and is the alternative cheaper or more expensive than the proposal that we have before us? Setting up house is widely recognised as a moment of great and exceptional expense—a moment when, as the right reverend Prelate said, there is a need for a support system. That is why those of us in more fortunate positions expect, when we first set up house, to receive wedding presents. That is a practical support system which is not normally open to the people with whom we are now dealing.
The concern, on moving into new premises, that there should be furniture, extends much further up the social scale. In 1572 the then Bishop of Norwich arrived very late for the beginning of Parliament and explained to one of his brother Bishops that the reason for his delayed arrival was that he could not find anywhere to live. He had been offered one place, but he said, "She was a great enemy to religion, and besides there was no furniture".
Like the noble Countess, I shall not go through all the defects in the Social Fund. We have done that before and we will doubtless do it again. However, I shall touch on one or two cases in which the rules of the Social Fund operate to the detriment of applicants and, I believe, to the detriment of public funds. One is the eligibility rule —one has to have been 26 weeks on income support before one can apply. Let us take the example of a case reported by Barnardo's of a man aged 23—a care leaver —who had spent a period in a psychiatric hospital. He was refused the loan because of a period of interruption in his benefit while he was on remand, even though the case was dropped and he was released from remand. That person, not getting help when he needed it, could perfectly possibly have ended up either back in the psychiatric hospital or on remand, this time for something that he did do. Neither of those things would be to the advantage of the Exchequer, any more than they would to the person concerned.
We have problems as regards those who are found by the Social Fund to be too poor to be eligible for a loan. I will ask the noble Viscount the question that I have asked before—I am still waiting for an answer—what is the justification for a rule that rules that people are too poor to receive help from the social security system? How can that be found to be consistent with the basic purpose of the system?
There was the case of a 22 year-old man who had spent extensive periods in social services care and served a custodial sentence of 27 months. When failing to receive any help at that stage he suffered outbreaks of aggressive behaviour at probation and benefits offices and was in danger of breaching the terms of his probation order. One can see the danger of increased spending there. Finally, he was successful, with help. His advisers reported that his mood and motivation improved enormously—with the prospect, of course, of considerable savings.

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We then have the problem of eligibility under Direction 4. A remarkable proportion of applications for community care grants from the Social Fund are found ineligible because they are not within the scope of Direction 4. Direction 4 provides that the money can be used to assist people leaving residential or institutional care to live independently in the community, to help people stay in the community rather than to enter care, and to ease exceptional pressure on families—not on the single homeless. Homelessness is not regarded as ipso facto exceptional pressure in relation to the Social Fund. That is a pity. In June 1992 the guidance for the first rule was tightened. People must now have received a significant amount of care or supervision before they qualify.
Those have been described as slippery definitions. I could not help noticing, looking at returns from the Social Fund as regards a number of areas of the country over a considerable period of time, that the percentage found contrary to Direction 4 was remarkably constant. I cannot resist the suspicion that the interpretation of Direction 4 is being used as a form of impromptu quota system. I hope that the noble Viscount can deny that. I shall listen to the denial, if I receive one, with great care.
The homelessness circuit is not a good thing to be left in. It is important for us, as well as for the homeless, to lift people out of it as soon as possible. That moment of suspense, the moment when one first tries to get into one's own place, is a moment of maximum hope and therefore, as a consequence, a moment when one is most liable to disappointment.
What we propose is a regulated payment. By ruling out the element of discretion, the administrative costs would be much reduced. As the noble Countess pointed out, those amount to 45 per cent. of the cost of the system. It does not seem very constructive to spend large sums of public money on administrators to tell people that they cannot have what they want. It is a little like the proverbial plumber's bill—"To making good leaks in pipes: 7/6d".
What happens if people come up against this problem? First, they may possibly refuse the tenancy. It happens in a number of cases. That leads to the problem with which we are all familiar of the silting up of accommodation which provides temporary housing.
Let us take the example of the case of a 22 year-old man estranged from his parents since he was 16 and who lived in a hostel for five years. He was found not to meet Direction 4 and did not apply for a loan because he was on the younger rate of income support and could not afford the repayment. He could not accept the flat that he was offered because he said that he could not afford to move in. That not only incurs the hostel costs, which are not inconsiderable, but also increases the demand for more hostel places because those waiting behind in the queue cannot get in. The prospect of extra costs is obvious and considerable. Meanwhile the people who do not obtain secure accommodation are not earning, they are not paying taxes and are not reducing the public sector borrowing requirement.
If those people move into bare-board accommodation, there are a number of possible results. They may suffer from illness. Let us take a case that was
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discovered by the National Association of Citizens Advice Bureaux. A family with two children suffering from asthma was moved into a building with no heating. If I were in the Department of Health, I would suspect that the Department of Social Security was wantonly sweeping costs into my department. The Department of Social Security is often sinned against in that regard. However, I believe that it was sinning, and if it wishes not to be sinned against, it should desist.
In some cases there may be psychological damage. One may say that people should be tougher. But, of course, they would not have got into such a situation if they had not suffered considerable misfortune already. Perhaps I may refer to the case of a woman with three children who had been a victim both of burglary and of domestic violence. She was left sleeping on a sofa, having to borrow a refrigerator and a cooker and to make do with curtains that did not fit. If one thinks about it, any woman who has been the victim of domestic violence is in a position to understand the story of Susannah and the Elders. It is a quite unnecessary stress.
Alternatively, such people may turn to crime. The number of ex-offenders on the list of people who have difficulty with regard to accommodation is quite considerable. Many of those people know perfectly well what they have to do if they need to obtain the money they lack. But I do not believe that it is our duty to lead them into temptation. Alternatively, the children may be taken into care. The cost of that is very great indeed —far more than a grant for a little furniture. It occurs particularly when mothers are unable to cook for their children and cannot feed them properly. They may be told, as one mother was, "That doesn't matter. You can go to the takeaway"—a cost to which income support does not run.
There are considerable problems of debt. It is a very great pity that the Department of Social Security keeps no record of the indebtedness of those on benefits. Such scraps of information as we can discover suggest that, if it collected such information, it might find the result rather startling.
If we can lift those people out of homelessness, they can earn and pay taxes. If not, they are back on the streets, where Crisis tells us that TB is now beginning to spread at an alarming rate. That again is an expensive illness. Therefore if the Government will spend that little bit of money they can save themselves a fortune.
I hope that the Government will not tell me, as one of my colleagues said of the government of Charles I, that they are not rich enough to afford economies.
9.43 p.m.
Baroness Hollis of Heigham: My Lords, I, too, thank the noble Countess, Lady Mar, for initiating the debate, on behalf of her noble friend Lord Henderson, on the report entitled The Bare Necessities. It is especially appropriate that it follows the debate last week on housing and homelessness in which we explored some of the problems facing many homeless people, especially the single and the vulnerable, in obtaining a home of their own.
Last week we argued that a crucial need was for a home, but that home also has to be made habitable. We

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also discussed last week that many, perhaps most, of the homeless have, by being in bed-and-breakfast accommodation, lost not only their home but their furniture. Women with children may have fled a violent relationship, leaving everything behind them. Young single people coming out of care, older single men and women coming out of institutions have clearly little or nothing in the way of possessions. They are homeless, jobless, rootless and very poor.
Often against the odds, the local authority has offered them a flat. The would-be tenant then needs help in furnishing it. Yet we find that three-quarters of all requests for community care grants are refused; half of all pensioners and three-quarters of the sick and disabled are refused grants; 80 per cent. of the unemployed are refused loans.
As the Social Security Advisory Committee said, it is not just a question of total moneys, but also the lottery —as the noble Earl, Lord Russell, and the noble Countess, Lady Mar, said—by which that money is distributed. The total budget of the social fund is low; its administrative cost is very high. I think I am right in saying that in 1992–93 —the last year for which we have complete figures—£163 million was spent in dispensing some £317 million. I doubt whether there is a higher ratio of costs to money disbursed in the entire field of government expenditure. Of that £317 million discretionary money, £188 million was recovered money; only £126 million was new.
However, although the "new" money was low and the administrative costs high, what is almost as bad is the lottery. The first hurdle which someone needing help with furnishings has to overcome is whether they are on income support for more than 26 weeks. If they are on support for less than that time, whatever their need, or if their benefit comes from some other source such as invalidity benefit, even though it pays them no more, they are ruled ineligible.
We have, for example, the case of a 19 year-old girl raped by her step-father, who therefore left her mother's home and was offered a council flat, but because she had not been on income support for 26 weeks she was not eligible for the community care grant. What was she supposed to do—return to the home and risk further abuse or go onto the streets?
Another claimant was discharged after two years in hospital with multiple sclerosis. He had no furniture but was refused a community care grant because he was receiving invalidity benefit at almost precisely the same level as income support. What was he supposed to do —return to hospital?
That is the first hurdle. If claimants pass that and have been on income support for more than 26 weeks, the second hurdle claimants have to pass is whether they fall into high, medium or low priority categories. I have been looking at the local guidance issued in about a dozen local DSS offices. I have it here. Almost always, the high priority includes the elderly, the mentally and physically sick, families at risk of violence or those who need help to prevent a return to institutional care. No one would challenge that high priority. However, what about other vulnerable single people, former offenders,
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drug or alcohol abusers? For example, if they live in East Nottinghamshire or North Yorkshire, they are counted as medium priority. But if they are in Essex they are a low priority. Alternatively, take a family under exceptional stress where there is no risk of violence. They are regarded in Norwich and Tameside as being of medium priority but in North Yorkshire and East Nottinghamshire as being of low priority —the same families.
Therefore, we find examples such as a single, homeless man allocated a council flat but refused a grant and a loan for furniture because he could have lived in a hostel and refused money for a cooker because he could eat sandwiches; or a family with six children and two beds refused a grant for beds because, though under exceptional stress, they were not at risk of violence and therefore they remained of low priority. Is that tolerable? If a family was in similar financial circumstances we would not tax that family more heavily in Norwich than in Nottingham. Why should we tolerate similar heavy discrepancies when it comes to the shadow fiscal system, namely social security?
Let us assume that our family, or our homeless, vulnerable ex-offender, have passed the 26-weeks hurdle (the first hurdle), and the second hurdle, namely that they are a high priority. They then have to pass the third hurdle, if they can, which is that of the budget. The budget is cash controlled. According to how many people present themselves and in what month of the year, all or only some of those who come within the category of high priority will be helped. Some, or none, of those who come within the category of medium priority will be helped.
For example, one week a CAB in the North East was told that only cookers could be regarded as being of high eligibility; it was told the next week that it could add to that list cookers and bedding; it was told the week after to keep phoning and it would be told what other items would be added. Too often, because of the budget, less is given than is needed. An incontinent woman who was 80 years old needed a washing-machine. She was given £75. She bought a second-hand machine, which speedily broke down within six months. The Family Services Unit interviewed people after a one-year interval and found that half of all the cookers and washing-machines which had been bought second-hand had broken down.
As I said, we would not tolerate this degree of arbitrariness in our tax system. We would not say that someone is taxed if he starts work before February but is not taxed if he starts work after February. Yet we tolerate that degree of irrationality and arbitrariness in our social security system.
The Family Welfare Association has sent me details of the 4,000 small grants that it gives out each year for items such as cookers, bedding, washing-machines and children's clothes. I quote:
"We find that people of apparently similar circumstances can be turned down, or accepted by the fund at any time—there is no obvious reason behind a refusal or acceptance other than that the Social Fund has run out of its monthly allocation of funds".
That is the third hurdle: the budget.
The fourth hurdle, of course, is the judgment of the Social Fund officer himself or herself as to whether to

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offer a grant, a loan or nothing at all. The right reverend Prelate has already referred to this matter. The York research showed an identical case presented to 15 DSS local officers: for example, a lone parent needing a washing-machine. Two of those officers would have offered grants; 11 would have offered loans; two would have refused. Another example is that of a pensioner with special clothing needs. Six of those officers would have offered grants; four would have offered loans; five would have offered refusals.
We were told this morning at the presentation of the report The Bare Necessities that in the same DSS office, of two people with identical circumstances, income and needs, one was offered £621, the other £375; and they were told that that was how it was. It is quite arbitrary. We would not in our tax affairs tolerate decisions on whether you did or did not pay capital gains tax, for example, on the personal preferences, idiosyncrasies or responses of the taxman. Why should we tolerate it in the DSS?
The final hurdle is, if you are refused, the question of whether the matter goes to review. That usually depends on the availability of a local advice or aid centre. Over one-third of those whose claims are refused have their claims granted if they go to appeal. For example, in East Anglia, a client of the CAB with three children, who had been rehoused by the local authority, asked for a community care grant for furniture and was refused as being of only medium priority. On review, the client was awarded £1,500 by the inspector.
In other words, what we have is welfare by where you live; by what month you apply; by whom you happen to have as a Social Fund officer; and by how willing you are to go to appeal". What you do not have is welfare by need, or welfare by targeting need, as the Government insist that we have. After all, the York report showed that those who got help were neither more nor less needy than those who were refused it. It showed also that those who got grants tended to be less needy than those who got loans, who were in turn less needy than those who were denied any help whatsoever. Would we tolerate a tax system in which the better-off paid 40p in the pound and the poorest paid 70p in the pound? No, my Lords—except when it is called social security. It is a lottery, as all the research from the CAB and from the charities has shown and as this report The Bare Necessities has shown.
The Government refused to act because they said that the evidence was anecdotal, that they would await a report from their own advisory committee, the Social Security Advisory Committee. When the Social Security Advisory Committee damned the Social Fund as a lottery, the Government said that they would have to await their own independent research. When they got that from York, and when that research also damned it as a lottery, what then did the Government say? Quite remarkably, in its annual report for 1992–93 it said:
"Ministers have seen no evidence to alter their belief that the basic principles of the discretionary system are right and working effectively."
Could I ask the Minister, in the light of the CAB information, in the light of the Social Security Advisory Committee, in the light of the SPRU report from York,
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in the light of The Bare Necessities, what then would count as evidence to make the Government change their mind?
As one Salvation Army officer said this morning, she never thought that when she went into the field of the Social Fund she would be taking part in gambling, but she said that that was precisely, what she was doing. And the lottery continues.
What happens to those who are not helped? Some of these have been mentioned by the noble Earl, Lord Russell. Needs do not disappear. Six months later, 40 per cent. of them are still struggling to move beyond the lilo/sleeping bag/camping stove syndrome, which is all that such people can afford when they are refused a community care grant. Some turn to social services, transferring DSS costs on to local authorities; others turn to charities, who find themselves funding what we believe to be the DSS role. As the Family Welfare Association says:
"We are overwhelmed by the number of applicants from all sources."
Charities are having to close their lists.
Other claimants disappear into debt. The National Audit Office has estimated that two-thirds of all people applying to, and refused by, the Social Fund, are in multiple debt—rent debt, fuel debt, poll and council tax debt, finance company debt. The CAB found that in 1992 10 per cent. of all those on income support were paying off a loan to the Social Fund because they had been refused a grant, and that this was pressing down their level of income to below that of poverty. From then on they were forced to beg, borrow or steal; to move into the black economy or into the economy of semi-criminality.
Still others go without, mainly women, 60 per cent. of whom cut back on food, nearly half on essential clothes, such as a winter coat, and a quarter default on other bills, as they try, just as their Victorian great grandmothers did, to scrape and save.
An increasingly significant group, because they are refused financial help, are forced to refuse a cherished place of their own offered by the local authority. The noble Earl, Lord Russell, quoted one such instance; I would like to quote another. A young family, Mr. and Mrs. Leavis—that is not their real name—were accepted as unintentionally homeless and in priority need by the local authority. They received a permanent offer of accommodation in May 1994, just a month ago. They applied for £900 to start up their home. A swift decision from the DSS turned them down because their pressures were not exceptional. They are now, therefore, not able to leave their temporary accommodation until or if this matter is resolved by Social Fund inspectors. But, unless they accept and move into their permanent offer of housing, they may be deemed by the local authority to have turned this offer down and to have made themselves 'intentionally homeless', and therefore they may never again be eligible for a council authority tenancy.
Do Government departments not even talk to each other? Does the DSS not know what will happen to such

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families given the DoE guidance? Why do we persist in refusing to see the problems of people across departments?
Let me give another example from the West Midlands. A woman with two young children following a violent marriage was living in temporary housing. She was lodging with a man who had behavioural problems which frightened the children. She was anxious to accept the offer of permanent housing. But she too was told that she was not suffering exceptional enough stress. She was not eligible for a community grant and was unable to move into her new home. So she lives with a man whose behaviour is problematic, and with her children frightened and reverting to bedwetting.
We must ask the Government to consider following the advice of their own Social Security Advisory Committee; to take heed of the information offered by the case studies in The Bare Necessities; to follow the recommendations of their own research; and to consider start-up grants as of right. A few hundred pounds of start-up grant would perhaps stop the work of the DoE in responding to homelessness and of the DoH in responding to community care from being vitiated.
If government will not do that, homeless families will remain without a home; community care will remain a fiction; temporary accommodation will be blocked; hostels will silt up; children will remain in bed-and-breakfast accommodation; ex-offenders will re-offend; and families in stress will become families in exceptional stress and therefore increasingly prone to violence—all because the DSS refuses to give as of right to the poorest and most vulnerable families the means to furnish a home.
10 p.m.
Viscount Goschen: My Lords, firstly, I should like to thank all noble Lords who have taken part in this debate and especially the noble Countess, Lady Mar, who has given us the opportunity to discuss this most important subject. She began by saying that she was not suggesting a return to the system of single payments. But I believe that she was in part suggesting a form of mandatory start-up payment.
The Government do not believe that a regulated payment is appropriate for this kind of need. As the noble Countess remarked, some regulated payments are made through the Social Fund—for example, funeral, maternity and cold weather payments. However, those payments relate to events which we believe are so widespread and universal in their impact that minimal consideration of individual need is required. Regulations therefore detail the very specific situation in which such payments can be made.
But if we were to introduce regulated payments for household items limited to certain groups of people, in effect we should return to some of the problems of the old single payment scheme. It may be helpful to look at why the single payment scheme was abolished and why the Social Fund was introduced. Expenditure on single payments had spiralled totally out of control,
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approximately doubling every two years between 1980 and 1986 from some £48 million to £335 million. It was rigid and complex.
Earl Russell: My Lords, is that the fault of the single payment system or of government economic policy?
Viscount Goschen: It illustrates the point that, having a rigid system resulted in a rising budget. The money was reaching an extraordinary level and heading even higher. That was happening as a result of the totally rigid system. That is why we introduced the superior Social Fund system, which I shall now detail.
The Countess of Mar: My Lords, I am sorry to interrupt the noble Viscount. However, the system that I suggested is not rigid. It has flexibility in that people with small households would not need so much money. People who already have some possessions would not need so much money. But the people who need things most would be given the money.
Viscount Goschen: I take the noble Countess's point about her suggestion having some flexibility built into it, which she detailed. But it is still a form of mandatory payment. We are trying to get away from that and move towards the provisions of the Social Fund which are much more flexible. They are discretionary and much more efficient.
Baroness Hollis of Heigham: My Lords, I am sorry to interrupt the noble Viscount. Am I right in believing that when he uses the word "rigid", those of us on this side of the Chamber would use the word "rights"?
Viscount Goschen: I am afraid that I do not accept that point. Let me say by way of a question that I do not understand what the noble Baroness is driving at. A rigid system is a rigid system and that is what I have detailed. I shall now explain why the Social Fund is superior, more efficient and helps many more people.
No responsible government could have allowed such a scheme to continue and the Government believe that it would be a mistake to return to anything similar. The discretionary Social Fund takes a different and we believe better approach by allowing a wider range of needs to be considered. Social Fund officers, who know their customer best, decide priorities taking into account the individual circumstances of the applicant. They are in the right position; they possess the knowledge and will therefore be able to decide the priorities accurately.
The Government believe that the Social Fund is fairer than the old single payments scheme, which was rightly criticised because supplementary benefit claimants could get very substantial amounts to meet expenses such as essential household items, while others on low incomes had to manage without that help. Most people, at some time in their lives, have to meet the costs of setting up home, or of other relatively large and intermittent expenses. Anyone living on a limited income cannot realistically expect to get everything they need immediately, but like most other people may have to settle for accumulating items over a period of time, or making use of credit arrangements to spread the cost; including help from Social Fund loans.

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One of the main aims of the social security reforms was to encourage people on income support to budget appropriately. Payments from the Social Fund are intended to complement, not duplicate, the income support arrangements. The role of the Social Fund must be seen in relation to the overall provision of social security benefits.
Having said that, we recognise that some of the more vulnerable people in our society encounter difficulties coping with certain expenses and sometimes find themselves in special circumstances where additional help is appropriate. Most community care grants are paid for the sort of items we are discussing. Over 76 per cent. of grants for 1993–94 were awarded for household items. Many of those will have gone to homeless people. The Social Fund was designed to ensure that the most vulnerable in our society will generally be given high priority. Social Fund officers are given consider-able guidance and training on how the fund can best be used to help those who need it most. This is provided by guidance not only from the Secretary of State, but also locally from the area Social Fund officers. The area Social Fund officers are well placed to recognise local factors in their district, and to target resources effectively. The Social Fund contributes to the wider policy of care in the community, but is targeted at those people in receipt of income support.
When the Social Fund was introduced the idea of interest-free loans was a new concept. They are now recognised as providing proper and valuable help to people who need household items. All loans are interest-free and repayment rates are flexible and take account of income and commitments. Only 1 per cent. of crisis loan applications and less than 2.5 per cent. of budgeting loan applications are refused because the person cannot repay the loan.
I believe that that addresses the points raised by the noble Earl, Lord Russell, earlier in the debate.
Earl Russell: My Lords, my question was how the Government justify doing that, even if they do it to only a few people.
Viscount Goschen: My Lords, the important point is that, where budgetary loans are not considered appropriate, there are other methods that can be employed; for instance, the community care grants and the crisis provisions. That is the key point. We are talking not only about loans but also about community care grants.
Baroness Hollis of Heigham: My Lords, perhaps the Minister will allow me to intervene again. I am not sure that I understand. Is he saying that people who are refused a loan because they are too poor to repay it will then receive a grant? All the evidence from the York research shows that grants go to the better-off, the owner-occupiers, the more spacious accommodation, the higher incomes; loans go to those in rented accommodation and on lower incomes; refusal of grants and loans applies to the poorest of all. If the Minister is now saying that people too poor to be able to repay a
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loan will in future, or have been in the past, offered grants in lieu, that will be welcome and rather surprising news.
Viscount Goschen: My Lords, the point I was seeking to make was that the budgetary loams are not the whole picture and that the grants are another part of the Social Fund. Both of these types of arrangement must be seen within the broader picture of the income support provisions which they complement.
It is important to remember that just because a loan is outstanding does not mean that it is necessarily causing problems. It simply means that the Social Fund is helping people in a practical way to manage their financial commitments.
I turn now to the criticism of inconsistency in Social Fund decisions which the right reverend Prelate, among other noble Lords, raised this evening. The Government know that there will inevitably be some variation between decisions in a flexible, discretionary system. But we should remember the considerable problems of the previous rigid system. Decisions were never really consistent under the old single payment scheme; for example, there were marked and unfair contrasts in expenditure between different areas of the country. The Benefits Agency's reorganisation of nearly 500 local offices into 159 districts, together with revised guidance and training, has improved considerably the consistency of Social Fund decisions.
The right reverend Prelate the Bishop of Ripon raised the issue of people attempting to repay their loans on reduced income support. We believe that these Social Fund loans are fair. Many people looked to previous schemes as a source of regular top-ups to their weekly benefit. That was unfair to those on or just above benefit level who managed their income without extra help. We estimate that a considerable majority of people who received income support managed to cope with intermittent expenses without the help of a Social Fund loan. By setting aside money from their weekly income to meet these expenses, they are really in no different position from those who use Social Fund loans to help with their budgeting.
As far as the budget for the discretionary Social Fund is concerned, the Government believe that it is sufficient to meet the highest priority needs whenever they occur. The noble Baroness, Lady Hollis, criticised the principle of having a top budget. But cash limits are an important and vital part of sound financial management in contrast to the expenditure on the previous single payment system which rose uncontrollably. I should add that the great majority of unsuccessful applications are not refused on budgetary grounds but because the basic eligibility criteria are not satisfied.
Directing help where it is most needed implies some judgment about the purpose of the provision as well as the financial position of the recipient. Experience with the Social Fund shows that such an approach is not only practicable but can deliver, inevitably, limited public help more effectively.
The CHAR report, which has been raised by a number of noble Lords who have spoken this evening, is an interesting contribution to the discussion about the

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Social Fund. However, we do not believe that it really introduces any new points that have not already been considered fully. It has suggested a scheme of grants which is really broadly similar to single payments; a scheme which had proved to be unworkable, as I have demonstrated. In this day and age of a rapidly changing society, the Government need to be able to respond as flexibly as possible to help individuals as well as responsibly controlling public resources.
The right reverend Prelate the Bishop of Ripon raised the issue of rent deposits and guarantees. I can advise him that as part of the Government's rough sleepers' initiative, in Central London the Department of the Environment has funded a pilot project for a rent deposit fund. The project is currently being evaluated by independent research which will be published later this year. Deposits are excluded from the Social Fund because of evidence of abuse under the old scheme and rapidly expanding expenditure. However, 19,000 rent-in-advance payments, worth some £3 million, were made in 1992–93 and over 21,600 payments, worth nearly £3 million, were made in the year April 1993 to March 1994.
A number of noble Lords have cited the quotation that the Social Fund is a "lottery". I strongly reject that. The Social Fund is not a lottery. The framework of the law, the directions, guidance and budgetary discipline, together with the careful consideration that is given to individual circumstances by Social Fund officers, ensure that available resources go to those with the highest priority needs.
Another recurring theme raised by a number of noble Lords was the issue of administration costs. The important point is that the recycling of loans and the budgetary framework ensure a very effective use of resources. Inevitably, detailed personal assessments of applications and recovery procedures mean that administration costs will be more than for other mainstream benefits, but the important point is that the new Social Fund computer system will result in significant improvements to efficiency.
Finally, the Government believe that the Social Fund is working well in focusing resources on those people most likely to be in need and in supporting the Government's wider initiatives to promote care in the community.
Earl Russell: My Lords, can the noble Viscount tell me of anyone who shares the Government's view that the Social Fund is working well?
Viscount Goschen: My Lords, we believe firmly that the Social Fund is working well. The point is that
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we are recycling money. Although the budget is a large one, it is necessarily limited. Indeed, the noble Earl himself referred to the necessity of containing public expenditure. So, within a necessarily limited budget, we have found a scheme that is helping a great many people. It is flexible and makes very efficient use of resources. We believe that any return to a system that went the other way—that is, towards regulated payments—would not be so efficient and would not help nearly as many people.
Since the start of the scheme nearly 1 million non-repayable grants have been awarded, and over 7.4 million interest-free loans. Our commitment to this important area of provision is clear. We have given more money to the fund every year since it began, and that is being repeated in 1994–95, even though there is fierce competition for public funds. In fact, the Social Fund gross budget now stands more than £50 million higher than it did two years ago.
I was agreeably surprised to note that the noble Earl, Lord Russell, was concerned about the size of the social security budget, unlike the noble Baroness who criticised the principle of having a limited budget. The important point is that the Social Fund is part of the wider social security budget. We are spending record amounts on helping those in need. Over £80 billion will be spent on social security this year. That is a cost to every working person of nearly £15 every working day. The Government are not complacent—indeed, quite the contrary. We shall continue to keep the operation of the fund under close scrutiny and we shall continue to introduce improvements, as we have done recently, to ensure that the considerable help that is provided by the fund goes to our most vulnerable citizens.
Lady Kinloss: My Lords, before the noble Viscount sits down, will he answer the question that I asked him about the Ministry of Defence and his own department?
Viscount Goschen: My Lords, my apologies to the noble Lady. With reference to her proposed scheme, we welcome any such suggestion that might be of value and I shall, of course, take note of her suggestion. I should add that there are a number of existing furniture schemes within the voluntary sector. However, I shall refer the noble Lady's remarks to my right honourable friend.

Drug Trafficking Bill [H.L.]
Reported from the Joint Committee with amendments, and recommitted to a Committee of the Whole House.
House adjourned at twenty minutes past ten o'clock.