Lords Sitting of 27 June 1994

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

Investment Protection Promotion Agreements
Baroness Young Baroness Young asked Her Majesty's Government:
What is their current position on the proposed Investment Protection Promotion Agreements (IPPAs) with Cuba and the Dominican Republic.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, last year we made proposals for Investment Promotion and Protection Agreements to the Governments of Cuba and the Dominican Republic. Negotiations have since advanced with the Cuban Government who are seeking amendments to key points of substance in the draft text. We have sent further proposals to resolve outstanding issues and await their response. We continue to press the Dominican Republic Government to study our proposed text and to let us have a considered response.
Baroness Young: My Lords, I thank my noble friend for that reply. Is she aware of the importance which business people attach to these forms of agreements, particularly when they are proposing, or hoping, to export to a country? Can she say, when the time comes for her honourable friend in another place, Mr. Patrick McLoughlin, to visit Cuba in the autumn, whether or not we will be in a position to sign the IPPA between ourselves and Cuba, which would be a great encouragement to exporters and others generally?
Baroness Chalker of Wallasey: My Lords, I certainly realise how important these bilateral agree-ments are because they encourage long-term investor confidence by setting high standards of investor protection. It is notable that since 1975, 66 such IPPAs have been signed and indeed in the first five months of this year eight have been signed. Therefore, we give full weight to business interests as regards having such agreements. As regards the visit of my honourable friend Mr. McLoughlin to Cuba in the autumn, we very much hope that we shall have had a satisfactory conclusion to our discussions with the Cuban Government by that time which will enable him to sign, but the ball is at the moment in the Cuban court.
Viscount Waverley: My Lords, is the Minister aware that Italy, France and Spain have signed IPPAs thereby giving their business communities an advantage over ours? The Minister must surely be concerned by this.
Baroness Chalker of Wallasey: My Lords, we are indeed anxious to sign an investment agreement with
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the Government of Cuba and with the Government of the Dominican Republic, and with a number of other countries too, but the very fact that some countries will settle for less investor protection than we believe is right for British business does not mean we should proceed in haste and regret it at leisure.
Lord Molloy: My Lords, bearing in mind that the UK is the second largest investor in the world and the fact that the Government have a good record on IPPAs, would it not be possible to increase that number and keep up that good record by paying attention to South-East Asia and, of course, the countries that were at one time under the heel of the Soviet Union?
Baroness Chalker of Wallasey: My Lords, we have indeed paid attention to every country that is prepared to have a satisfactory agreement on investor protection but what I would not wish us to do is to sign up for half-baked agreements which do not protect British business interests, because that way the investments would not give us the sort of returns that those under the IPPAs have done.
Baroness Blackstone: My Lords, while I agree with the Minister that undue haste in these matters would be undesirable, will she explain to the House why it is that our European neighbours have been able to conclude their negotiations for IPPAs in advance of us? Will she also say what interim support is being given to British businessmen in the light of the delay in the signing of an IPPA agreement with Cuba?
Baroness Chalker of Wallasey: My Lords, may I first of all correct the impression which seems to have arisen in your Lordships' House that there has been some delay? It was quite difficult to get Cuba to look at Investment Protection Promotion Agreements until fairly recently. Many negotiations in the past have been much more protracted than I sincerely hope these will be. In fact, Cuba and the Dominican Republic only expressed interest in an IPPA last year when we proposed a draft text to them. We are certainly determined to get the right sort of text and, as I hinted in my answer to the noble Lord, Lord Molloy, I would not want our businessmen only to be protected by the text that some other countries may have with Cuba or any other country.
Baroness Blackstone: My Lords, I am sorry to intervene once again but I wonder whether the Minister could answer the second part of my question on whether any interim support is being given to British businessmen.
Baroness Chalker of Wallasey: My Lords, I apologise to the noble Baroness and to your Lordships' House. The interim support is to give as much support as possible to British exporters and potential investors through the joint Foreign Office/DTI unit and also through our mission in Havana. That is the best sort of help we can give at present but I believe that our exports, which totalled £14 million last year, are a significant step forward despite the fact that until Cuba becomes a member of the IMF we cannot do anything

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about the debt burden that Cuba carries, and has carried for some considerable time. That, of course, would help as well.

Truancy and Delinquency: Projects in Schools
2.43 p.m.
Baroness Faithfull Baroness Faithfull asked Her Majesty's Government:
Whether, as a matter of urgency, projects are being set up in schools to deal with children excluded from school and with non-attenders.
The Minister of State, Department for Education (Baroness Blatch): My Lords, the department is already supporting locally-devised projects to a value of some £14 million in more than 80 local education authorities under the truancy and disaffected pupils programme of the Grants for Education Support and Training Scheme for 1994–95.
Baroness Faithfull: My Lords, I thank the Minister for that reply. I agree that £14 million has been provided to deal with truancy on the streets and that some projects have been successful. However, does my noble friend the Minister agree that there is a need for units within schools such as the one introduced in Birmingham by Barnardos and the local authority to deal with such children? I am sure that she is aware that delinquency and truancy are closely allied.
Baroness Blatch: My Lords, I agree with my noble friend that there is a connection. The projects are many and varied. They may involve appointing additional education welfare officers to investigate non-attendance and to improve home-school liaison; support for action against bullying, which we all know can lead to truancy; the installation of electronic systems; and, in relation to the matter which concerns my noble friend, training for teachers in managing the behaviour of difficult children, the establishment of LEA behavioural support units and improved facilities for home tuition and off-site units for excluded and other pupils.
Lord Peston: My Lords, we all agree that if the child is not in school it cannot be taught, and what it learns on the streets is what we do not want it to learn. That is the point that the noble Baroness, Lady Faithfull, made. I do not get a sense of the scale of the problem from the Minister's Answer. Is this an area where voluntary bodies and LEAs can work very well together? I am not clear whether in this context £14 million is a great deal of money or a little money. My recollection of the Elton Report on truancy is that the scale of the problem is so large that that sum would not enable the relevant bodies to get to grips with it. Will the noble Baroness comment on that? Can she also say whether she has received representations from voluntary bodies on this matter?
Baroness Blatch: My Lords, I am sorry that the noble Lord does not believe that the problem is being tackled properly. First, there are many thousands of
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schools up and down the land where there is no problem. We are building up a body of evidence from inspection reports as to why some policies work in some schools but not in others. The £14 million is directed mainly at those areas where there is a problem and where the schools do not appear to have solutions. As I said, the solutions are many and varied. We shall be evaluating those solutions to see what works.
The noble Lord will remember that Part III of the Education Act 1993 was devoted to children with special needs, which includes many of the behavioural problems we are discussing. The key is early identification. Schools should develop policies and strategies to nip all these problems in the bud. Where there are problems which are beyond the scope of a school, it should seek the help of outside agencies.
Lord Peston: My Lords, the Minister misunderstood me. I did not suggest that enough was not being done. Nor, for a change, was I criticising the Government in this regard. I genuinely asked about the scale of the problem. As I understand it, the problem is still large. I do not suggest that it is easily solved. I simply seek enlightenment on where we go next.
Baroness Blatch: My Lords, we do not know the full extent of the problem. Help will be provided by the requirement on all schools to let the outside world know how many young people are out of school, with or without authorisation. We shall then have a full picture of the number of young people who are out of school. I agree with the noble Lord that children out of school are not being educated, and if they are not being educated they are in a spiral of deprivation. We want to do all that we can to ensure that young people are in school and benefiting from being in school.
Baroness Seear: My Lords, does the noble Baroness agree that one of the ways in which the problem has been dealt with in the past is through the provision of additional staff in classes who are allocated to children showing behavioural problems? Is that still being done? Is it true, as it is sometimes said, that those additional staff have been withdrawn? If the problem can be cured in the early stages in primary school, does the Minister agree that that is the best way of dealing with it and nipping it in the bud?
Baroness Blatch: My Lords, it is difficult to answer the question specifically because staffing policy is now a matter for schools themselves. Some schools manage to staff very well and have policies to which all the staff are signed up and strategies which are applied at the earliest signs of disruption or poor behaviour on the part of children. However, sometimes the situation is so difficult that extra staff are brought in to help. Sometimes the local authority will collaborate with the school if the problem is very serious. Turning to my noble friend's concern, if the problem is beyond the scope of the school to cope with then outside agencies are the answer.
Lord Morris: My Lords, is my noble friend entirely happy with her use of the phrase "disaffected pupils" in

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that it suggests that the cause of the problem does not lie with pupils or their parents but with the school and the authorities concerned?
Baroness Blatch: My Lords, I wish it were as simple as that. In some cases a school may be poorly run. It may tolerate a level of behaviour which is unacceptable and to which the children respond. Children respond to a framework of discipline and knowing what is expected of them in school. It is increasingly obvious that where a school has a good framework of discipline, well understood by staff and children, the likelihood of unmanageable behaviour is much less than in a school where such rules do not apply.
Lord Monkswell: My Lords, how many local education authorities have put forward projects under the scheme and have not received funding? I believe that the scheme put forward by the Manchester LEA met all the criteria that the ministry required. Will the noble Baroness explain why that scheme did not receive funding?
Baroness Blatch: My Lords, I cannot be specific. I shall write to the noble Lord giving the exact answer to his question. My understanding is that almost all LEAs which applied with a bid addressing the problem received some funding from the department. I find it almost inconceivable that Manchester received nothing. However, I shall check and write to the noble Lord.
Baroness Faithfull: My Lords, I am sorry to press the Minister. The £14 million allocated to non-school attenders is very much a "street" scheme which will get the children back to school temporarily. However, when the Education Act is implemented, will there be resources to set up special units within schools?
Baroness Blatch: My Lords, I stated that part of the scheme involves taking children off the streets and bringing them back into schools. However, I also mentioned that the projects included both training and improved facilities for home tuition and off-site units. The £14 million is particularly directed at new ideas for tackling a problem which is long overdue for attention. As my noble friend knows, there are such units. Indeed, in my own local authority they work well.

War Crimes Act 1991
2.51 p.m.
Lord Stoddart of Swindon Lord Stoddart of Swindon asked Her Majesty's Government:
How many instances of alleged war crimes are now being investigated under the War Crimes Act 1991 and whether they expect that a case will be brought to trial in the foreseeable future.
The Minister of State, Home Office (Earl Ferrers): My Lords, the Metropolitan Police War Crimes Unit is currently investigating 28 cases against alleged war criminals. It is not possible to say if or when a case will be brought to trial.
Lord Stoddart of Swindon: My Lords, the noble Earl will be aware that it is now three years since the War Crimes Act was given Royal Assent without first having obtained the consent of the House of Lords. It is five years since the Chalmers Hetherington inquiry reported. Surely by now we would have expected to see some results, and some cases brought before the courts. Will the noble Earl say how much public money has been expended so far, and how much more will be spent on those inquiries?
Earl Ferrers: My Lords, the noble Lord is quite right when he states that the Bill became an Act three years ago. However, he is not quite right when he states that nothing has happened: 369 cases have been investigated; 229 have been rejected; 112 of the people who were being investigated have since died; and 28 people are being investigated at present of whom 10 are being considered for prosecution by the Director of Public Prosecutions. The noble Lord asks when we can expect any results. I believe that he will agree that that is quite a considerable result. He asks when we can expect a trial. As he would expect, I cannot answer that question. He asks how much money has been expended. Up to the year ending 31st March 1994 the sum of £5,201,600 has been expended; and allowance has been made during the current year for the possible expenditure of £8,600,000. That will bring the total to £13,801,600.
Lord Campbell of Alloway: My Lords, have all papers relevant to the decision to be taken by the Attorney-General under Schedule 1(5) to the Act been sent to the Attorney-General to enable him to take the decision as to whether any of those people are to be charged?
As the Act does not extend to Scotland, is it the intention to arrest those domiciled and ordinarily resident in Scotland and to bring them to trial in England?
Earl Ferrers: My Lords, the Director of Public Prosecutions is considering 10 cases. If she considers it appropriate to prosecute she will seek the authority of the Attorney-General whose responsibility it is to bring the prosecution on the advice of the Director of Public Prosecutions. For obvious reasons I cannot tell my noble friend when or if that will happen.
Perhaps I may answer the last point with regard to Scotland. The Scottish investigations have been completed.
Lord Irvine of Lairg: My Lords, while supporting the Act in principle, how many cases under investigation—I should have thought most—will turn on disputed issues of identity? In those circumstances, what is the prospect of a fair trial into these horrific crimes committed 50 or more years ago?
Earl Ferrers: My Lords, with respect to the noble Lord, those are hypothetical questions. I cannot tell him how many cases will depend on identity. I cannot tell the noble Lord how many would succeed in that regard.
Lord Boyd-Carpenter: My Lords, for how long is it intended to continue to spend public money at the very

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high rate that my noble friend has just announced on cases which never come to trial? Would it not be sensible to admit that the whole issue is a mistake and had better be dropped?
Earl Ferrers: My Lords, the only reason why the investigation has been undertaken is that that was the wish of Parliament by the passing of the War Crimes Act 1991. I can understand my noble friend's desire to spend the money in other directions. That may be the view of many people. However, the view of Parliament was that the investigation should be undertaken. Expenditure has been allowed up to and including the current year. However, no further provision has been made for further expenditure after the end of the current year.
The Earl of Lauderdale: My Lords, does my noble friend agree that it is a classic example of the folly of the House of Commons ignoring the view of the House of Lords?
Earl Ferrers: My Lords, that is a highly provocative remark which my noble friend would not expect me to answer. Parliament has the right to make the laws. Both Houses of Parliament have the right to participate in the making of the laws, and there was a provision under the Parliament Act which brought the measure into effect.
Lord Mayhew: My Lords, does the noble Earl recall that when the Bill was before Parliament, its supporters, including Ministers, urged us to note the experience of Canada, Australia and Israel which had taken roughly the same line as the provisions laid down in the Bill? Is he aware that subsequent experience in those countries has confirmed the worst expectations of the opponents of the Bill?
Earl Ferrers: My Lords, the noble Lord is right in this respect. Australia has investigated all the complaints that it has received. Two people have been acquitted, and one case has been stopped because of the defendant's health. Investigations are continuing in Canada. It is doubtful whether one can compare the legalities and so forth of different countries because different countries have different laws. We can only concern ourselves with our country and our country's laws.
Lady Saltoun of Abernethy: My Lords, I listened carefully to the noble Earl, but I did not hear him answer the second part of the question of the noble Lord, Lord Campbell of Alloway, as to what would be done with suspects resident in Scotland and whether they would be brought to England for trial. Can the Minister repeat the answer?
Earl Ferrers: My Lords, If I may say so, that is a hypothetical question. First, we need to find out whether anyone in Scotland has to be brought to England for judgment. I cannot say whether that is likely to happen. All I can tell the noble Lady is that the investigations of people in Scotland have been completed.
Lord Stoddart of Swindon: My Lords, the noble Earl stated that the not inconsiderable sum of just over £8 million has been set aside for the current financial year in connection with war crimes investigations. Does that sum include the cost of possible prosecutions?
Earl Ferrers: Yes, my Lords, it does. The figures set aside for the current year are £500,000 allowable for police investigations, £1 million allowable for the Crown Prosecution Service and £7,100,000 for, dare I say it, my noble and learned friend the Lord Chancellor's Department. That sum would cover such matters as legal aid, court costs etc. Of course, if no one is prosecuted, there will be no legal aid.

Overseas Aid: GNP Proportion
3 p.m.
Lord Ashley of Stoke Lord Ashley of Stoke asked Her Majesty's Government:
What is the present proportion of gross national product allocated to overseas aid, and what was it when the Government took office in 1979.
Baroness Chalker of Wallasey: My Lords, UK net official development assistance was 0.51 per cent. of GNP in 1979 and 0.31 per cent of GNP in 1993.
Lord Ashley of Stoke: My Lords, is the noble Baroness aware that she is deservedly praised for her work? However, those figures indicate that the Government have consistently moved away from the target of 0.7 per cent. At a time when the Government claim that our economic recovery is stronger than that of other countries, no fewer than 12 out of 21 OECD countries devote a higher proportion of their GNP to overseas aid. What can we do to persuade the Government to give a higher priority to overseas aid and to start moving towards the target of 0.7 per cent. rather than away from it?
Baroness Chalker of Wallasey: My Lords, I am well aware of the noble Lord's anxiety in the matter. However, according to the latest OECD statistics published last week, the UK oda/GNP ratio at 0.31 per cent. was above the average of all donors of 0.29 per cent. in 1993. We are concerned at the decline in aid flows from the OECD as a whole, but our aid has always focused on where it can do the most good. One of the important aspects of our aid is the continued high level of private finance flows to developing countries. We are the major provider of private finance, more than £1.7 billion in 1992, which is more than half the whole European Union total. Only Japan and the US do better. So aid is not the whole story; debt relief, a successful outcome of the Uruguay Round and private investment are part of the whole. Of course, those other issues are not included in the OECD figures.
Lord Cledwyn of Penrhos: My Lords, can the noble Baroness say what is the estimated value at this time of the peace dividend? Can she say how much of that is being used on overseas aid?
Baroness Chalker of Wallasey: My Lords, the noble Lord, Lord Cledwyn, will know that we have all wrestled for that figure. I do not believe that anyone has an adequate answer. I believe that we will only really benefit from the peace dividend if we see stability in those countries which previously spent so much money on armaments and which we are helping both through the well-respected know-how fund of Britain and in other ways, through the EBRD and EC funds of PHARE and TACIS. But it will be a long while before we know the real dividend.
Baroness Hooper: My Lords, will my noble friend confirm whether the figures which she quoted in her original Answer include the aid distributed via the European Community or the European Union?
Baroness Chalker of Wallasey: Yes, my Lords.
Lord Stoddart of Swindon: My Lords, will the noble Baroness confirm that in 1995–96 Britain's contribution to the EC will be £3,500 million? That is approximately 0.65 per cent. of gross domestic product. Is it fair, right or moral that we should contribute nearly twice as much to already rich countries as we contribute to very poor ones?
Baroness Chalker of Wallasey: My Lords, I understand the noble Lord's anxiety. My concern with the Question is for the aid programme. I am also anxious that the 25 per cent. of the UK aid budget which goes to the European Community should be well spent. I cannot forecast for 1995–96, but Britain can hold its head high in terms of the quality and targeting of its aid. I hope that in the years to come there will be more sense about the wider EC spending on which the noble Lord rather cleverly sought to persuade me to respond in his question.
Lord Dean of Beswick: My Lords, in view of the repeated horrific scenes—one of which was shown on television—of the massacres in some third world countries which part of the aid reaches, can the Minister tell us what steps are being taken to ensure that money from the aid programme does not reach people or forces indulging in genocide against minorities?
Baroness Chalker of Wallasey: My Lords, the United Kingdom has been extremely careful with the £11 million that it has given in assistance for the refugees from the fighting in Rwanda. It has also been careful with the £170 million that we have given to those suffering in Bosnia. We often work directly with local groups, helped by our own non-governmental organisations, ensuring that the assistance goes, so far as is humanly possible, to those in need. We all know of bad examples where troops have stolen food or medicines; but, on the whole, I can be fairly confident in saying that well over 90 per cent. of what Britain intended for the victims has reached them.
Lord Ashley of Stoke: My Lords, is the noble Baroness aware that I agree with her that the quality and targeting of the aid is good? That is in part due to her own efforts and she should be congratulated. However, the central point of the Question is that the proportion of

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GNP is decreasing. That is what is important. It does not matter about the methods being used; the important point is the proportion of GNP. We must persuade the Government to change that, causing the proportion to go up rather than down.
Baroness Chalker of Wallasey: My Lords, I know of the noble Lord's anxiety about the proportion; but over the past five years the figures have varied from 0.27 per cent. to 0.32 per cent., averaging out at more than 0.30 per cent. Britain has made steady progress. The second point to remember is that as Britain's GNP has increased, the amount we spend on aid, which has been growing slowly but nevertheless growing, decreases as a proportion of GNP. It is important that we have good quality because that quality can produce more than it used to, as it certainly does in the case of Britain's aid programme.

Business
3.7 p.m.
Viscount Ullswater: My Lords, at a convenient moment after 3.30 p.m., my noble friend the Leader of the House will, with the leave of the House, repeat a Statement that is to be made in another place on the European Council in Corfu.
Lord Simon of Glaisdale: My Lords, your Lordships will certainly wish to hear that Statement. However, in view of the Government's proposals on the distance we have to go on the Deregulation and Contracting Out Bill I would point out that there will be no convenient moment after 3.30 p.m.

London Underground (Green Park) Bill
Read a third time, and passed, and returned to the Commons with amendments.

Criminal Justice and Public Order Bill
Earl Ferrers: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the amendments for the Report stage of the Criminal Justice and Public Order Bill be marshalled and considered in the following order—

Clauses 1 to 12,

Schedules 1 and 2,

Clauses 13 to 26,

Schedule 3,

Clauses 27 to 40,

Schedule 4,

Clause 41,

Schedule 5,

Clauses 42 to 109,

Schedule 6,

Clauses 110 to 117,

Schedule 7,

Clauses 118 to 147,

Schedule 8,

Clauses 148 to 155,

Schedules 9, 10 and 11,

Clauses 156 to 159.—(Earl Ferrers.)

On Question, Motion agreed to.

Deregulation and Contracting Out Bill
3.8 p.m.
The Minister of State, Department of Trade and Industry (Lord Strathdyde): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Strathclyde.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Lord Vinson Lord Vinson moved Amendment No. 61:
Before Clause 5, insert the following new clause:
Review of unreasonable official decisions
(".—(1) Subject to subsections (2) and (3) below, this section applies to orders or decisions made under such statutory provisions as the Secretary of State may by order prescribe.
(2) This section does not apply to any order or decision of a court or tribunal constituted under any statutory provision.
(3) Notwithstanding subsection (1) above, no statutory provision shall be prescribed by the Secretary of State if a greater burden could arise on any person as a result of it being so prescribed.
(4) Where a person carrying on any trade or business is aggrieved by any order or decision to which this section applies on the grounds that the effect of such order or decision is either—

(a) to prevent him from lawfully carrying on the trade or business; or

(b) to interfere materially and detrimentally with the conduct of the trade or business,

he may apply to a magistrates' court for a declaration in the terms of subsection (5) (a) below.

(5) A magistrates' court considering an application under subsection (4) above shall—

(a) if it is satisfied that the order or decision to which this section applies imposes a greater burden than is reasonably necessary to achieve the objects of the statutory provision under which it is made, grant a declaration to that effect, and

(b) if it is not so satisfied, refuse to grant such a declaration, and may award costs either to the applicant or to the respondent.

(6) In reaching a decision on whether to grant a declaration under subsection (5) (a) above, the court shall have regard to—

(a) the scale and imminence of any risk to life, health or property,

(b) the impact of any action required by the order on the viability of the trade or business,

(c) the length of time for which the situation addressed by the order or decision has persisted, and

(d) the extent to which action other than that prescribed by the order or decision and having less detrimental effect on the trade or business might reasonably have been taken.

(7) The effect of a grant of a declaration under subsection (5) (a) above shall be—

(a) if the order or decision has come into effect, to suspend that order or decision, but without prejudice to anything done before it was suspended, and

(b) if the order or decision has not come into effect, that it shall not come into effect other than in accordance with subsection (8) below.

(8) Subject to subsection (9) below, a declaration under subsection (5) (a) above shall cease to have effect—

(a) at the end of the period of 14 days beginning with the date on which it is granted, or

(b) on the expiry of any period prescribed either in the statutory provision under which the order or decision was made, or in any other statutory provision, for an appeal against the order or decision,
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whichever is the later, and the relevant order or decision shall, unless it has been revoked or withdrawn, thereupon cease to be suspended, or come into effect, as the case may be.

(9) Where, within the period prescribed in subsection (8) above—

(a) notice has been given of an appeal, or

(b) an application for judicial review of the relevant order or decision has been made,

the relevant order or decision shall not cease to be suspended, or shall not come into effect, until the appeal or application for judicial review has been finally determined, and it shall then cease to be suspended, or come into force, only to the extent that is consistent with the determination of the appeal or the judgment of the court.

(10) An application under subsection (4) above may be made by—

(a) the person to whom the order or decision is addressed, or

(b) any person duly authorised by him,

and shall be made within the period of five days beginning with the date on which the person to whom the order or decision is addressed was notified of it (or was deemed by statutory provision to be notified of it).

(11) An application under subsection (4) above shall be accompanied by a fee of £200, which shall be refunded if the application is successful.
(12) A person making an application under subsection (4) above shall serve a copy, or cause a copy to be served, on the person who made the relevant order or decision, or on any officer of his, on the same day as the application is made.
(13) A magistrates' court shall consider an application for a declaration under subsection (1) above within the period of seven days beginning with the date on which it is made.
(14) Subject to subsections (12) and (13), the Secretary of State may, by regulations prescribe—

(a) the form of application for a declaration under this section, and

(b) the procedure to be followed by the magistrates' court on such applications.

(15) An order made under subsection (1) above, or regulations made under subsection (14), above shall be made by statutory instrument.
(16) In this section "statutory provision" means any provision in any Act of Parliament or any statutory instrument.").
The noble Lord said: With the leave of the Committee, in moving Amendment No. 61 I should also like to speak to Amendment No. 62. The deregulation Bill will, I am sure we all agree, remove much unwanted legislation from the statute book. But the fact remains that most regulation will stay in place—and quite properly too. The concern is that it should be fairly and genuinely administered.
At Second Reading I raised the problem that is caused by the misapplication of regulations and the real injustices that occur when over-zealous regulators disproportionately or unreasonably interpret the law at the point of implementation. Many noble Lords will know of this from their own direct experience and others will not have failed to come across the remarkable stories of the numerous near-lunatic regulatory conditions that are forced on the owners of small businesses.
The law rightly cannot possibly attempt to define every regulatory condition. Thus substantial discretion is very properly left to the regulatory officer who is concerned. It is consequently at that point that on occasions the law is interpreted by over-zealous officials in a manner that no legislator in his wildest dreams would have anticipated when framing the original statute.
A number of us believe that there is widespread public anxiety over the inadequacy of appeal procedures

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against such enforcement. While there are some appeal procedures, they are often cumbersome, slow and extremely expensive. Consequently, in practice they are hardly ever used and bad regulation goes unchallenged. It is unrealistic to expect small businesses and the proprietors thereof to go to the expense of a judicial inquiry costing many thousands of pounds quite apart from the inordinate delay. Some intermediate steps are surely needed.
Frankly, the checks and balances that the law normally has in place to see sensible conduct between two parties—as in this case between the regulator and the regulatee—do not exist. So the object of this new clause is to introduce a simple appeal procedure to give time for common sense to reassert itself.
The thinking behind this clause originated in this Chamber and was taken up in Committee in another place, where similar amendments were introduced. The Minister for deregulation welcomed the principle but wished to see whether he could find a different remedy. The new clause gives a right to any regulatee to apply to a magistrates' court for an immediate stay of a regulatory order if prima facie it appears to be unreasonable or disproportionate and there is no immediate threat to life and limb.
Perhaps I may illustrate this intention by one example. There is a well-known block of flats in London with an underground garage. The residents have quietly used that garage for the past 30 years with the full approval of the fire officer. Recently, a new fire officer has come along —who had, no doubt, just got out of bed the wrong side—and said that he will not reissue the fire licence unless immediate steps are taken to narrow the entrance to the garage to prevent double parking. The managers of the block of flats had to comply immediately with his demand, otherwise the garage would have been closed by the following Monday, which was the date of expiry of the previous approval certificate. After 30 years of use one could well ask what was the problem. Had the appeal procedures that we now advocate been in place, the proprietor could have gone at once to the local court and would, I believe, and should, have obtained a stay of that order.
More importantly, had he been able to turn to the regulatory officer and say, "Frankly, I think you're being unreasonable. I intend to take this to appeal", the chances are that the fire officer would have had second thoughts, would have realised that his conduct was indeed unreasonable and that a sensible compromise or retraction would be to everybody's advantage. Not least, much time and cost, which are eventually paid for by all of us in society, would have been saved.
We have examined alternative appeal procedures and can find none to date that offers the familiarity and speedy remedy of the magistrates' courts. They are already there, and the public and local solicitors know of them. Magistrates' courts are of course well versed in regulatory procedures. Indeed, they are already the mechanism through which enforcement orders are made. Through them justice is administered by good citizens who understand the meaning of common sense and of common sense interpretation of the law.
However, if the Government can come up with an alternative such as, for example, a regulatory ombudsman, I am sure that we would be the first to welcome it. But by using the magistrates' courts, no new appeal framework would have to be set up, though inevitably some extra workload would occur.
It is our belief that the very presence of sensible appeal procedures would broadly achieve the. better interpretation of the law that I am sure we would all wish to see. The law works best when it is not used. However, to make certain that there is no frivolous use of the courts for every minor disagreement, we suggest that the applications are accompanied by a fee of £200 which would be refundable only in the event of the court finding in favour of the applicant.
The procedures that we advocate give time for second thoughts and offer a stay of execution. We believe that they dovetail nicely in most cases into the wider pattern of appeal procedures which remain to be used after 14 days if neither party retracts. That is the background to our thinking.
Amendment No. 62 follows the same line of thinking. It puts an obligation on the regulator to advise the regulatee at the point at which any order is made of his rights under any appeal procedures. Here again, the very action of what one might call cautioning the regulatee would make the official concerned think twice before proceeding with an enforcement order which he might know in his heart of hearts was unreasonable and disproportionate.
Finally, I would like to stress that the object of these amendments is not to undermine regulation in any way but to make the interpretation of regulations by officials on the spot fairer, thus making the law better. On my own behalf and on behalf of my noble friends I commend this clause to the Committee. I beg to move.
3.15 p.m.
Lord Reay: I should like to add my voice as well as my name to these amendments, at which my noble friend Lord Vinson has worked long and hard, which he has moved very ably and which address an issue that is of paramount importance to small businesses; namely, the right to appeal against wayward or unreasonable decisions by officials. I hope that my noble friend the Minister will be able either to accept these amendments or to promise to produce his own independent appeals procedure for the next stage of the Bill.
The Government have been moving very much in the direction of Amendment No. 61. I was encouraged by what my noble friend Lord Mackay of Ardbrecknish had to say when he wound up at Second Reading, when he was able to inform the House that the deregulation unit had been asked to consider the issue as a matter of urgency. When the Under-Secretary of State for Corporate Affairs wound up the debate on the version of this amendment that was considered by another place, one of the things that he said was that the Government wished to ensure that there was a well-publicised, swift and effective complaints procedure which was easily accessible to business, and one, he added, which would not create a new bureaucracy. As my noble friend Lord

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Vinson has pointed out, this amendment would not create a new bureaucracy. It would use the existing system of magistrates' courts.
It may be that that would not be the best solution for all cases. Perhaps there needs to be a differentiation between the different areas of enforcement. If that is the Government's view—and my noble friend Lord Mackay of Ardbrecknish seemed to hint at that when he wound up at Second Reading—then I look forward to hearing their arguments. We have time to explore the matter thoroughly and to come up with the best solution before the Bill leaves this House in October. I would certainly not want to be a party to any new legislation that we adopted in haste and about which we could then repent at leisure—that is the besetting sin that is largely responsible for the need to bring forward much of this Bill in the first place.
This issue is important. Christopher Booker, whose dogged exposure of the oppression of businesses by regulation will be well known to many Members of the Committee, writing in the Daily Telegraph on 1lth May concluded his article by saying that an amendment such as this,
"has become the real acid test of whether the Government's Deregulation Bill is to have any serious purpose at all, or is just an empty charade which shows that ministers are still completely under their officials' spell".
That may be going a little far in the view of some Members of the Committee. But it brings out the great need to add to the Bill an effective appeals procedure against unreasonable decisions by officials which is also affordable by small businesses. The harm done by regulations is not due just to their existence but to the manner of their enforcement. These amendments seek to provide a practical remedy.
Lord Moyne: My noble friend Lord Reay mentioned Christopher Booker. It would be relevant to read into the record of this Chamber the whole book which he wrote with Richard North, rightly called The Mad Officials. I shall not of course do so.
My noble friend Lord Vinson spoke of widespread public anxiety—a characteristically moderate phrase but a serious understatement. Outside these walls there is a gale of genuine and justified anger among some of the most economically valuable members of our society. I shall illustrate the problem by a true story which has a comparatively happy ending. The main point is to show how some of the officials themselves are deeply unhappy about the situation. My noble friend Lord Vinson may be interested to know that in this case the fire officer comes out well.
A business man whom I know wanted to open a new shop in a south coast town. He took two-storey premises which had the requisite planning permission, intending to use both floors. He applied for building regulation permission to put lavatories on the first floor. Apparently, that brought the whole building under the 1993 building control regulations which would not otherwise have applied since trading had been carried on in those premises for about 100 years.
When the building control officer visited the premises with the fire officer, he told my friend that he

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could not open the shop because the first floor on which the lavatories were to be put was at its furthest point slightly more than 18 metres from the exit on to the street. My friend is a lateral thinker and he put many alternative suggestions. Each time he was told that the suggestions did not comply. When he asked the building inspector outright for his suggestions, he was told, "My job is to tell you what you cannot do, not what you can do." In the end my friend came up with a solution of sorts, which was accepted; namely, that the lavatories should be on the first floor at the top of the stairs and the rest of the first floor should remain unused. That was not before further difficulty had been raised, to the effect that the door at the bottom of the stairs was a few inches more from the exit than the regulation allowed.
At this point the fire officer intervened and successfully pleaded for a minimal amount of flexibility. Later, off the record—this is the reason why I must not give any clues to identify the case but ask the Committee simply to believe me—the fire officer apologised for the building control officer's attitude and said, "Please try to put some pressure on these people to listen to us". That is what my noble friends and I are trying to do with this amendment.
As it stands, the Bill needs teeth. Our purpose is to supply them.
Lord Laing of Dunphail: I wholly support my noble friend Lord Vinson. There is a great deal of merit in these amendments. Unnecessary burdens on industry through erroneous interpretations of regulations go unchallenged because it is impossible to challenge them quickly. Also, many small and medium-sized busines-ses do not have the staff or the resources to pursue them and suffer accordingly.
Lord Peyton of Yeovil: I too would like to support very strongly the amendment moved with such commendable moderation by my noble friend and I hope that my noble friend on the Front Bench took note of it. In my view he could have expressed his admirable intentions with a little more roughness.
There is just one point that I should like to make. It is very easy for everybody to blame anonymous officials for the terrible things which take place in the process of rounding up, improving and clarifying regulations. One is tempted to ask why those regulations were not made clear in the first place. The process of adding to them is intolerable. I cannot believe that it is always officials who are to blame. I do not like to ask such an obvious question as, "What is a Minister for?", because one might get all sorts of answers. I hope very much that my noble friend will give this matter his serious attention.
Perhaps I may give just one example of the kind of thing that worries me about small businesses. Only two or three days ago I was talking to someone about a firm which had sought the help of the department. The firm is small; it is innovative; and it is a high technology business. Its achievements have received a certain amount of public notice. It is of distinction. When the firm approached the department seeking help it was told, "We are very sorry but what you want us to do is not within our guidelines". When asked, "What are your guidelines?", the answer was, "We are not at liberty to

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tell you that". That is what I would regard as a classically unhelpful piece of dialogue. It leaves small businesses in a state of profound discouragement.
At the time, I said that I intended to put this case to my noble friend and ask him to give it his personal attention. I knew that he was a very unusual kind of Minister and listened to what was said to him. I was confident that in due course he would take effective action. I shall shortly seek the loan of my noble friend's attention so that I can tell him the details of this case.
There is no doubt that the Government are full of good intentions. But, as so often in our experience, the good intentions are hedged round with regulations and difficulties of every kind. Somehow those good intentions are inhibited from coming to fruition. I hope that my noble friend will take a fairly brutal stick to this process and that on this occasion he will show his good intentions by accepting my noble friend's amendments. I am not at all sure that I would welcome some alternative. I feel that it would necessarily be something rather more comfortable than accepting adjudication by an independent body such as Her Majesty's courts.
My noble friend is one of the most reasonable men that I know, as well as one of the most intelligent—I am talking about my noble friend Lord Vinson. I am not at all sure that he was not just a shade too reasonable on this occasion in suggesting that he might accept an alternative. I believe that my noble friend on the Front Bench will find it very hard to better the ideas that he has put forward so cogently and with such eloquence.
Lord Cockfield: I am sorry to dissent from this chorus of approval for these amendments. I do not know whether it is an orchestrated chorus or an entirely spontaneous one. It was so well performed that a lack of prior practice seems to me to be improbable.
This is one of those areas in which a balance has to be kept between the needs of industry and the needs of the public at large. I entirely agree that many decisions are taken by official bodies which are not good decisions from the point of view of industry. Equally, those bodies take many decisions which are favourable to industry and pay insufficient regard to the wider public interest. That is particularly true in the case of planning decisions, which was the specific instance raised by my noble friend Lord Vinson. Sometimes planning decisions that are made in favour of a small business operate very much to the detriment of other people.
If business is to be given a right of appeal to the magistrates' courts I do not see why aggrieved citizens should not also be given a right of appeal against all decisions which they do not like. That was the point I tried to raise at Second Reading; that is, that the duty of the Government is not simply mindlessly to repeal every regulation to which somebody draws their attention. Their function is to hold a proper balance between the interests of industry and the interests of the public at large.
3.30 p.m.
The Earl of Onslow: The difficulty in which we find ourselves is that on occasions like this industry A says that something must be done or must not be done. It has

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a direct and personal interest in what happens. There is then a general feeling of, "Oh no, we don't like it", from people who have no genuine and personal interest in what happens. However, they may be founder and active members of special interest groups. It is those special interest groups which impose upon us regulation after regulation without any real balance of cost and analysis.
Of course, it is an extremely difficult balance to achieve. I understand that. And of course I understand that it may be more profitable for somebody to build a factory in my back yard which will affect me, but I do not like it. I do not want it and my interest is not exactly economic. I understand that difficulties exist, but sometimes we take too much notice of the NIMBY factor. We react to it because it is a powerfully expressed single interest lobby and we regulate for that.
We then encounter a further difficulty in that our civil servants are, above all, honest, efficient and enthusias-tic. When those three factors are combined we are: likely in the end to get "Horlicks"; but not the same "Horlicks" we get from Italian officials (I shall probably be called to order at any moment for being rude about them) or dishonest foreign civil servants who pay no attention to the regulations. Fortunately, our civil servants are extremely conscientious and the fault lies in their conscientiousness allied to single interest propositions. Somehow we must find a balance and a way through this problem.
Lord Moyne: One can be honest, enthusiastic and efficient and also be petty-minded.
Lord Northbourne: Having put my name to the amendment I must take up the time of the Chamber for one moment to try to convince Members of the Committee, in particular the noble and learned Lord, Lord Hailsham, that it is an important amendment. I suggest to the noble Lord, Lord Cockfield, and the noble Earl, Lord Onslow, that, interesting though their discussion was, it was not actually about the subject of the amendment.
The amendment concerns petty regulations applied by individual inspectors who may, perhaps because they got out of bed on the wrong side or hold a specific: view on a specific subject, unfairly impose a regulation on a business which destroys it. In those circumstances, it is important that the owner of the business can obtain some kind of relief as quickly as possible. That is what the amendment is about.
I greatly support the Government in their policy of deregulation. However, the amendment forms a modest second leg to their Bill. The first leg concerns wiping out a whole lot of unnecessary regulations, and that must be a good thing. In my view, the second leg must be to ensure that the people who implement the regulations which remain do so in a sensible and responsible way with a sense of proportionality. Most officials are sensible, responsible and have a. sense of proportionality. But a tiny proportion —naturally, as with any other human activity—make mistakes or are not so responsible. The stories circulate of those cases and I suggest that that is not only unfair to the businesses concerned, but also extremely damaging to the Government's policy—a policy we all want—of

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small businesses developing. Small businesses become frightened that they will be stamped upon and wiped out by a mistake.
If the Government want to be popular—I assume that that is what politics is all about—then I recommend that they take the amendment away and bring back an amendment which will have something like the same effect. It must be wrong that one official can wipe out or severely damage a business which has been built up over decades by a family or an individual. I therefore strongly support the amendment.
Lord Tordoff: One has great sympathy with what lies behind the amendment and discussions in Committee in another place made quite clear that that sympathy extended across the whole of the political spectrum. Certainly I want to place my name on record in your Lordships' Chamber as saying that this sort of petty dictatorship must be stopped and small businesses should not be subjected to the sort of foolishness suggested.
However, the suggestion that every small business somehow has a halo round its head is not always right. The regulations exist to catch the cowboys for the benefit of properly-run small businesses which are dealing properly with health, safety, planning and so forth. I am sure that there will be general agreement on that and I see Members from all sides nodding.
My criticism of the amendment is the mechanism by which it is supposed to work. I have looked at it several times and do not understand how it can work. I do not understand how the magistrates' courts can be the proper place to deal with this type of problem. For a number of years I was a magistrate in the great city of Manchester. A varied bunch of people met from time to time on the Bench and a whole range of disciplines were involved. But if on any specific day somebody from the industry in which both the noble Lord, Lord Vinson, and I were engaged—the chemical and associated industries —came before one or two of the Benches in that city I could not guarantee that the subsequent hearing would mean anything at all to the people sitting on the Bench.
That is my problem. I hope that the Government will find some mechanism, whether an ombudsman or some other arrangement, that is capable of dealing with the difficulties because they need to be dealt with. Frankly, I do not believe that the magistrates' court is the right place.
Lord Peston: I echo the remarks of the noble Lord, Lord Tordoff. I am extremely sympathetic to both the thinking and the feeling that lie behind Amendments Nos. 61 and 62. The point was extremely well put by the noble Lord, Lord Northbourne. Clearly we do not want a rogue's charter, which is what the noble Lord, Lord Tordoff, had in mind. In my view, if a business cannot survive unless it breaks the law on health, hygiene or safety, good riddance to it. That is not something to which we could be a party.
I do not believe that that is the intention of the amendment. As I interpret its intention, it is about how some officials put the regulations into practice. I agree with the noble Lord, Lord Northbourne, that only a tiny

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minority of businessmen may be aggrieved. But, if one is at the receiving end, to be told that one is in the minority is not much consolation. For example, the trading standards officers do a good job in difficult circumstances. But that does not mean that sometimes things do not go wrong. The problem is that a small businessman may interpret a specific regulation one way and the officials another. One tries to argue the case but the official's response may be aggressive, officious and unreasonable and he simply says, "Do it or legal proceedings will follow". One may still believe that one is right but is frightened by the thought of legal proceedings, cannot afford them anyway and gives in. The important point for the Committee to bear in mind is that in that case the businessman will feel aggrieved for many years and that is not a satisfactory state of affairs. Those are the reasons why, on the one hand, I am very sympathetic and, on the other hand, we do not want a rogue's charter. Then I come to the difficult bit: I simply do not believe that the amendment can work. For example, it does not have a clause which restricts it to small businesses, unless I have misread it; it applies to all businesses. So the case is less powerful, in a way, than it should be.
Secondly, the clause seems not to distinguish—and again the noble Lord, Lord Vinson, will perhaps take a moment to clarify this—between the merits of the regulation per se and the way that it is put into practice. I do not wish to use an amendment of this kind to undermine the regulations per se. I am concerned that if you feel that you are meeting the regulations in a perfectly sensible and effective way but it is not the way the official likes, you should have a chance to argue your case elsewhere.
I come to my final point, which the noble Lord, Lord Tordoff, has already raised. My first inclination—and I mentioned this to the noble Lord, Lord Vinson, after your Lordships' Second Reading—is that a magistrates' court does not seem to me to be the natural home for what I have in mind. If we could find the regulatory equivalent of the small claims court, which is a court that I am very keen on, I would be very much happier; or, alternatively, a regulatory ombudsman—and on looking round your Lordships' Committee I can see that it is full of excellent candidates for the job.
To summarise, I am sympathetic—and I hope that nothing that I have said will suggest that I am not. The fact that there is a minority of cases does not mean that we ought not to concern ourselves. Although I appreciate that this may be technically very difficult, I hope that the noble Lord, Lord Strathclyde, will say to the noble Lord, Lord Vinson, and his friends, "Come and see us in the department and one way or the other we shall see whether we cannot find an amendment that does the actual job you have got in mind; one which we can all support". Let me add that it is not obvious to me how to write that amendment. I am not suggesting that it is easily done. But I would certainly be unhappy if the noble Lord simply turned this down. I think there is an important consideration here which, if we can solve it, would be worth solving.
Lord Hailsham of Saint Marylebone: I hope that I am wrong in everything that I am going to say but I am going to say it. I am not going to embark upon the merits of the kind of grievances which my noble friends and others have put before the Committee; I am not qualified to do so. I simply raise two separate points about the magistracy. First of all, is it the function of the judiciary, high or low, simply to second-guess the officials who are part of the Executive? I think that is an important constitutional question which has not been addressed at all in the course of this debate. My answer is, no, it is not a judicial or justiciable question. That is my belief; it may turn out to be wrong. I hope my noble friend will either be able to answer that or will consult with our noble and learned friend the Lord Chancellor before he gives in to this particular magnet.
Secondly, of all the judicial bodies to deal with this particular grievance the last that I would choose is a magistrates' court. Magistrates' courts are already overworked to an almost unbelievable extent; they are composed of lay people who do not know anything necessarily about small businesses or what is reasonable to impose by way of a regulation inhibiting certain kinds of practices. They are courts that are designed to deal with petty criminal offences which are either proved or not proved after a judicial hearing with witnesses; they deal also with domestic disputes, and of course they have a licensing function about public houses, which are irrelevant for this purpose. The idea that you can suddenly offload onto the magistrates' courts system of this country this enormous, unmeasured and unmeasur-able burden—to try something which I do not believe even the highest judges can do except by way of a judicial review—seems to me, frankly, to initiate a nonsense. I hope that my noble friend will think very carefully before he gives into this.
3.45 p.m.
Lord Monson: I too support this pair of admirable and well thought out amendments which are designed to support commerce—including small-scale commerce —as well as industry, contrary to what the noble Lord, Lord Cockfield, seemed to suggest. I join the noble Lords, Lord Reay and Lord Moyne, in commending Mr. Christopher Booker for his tireless efforts in reminding us, week after week, of the abuses of petty officialdom.
The problems that these amendments seek to address are not trivial ones; on the contrary, they are very serious ones which cause financial misery, economic inefficiency and personal distress. It is time that we put a stop to them.
Lord Wade of Chorlton: One cannot but be delighted over the great support that there is for the need for an appeal procedure. I would like to draw the attention of my noble friend Lord Cobham to the fact that, although these laws are created to make a balance, the balance is now getting out of the picture. Clearly there are many more forces in society making it much more difficult for the right businesses and certain things to develop. We need to get that balance back. I hope that my noble friend will take on board the clear demand of the Committee for some kind of appeal procedure to be

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set up which can be fair to all sides and which would give an opportunity for small businesses in particular to become effective very rapidly. More importantly, we need to get a balanced view on regulations throughout the country. Fire regulations can vary from area to area and it is impossible to know from one minute to the next what the regulations are. An appeal procedure would have the impact surely of at least levelling out the procedures throughout the country and balancing certain regulations.
I hope that my noble friend will take the view of the noble Lord, Lord Peston, and that we can sit down together over the period before the Report stage and come to a sensible agreement—an agreement which will appeal also to the other place—in which clearly a. similar view is held. I very much support such a. proposal.
Lord Strathclyde: I am genuinely grateful to my noble friend Lord Vinson and other noble Lords for putting forward these amendments and giving us the opportunity to debate them. What is well known to the Committee is that I spend a great deal of time before your Lordships at this Dispatch Box; what is perhaps less well known is that I also spend a great deal of time travelling the country and visiting many businesses, particularly small firms. It is true that one of their overriding concerns is the interpretation, implementa-tion and enforcement of rules and regulations, which they do not feel are dealt with in a fair, reasonable, or proportional manner. That is what is at the heart of this debate.
It is one thing to look to remove or lessen unnecessary burdens, as Clause 1 of the Bill does; it is quite another to ensure that where regulation is justified it is enforced in a fair, open and reasonable manner. I would say to my noble friend Lord Cockfield that what is at the heart of the Bill is not a mindless repeal of legislation—which I think were the words that he used —but rather the surgical operation that has been done by my noble friend Lord Sainsbury of Preston Candover to make sure that the burdens that exist on business are genuinely necessary—and of course Parliament will eventually be able to make its mind up on that.
My noble friend Lord Peyton came in with a defence of officials and civil servants—and quite rightly. He asked the question, "What are Ministers for?" I am sure that he is much better able to answer that than I am. What is important in this debate is to make sure that we get to the right solution, which is why I am grateful to my noble and learned friend Lord Hailsham for his words.
At the heart of the new clause is the concern that any official decision that imposes a burden should be capable of being challenged and, if found to be unreasonable or arbitrary, overturned. Deregulation is as much about ensuring that right decisions are taken as about abolishing unnecessary ones. I therefore have every sympathy with the objectives behind the new clause—the ability, as my noble friend Lord Vinson says, for common sense to reassert itself. An ability to

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appeal in itself provides a powerful discipline on those making decisions; they can be called to account and made to justify actions they have taken.
It is, however, important for there to be proper procedures at each stage where enforcers and businesses are in contact and for complaints to be dealt with effectively before they even reach the stage of a formal appeal. This is the approach that the Government are already pursuing. We are encouraging regulators to balance the cost of compliance with the objectives to be achieved; we are working to improve contacts and to create a much better understanding on both sides—by businesses and by enforcers—of why regulation is justified and how best to comply with it. There are a growing number of local business partnerships to that end along with the promotion of a code of conduct and improved and simplified guidance for business.
The new clause seeks to provide a single appeals mechanism via the magistrates' court to overturn any unreasonably burdensome decision. Since this issue was first raised in another place we have been investigating carefully the option of a legislative solution and in particular the issues raised by the kind of single appeals mechanism envisaged by the new clause. I have to report that our work is not yet complete.
The area of appeals mechanisms and complaint procedures is complex. There already exists a wide range of appeals and complaint procedures. Appeals are dealt with in all manner of ways. Some already go to magistrates' courts; others to the High Court. There are also appeals to Secretaries of State, industrial tribunals, inspectors, commissioners and, of course, the ombud-sman. I accept that the multiplicity of appeals processes may in itself be a criticism, but there are many different statutes and many different types of decision ranging from straightforward assessment of facts to highly technical judgments about the possible consequences of industrial processes for health and the environment. Different approaches to the handling of appeals involving specialised fora may well be the most efficient means of providing effective redress rather than a single mechanism as envisaged by the clause.
In Amendment No. 62 my noble friend Lord Vinson has included a requirement that when an enforcement decision is taken the business affected must be made aware of the appeal mechanism available. From the work we have already done we know that this is a feature of some existing systems and one which is appreciated by business. I can assure my noble friend and others who spoke in favour of the amendment that we share the objective of providing efficient and effective appeal mechanisms along with proper complaint handling procedures. What I would like to suggest is that the Committee agrees to allow the Government to complete their analysis of this complex issue and, working with the deregulation task force, to come forward with proposals which address the concerns expressed in the best way possible.
I think that is the best way to go forward with some of the criticisms that have been made today and perhaps to deal with the argument raised by my noble friend Lord Cockfield that our role should be a proper balance

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between industry and the public interest at large. We still have a great deal of work to do. Fortunately, we also have a reasonable amount of time in which to do it. I hope that by the time we return to this issue at Report we will be able to have a much better informed debate.
Lord Vinson: I am extremely grateful to the many noble Lords who have spoken in favour of the principle behind the amendment. It was largely a probing amendment to try to get the debate given wider coverage and to try to find the best route. I am deeply heartened by the acceptance that there is a problem out there— except, that is, by the noble Lord, Lord Cockfield, who perhaps throughout his life has been what one might call the arch-regulator. I am sorry that there was no deathbed repentance in saying that the gentleman from Whitehall perhaps does not always know best. Leaving that aside, I am very reassured by the Minister's statement. I take the full value of his word that he will come back to the issue at Report. Certainly, many eyes will be watching him and many ears will be listening to see that he does.
Lord Peyton of Yeovil: I am most grateful to my noble friend for giving way. I hope that he will take this very valuable opportunity to press my noble friend on the Front Bench to give a firm undertaking to produce a proposal from the Government before the next stage of the Bill is reached.
Lord Cockfield: I do not know whether my noble friend Lord Vinson has finished or whether I am merely interrupting or speaking again, as I am entitled to do. I avoided replying to the noble Lord, Lord Northbourne, who also attacked me on the ground that I did not understand his amendment. The trouble is that I understand his amendment only too well. Equally, as far as concerns the noble Lord, Lord Vinson, I spent 15 years in industry and probably know just as much about it as he ever did. What I am saying is perfectly valid. The Government have a balance to make. We all know that regulations dealing with health, safety, the environment, consumer protection and so on affect not only businesses but members of the public as well. The Government need to remember, if only in a political context, that it is members of the public who at the end of the day vote for them.
Lord Hailsham of Saint Marylebone: Or against them.
Lord Cockfield: Or against them, as is the case at present. I accept my noble and learned friend's correction on that. I am saying no more than that a proper balance has to be kept. Of course there are instances where officials do stupid things. There are instances where officials do things that cannot be defended. There are also instances where officials fail to take into account the wider public interest. That is the point I am making: no more and certainly no less.
Lord Vinson: I am sure that there is more that unites my noble friend and I than divides us. He will recall that I went out of my way in introducing the amendment to say that behind it stood the desire to make the law work better. I am sure that that motivates us all.
Lord Peston: Before the noble Lord tells us what he is going to do, did I mishear the noble Lord, Lord Strathclyde? Apart from the deregulation task force, did he say that he would talk to the noble Lord, Lord Vinson, and his friends before coming back to us? Did I hear him give that assurance?
Lord Strathclyde: I hope that the noble Lord, Lord Peston, knows the way I like to do business. I am delighted to speak to him, to my noble friend and to anyone else who wishes to discuss the matter with me.
Lord Vinson: On behalf of my noble friends here and, I hope, on the other side, perhaps I may say that we shall look forward to these extremely constructive discussions. I do not want to run over the arguments again. I think that we are being led broadly to a solution. What I would like to hear from the Minister is perhaps a more forthright and categoric assurance that these issues will be addressed with a view to bringing forward a solution, which I accept may well be better than the one put forward, which will give quick recourse. There is out there in the wide world of the administration of regulations considerable injustice. Something needs to be done about it.
Lord Strathclyde: I said at the outset that I understood very clearly what the problem is. The debate we have had demonstrates that it is not the problem which is in doubt: it is the solution. That is why the Government are currently carrying out an urgent exercise on the whole manner of appeals procedures, some of which I mentioned. I said at the end that the Government would be looking to come forward with proposals. What I cannot confirm to my noble friend is that those proposals will necessarily be legislative proposals or proposals that would fit under the Bill. They may be or they may not be. What is important is to solve the problem so that the people who are being regulated at least feel that that regulation is being carried out in a fair-minded way.
Lord Peyton of Yeovil: Perhaps I may intervene again to ask my noble friend to go a little further than that. Will he at least give an undertaking to come forward at Report stage with a statement of the position that has been reached by the Government showing that he is really minded to deal with the problem and knows how to do so?
Lord Strathclyde: My noble friend Lord Peyton will perhaps be surprised to hear that I am not at all concerned about being pressed on this matter. I shall be delighted, if I am given the opportunity at Report stage, to honour that and to make a commitment that I shall come forward with a statement explaining exactly where we stand.
Lord Vinson: In view of those very positive assurances it would not be right to divide the Committee. I am sure that we shall have the opportunity at Report stage to readdress the matter and to weigh up the substance of the Minister's suggestions. In view of that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 62 not moved.]
Viscount Goschen: This may be a convenient time to take the Statement. I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

European Council, Corfu
4 p.m.
The Lord Privy Seal (Lord Wakeham): My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Prime Minister, about the European Council in Corfu.
"With permission, Madam Speaker, I will make a Statement about the meeting of the European Council which I attended with my right honourable friends the Foreign Secretary and Chancellor of the Exchequer.
"The Corfu Council put another three building blocks in place in constructing post-Communist Europe.
"First, the Treaties of Accession signed with Austria, Finland, Norway and Sweden will help create the wider Europe that we seek: a European Union that extends from the Atlantic to the Arctic. I warmly welcome the positive vote on accession in the recent Austrian referendum. I hope referenda in the other three EFT AN countries this Autumn will be equally successful.
"Secondly, we agreed in Corfu that the association agreements with our central and eastern European partners must be fully and urgently implemented. So should the UK-Italian initiative to link these countries more closely with the foreign affairs and home affairs pillars. This will help them to prepare for full membership of the European Union as soon as possible. Cyprus and Malta, too, will be involved in the next phase of enlargement.
"Thirdly, the European Union signed a part-nership and co-operation agreement with Russia-— one of the most comprehensive agreements ever concluded between the Community and another country. President Yeltsin said that the agreement symbolised Russia's return to the economic life of Europe as an equal partner. He also pledged the support of his government in bringing about stability in central and eastern Europe and his willingness to work closely over former Yugoslavia.
"Russia has just signed the Partnership for Peace Agreement with NATO, and on 9th July President Yeltsin will play a full part in the political debate at the Naples Summit. I warmly welcome Russia's increasing integration with western political institutions.
"In the discussion of the problems facing people throughout Europe, I suggested a series of moves to combat drug trafficking and other international crime. The drugs problem in Europe is growing. Enough cocaine has been seized in the European Union this year to provide 24 million individual

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doses. I pressed for more effective cross-border intelligence gathering on drug trafficking. I urged the Community to strengthen the Europol drugs unit and to set up the full European Police Office quickly, with a wide remit to tackle organised cross-border crime. I underlined the importance of action within our own countries. I suggested that the Union should hold a conference on drugs and organised crime, and should involve countries in central and eastern Europe.
"I was glad to receive wide support for these proposals, which were endorsed in the Conclusions of the Council.
"We made progress on two economic issues high on the British agenda. First, we agreed that markets in telecommunications and energy should be further liberalised, to give Europe's consumers access to wider, cheaper and more efficient services.
"Secondly, we strongly supported the German proposal to set up a European deregulation task force with businessmen as members, just as we have done in this country. This was agreed. The task force will help to cut back burdensome Community regulations on business.
"The Council endorsed the macro-economic guidelines drawn up by the Economic and Financial Council on the conditions for sustainable growth. We agreed that it was essential to continue cutting public sector deficits and reducing inflation. I reported that the British economy had grown by nearly 3 per cent. in the year to this Spring, and that unemployment had fallen here by over 300,000 since the end of 1992. Britain remains the fastest-growing of the big economies in the European Union.
"The Council approved a first priority list of 11 trans-European network projects. This includes the second Channel Tunnel rail link and proposals to improve the rail links between Northern Ireland and the Republic. Any contribution to the financing of such projects must come from within existing Community resources. At our insistence, the Council agreed that there could be no financial guarantee from the Community for trans-European networks. We believe that Europe's taxpayers must be protected against such open-ended commitments.
"We further heard evidence that the subsidiarity principle is being implemented successfully. We expect the number of main legislative proposals coming out of Brussels this year to be about half the number in 1993, and a quarter of the total four years ago. This is a very significant improvement.
"In external policy, the Council discussed Ukraine and agreed to step up support for economic reform and nuclear safety there, tied to the closure of Chernobyl. This discussion will be taken forward with the United States, Japan and Canada at the Economic Summit in Naples in early July.
"The Council once again discussed Bosnia. The Contact Group has done valuable work based on the European Union's plan; but there is an urgent need for the parties to show the will for a negotiated settlement if the process is to succeed. We agreed that

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the European Union would make every effort with the United States and Russia to bring the negotiations to a point of decision.
"Let me turn now to the Presidency of the European Commission. The treaty lays down that the Commission President should be selected by 'common accord' to serve a term of five years. Common accord is vital. For the President of the Commission to serve the whole Community effectively, he must enjoy the confidence and support of all of its members.
"Before the Corfu Council, we told the Presidency and other partners that we supported Sir Leon Brittan's candidature; and believed a genuine consensus of all 12 Member States to be essential. No-one disputed the latter point.
"When we heard that Mr. Dehaene was thinking of putting himself forward at a late stage, we privately informed the Belgian Government and other partners that we could not support him. We warned that it would not be possible for him to attract a consensus of the whole Community. We hoped, therefore, that his candidature would not be pressed.
"Neither then nor at any later stage did any partner say that either Sir Leon Brittan or Dr. Lubbers, the two long standing candidates, was unacceptable. Both, of course, had outstanding credentials and long experience of the Community —Sir Leon Brittan as a Commissioner for six years and Dr. Lubbers from 12 years on the European Council.
"At the Corfu Council, four states—representing nearly half of the Community's European Union's population—did not support Mr. Dehaene in the long discussion on the first evening. In several interventions, I made our strong views very clear to the Council, as I had in a number of bilateral discussions.
"On the following morning, Sir Leon Brittan and Dr. Lubbers decided to withdraw their candidatures. Other European countries indicated that they could accept Mr. Dehaene. I maintained my position that we could not. I said that I had given the matter careful thought and that our decision would not change at any stage. I reiterate that position in this House today. I suggested that consultations should be put in hand to find a candidate who had the support of all.
"The German Chancellor, who takes over the Presidency later this week, said that he hoped to resolve the matter quickly, if necessary by convening a special summit on 15th July.
"Our position was not a personal criticism of Mr. Dehaene, although in our view Sir Leon and Dr. Lubbers had much stronger qualifications. For the next five years the Commission needs a President who is in tune with the times and the mood across Europe—a President whose instincts are with enterprise and competitiveness. Above all, Europe needs a President of the Commission selected with the full approval of all member states.
"The Corfu Council has highlighted an issue of increasing concern to many European Union members: that issue is the way in which decisions are reached. It is an important point of principle that the

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key decisions require unanimity and that all member states should have an equal opportunity to participate in collective decision making. The procedures used for this decision, before and during the Council, were not satisfactory.
"There was no need for this matter to have come to an open division at a European Council. It should have been avoided. Had more comprehensive consultation taken place, as in the past, and had the views expressed by different states been heeded, it could have been avoided.
"I believe that there are a number of well qualified people who could take on this post, on the basis of a genuinely common accord. We stand ready to play our part in consultations on it. There is no reason why this should not lead to an early and satisfactory outcome.
"Madam Speaker, I want Europe to succeed. I want it to regain the affections of the people of Europe. I want a Europe with which all member states—soon to be 16, then 20—can feel comfortable.
"Achieving that may mean disputes along the way. But being a good European does not mean signing up to everything which our partners propose.
"At Corfu we fought for what we believe to be in the best interests of this country and of Europe. That, Madam Speaker, is what we will continue to do." My Lords, that concludes the Statement.
4.11 p.m.
Lord Richard: My Lords, like many conclusions following such meetings, the Statement falls into two parts. If I may, I shall address first the less controversial part before saying one or two things about the part that has created a certain amount of controversy. I have also noticed as regards such Statements that the contents of the Statement and the Communiqué do not necessarily coincide. Therefore, if one wants to get the full flavour of what was discussed one should carefully avoid relying solely upon what the Prime Minister says.
I received the conclusions about three-quarters of an hour ago. It is interesting that the Council spent an awfully long time discussing social affairs. It dealt with such controversial matters as the organisation of work, obstacles to part-time work, new forms of organisation of work, moving young people from education into work, and efforts to promote youth employment and to combat long-term unemployment, but there is not a word in the Statement about those. We must forgive the Prime Minister, however, because I understand that he was not even present for the discussions. Perhaps that is the reason why those matters were not included.
Of course, we welcome the accession agreements with the EFTA countries. We welcome the result of the recent Austrian referendum. We welcome the signing of the partnership agreement with Russia. We are glad that the Reflection Group now includes some Members of the European Parliament. I understood that the Government originally opposed that position. Of course, we support the trans-European networks. They may involve extra borrowing. I thought that the Government's attitude was somewhat over-negative

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towards that, but, again, if one reads the Communiqué, one sees that the position is perhaps not quite so negative as the Prime Minister has led us to believe.
The European Council greatly emphasised the social dimension. We support a great deal of what was said. Perhaps I should read just one sentence from the Communiqué, which states:
"Finally the European Council invites the Commission to renew its efforts … making full use of the new possibilities available in the Treaty on European Union and in particular of the provisions on the protocol annexed to it".
So, the 11 are going to beaver away in accordance with Maastricht, and the British are going to sit outside watching them beavering away and no doubt complaining at the end of the day that they have not been properly consulted.
I turn now to the issue of the successor to President Delors. I am bound to say that my first reaction was;, "Well, here we go again. This is another foreign policy triumph for the Prime Minister". Once again, the Prime Minister has managed, with all the diplomatic skill for which he is becoming so famous throughout Europe, to produce the maximum amount of irritation with the minimum amount of political success.
It is worth asking ourselves—is it not?—what we set out to achieve and what we did in fact achieve. What was the object of the exercise? Was it to try to prevent a so-called "Federalist", whatever that may mean in this connection, becoming President of the Commission? If that was the object of the exercise, it was, on the face of it, unlikely to succeed. All the alternative candidates now being mentioned are very similar to Mr. Dehaene. They are all interventionists. They all believe in a strong and active Commission. They are all for a greater degree of integration in Europe. I am bound to say to the Government that if the result of this exercise is that they get Etienne Davignon as President of the Commission, they will have only themselves to blame for the amount of intervention that they will get from the Commission. I do not think that Mr. Dehaene was put forward because he has strong ideological views. He was put forward because he has a high reputation as a compromiser and a fixer inside his own country. He could hardly be otherwise, coming from Belgium and being the Prime Minister of that divided country.
We have succeeded so far in stopping one Belgian on somewhat spurious grounds. Are we to continue with a succession of vetos until we get someone we like? If that is so, the others may seek to exercise their rights of rejection too. Indeed, I can imagine nothing more damaging to any candidate than that he should now be supported by the British Government, such is the state to which our influence has now been reduced.
The Prime Minister said:
"For the next five years the Commission needs a President who is in tune with the times and the mood across Europe".
What does that mean? It does not mean,
"in tune with the times and the mood across Europe";
it means, "in tune with the British view of the times and the mood across Europe". There is no doubt whatever that 11 of the 12 countries thought that Mr. Dehaene was,
"in tune with the times and the mood across Europe",

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otherwise they would never have backed him. When looking at this whole sorry affair, it is difficult to believe that the reasons set out in the Prime Minister's Statement are the real ones.
There are grounds for criticism—I accept them and join those making them—about the way in which France and Germany presented Mr. Dehaene's candidature. They were repeated in the Statement. But one then has to ask the next question because it is not sufficient simply to say that they should not have done it. The next question is: why was Britain not consulted by France and Germany? Why were we not part of that process? Is our position in Europe now so slight that Chancellor Kohl and M. Mitterrand no longer feel the need to take us into their confidence? At the heart of Europe? We are just about as peripheral now as a major power can possibly get. That is a tribute to the Tory Party's stewardship of the nation's affairs over the past 15 years!
The truth is that this farce was played out in Corfu not to accommodate any particular vision of a future Europe —I do not believe that for an instant—but to soothe the dissidents inside the Conservative Party. When the noble Lord, Lord Tebbit—I am glad to see him in his place—and Mr. Lamont, let alone Sir James Goldsmith, approve of the Government's European policy, it is time for all sensible men to think and ponder well.
The Financial Times put it correctly and succinctly this morning when it stated:
"Unfortunately, one is forced to conclude that the veto was no more than an improvised and futile gesture to Tory Euro-sceptics —futile since no Commission candidate who would command a consensus on the continent is likely to attract their support, and the party's civil war over Europe can now only deepen".
I gather that already the Euro-sceptics in the Tory Party are demanding that the Prime Minister vetos any other "Federalist" candidate of whom they disapprove.
Mr. Major picked this quarrel himself on dubious grounds. He chose the corner and the colour of the paint, and he painted it himself. He has persisted in it and is still persisting in it with all the obduracy of a fundamentally weak man. He has succeeded in antagonising precisely those countries that we shall need in the future. In reality, he has done it for the sake of a few cheap plaudits from the irreconcilables in his own party. I find it deeply shaming.
Baroness Seear: My Lords, we on these Benches thank the noble Lord the Leader of the House for repeating the Statement. Like the noble Lord, Lord Richard, we too can go along with many of the points that were made at the beginning. Clearly, we welcome the accession of Austria, Finland and Norway, and the second and third items which were reported and dealt with at the conference.
We note also the position of Russia and the fact that Russia has now signed a peace agreement with NATO. We welcome the full part that Russia is now playing. However, I should like to ask the noble Lord about the attitude of the Eastern European countries, the former members of the Warsaw Pact, who have some anxieties about the position of Russia in relation to the western

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world. Have they been consulted? Have they anything to say about what is happening? Are we considering their interests as well as the interests of Russia?
We welcome, too, the two economic issues: they are the markets in telecommunications and energy and the European deregulation task force. We note that that task force will have businessmen as members, as was the case in this country. There is nothing wrong with that, provided that there are other members who are considering other aspects of deregulation. I give as an example the social issues that are connected with deregulation, which can be seriously affected by it. Who will speak on and look after those issues? Will people who are competent to speak in that regard be included in the task force which is to deal with European deregulation?
We welcome the remarks about Bosnia and Russia's relations with it. But, of course, what is of concern is the issue of the presidency. We agree that not necessarily is Mr. Dehaene the most ideal person to be the new President of the Commission, but that view may well be open to challenge. We agree, as did the noble Lord, Lord Richard, that the way in which his name emerged was far from satisfactory. France and Germany getting together to put forward their candidate was not in accordance with the requirements of the treaty. It requires consultation with all members of the Community, which did not take place. Moreover, the Maastricht Treaty requires that there should be consultation with the European Parliament. The new Parliament, with its added powers, is meeting in July. Can we have an assurance from the noble Lord the Leader of the House that the Parliament will be brought into the consultations, as required by the Maastricht Treaty?
What an extraordinary situation we now have in front of us. The Prime Minister has talked himself into a corner in which he is in opposition to all the other 11 member states. The noble Baroness, Lady Chalker, shakes her head. There is no question but that, whatever may have been the case during the discussions, ultimately none of the other 11 members supported the position taken up by the Prime Minister in Corfu. How can that possibly be to the benefit of the United Kingdom?
There are important issues to be decided, in particular at the inter-governmental conference in 1996. Before that meeting surely it is of the greatest importance to develop alliances and friends with whom we can discuss the issues that are of importance to us. We must be able to rely on obtaining collaboration in putting forward the issues that we wish to defend. However, after talking ourselves into such a corner, where will those friends come from? What kind of impact can we possibly have in 1996 if we are continuously seen as being the odd man out, the enemy of the development of Europe, based on a totally faulty idea of what federalism is all about?
This is to isolate Britain. It is extraordinary that we should claim that we are aiming to be at the heart of an organisation when we are locked in seemingly endless strife with the other 11 members of that organisation. Is that the way to get to the heart of any organisation? Is

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it the way to have any impact and effect on the way in which that organisation will develop and affect in many vital ways the future of this country, as it is bound to do?
4.24 p.m.
Lord Wakeham: My Lords, saying that I am grateful to the noble Lord, Lord Richard, and the noble Baroness, Lady Seear, for the questions that they have raised does not indicate that I accept all that they have said. I accept that they have raised important and significant questions and I shall do my best to answer them. I need not delay too long on the first part of the Statement, on which the noble Lord commented, because there is a great deal of common ground on that. However, there are one or two comments that should be made.
It is not true that the British representatives—my right honourable friend the Prime Minister and his right honourable friends the Foreign Secretary and the Chancellor —did not play a full part in the discussions on competitiveness and employment. Indeed, much of Friday afternoon and Saturday morning were taken up with those issues. The Council welcomed the evidence of economic recovery across Europe. However, it reaffirmed the need for structural reform, more flexible labour markets, better training and education and the cutting of European red tape.
We fully support the conclusions of the European Council that obstacles to part-time work should be removed and that it is important to find ways of tackling youth unemployment. Indeed, on both those issues the United Kingdom has one of the best records in Europe.
The noble Baroness, Lady Seear, commented on the attitude of the former Warsaw Pact countries—the Eastern European countries. They were kept closely in touch with everything that was going on. The European Council spent a considerable time discussing those countries and the conclusions contain a number of proposals for strengthening the relationship with them and preparing them for membership. There is no reason to suppose that the Eastern Europeans oppose what has been agreed at Corfu.
The noble Baroness was also right to stress the fact that, in moves in this country and in Europe, in many cases deregulation has two sides to it. The first is the lifting of burdens on business and the second is the necessary protection of consumers. It is vital both here and in Europe that we identify the burdens and that is where we believe that the use of businessmen is particularly valuable and important. It is, as in this country, finally the job of Parliament to decide whether those burdens are rightly to be changed, whether they cease to have a valuable role or whether they should be moved in some other way. I agree with the noble Baroness that, while we defend the idea of using businessmen to help us with that task, there is the other side, which is most important.
With regard to the presidency of the Commission, the position is simply that, as the noble Baroness and the noble Lord agreed, the Prime Minister used our constitutional right to a veto and prevented the appointment of a candidate whose views in several respects run counter to our key strategic interests. We

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believe that Mr. Dehaene stands for ideas about interventionism and the gradual pushing of power to the centre of Europe, which we believe are out of date. We simply did not believe that he was the right person to be the chief manager for the next five years of a European Union. We made that clear at the outset. It is not a personal matter or an issue of nationality. We believe that the issue should have been dealt with by arriving at a candidate who could be supported by all members of the Community.
There have been a number of so-called crises in the history of the European Union. Compromises were eventually found. This occasion should be no different. Britain has often taken a stand of principle which has attracted criticism at the time, but which has resulted in satisfactory outcomes; for example, our budget rebate, our Maastricht opt-outs and our rejection of the Dutch presidency's federalist blueprint before Maastricht. Over the years, we have helped to shape the European Union agenda in key respects: for example, on the assistance of budgetary restraint; on the drive for the single market; the acceptance of enlargement; the new principles of subsidiarity; intergovernmentalism; and, most recently, the drive for deregulation and competitiveness. Therefore, we make no apology at all.
It is interesting that that was a major issue during the recent election campaign. The Conservative Party made it clear that it felt that both the Labour Party and the Liberal Party would undermine our national veto. Their reactions to our use of the veto in Corfu bears out that point. It is to stand logic on its head to imply that Britain has influence in Europe only when it accepts the decisions of our partners.
At the next stage—and we shall play a full part in that —it falls to the new German presidency to find a candidate for the Commission presidency who is acceptable to the 12. The population of the European Union amounts to some 360 million people. It should be perfectly possible to find a candidate who will attract unanimous support. The Germans have already made it clear that the problem should be sorted out quickly. Their aim is to present the new president designate of the Commission to the first plenary of the new European Parliament on 20th July. We shall play our full part in that.
4.33 p.m.
Lord Tebbit: My Lords, would my noble friend not agree that it is unfortunate at the very least for one member state to find itself isolated by reason of its obduracy, by its refusal to countenance complying with its obligations and by persisting in policies which have the complete disapproval of all other member states? Will my noble friend tell me what pressure was put on Greece to cease its disgraceful behaviour towards the state of Macedonia in which Greece has been indulging now for some months past to the entire disapproval of all other member states in the Community?
Secondly, does my noble friend not agree that having heard the voice of the noble Lord, Lord Richard, relayed, perhaps, from his years in Brussels, we should remember that the doctrine of appeasement within the European Community is far from dead?
Lord Wakeham: My Lords, my noble friend makes his points in his own way. Of course, he is absolutely right. The European Council and the Foreign Ministers have said repeatedly that the position with regard to Greece and Macedonia is unsatisfactory. They are seeking to bring pressure to bear to resolve that problem.
It should not be thought that for Britain to take the view that it did is anything novel or new in the European Community. I can remember not very many months ago the French being extremely difficult over the GATT negotiations; but that does not make them any less European. I can remember only days ago—and I do not know whether the problem has yet been resolved—the Italians being very difficult with regard to budgetary matters because they do not approve of the milk quotas. This country is entitled to stand up for its interests and while this Government are in office, they will stand up for them.
Lord Barnett: My Lords, I have always tried to persuade friends that the noble Lord, Lord Tebbit, is nothing like as nasty as he always sounds—although I hasten to add that that is usually without success.
Of course the Prime Minister was perfectly entitled to veto what the other 11 wanted. Nobody disputes that. The question now is whether the Prime Minister intends to veto any other candidate whom he assumes to be federalist. Will the noble Lord give us a definition of what European federalism really means to the Prime Minister and to the Government? Does the Minister accept that it may mean more and not less subsidiarity? In those circumstances, why should the Prime Minister oppose somebody who necessarily, on the Government's definition, is assumed to be a federalist?
With regard to interventionism, is it not a fact that the Council of Ministers is the supreme body? If the Commission seeks to be too interventionist, it is perfectly open to the Council of Ministers to oppose that.
Lord Wakeham: My Lords, the noble Lord is right to say that the Council of Ministers has a great say and, in a sense, disposes of many of the issues. But that should not mean that the position of the new president of the Commission, who will be president for five years and perhaps longer, is not extremely important. Those five years will see dramatic changes within the European Union. The direction of that change has become increasingly apparent. We should like to have a president who will sustain rather than retard that movement. We shall not enter into further negotiations with any desire to veto anybody. We shall seek to discuss with our colleagues in Europe a candidate who is acceptable to all member states, and I believe that that is possible.
Lord Beloff: My Lords, does my noble friend the Leader of the House agree that once again the noble Lord, Lord Barnett, speaking from the Labour Benches, is trying to obscure matters by his play with the word "federal"? In the minds of some continental philosophers it may mean less than central government. Mr. Dehaene and people who think like him—and this

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can be found in every recorded speech that he has made —are in favour of what is called further European integration; that is, more laws made in Brussels and fewer laws made by national parliaments.
Mr. Dehaene would not deny for a moment that he takes that line. Do not Her Majesty's Government believe that while may have corresponded with the feeling in Europe that 10, 15 or 20 years ago, the recent European elections—both the voting and the number of abstentions in many countries, as well as other evidence —show that that is wholly out of date? Therefore, one is looking for a president who understands what is going on now and who will not repeat the litany of M. Monnet a generation ago.
Lord Wakeham: My Lords, my noble friend makes his point extremely clearly. I did not use the word "federalist" and I do not use it because I agree that it opens up a new discussion about what it means. We said that Mr. Dehaene stands for ideas about interventionism and the gradual pushing of power to the centre of Europe. We believe that those ideas are out of date. We wish to find a candidate who we believe has a feel for how Europe will be during the next five or 10 years.
Lord Bruce of Donington: My Lords, we seem to have got ourselves into a lot of trouble even though a year ago we were busily examining the Maastricht Treaty. I am given to understand that Members of the Government at that time, after tuition at Conservative Party headquarters, understood what was in it.
We are in the trouble that we are because we still have not read the treaty. It may be helpful to remind your Lordships that Article 158(2) of the treaty states:
"The governments of the Member States shall nominate by common accord, after consulting the European Parliament, the person they intend to appoint as President of the Commission".
Everybody seems to have forgotten the word "after".
The European Parliament is not in session until 15th July. It has not yet selected its committees, although I am quite sure that the committee which deals with pay and allowances will be one of the first to meet! But the European Parliament still has to determine a definitive attitude towards that most important problem. Indeed, that is right. As the Government say—I am quite sure that my noble friend agrees—the choice that is made as regards the President of the Commission is of crucial importance in the years that lie ahead, particularly in the year 1996 when the inter-governmental conference takes place. This is why the Corfu proceedings were entirely meaningless. The European Parliament had not been consulted and the views that the population of Europe have put forward to their various European Members of Parliament were not known. It will probably take some six weeks to two months for the European Parliament to articulate its views, bearing in mind that shortly after it assembles on 15th July it will depart for two months recess.
Where are we on this? Surely the main trouble is this; that Germany and France—I am not afraid to mention this —decided which way they wanted to go and they sought, by using what power they have in terms of the influence that they wield economically and financially in Europe, to railroad the rest of the Community into

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supporting the candidate of their choice. I do not think it was right to do so. If I were in a Labour Government I would not be railroaded. I would follow the procedure laid down in the treaty itself with which I have acquainted the House. It may well be that the Parliament would reach a conclusion that was not amenable to me —maybe I would disagree with it—but at least the procedure would be followed. It should have been followed in this particular case.
Lord Wakeham: My Lords, I do not think I need go into quite such a wide survey of the scene as did the noble Lord, with his enormous knowledge of these matters. But the position is quite simple. The European Council has first to agree a nominee before it can put a name to the European Parliament. The discussions, as I understand it, at Corfu were to seek to agree a nominee to put to the European Parliament. There were three candidates on the table, so to speak, of which two were not objected to in terms of a possible veto by anyone. There was one candidate who, it was made abundantly clear, was unacceptable to one member state. As there has to be unanimity, we ended up, unfortunately, in the position we are in and we shall have to get out of it for the next time. However, I am sure the British Government did the right thing.
Baroness Elles: My Lords, is my noble friend aware of the very great support and admiration we have for the Prime Minister, who took his action at Corfu to protect not only British but European interests? Is it not recognised that even if Mr. Dehaene was a very suitable candidate to be President of the Commission—there are indeed doubts as to his political views—in view of the fact that he would be President of the Commission for five years, that would have influence on the whole of the future of the European Union? Is it not time that people realised that, particularly the Opposition, who seem to have been ready just to be dominated by a decision knitted and cobbled together by the German and French Governments? Is not that an intolerable situation? Should we not support the Prime Minister in standing up, as I say, for British and European interests?
Lord Wakeham: My Lords, I am most grateful to my noble friend for that question. She is, of course, absolutely right. There was considerable unease in most other delegations about the way this matter had been handled and the way people's agreement had been taken for granted. Others expressed doubt there, and I see from this morning's press that others have expressed doubt since. I hope there is a lesson for all of us in this and that at the next meeting we find a candidate, who under the rules has to be unanimously agreed. That is the way forward.
Lord Rodgers of Quarry Bank: My Lords, there is a puzzling aspect of the story and I hope the noble Lord the Leader of the House can help us to see it more clearly. It was plain from an early stage that the Government's own candidate, Sir Leon Brittan, whatever his merits—I would not attempt to suggest he does not. have them—was not a candidate who would gain support. It is not really sufficient to blame a major defeat for British diplomacy on other countries' bad

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behaviour. Why did we not take an initiative much earlier and look for a candidate who would meet exactly the criteria which the noble Lord the Leader of the House and the Prime Minister have indicated; in other words, a candidate who would be a candidate of consensus? Why did we not take an initiative and find someone to put forward, because at the end of the day the failure of our diplomacy was marked by the withdrawal of the two other candidates, including Her Majesty's Government's candidate, who had only three supporters at the best of times?
Lord Wakeham: My Lords, I must say that I do not consider it to be a defeat to stand firm for British interests as we did on this occasion. I think it would have been a defeat to have gone along with some candidate who we did not think was acceptable. The position is that we supported Sir Leon's candidacy because we thought he was highly suited to the job. We also recognised that Dr. Lubbers was a strong candidate, and no other country thought that either of them was; unsuitable as a possible President of the Commission. We made it clear that the Belgian Prime Minister was unacceptable to us, and that was the difficulty we found ourselves in at Corfu, with the consequences that we all know about.
Lord Merlyn-Rees: My Lords, following what the noble Lord has just said, what will happen now? Is it not right that the names, or the name, that the Government are going to put forward should be known to all of us? If it is a matter of the European Parliament playing a part in this, why not us? The noble Lord has reported to this House; we have heard about names being bandied about. Why should we not be able to discuss the name of a person that is to be put forward? I wish to ask one other question. This morning I listened to the "Today" programme—I never listen to it for very long but I listened to it this morning—and I heard the Home Secretary say that this was not just a matter of choosing a President. He said that there is a turning point and that this matter constitutes a movement of the European Community towards a free trade area. That is what he said. Was he speaking on behalf of the Government?
Lord Wakeham: My Lords, the noble Lord, whom I have known for many years, occasionally puts on an appearance of innocence which never convinces me and which does not convince me this afternoon. If he seriously thinks that any candidate which the British Government consider to be a suitable President should be—I hope your Lordships will not feel I say this in any disrespectful fashion—bandied about in your Lordships' House this afternoon, I do not think that that would necessarily improve his chances of being elected. We believe the way to select a President of the Commission who is acceptable to all the members of the Community is to go about it with quiet diplomacy, and that is what we shall do under the leadership of the German Presidency.
Lord Monson: Does not the noble Lord the Leader of the House agree that it is most regrettable that the official Opposition—or at any rate their Front Bench —see fit to attack Her Majesty's Government for having

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the guts to stand up to what, by common consent, was Franco-German bullying; in standing firm not only for our own sake but for the sake of a number of smaller countries whose views, secretly, are rather closer to our own than they are to the views of France, Germany or Belgium?
Lord Wakeham: My Lords, I am entirely content when the Opposition are attacking the Government. I get myself into some anxiety when I receive too much support from the noble Lord, Lord Richard, opposite. Therefore I am perfectly content that he should be attacking the Government in this way. But I think he is wrong for the reasons that I have said.
I believe the noble Lord made a good point. It perhaps is less difficult for a major nation like the United Kingdom to stand firm on these occasions. Some of the smaller countries of the European Union perhaps find it less easy to stand firm. Therefore it is the decision-making processes within the Community that we believe to be an important part of the lessons that should be learnt from these events.
Lord Howell: My Lords, may I—
Lord Pearson of Rannoch: My Lords, a sceptic voice from these Benches can add to the congratulations of my noble friend Lady Elles to the Prime Minister on the stand that he has taken—I think, and many of us think, with considerable courage—on this matter of the Commission President. In regard to the point of the noble Lord, Lord Richard, about there being other candidates who may be just as bad as Mr. Dehaene, I for one hope that my right honourable friend the Prime Minister will veto them until we get a candidate who is acceptable to all European Governments.
My main question to my noble friend relates to the early part of the Statement, in which my right honourable friend the Prime Minister was glad to welcome Austria and hoped soon to welcome three more countries to make the Community number 16 and then to move on to 20 in due course. Some of us have a worry that if this process takes place the strength of the centre of the Community—the Brussels bureaucracy which many of us dislike so much—will be strengthened by a widening of the Community. Most of us support widening because we hope that it will lead to a weakening of the centre. Has my noble friend the Leader of the House anything to say on that fear? I look forward to hearing what he has to say.
Lord Wakeham: My Lords, I thank my noble friend warmly. I am delighted when he supports the Government on European matters, as opposed to my lack of concern when the noble Lord opposite disapproves of what I have to say. I believe that the accession of the four additional members of the European Union—which I very much welcome—will produce a Community which will be very different in character from the type of central, interventionist Community which was developing until my right honourable friend played a large part in arresting that movement. I believe that that will be even more so when the Community is enlarged to 20 members. I do not

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want to tempt my noble friend too much, but that is why a number of us believe that the Maastricht Treaty was such a significant event in the development of the European Community.
Lord Howell: My Lords, having regard to the fact that the European Union has as one of its principal purposes economic advance, about which little has been said today, and the silence of the leaders of British industry, which has such fundamental trade with Europe, what discussions have the Government had with British industry and what assessment have they made of the effect of the continuing isolation of our Government, not only on this issue but on all recent important issues? Has the noble Lord read the statement made by Chancellor Kohl this weekend about future economic planning, which will require full co-operation and participation in regard to workers' rights in drawing up economic strategies? Judging by the assessment in The Times today, we have again lost on this vital question. What assessment have the Government made about the need for economic advance on these matters, on which we are also at odds with our 11 partners?
Lord Wakeham: My Lords, I think that the noble Lord is wrong about that. As a result of the Copenhagen and Edinburgh summits and the most recent summit the British Government's agenda on economic affairs has now been widely accepted throughout the Community as the right way forward. That agenda includes improved competitiveness, labour market reforms, the importance of keeping down inflation and the control of public sector spending. All of those issues are issues on which the whole of the European Community has now united behind the British initiative. We are right at the centre of the developments taking place within the Community.

Deregulation and Contracting Out Bill
4.53 p.m.
House again in Committee.
Clause 5 [Undertakings as alternative to monopoly reference by Director General of Fair Trading]:
Lord Williams Lord Williams of Elvel moved Amendment No. 63:
Page 5, line 28, at end insert:
(""Onus of proof in case of undertakings.
56ZA. The Director shall not make a proposal under section 56A below, or accept any undertaking proposed to be made under section 75G below, unless he is satisfied that the particular persons, the parties to the transactions or the relevant enterprises, as the case may be, have demonstrated that their activities or proposals for merger, as the case may be, are not against the public interest and will not result in a diminution of competition.").
The noble Lord said: I beg to move Amendment No. 63 standing in my name on the Order Paper.
The amendment that I have tabled is designed to bring some rationality to competition policy. Competition policy in legislation is, I admit, extremely complex.
I recognise that there is a mistake in my amendment. Under Section 75G, which is an amendment to the Fair Trading Act introduced by the Companies Act 1989, it is the Secretary of State who has to accept undertakings

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rather than the director. I recognise that error in the amendment. Nevertheless, I believe that that is an error which could be rectified at a later stage if the Committee accepts the amendment today.
In my view competition policy is in a state of some confusion. It was set out initially in the Fair Trading Act 1973. I remind the Committee that that was quite a long time ago. Since then, the Fair Trading Act has been amended by the Companies Act 1989, in particular Section 147 which allowed undertakings as an alternative to merger references. Furthermore, arrange-ments were agreed under which large mergers would be treated under European jurisdiction under Article 86 of the Treaty of Rome. That led to a different tier of jurisdiction. It is now proposed under Clause 5 of the Bill to extend the principle of undertakings to monopoly references.
There are several difficulties with that. First, monopoly references to the Monopolies and Mergers Commission are made by the director—or, as we shall debate subsequently, perhaps by other people or by the Secretary of State acting on the director's advice. In cases other than newspapers, the Monopolies and Mergers Commission is governed by the criteria of Section 84 of the Fair Trading Act, which define the public interest in what I accept is, and has been accepted for a number of years, a rather loose manner. Secondly, merger references to the Monopolies and Mergers Commission, when they arrive at the commission, are governed by the definition of public interest in Section 84 of the Fair Trading Act. Thirdly, large mergers— "Euro-mergers", to use that rather unpleasant expres-sion—are dealt with by the European Commission. The only criterion under Article 86 of the Treaty is reduction in competition.
Therefore, Section 84 of the Fair Trading Act applies only to domestic situations; namely, mergers which do not come up to the level that falls under European jurisdiction. There is no specific reference to what motivates the Secretary of State or the director in making a reference under any of this legislation to the Monopolies and Mergers Commission. And there is nothing in any legislation that determines on what basis such a reference should be made. Furthermore, the matter is taken out of its hands by the European Commission should the threshold be passed. The whole area at the moment is very messy and unsatisfactory. The criteria which may be used by the director or the Secretary of State may be quite different from the criteria to be used by the Monopolies and Mergers Commission in judging them. That is the case both in monopoly references and merger references. Furthermore, if there is a large merger a wholly different series of criteria apply in the case of Europe.
We have for long argued that there should be a complete review of competition policy and that that review should translate itself into a consolidated piece of legislation which takes account of what has happened since the Fair Trading Act 1973 was passed and amended by the legislation which I have mentioned. My amendments are a modest attempt to achieve a certain rationality. The Companies Act 1989 introduced the question of undertakings. Undertakings were allowed

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under Section 56A, as amended, of the Fair Trading Act when it was decided that the merger in question was not to be referred to the Monopolies and Mergers Commission. As I understand it, under Clause 5 that process is now to be extended to monopoly references. Again we have the problem regarding domestic mergers or monopolies where different criteria apply to different pieces of the legislation.
Our general belief is that in all cases of mergers or monopolies it is up to the parties to the transaction, the companies involved, to prove beyond any reasonable doubt that what they propose is in the public interest. It is not for the Government, the Monopolies and Mergers Commission, or anyone else, to make that assertion unless the companies are challenged on their proof.
I do not wish to go into the process of short termism and how we have arrived at those views. Over a period of years, starting as I remember with the 1978 White Paper and subsequently confirmed, the DTI has shown that in the case of mergers only 50 per cent. are successful by any reasonable criterion. In the case of monopolies references, we have recently had the report of the Monopolies and Mergers Commission on compact discs which has caused a certain amount of controversy. If Parliament will allow companies to give undertakings instead of being referred to the Monopolies and Mergers Commission on either a monopoly or a merger situation, surely the onus of proof that what is proposed in such undertakings is not against the public interest must rest with the companies involved. I should like to extend that onus to all merger references. However, in the context of the Bill, we are only dealing with undertakings. We believe that if companies are able to demonstrate that their proposals with regard to a monopoly or a merger is in the public interest, they are entitled to have such an undertaking accepted. If they are unable to do that, then the matter should be referred to the Monopolies and Mergers Commission.
Secondly, I believe that we should start to bring our criteria for public interest into line with the criteria of Article 86. We recognise, quite properly, that the total result regarding competition in the overall sense may not be entirely in the public interest of the United Kingdom. Nevertheless, that is the criterion of Article 86. My amendment provides that such a measure will not result in a diminution of competition.
However, we recognise that there may be merit in the Government arguing in the forum of Europe that the public interest factor might be moved a little away from total insistence on competition. Nevertheless, those are the criteria before us. That is why my amendment is couched in the terms that it is.
I accept that my amendment is only a small and modest start. It is designed to ensure that those companies which enjoy the benefit of deregulation in the form of undertakings have an onus on them to prove that what they are doing is in the public interest. I have sought to define a little more clearly what I mean by that.
However, there are two principles which my amendment embodies. First, there must be a consistency of approach across the range of monopolies and mergers

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between our own and the European jurisdiction. Secondly, if there will be any undertaking, the onus of proof must be with the companies which are either in a monopoly situation or which propose a merger. It is a modest amendment. I hope that the Government will accept it. I beg to move.
Lord Strathclyde: I am grateful to the noble Lord, Lord Williams, for proposing his amendment in such a way. I am sure that deep in his heart he realises that there is nothing modest about the amendment. It is an important amendment which goes back to debates that he started in this House during the passage of the Companies Act 1989. He said that he would like to see such a clause provided for all monopoly and merger cases. At least the noble Lord is consistent.
The Committee will know that in 1984 the Government stated that mergers should be referred to the MMC primarily but not exclusively on competition grounds. That statement is still the bedrock of the way in which we deal with MMC policy.
Lord Williams of Elvel: I am sorry to interrupt the Minister at an early stage. Does he accept that while that may be the bedrock of the Government's views on references, it is not the bedrock of the duty on the MMC to report on those references?
Lord Strathclyde: The MMC is an independent body which looks at a range of criteria. Furthermore, we do not feel that a review of competition policy is necessary. We have had several reviews over the years covering all aspects of competition policy. In 1988 there was a review of mergers policies leading to the 1989 Act. There was, too, a review of restrictive trade practices. In 1992 there was consultation on abuse of market power. We are responding to the reviews already carried out. There is a great deal going on in the field of competition. Under these clauses, we are looking at how we can deregulate to make easier the policy on mergers and monopolies.
We are proposing Clause 5 because we believe that it is not always necessary to deploy the whole of the competition machinery, with the expense that entails for everyone, to solve the problems that may arise from the operation of monopolies. It may be helpful if I briefly explain the existing position.
Under the Fair Trading Act 1973, the Director General of Fair Trading has a duty to keep under review the carrying on of commercial activities in the United Kingdom and may, where he thinks fit, at any time make a monopoly reference to the MMC. It is for the MMC then to investigate whether there is a monopoly situation and if so whether it operates or may operate against the public interest. If the MMC reports adversely, undertakings may be accepted or an order made by the Secretary of State to remedy the adverse effects identified.
To solve competition problems arising from monopolies, all we have at the moment, therefore, is a full-scale reference to the MMC. Clause 5 provides a more flexible option to solve such problems, where appropriate, more quickly and at an earlier stage. We are

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also proposing Clause 7 because it seems appropriate for companies and the authorities to have the same flexibility to solve competition problems that may arise from a merger, again without necessarily going through a full reference to the MMC. In each case, the objective is to provide a short cut to the right solution in straightforward cases where the answer is clear.
The noble Lord, Lord Williams, said that it was a modest amendment but it would in fact defeat the whole object of Clauses 5 and 7. It would also eliminate the degree of flexibility which Section 75G of the Fair Trading Act already provides for companies to offer divestment undertakings as an alternative to a merger reference. Instead of clauses designed to resolve simple problems, we would have clauses which could only come into operation once it had been shown that no problem existed. We have designed the system to be fair so that it balances the ability of the authorities to take effective action, where that is necessary, with the interests of companies in lightening the competition machinery.
There will be no shady deals. Consumers, competitors and others interested will have the chance to comment and their views will be taken into account. We are therefore not weakening competition policy. If companies do not keep to the undertakings, they risk being taken to court. We are not supplanting the MMC's valuable role and will continue to look to it to investigate the more complicated cases.
We believe that Clauses 5 and 7 offer a common-sense approach. The existing Section 75G of the Act has already been used to provide quick, simple and effective solutions for mergers in a narrower range of circumstances. Now we are proposing to widen that range.
We believe that that should be in everyone's interest. The companies under investigation can get on more quickly with their business without incurring the considerable expense of an MMC investigation. The consumer benefits from earlier resolution of a competition problem and the market can start to work properly again.
I know that it may have been the wish of the noble Lord, Lord Williams, that we should have a debate about competition policy in general. However, his views on the subject are well known and we have a fundamental disagreement. I accept that he was trying to introduce the concept of the public interest into these measures but I believe, for the reasons that I have outlined, the clauses should remain the way they are and provide that light touch, deregulatory system as regards undertakings.
Lord Rodgers of Quarry Bank: I am sure that when the noble Lord says that there will be no shady deals, he is telling no less than the full story. However, I feel in my guts—often quite a good way of judging where the contents of a piece of legislation really lie—that this is weakening competition policy. Given that the actions of the Director General of Fair Trading and the whole ambience of his department are influenced by the feelings within the Department of Trade and Industry, there is no doubt at all that both the Monopolies and

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Mergers Commission and the Office of Fair Trading reflect, to a considerable degree, changes in the Government's policy. The consequence of that— whatever the Minister may say—will be a weakening of competition policy.
Although we have been led to believe that the whole process that the Bill is engaged upon is a matter of cutting red tape, this goes far beyond that. It is a major issue of competition policy, and competition policy is at the heart of industrial policy for the Government, as for others.
It seems to me that what is at fault at the moment —and I do not deny that there is a problem although I am not sure that it is a matter of confusion, as the noble Lord, Lord Williams, described it—is that there are delays which are an impediment to the proper functioning of government as well as of business. But surely the right approach or a simpler approach, which would be totally consistent with maintaining competition policy, would be to simplify the procedures of the Monopolies and Mergers Commission. In other words, references should take place as now, but there ought not to be a long delay and an elaborate inquiry which results in an unsatisfactory outcome.
If the noble Lord were to give me a satisfactory reply to the question that I wish to ask, it would put some of my anxieties at rest. Could he say what are the recent references by the Office of Fair Trading—he is already shaking his head, before I have completed my sentence, but if we are to judge the future we can only do it in relation to the past. When Ministers construct proposals of this kind, they have in mind examples of things which did not happen in the way that they would have liked them to happen. The noble Lord now nods his head, so perhaps he is moving in my direction. Can he give the Committee examples of the kind of references which have occurred and which he does not believe need occur in the future, given the provisions of this clause and subsequent clauses, including the safeguards which he believes are built in? If he would give examples, we could then judge both the importance of the clause and the view that we should take of the amendments before the Committee.
5.15 p.m.
Lord Haskel: I am surprised that the Government do not accept and welcome the amendment of my noble friend Lord Williams. Since 1988 they have said on several occasions that more powers of investigation and enforcement are needed. Successive Directors General of Fair Trading have publicly expressed the urgent need for such action to eliminate practices which they have frequently exposed. Green Papers were published in March 1988 and November 1992, and a White Paper in July 1989. There have been several other statements since.
The DTI and the Office of Fair Trading Deregulation of Competition Law and Procedure Changes in January 1994 stated in paragraph 19 that the Government were conscious of the strong criticism levelled at them and remained committed to replace the legislation with a prohibition-based system. I believe that the amendment

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of my noble friend Lord Williams makes a contribution towards that and I am surprised that the noble Lord does not accept it.
Lord Strathclyde: Of course, the amendment makes a contribution to the debate. My point earlier was that it is a contribution that we have heard many times. The noble Lord, Lord Williams, and I have a fundamental disagreement about the issue, or his party and my party have a fundamental disagreement about it. I stand by what has been said in the past. We have no desire to weaken the cause of competition and do not believe that anything we propose in the clauses does that. Therefore, I cannot agree with what the noble Lord, Lord Rodgers, said.
What we are not doing is to change the criteria or powers for making references on monopolies or mergers to the MMC. Instead, we are providing flexibility to solve competition problems without employing the whole of the competition machinery. The clauses are, therefore, designed to provide faster solutions to sraightforward competition problems. That will save time, expense and effort for all concerned and, as I said, earlier, quicker solutions are in everyone's interests— consumers, competitors and businesses themselves. I would have hoped that this would be something that the noble Lord, Lord Rodgers, would welcome. It is the kind of short-cut, fast-track method which I would have thought he would welcome.
The noble Lord went on to ask me a question which is much more difficult to answer: if we are to judge the future, we should look at the past. Therefore, what kind of past undertakings do we see being used in the future under the new clauses? The Bill does not limit the type of undertakings that would be acceptable, but we would be looking for undertakings that would solve monopoly problems cleanly and simply where the issues themselves are clear cut. These are the kinds of assurances that would most likely involve future conduct: for example, ending discriminatory pricing or refusal to supply. The undertakings will need to be sufficient to solve the problem, otherwise—and this is important—there is still room to go for a full reference.
Lord Peston: Perhaps I may intervene for a moment. I was intrigued by the Minister's reply to the noble Lord, Lord Rodgers. He should not exaggerate the difference between us; we are strong advocates of competition and I cannot list the number of times that I have heard the Minister say that competition is the essence of the Government's policies and that they favour it. Therefore, that is not the point at issue. The point is how we judge it.
To help the Minister, perhaps I may put specifically two examples which perhaps the noble Lord, Lord Rodgers, had in mind. Perhaps we may take the two most ludicrous reports of the Monopolies and Mergers Commission over the past year. There have been several vying for ludicrousness. The MMC has become so ludicrous that I am even tempted to support the Government on the Bill. I find it hard to see the MMC as the consumers' friend any more. If the Government had their time over again, would they have submitted the problem of resale price maintenance being

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introduced through the back door on the supply of perfumes? Would they have done it that way rather than through the Monopolies and Mergers Commission which produced a quite astonishing report suggesting that resale price maintenance in that case is acceptable? To take the even dafter report on the supply of compact discs last week, which I am sure the noble Lord read as closely as I, the MMC came up with the statement that there was a monopoly but it was not against the public interest. Are not the Government taken aback by that at all? Does the Minister realise that that totally flies in the face of the Government's own policy statements? Would the Government, if they had the chance, use their own new route (to follow the point that was made by the noble Lord, Lord Rodgers of Quarry Bank) on the compact disc question? As I say, my own temptation —although of course I totally support my noble friend on the general matter—in regard to how the MMC is behaving is to wonder whether what we really need is a new approach to the MMC. I should really like something more practical, as the noble Lord, Lord Rodgers, said, on, for example, those two cases.
Lord Rodgers of Quarry Bank: I wonder whether I might intervene before the noble Lord replies to that very helpful comment by the noble Lord, Lord Peston. He said, in trying to explain without examples—though I hope that he will now deal with the matter that the noble Lord raised—that matters that are suitable for an undertaking might be issues that are clear-cut. If the Minister does not want to go into a great deal of detail in terms of examples, could he tell us over a convenient period such as the past five years how many issues were so clear-cut as in his view to be ones where undertakings could be given? Then—and perhaps the Committee will forgive me if I overlooked this—could the Minister say (or repeat, if he has already said) how many fewer references he expects as a result of the Bill? Again, he holds up his hands as though he does not know. But there must have been some assumptions made within his department; otherwise it would have been extremely irresponsible to bring forward a proposal when he cannot give examples of cases that will not be referred and does not even know now how many fewer there would be. And finally, if this procedure is followed, what does the Minister imagine to be the length of time between the original consideration by the Office of Fair Trading, the request for the undertakings and the consultation? In other words, how much shorter will those occasions be than they are now? These are very simple questions and they must have been discussed within the department; otherwise the Minister would have been very irresponsible—and I know that he is not irresponsible—to bring the matter forward.
Lord Strathclyde: My Lords, the noble Lord makes a number of very nice, very neat debating points. But I am not sure that they deal very much with the substance of the case with which we are dealing: for instance, on the whole question of the length of time involved. We shall come to that subject in later amendments. But the main point here is that time will vary depending on the industry being looked at or on the particular problem or

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issue in question. Therefore it is not possible to say how much time will be saved. What we do know, however, is that there are substantial costs involved in going forward to a full reference. We believe that there are instances—certainly there will be instances in the future, once we have passed this measure, if it is passed —where it will save a lot of money and time to go through the short-cut procedure—
Lord Tordoff: I can quite understand when the Minister says that there are a variety of cases. But can he set some kind of proportion on the time that is likely to be saved? Clearly it will not be the same in each case. Will the measure cut the time by half? Will it cut the cost by half? We need some kind of guidance on what the effect will be.
Lord Strathclyde: The noble Lord asks the unanswerable. There is not an obvious answer to those questions. We believe that the cost will be substantially reduced; by more than half, about half—
Lord Peston: By half then.
Lord Strathclyde: It may be by half; it may be by more than half. I hope that it will not be less. The whole point is to look at areas which are clear-cut and with which we can deal in a practical way.
I felt when the noble Lord, Lord Peston, was speaking that there was an amount of admiration for the way in which the Government had brought forward these clauses and that the noble Lord was in favour of having this short-cut regime on the basis that, by having it, we might have had a different answer as regards some of the recent reports that have been made—
Lord Peston: I do not mean to interrupt the noble Lord. I was simply being helpful to the Government. I believe that competition is the consumers' friend. I have often heard the Government say that as well. The MMC certainly does not seem to believe that any more. I simply sought guidance as to whether the new procedure might help us in that regard. My concern is that the new procedure—as I shall demonstrate, probably ad nauseam, during the course of the rest of the afternoon—will weaken rather than strengthen. We shall come to that matter in due course. I would like the Government at least to recognise their own commitment to competition.
Lord Strathclyde: Many times I have recognised our commitment to competition. But we do have procedures in this country for looking at monopoly and mergers procedures, through the MMC and through the DGFT. The noble Lord raised two particular cases; namely, on retail price maintenance and on CDs. But he could have raised many others where the MMC has made adverse findings; for instance, on gas; private medical services; contraceptive sheaths; mortgage valuations; and national newspapers. And there have been others about which the noble Lord may not agree. We could have a debate as to whether or not the commission was wrong. I do not believe that this is the right place for such a debate. But as to the question of whether these are the kinds of cases that would have been dealt with under these new procedures, it would be

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up to the director general to decide whether to make a proposal and for the companies to decide whether to agree undertakings. That is why these questions, which are well put by the noble Lords, Lord Tordoff and Lord Rodgers of Quarry Bank, are impossible to answer. I hope that I have been helpful. I know that the noble Lord, Lord Williams, is no doubt itching to wind up this debate. I hope that I have given him an explanation of what is at the heart of the new clauses.
Lord Monkswell: I am sorry to intervene, but it seems to me that one of the key issues in regard to this amendment is the public interest. The noble Lord, Lord Williams, mentioned, as I did, the concern that exists in regard to the situation not only in this country but in a European dimension. There is a concern that competition is not the only mechanism to judge mergers and developing monopoly situations, but that there is a case for the public interest to be taken into account.
I was very interested in the comments of the noble Lord, Lord Peston, about the apparent inadequacy of the deliberations of the Monopolies and Mergers Commission. It reminded me of a question that somebody asked me a number of years ago; namely, why do we have only one Monopolies and Mergers Commission? Is there not a bit of a monopoly there?
I wonder, bearing in mind the developments of technology and financial regimes in terms of the international financial markets and developments in patterns of trade, whether we need to make some changes in this area. I wonder whether the Minister can respond to those points, particularly with reference to the public interest issue which formed such a key part of the amendment of my noble friend Lord Williams.
Lord Strathclyde: I am well aware that that is the key part of the amendment of the noble Lord, Lord Williams. But I do not believe that there is any gap in the ability of the MMC, or indeed of the DGFT to be able to make his deliberations. The MMC is an independent statutory body. It has a role to assess the impact of activities and transactions on the public interest. It is the job of the MMC to weigh up carefully all the evidence from all interested parties, be they consumers, competitors or anybody else. It must then produce independent and objective reports. I for one have every confidence in the MMC's ability to perform that valuable role.
Lord Williams of Elvel: This has been an interesting debate—not least because of the Minister's replies to the various questions that have been put to him. I am surprised that the Minister, who normally treats these matters in an intelligent and sensitive manner, does not seem to understand that what is being asked of us in this Bill is by its nature a weakening of competition policy. We on this side are in favour of a strengthening of competition policy. He did not seem to understand that competition policy needs an overall review and an overall rationalisation in the way that I mentioned. He has not given us any examples of how that might have applied or how it might apply in future. When asked how much it will be, he says that maybe half will be spent and half will be saved. It is all very vague. I am

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rather surprised that the Minister can come before this place, which after all is a revising Chamber, with such measures and not give us proper answers.
Competition policy remains in confusion. I return to what I said when introducing the amendment. The amendment is designed to introduce an element of rationality into competition policy. I agree that there is a divide between ourselves and the party opposite about the onus of proof. But I believe that by introducing the onus of proof in this very modest manner, and if we allow undertakings instead of references to the Monopolies and Mergers Commission, we simply push the whole matter forward onto what I regard as more sensible ground. In recognising that there is that divide, I have no alternative but to seek the opinion of the Committee.
5.30 p.m.
On Question, Whether the said amendment (No. 63) shall be agreed to?
Their Lordships divided: Contents, 57; Not-Contents, 128.

Division No.1

CONTENTS

Addington, L.

Mackie of Benshie, L.

Airedale, L.

Mar and Kellie, E.

Beaumont of Whitley, L.

Mason of Barnsley, L.

Boston of Faversham, L.

McIntosh of Haringey, L.

Broadbridge, L.

McNair, L.

Bruce of Donington, L.

Merlyn-Rees, L.

Carmichael of Kelvingrove, L.

Molloy, L.

Cocks of Hartcliffe, L.

Monkswell, L.

David, B.

Morris of Castle Morris, L.

Dean of Beswick, L.

Nicol, B.

Donoughue, L.

Peston, L.

Eatwell, L.

Pitt of Hampstead, L.

Ewing of Kirkford, L.

Prys-Davies, L.

Falkland, V.

Redesdale, L. [Teller.]

Gallacher, L.

Richard, L.

Geraint, L.

Rodgers of Quarry Bank, L.

Gladwyn, L.

Sefton of Garston, L.

Graham of Edmonton, L.

Serota, B.

[Teller.]

Shannon, E.

Grey, E.

Shaughnessy, L.

Haskel, L.

Stoddart of Swindon, L.

Hughes, L.

Taylor of Gryfe, L.

Jenkins of Putney, L.

Thomson of Monifieth, L.

Kennel, L.

Tordoff, L.

Kilbracken, L.

Turner of Camden, B.

Listowel, E.

Warnock, B.

Llewelyn-Davies of Hastoe, B.

White, B.

Lockwood, B.

Williams of Elvel, L.

Longford, E.

Young of Dartington, L.

NOT-CONTENTS

Addison, V.

Cadman, L.

Ailesbury, M.

Campbell of Croy, L.

Aldington, L.

Carnock, L.

Annaly, L.

Chalker of Wallasey, B.

Archer of Weston-Super-Mare, L.

Chelmsford, V.

Arran, E.

Chesham, L.

Astor of Hever, L.

Clanwilliam, E.

Astor, V.

Clark of Kempston, L.

Balfour, E.

Cochrane of Cults, L.

Belhaven and Stenton, L.

Cockfield, L.

Blatch, B.

Courtown, E.

Blyth, L.

Craigavon, V.

Boardman, L.

Cranborne, V.

Borthwick, L.

Crickhowell, L.

Boyd-Carpenter, L.

Cumberlege, B.

Bridgeman, V.

Davidson, V.

Brougham and Vaux, L.

Dean of Harptree, L.

Bruntisfield, L.

Denham, L.

Butterworth, L.

Eden of Winton, L.

571

Ellenborough, L.

Moyne, L.

Elles, B.

Munster, E.

Elliott of Morpeth, L.

Murton of Lindisfame, L.

Elphinstone, L.

Norfolk, D.

Elton, L.

Northboume, L.

Faithfull, B.

Northesk, E.

Fanshawe of Richmond, L.

Onslow, E.

Ferrers, E.

Orkney, E.

Rather, B.

Orr-Ewing, L.

Gainsborough, E.

Palmer, L.

Gardner of Parkes, B.

Pearson of Rannoch, L.

Geddes, L.

Pender, L.

Gibson-Watt, L.

Peyton of Yeovil, L.

Goschen, V.

Pike, B.

Gray of Contin, L.

Reay, L.

Hanworth, V.

Renton, L.

Harding of Petherton, L.

Renwick, L.

Harmar-Nicholls, L.

Richardson, L.

Harrowby, E.

Rodger of Earlsferry, L.

Hayhoe, L.

Sainsbury of Preston Candover, L.

Henley, L.

Seccombe, B.

Hesketh, L.

Sempill, Ly.

Holdemess, L.

Simon of Glaisdale, L.

HolmPatrick, L.

Skelmersdale, L.

Hood, V.

Skidelsky, L.

Howe, E.

St. Davids, V.

Hylton-Foster, B.

Stewartby, L.

Jenkin of Roding, L.

Strange, B.

Johnston of Rockport, L.

Strathclyde, L.

Kimball, L.

Strathcona and Mount Royal, L.

Lauderdale, E.

Strathmore and Kinghorne, E.

Leigh, L.

[Teller.]

Lindsay, E.

Sudeley, L.

Long, V.

Teviot, L.

Lucas of Chilworth, L.

Thomas of Gwydir, L.

Lyell, L.

Trumpington, B.

Mackay of Ardbrecknish, L.

Ullswater, V. [Teller.]

Malmesbury, E.

Vaux of Harrowden, L.

Manton, L.

Vivian, L.

Marlesford, L.

Wade of Chorlton, L.

McAlpine of West Green, L.

Wakeham, L. [Lord Privy Seal.]

Merrivale, L.

Waverley, V.

Mersey, V.

Willoughby de Broke, L.

Mottistone, L.

Wise, L.

Mountevans, L.

Wynford, L.

Mowbray and Stourton, L.

Resolved in the negative, and amendment disagreed to accordingly.
5.38 p.m.
Lord Peston Lord Peston moved Amendment No. 64:
Page 5, line 42, after ("considers") insert ("and is able to demonstrate").
The noble Lord said: This is the first of a great many amendments which essentially are to test the Government's statement, which the Minister has just repeated, that whatever we see under this chapter of miscellaneous deregulatory provisions, the Government's policy is not—and is stated not to be—a weakening of competition policy. In other words, the Government want to do things in a different way but their view is that it does not weaken competition policy.
Almost everyone who has written to me on the subject takes the contrary view. It is perhaps very difficult to make up one's mind because it would not be known whether the provisions weakened competition policy until they were used. Then it would be clear. The noble Lord heard me say earlier that I was not too happy with the present state of competition policy if it could give rise to the kind of reports from the Monopolies and Mergers Commission that we have just seen. My first amendment, which is one of many, is a test of that.
As it stands, Clause 5 of the Bill refers to the director general and new Section 56A (1) (c) contains the provision:
"if he considers that undertakings offered to be given by particular persons would be sufficient".
We raised this matter in your Lordships' Committee on Thursday last when I was unhappy about similar statements in relation to the Secretary of State. I do not believe that "considers" is sufficient, particularly for those of us who take an interest in the matter—I refer to those of us in your Lordships' Chamber as well as those of us outside. We want more than that. We want the director general to demonstrate that the undertakings are sufficient. In other words, we want to be persuaded and we want to see how the director general was persuaded.
To return to an earlier example, I would have been quite happy if the undermining of resale price maintenance in the perfume case had been dealt with in that way. The scandal that essentially the perfume companies have undermined the work of the noble Lord's right honourable friend Mr. Edward Heath— whose greatest contribution to the welfare of this country was the abolition of resale price maintenance which he introduced when he was President of the Board of Trade in 1963—is being repeated consistently by all sorts of companies, though the perfume case was by far the most disgraceful. Essentially the Monopolies and Mergers Commission validated that case.
I am interested in whether or not the Minister will say that under these rules—this is mutatis mutandis in this case —the DGFT will seek undertakings from people engaged in bad behaviour to desist from it; that he will demonstrate that it will work—that is the point of my amendment—and then we need not bother with a rather eccentric monopolies commission.
Members of the Committee will see that many other amendments tabled in my name are along the same lines as Amendment No. 64. My intention is to obtain a more positive statement from the Government that the provision will strengthen competition policy. If they are able to accept Amendment No. 64, nothing will show more clearly their commitment to this matter.
Lord Strathclyde: My main disagreement with the noble Lord, Lord Peston, lies with the contention that what we are proposing weakens competition policy. We do not believe that it does; it simply changes the procedures whereby the DGFT receives undertakings. The principle of undertakings was conceded some years ago and we are simply looking at ways of finding a regime whereby we can come to decisions neatly and easily. I believe that Amendment No. 64 is unnecessary and would lengthen the process unduly.
Under subsection (2) in new Section 56A, the director already has to set out, in his proposal to the Secretary of State, a whole range of information: the terms of the undertakings; the companies offering them; the facts of the monopoly situation which he believes may operate against the public interest; and the relevant adverse effects which he identifies. In short, he must present both the problem and its possible solution.
The Secretary of State, who has the final decision on acceptance, can therefore form his own view of the likely effectiveness of the undertakings. Moreover,

573
before making his proposal the director will have published a notice, under new Section 56B, setting out the adverse effects and the terms of the proposed undertakings. So everyone interested will have had the opportunity to comment on the adequacy of the proposed solution.
I believe those arrangements, which are designed to promote a balanced and transparent assessment, are sufficient as they stand in providing the degree of certainty required to show that an adequate solution has been reached. I believe that we can also rely on the director to fulfil his independent role and come forward with well thought-out proposals. It would be wrong to require the director to prove indisputably that the proposed solution is right. I believe that the amendment could lead to a situation similar to that which my noble and learned friend Lord Hailsham warned against in our debate last week on Amendment No. 2. The onus of proof on the director to demonstrate the effectiveness of proposed undertakings would, in effect, mean that the courts could decide whether or not the proposal should go forward.
I do not believe that we need to increase the possibility of judicial scrutiny in that way. The director's consideration must in any case be based on reasonable grounds, or else there would be a risk of judicial review. The whole purpose of the clause is to provide the possibility of a short-cut solution, without a full-scale MMC investigation. The amendment would require the director to conduct a much fuller investigation. That would risk lengthening the whole process and supplanting the role of the MMC.
I hope that I have demonstrated that the clause already provides an appropriate level of certainty and transparency, and that the noble Lord, Lord Peston, can therefore withdraw the amendment.
5.45 p.m.
Lord Peston: I thank the noble Lord. We are certainly on the same wavelength in that we are talking about the same subject. He used exactly the word that is at the centre of my concerns—transparency. He is aware that I was mystified by his noble and learned friend Lord Hailsham last week in that merely making the common sense point that when one says, "I am going to do this", one ought to be able to show that it works—that is all I am asking—suddenly gets us into the deep water of judicial review and the heavy-handedness of the law.
I felt it was common sense that if the DGFT said, "These undertakings do this job", I should be able to put up my hand and ask him why. I am not asking him to go through the whole of the MMC report again, but I should like to be persuaded. To be told that merely asking the question "Why?" brings down galaxies of silks and goodness knows what else rather shatters me. I like to believe that the world is not quite like that; that one can ask a reasonable question and receive a reasonable answer.
Again, the noble Lord and I are on the same wavelength in that we agree on the objective. If we can make competition policy work as well or perhaps better than it works at the moment, and do it more efficiently, then the Government will get no trouble from me. That

574
is not where we disagree. I want a better case put forward that that will be so. The noble Lord cannot blame me if I am a teeny bit suspicious. He knows the disdain with which I view the deregulation committees —I am not sure whether that is their correct name— simply because of the monolithic way in which they have been set up. If those committees had contained a broader range of opinion, then the opinion of all the people concerned would have carried a good deal more weight than simply including the rather narrow range of opinion that was included. I would have been much more impressed in that case.
My concern is that if this kind of amendment comes from that kind of person then I become extremely suspicious, and the noble Lord cannot blame me for that. I was interested in his answer. What matters is that he is on record as saying that he and the Government are convinced that the provision will not weaken policy. Several other amendments will allow me to repeat my speech and him to repeat his. Indeed, if we had a Committee upstairs consisting purely of the noble Lord and me, we would proceed much more quickly and the Government Chief Whip would be a good deal happier. However, we are not doing it that way at the present time. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Peston Lord Peston moved Amendment No. 65:
Page 6, line 7, at end insert ("and an explanation of why he believes that to be the case").
The noble Lord said: In moving this amendment I shall speak also to Amendment No. 67.
Again, as the noble Lord points out, a statement is required to be made about the facts relating to the monopoly situation, which the director considers may now or in future operate against the public interest. This somewhat follows from the earlier ammendment of my noble friend Lord Williams of Elvel. I simply ask—and my heart sinks at what the answer might be, because I would not be surprised if it is identical to the one that I have just had—that he should add an explanation of why he believes that to be the case; why he believes it to be against the public interest. That applies also to Amendment No. 67.
It seems perfectly reasonable that one can ask the DGFT not merely to say "I think this is against the public interest", but to tell us why. I hope that the answer is not going to be "judicial review" again, but I fear it may be.
Lord Strathclyde: I do not wish to bore the Committee and so I shall not use an identical answer. But I have similar reservations with this amendment as with the last one: I believe that it would be unnecessary and over-prescriptive to make the requirement. We are trying to provide this new mechanism and there is a danger that, in placing too many requirements on the director, a mechanism intended for resolving problems quickly and effectively will become too bureaucratic ever to be used. The director already has to specify what are the identified adverse effects on the public interest that might be caused by the monopoly situation.
The nature of the problem which he has identified, the facts causing it, together with the proposed solution,

575
will all be presented in the director's proposals to the Secretary of State. They will also previously have been specified in the director's notice published for consultation. This should be sufficient for anyone to evaluate the director's proposal. I am sorry if the noble Lord, Lord Williams, does not think that that is a full enough answer.
The real question on this amendment and the ones that we will come to is that we have spent a great deal of time in working out how the proposals should work in practice, and we have eschewed putting other powers or duties on the director which may well hold them up. Our intention is for these things to be used where there is a relatively clear-cut case and we can reduce time and expenditure by avoiding a full reference.
Lord Peston: I thank the noble Lord for his reply. I understand his argument about wanting to be efficient and effective, but, in the end, effectiveness depends on the outcome as well as just on saving time. It is a question of what you achieve. I do not see why demanding that the director supplements his statement of the facts with an explanation should be so burdensome to him. The important point is that if I stand away from it—either outside or inside your Lordships' Committee—and I want to argue with it, and if I have not had any statement as to why he believes that the matter is against the public interest, I will find it difficult to know how to have an argument. All he will do is say, "I point to this; I have got an undertaking on that, and I think that what is going on may now or in the future operate against the public interest." Even the noble Lord himself, if confronted with this, would immediately say to the director, "Why?" He would demand an explanation. If there was a Secretary of State or President of the Board of Trade side to this, I imagine that he would do that. All I am saying, speaking up and sticking up for the rest of us, is that I would also like to be able to ask the question why—and the easiest way that I could ask that question is for it to be incorporated into the legislation. He would then give me the answer without my having to ask him.
As to the judicial review point, I do not see that his giving reasons need have the consequences that the noble and learned Lord, Lord Hailsham, said. What it does do is raise the level of public debate on matters of this kind in a helpful way.
I hope that the noble Lord will appreciate, as I said before, that there is not a lot of difference in our attitude to competition, or to the need to speed things up. I am sorry that he did not say he would like to think more about some of this redrafting. So far as I know, the parliamentary draftsmen are salaried employees, so my asking him to look again at some of these matters will not raise the cost of government; it is not piecework, as I understand it. So, at the very least, the noble Lord might reflect on one or two of these matters. I think the Bill would be somewhat improved if it was drafted slightly more towards my philosophy of things than it is towards the Government's.
The noble Lord has listened to what I have said—and replied—and I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Lord Peston Lord Peston moved Amendment No. 66:
Page 6, line 11, at end insert ("including an estimate of their quantitative significance").
The noble Lord said: Amendment No. 66 is grouped with Amendments Nos. 68 and 86 and I hurriedly look to see that the word "quantitative" is not misprinted on the Marshalled List as "qualitative", as it was last week. I hope that not too much official time was wasted in trying to work out what I had in mind—but I would be interested in the answers, if any were written—on the amendments containing the word "qualitative". "Quantitative" is what I wanted. This again I can deal with very briefly because I dealt with similar matters on Thursday.
When we are considering all matters of this kind, it is vital that we have a sense of scale as well as merely reorganising that the problem is there. I am certain that in practice—and the noble Lord need take no time to persuade me—that with this procedure, if it were in operation, someone would be looking at it in terms of scale and saying "How important is this?"; "How big are the detriments?"; "How much do we save?", and so on. So scale is of the essence. From what little knowledge I still have of economics, there are many problems with the economy on which very high powered articles are written but when you look at their quantitative significance they are fairly trivial. Their only significance is to provide a means whereby academics can get themselves promoted by writing esoteric articles. That is not something that I would criticise because many of us have got where we are that way in the first place.
But the fact is that, when it comes to policy, quantitative matters are important. I do not need persuading, as I have said, that the director would look at such matters in the normal way of working, but I should certainly like that on the face of the Bill so that I, as an interested person, could say of any proposals here, "What scale of a problem are we talking about; how do we measure the detriments?"—in rough terms, not necessarily to the last decimal point.
So I commend this to the Committee and look forward to hearing what the noble Viscount has to say.
Lord Peyton of Yeovil: I have been looking forward to hearing what the noble Lord, Lord Peston, said in introducing this particular amendment because so confident am I in his abilities that I knew that I would have a very clear understanding afterwards of what the effect of the amendment would be. As it is, I am still a little bit lost; I am not quite sure how useful it would be.
As I understand it, the purpose of the whole Bill is to get rid of restrictions which are unnecessary, silly and outdated. Some of them may have been silly from the very start. They are oppressive in their effects and therefore they should go. How my noble friend would possibly be able to give a useful estimate of the quantitative significance of getting rid of a silly regulation, I do not really know. I have said repeatedly during the passage of the Bill that I have a high regard for my noble friend's abilities and capacities; what does slightly surprise me is that a number of noble Lords on

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the Opposition Benches should have an even higher opinion of my noble friend's capacities than I have. They recognise that he is able to see the future very clearly and to assess without undue difficulty the answers to the noble Lord's questions. My noble friend may have them but I think it would not be a very useful exercise even if he does.
6 p.m.
Viscount Goschen: The Government do not believe that there is a need for these amendments even in their corrected form as they would appear to over-complicate the process under discussion. The whole purpose of Clauses 5 and 10 is to provide flexibility for solutions to competition problems to be reached far more swiftly. For example, there may be cases where a company or a limited number of companies are suspected of unfair pricing or of refusing to supply products to potential competitors. In such cases the solution to the problem may be fairly straightforward if the companies concerned agree to change their ways. These clauses provide the flexibility to accept undertakings, as has been mentioned earlier, to solve relatively simple problems instead of going through a complete MMC investigation. The effect of the amendments would be to delay that process unnecessarily.
I agree with my noble friend Lord Peyton not only on the question of the far-sightedness of my noble friend Lord Strathclyde but also that it is not clear what would be gained by requiring in all cases a statement of the quantitative significance of adverse effects in the director's proposal to the Secretary of State or in his notice published for consultation under Clause 5 or Clause 10. The director general is already required to specify numerous facts and other information both in the proposal and in the notice; for example, in a notice under Clause 5 the fact that a particular monopoly exists in a particular form or that the monopolists behave in a certain way. He is also required by Clause 10 to specify similar details in a notice of intention to accept undertakings instead of making a Competition Act reference. In each case he must indicate the possible adverse effects which the undertakings will be designed to alleviate.
We believe it to be unnecessary to require the director in all cases to give a quantitative estimate of the severity of the potential adverse effects either to the Secretary of State in his proposal, as suggested by the noble Lord's Amendment No. 66, or to those reading his published notice, as suggested by Amendments Nos. 68 and 86.
As far as concerns Amendment No. 66, the Secretary of State should generally be able to form his own view of the problem and the proposed solution from the information already provided in that proposal by the director. Similarly, readers of the published notice who are being consulted on undertakings as an alternative either to a monopoly reference or a competition reference should be able to form their own view of the adequacy of the proposed solution without requiring a detailed economic analysis in every case. Moreover, requiring the director in all cases to produce a detailed assessment right at the start of the consultation process

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would risk dragging out the whole exercise. It would also appear to pre-empt that consultation exercise, which itself may throw up further facts and figures.
It is important to note that the director could always provide such an analysis where he thinks fit but the amendments would require him to do so in all cases. That would complicate and prolong the process precisely for those more straightforward cases where we are seeking a quicker solution to any problems identified. Holding up that solution would not benefit the company or its customers. For those reasons we do not believe that we should be over-prescriptive in these matters. I therefore invite the noble Lord to withdraw the amendment.
Lord Peston: I thank the noble Viscount for his reply. I fear for once —perhaps for more than once— that I have not made myself sufficiently clear. If the director general had to do it my way—I should emphasise that my amendments are all of a piece although we are taking them separately-—far from complicating matters or prolonging them it would in many cases shorten and simplify them. The moment the director realised that he was going to come up with some numbers to show that the numbers were big enough to make it worth while he would soon see as a matter of common sense that a particular restrictive practice or a monopoly problem, although it was there qualitatively, had very little weight quantitatively and he would not do it. That is my whole point. Far from adding to his work, a very quick examination would show that it did not amount to a row of beans. Therefore, if someone had written to him about the matter he- would be able to say, "I have looked at this problem. I agree in purely formal terms that there is a problem of monopoly. But if you look at the adverse consequences they are so tiny that it is not worth while". That is why —I speak as someone who has spent a lot of his life doing quantitative work—quantitative work is so useful. It gives one a perspective and stops people fussing.
On the vital question of the merits of the noble Lord, Lord Strathclyde, I have to tell my good friend, the noble Lord, Lord Peyton, that for once I disagree with him. No one holds the noble Lord, Lord Strathclyde, in higher esteem than I do. I am most shocked that he thinks that there are others who think more: highly of the Minister than I do. I say that in the hope of persuading the Minister to accept another amendment in due course.
Lord Peyton of Yeovil: The noble Lord has completely misunderstood me. I was warmly welcoming the evidence that the noble Lord, Lord Peston, has an even higher opinion of my noble friend than I do.
Lord Peston: Forgive me. In that case we are more or less in agreement. All I hope is that someone says something nice about me before the day is over.
Noble Lords: Hear, hear!
Lord Peston: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 67 and 68 not moved.]
Lord Peston Lord Peston moved Amendment No. 69:
Page 7, line 21, after ("Director") insert ("in public").
The noble Lord said: It is useful when we are in Committee to go over every matter. The purpose of my amendment is to do that. The amendment takes us back to transparency. What I am saying is perfectly clear. It is vitally important that the invitations referred to should be in public so that we can know what is going on. I am not sure whether the noble Lord, Lord Strathclyde, or the noble Viscount, Lord Goschen, is to read out the standard lilac or turquoise coloured brief this time. However, I simply do not see that this requirement need in any way prolong the matter. It is simply a way of proceeding. The correct way of doing things of this kind is for those of us who are interested—the public and your Lordships—to be able to know what is going on. Adding the words "in public" is a useful amendment to insert in order to get that transparent outcome.
Lord Peyton of Yeovil: For a moment I was very nervous that the noble Lord, Lord Peston, would not move his amendment. I would not then have had the opportunity of asking him what he intends by it. If the amendment were accepted the clause would read:
"the Director in public may only make a proposal under section 56A — if.
Does that mean that he is free to make any proposal he likes in private and that the restrictions are on him only in public? That is the only way I can read the amendment. I think it is rather surprising.
Lord Peston: I am not certain that the noble Lord is placing my amendment at the right spot in the Bill. The Bill refers to representations and not to proposals. I refer to line 21 on page 7. That is where I mean it to be.
Lord Strathclyde: I like the way in which my noble friend Lord Peyton put it. I was hoping that the noble Lord, Lord Peston, had made a mistake which would have given us some cause for amusement. I would not have had to explain my opposition to this amendment because it would have been a nonsense. However, that was not the case. The noble Lord, Lord Peston, has put his amendment in the correct place, as I understand it.
This amendment takes us back to the debate which we had last Thursday about public consultation. We disagreed then and I believe that we shall disagree now. By making it necessary for representations to the director-general about draft monopoly undertakings to be made in public, this amendment deprives interested parties of the opportunity to make their views known in confidence if they wished.
It is a very strong principle as regards the kinds of consultations which governments carry out from time to time with individuals, that confidence is maintained at their request, particularly when commercial confidence is involved. Unlike the MMC, the director-general does not have the power to summon witnesses. If the consultation process had to be held in public and there was no opportunity for representations to be made in confidence, some competitors or customers of monopolies might be deterred from making their views known for fear of retribution.
We have already gone to some lengths to ensure that the whole process of identifying, consulting, advising

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and deciding on undertakings is as transparent as possible. I do not see how this amendment would significantly add to the overall level of transparency. Very possibly, it could detract from the purpose of consultation which would involve consumers as well as companies. It could lead to a lessening of the ability of the director-general to decide on these kinds of cases. Therefore, I hope that the noble Lord, Lord Peston, will feel able to withdraw the amendment.
Lord Peston: The noble Lord is quite right to refer to the last occasion when this matter was discussed. I am very sorry that we disagree on it. The Minister will recall what I said last time. If you want to make representations and you do not have the courage to make them in public, then I do not see why policy should be based on what you say. I would have thought that Members of the Committee opposite in other modes and when not trying to support the Government on this Bill, would always wish to favour transparency as opposed to covert ways of doing things.
We all know that in the real world people press things on the Minister saying, "I want to tell you this, but please don't quote me". The noble Lord will be horrified to discover that often people whom he believes to be his friends, come to me and say, "I would like to say the following to you, but I beg you not to let anyone know". I take the view that if people tell me things which I cannot repeat in public, then I do not want to know. Public policy should be based on transparent debate and not of the kind where someone says, "This is a problem, but I am not willing to let my name be made public". I am genuinely surprised that the Minister wishes to continue along that line. I understand that governments love that sort of thing. This is not a political point.
Lord Strathclyde: The noble Lord is slightly misrepresenting what I have said. I am entirely in favour of transparency and in an ideal world all these things would be made public. The problem is that very often when governments consult they are asked to keep matters confidential. We give that commitment. If we were not to do so, then it may well be that we would not get the information we need in order to make decisions and to make things more competitive and so on, which the noble Lord, Lord Peston, professes that he favours. That is the issue. It is not a question of the Government wishing for things to be more transparent. We believe in open government, as the noble Lord well knows. The point is that we are trying to get the best solution out of the consultation and that is why we keep certain issues private.
Lord Peston: May I return to this theme? We should not confuse consultation with representation. This is not a criticism of the Minister or the present Government. When I advised governments they always operated in this way. In my experience Ministers are very content to keep things "in house" so to speak. Increasingly I have come to the conclusion that that is not the right way to do things not so much as regards consultation, but concerning representation.
If you come to me and wish to represent a point of view as a Minister, in my opinion you must be willing

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to make your view known in public. If you want to influence me, but do not want anything to be known, then I simply look askance at that. That is the point that I made last week. I accept the noble Lord's point that sometimes as regards information —and I mentioned this a few moments ago—people will only tell you if you keep the source secret. That happens to me and it has happened more than once in connection with this Bill. People have come to me and told me about the sins of the Government as regards some matter of regulation and then they have said, "We do not want you to quote the exact case". Presumably, they tell the noble Lord that as well.
When people come to me and say that, I simply reply, "I am not willing to work on that basis. If you tell me something which I cannot use in public then it is no use to me". I am sorry that we are in disagreement on this issue. However, I do not feel that we are in quite so much disagreement on this matter as we are as regards other matters. I believe that I have used the Committee's time sufficiently to air the problem and that is what we are trying to do concerning this section of the Bill. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
6.15 p.m.
Lord Peston Lord Peston moved Amendment No. 70:
Page 7, line 21, leave out from ("within") to ("about") in line 22 and insert ("28 working days").
The noble Lord said: I am sorry for the delay. When you are doing everything on your own it is a slightly slower process than would otherwise be the case. This amendment was debated in the other place and I introduce it here to see whether the Government have any view on this question.
The Bill as it stands simply states,
"within such time as he may specify".
One sees why one does not want to be too prescriptive about this kind of thing. In so far as we all accept the Minister's view that we want a quick process and to get a move on, to specify a particular time—and "28 working days" is approximately one real month— would be worth doing. The matter was raised in the other place and I have tabled the amendment simply to discover whether the Government have had any further thoughts on the matter.
Lord Strathclyde: I am sorry that the noble Lord, Lord Peston, seems to be slightly overworked this afternoon. That is entirely his own fault, particularly when he moves an amendment which has already been dealt with extremely well in another place. Unfortunately, I suspect that he will get the same answer, although I have not consulted Hansard of the other place.
The noble Lord makes a perfectly reasonable point that if we want this matter to be dealt with quickly then a time limit should be specified. However, that would remove the director general's discretion to vary the consultation period according to the circumstances.
The purpose of new Section 56B is to build transparency and consultation into the system. We have taken care to ensure that everything is clear and above aboard and that everyone who wishes to comment will

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have the chance to do so. That means, besides the monopolists themselves, their competitors, customers and anyone else with an interest.
We have left it open to the director general to specify the consultation period. He has an independent role and we think it best for him to judge this for himself. He is charged with the duty of keeping markets under review so that he can take appropriate action. I find it difficult to imagine that he would allow consultation to be dragged out by companies, simply to avoid a resolution.
But this is the point: every monopoly case is different. The interests and number of those who may be affected are also different—customers, competitors and consumers generally. There might be cases where concerns were clear and all those affected agreed quickly on the solution and sometimes not. It would be difficult to tie all this down to a fixed period which might deprive some parties of the opportunity to comment in time. I know that that is not the intention of the amendment. It is better to leave it to the director general to make up his own mind. After all, he is already charged with a very responsible job.
Lord Monkswell: I am sorry to intervene, but if I heard the Minister correctly, he said that the director general would consult over not too long a period and would not allow the consultation to be dragged out by interested parties who wanted to delay. That goes with the grain of the thinking that things need to be sorted out promptly and in a timely fashion, but let us consider the Government's own consultation record.
I specifically have in mind responses to education White Papers or to proposals for legislation in relation to education when the consultation period has been over the summer holidays when everybody in the educational establishment is away. That has meant that the consultation has not been very adequate, at all—to put the best interpretation on it. Could we have some indication from the Minister of what the Government's advice to the director general will be in terms of ensuring that enough time is allowed for representations to be made by interested parties? Particular times in the year or in the business cycle should be taken into account to allow interested parties to make adequate representation.
Lord Strathclyde: It is entirely fair to attack the Government but it is not fair to attack the director general. The whole point is that, ultimately, the director general has three choices: do nothing; go for a full reference; or go for the new fast-track procedure. If he decides on the fast-track procedure in consultation with the companies involved it must be in their interests for the consultation to be as quick as possible. If the consultation is dragged out on purpose by the companies involved the director general is still free to go for a full reference. The problem with a full reference is that it will be expensive, it will take a long time, and the decision may be even more uncertain. Therefore, it will be in the interests of the companies to ensure that the consultation is completed as quickly as possible. It must also be in the interests of the director to ensure that he consults as many interested groups as possible. I

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sought to emphasise that that would include not just the company involved but its customers and, indeed, consumers generally.
Lord Peston: The Minister referred to "the director". I do not know whether by that he meant a whole class of directors that may or may not exist from now into infinity or the present Director General of Fair Trading. If the noble Lord meant the latter, I must advise him that the present DGFT is a very old friend of mine and that I do not regard it as remotely unfair of me to criticise him at any time. I know that he would not be in the least upset by it. He happens to be an extremely good person for the job.
I do not want to go over the ground trodden earlier by the noble Lord, Lord Rodgers of Quarry Bank. However, presumably by saying that they believe in flexibility and do not want to be too prescriptive towards the director general, the Government must have given some thought to what a reasonable period of time is. The Minister says that 28 days is too short or does not give enough flexibility, but presumably a year would be too long. It would be absurd. Can the Minister enlighten me about his department's thinking on the period of time? I am not pressing for 28 days, but I am interested in what the department has in mind.
Lord Strathclyde: That is exactly the difficulty. I am not saying that 28 days is too short a period. In fact, in some small cases involving monopoly considerations, the director general could have the whole thing wrapped up in a couple of weeks. In the generality of it, I should not have thought that 28 days was wholly unreasonable and a year would be too long. However, for us to specify in legislation what the period of time should be would be unnecessarily to constrain the director general. That is the issue. That is why we believe that he should have that discretion.
The noble Lord, Lord Peston, says that the current director general is a friend of his and he naturally respects his judgment. I am sure that future director generals will earn the same respect that the current director general enjoys.
Lord Peston: I am interested in the Minister's remarks. I cannot commit myself, however, because I never know what mood I shall be in in the future. I hope that the Minister understands that amendments such as this are in the spirit of what the Government are trying to achieve. We want to get a move on. I am glad to hear that if those who want to make representations to the director general say, "It will take us about a year to put a case before you", at least the Minister's department (although it would not be involved at that point) could take the view that that would sabotage the whole procedure. I take it that the Minister's interpretation of the provisions is that,
"within such time as he may specify",
means precisely that and that if the director general were to say, "I want your view within 28 days", then 28 days it will be. Can the Minister confirm that?
Lord Strathclyde: Of course. The director general comes to his view and sets a time scale. The companies or those with whom he is consulting must stick to that.
Lord Peston: I thank the Minister for clarifying the position a little. Although I cannot remember which amendment we are on—I suppose that it is Amendment No. 70—I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Lord Peston Lord Peston moved Amendment No. 71:
Page 7, line 31, leave out ("in his opinion").
The noble Lord said: This is a drafting amendment, unless my suspicions are correct and there is more here than meets the eye. Having read the clause, I cannot see that there would be any difference if the words "in his opinion" were removed. I am wondering whether those words drifted in from other pieces of typing in which they appear or whether the phrase has any meaning. That is why I tabled the amendment. I beg to move.
Lord Strathclyde: This is again the dangerous territory that we dealt with on our first day in Committee when we considered Amendment No. 2 and my noble and learned friend Lord Hailsham talked about making matters more challengeable in the courts.
In publishing the notice, clearly someone has to decide how to identify the persons who ought to see the notice when it is published. It is a question of the director general's opinion. The director general is best placed to take that decision. He has been in contact with the companies. His staff will have gained familiarity with the markets. He has an independent statutory role.
If the director general's decision on the manner of publication is such that no reasonable director could have made it, then he could be successfully challenged. But the amendment could deprive the director general of any discretion and might even increase the risk of legal challenge. I would not wish to suggest that the courts would come to the wrong judgment, but the director general is in a better position to make that judgment than the courts.
The noble Lord, Lord Peston, said that he was suspicious about the words "in his opinion". My understanding is that we need those words so that it is seen that it is "in his opinion". If those words were omitted, the director general could be open to his view being tackled in the courts.
Lord Peston: I hear what the Minister says and I certainly heard what his noble and learned friend said last week. However, I am unhappy about it. I simply do not see why the legal profession should make us write bad English or include superfluous phrases (as far as logic is concerned) in our legislation simply because of its great fear and worry. Perhaps I should put it the other way round. Perhaps the Minister can explain this to me. Why would the director general do something other than that which is "in his opinion"? We should try to read the sentence as if it could have any other meaning. Is there any suggestion that the director general would do something that was not "in his opinion"?
As I said last week, I dislike clashing with lawyers on their playing fields; I would rather play on mine. But if I may say so, things have come to a pretty pass when we

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are prevented from writing our legislation in a way that ordinary people can understand—I am sure that that is how the Minister and I regard ourselves—simply because of this sudden peculiar fear about judicial review. The sentence makes perfectly good sense to any reasonable person without the expression "in his opinion". If we were to set a general school certificate exam question, "Look at that sentence and, in your opinion, take out any phrase which you feel adds nothing", I am sure that any child would take out the words "in his opinion". I am sure that that is undoubtedly right.
Lord Peyton of Yeovil: I do not wish to try my noble friend's patience but I too wonder whether these words are necessary. I was very much influenced by what was said the other day by the noble and learned Lord, Lord Simon of Glaisdale: that the Minister's opinion was necessary in order to trigger the whole process. This case is slightly different. The use of the words "are likely" would indicate that an opinion is called for and that it would be no opinion other than the Minister's. I wonder whether in this case my noble friend can give way. The matter is of no great importance but it is different from the case that was mentioned the other day.
6.30 p.m.
Lord Strathclyde: I do not have a huge problem with the issue either way. Unfortunately, in this matter I am the creature of the draftsman but I do not believe that a great issue of policy is involved. I am advised simply that, in order to create some certainty, this is the way it needs to be done. If the director's decision on publication were challenged, the court would have greater freedom to interpret the clause so as to allow it to substitute its own view. I understand that the words "in his opinion" put the matter beyond doubt. We may believe that they are relatively redundant words; but I am in the hands of the draftsman and I believe that they are the correct form of words.
Lord Monkswell: I believe that if the words were omitted, as proposed in my noble friend's amendment, the courts would be given the opportunity to intervene in a situation in which, in their opinion, the director has not done the job satisfactorily. If the phrase is left in, the courts will not have the ability to say to the director, "We are sorry but we think that you have got it wrong. Can you try again?". Effectively, the courts will have no discretion and injured parties, or those who believe that they have been discriminated against, will have no opportunity of putting the matter right.
Lord Strathclyde: I agree with part of what the noble Lord says. If the words, "in his opinion" are left out, the case is more challengeable. In any case, if the director is unreasonable in the way in which he makes his decisions, he is open to judicial review and therefore there is no great problem.
Lord Peston: I am an implicit member of the "Campaign for Clearer and Simple Legislation", of which I see the noble Lord, Lord Peyton, as the leading figure in this Chamber. I often table amendments of this

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kind in the hope that one day someone will accept one; and by that minuscule amount, legislation will be easier to understand. As a result, the income of lawyers will go down, which is another of my ambitions.
I do not disguise the fact that I become irritated when I receive answers of this kind. However, I am certain that the advice that the Minister has received is the best available to him. That irritates me even more. I shake my head sadly, but I have tried and I shall try again. For the moment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Peston Lord Peston moved Amendment No. 72:
Page 7, line 32, at end insert:
("Proposals under section 56A: publication of response to representations.
"56BB.—the Director shall publish his response to any representations made to him by bodies representative of the interests of consumers or injured parties or their representatives in connection with proposals under section 56A." ").
The noble Lord said: At last we come to a matter of great substance, and I am certain that the "judicial review" card is not the one to play. As regards those who make representations, the interests of consumers are overwhelmingly important but other injured parties may be involved too. The director will receive such representations. To my deep regret, as the noble Lord has rejected my view of the matter, the director will be willing to receive such representations not made in public; in other words, he will consider matters covertly as well as overtly.
The next question is whether having received representations the director should respond to them. He will of course respond to them in the broad sense that eventually he will reach a determination. I believe that those who make the representations—whether they are the NCC or the Consumers' Association on the one hand or others who regard themselves as interested and injured parties—deserve more than a note or a printed card from the director stating, "Thank you for your representations. They have been noted by the Director General of Fair Trading". I imagine that: that is what happens most of the time. I believe that bodies which have gone to that trouble are entitled to know more positively the director's response.
I would enunciate this as a much more general issue in government but as we are discussing the more specific part of the Bill, I shall concentrate on that. It is a matter of some significance. I do not make this as a political point because I remember that as regards the Government whom I had the great honour to serve, one received representations and those outside wondered whatever happened to them. Did anybody receive them, read them or take any notice of them? Were they simply sidelined? Did they end up on a huge pile of papers so that the Minister could say, "I certainly received representations"?
The noble Lord referred to his commitment to open government. I agree with him. My commitment not merely to open government but to sensitive government suggests that something along these lines would be worth including on the face of the Bill. I beg to move.
Lord Peyton of Yeovil: The noble Lord, Lord Peston, asked who reads all the information. I wonder who will read the reply. I believe that there is enough information and data in orbit without adding to the huge volume of the illegible. The task will take up a lot of time, too, because once people have to make public statements, they must be very careful. Surely in many cases these matters can be dealt with briefly. I would be most reluctant to ask the Minister to put this provision in the Bill because it would prolong the proceedings and add to the floodtide of useless information which is in constant circulation.
Lord Renfrew of Kaimsthorn: I wish to second my noble friend's remarks. The noble Lord, Lord Peston, appeared to indicate that the director should respond to representations. No one could object to that view; but the publishing of all responses to any representations will generate an enormous amount of paper work. Who will receive it? Where will it be published and what will it cost? It is a piece of bureaucracy which I cannot believe the noble Lord, Lord Peston, with his sense of economy in the English language and so forth, can possibly desire.
Lord Strathclyde: We continue the debate on consultation. The amendment is similar to Amendment No. 85 and I do not know why they were not grouped together. Perhaps Amendment No. 85 will not be moved. There is nothing between the noble Lord and I in our desire for greater transparency, open government, and so forth. However, I do not see what useful purpose the amendment will serve. Like my noble friends Lord Renfrew and Lord Peyton, I believe that it could be counter-productive. Underlying the amendment, there appears to be an idea that the director would not be doing his job properly were he not forced to publish his response to representations. I believe that we can rely on him to come to a balanced view on the basis of all representations received and on any other information available to him. In his independent role, he must keep watch over markets and activities. He has shown in the past that he is willing to take action where he thinks fit.
I would not wish to tie the director to a particular course, but I assume that where representations are received he will normally respond direct. If the recipients consider that their comments and the director's response should be made available to a wider audience, there is nothing to prevent them seeking publication in a suitable journal. I do not see why the director himself should be forced to publish.
Moreover, the director's response will be likely to have to refer to the particular comments received from the person consulted. As I mentioned earlier, some companies as injured parties might be deterred from making comments to the director if they knew that his response was to be published. That is one difficulty with the amendment.
Another difficulty is that the amendment would risk simply keeping the debate open and prolonging the whole process. I believe that the opportunities for consultation and comment are fair and extensive. But at some point in the process a decision has to be made. It

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would be wrong to leave the companies concerned, and the market generally—including customers and con-sumers—in a perpetual state of uncertainty.
Perhaps the noble Lord, Lord Peston, will reflect further on the amendment. I know that he holds this matter dear to his heart, but I believe that the provisions as they stand provide the right balance between consultation and shortening the investigation process. I hope that the noble Lord will think again.
Lord Peston: I thank the Minister for his reply. I shall certainly think about it further. I was rather horrified by his reply, as I was by the remarks of other Members of the Committee who intervened. In our society today large numbers of people say that democracy is a sham. They say that no one ever listens; and that when governments say that they wish to consult, they mean that they ask for opinions and then take no notice. This is an extremely serious matter, and that is why I prefaced my remarks by saying that this is an amendment of some substance.
Perhaps I may ask the noble Lord, Lord Renfrew, this. If no one is going to read the answers, why are the Government and the director asking for the representa-tions in the first place? That is the central point. The noble Lord's view is extremely cynical. Let us assume that there is a restrictive practice about which I am concerned. Although the noble Lord, Lord Peyton, is not wrong to be cynical, I should like to believe that someone had actually read what I wrote. And then I should like to believe that someone would feel that it would be useful and democratic to reply to me by saying, "I do not agree with you but this is my argument. This is why I disagree with you". That is what the Minister has been doing all afternoon. I agree that no one else may be interested but I am interested and at least it can be said that, although the Government or the director did not do what I wanted, I have some evidence that at least they thought about the matter.
Lord Renfrew of Kaimsthorn: I thank the noble Lord for giving way. I believe that it is common ground among us all that when representations are made they should receive a reply. Nobody disagrees with that. The question is upon whom it should be incumbent to publish the reply. If the noble Lord made a representation, one would hope that he would receive a reply from the director. If he wished to make that reply public, no doubt he is entitled to do so. But it seems rather tedious for the director to have to publish every representation that he may receive. I believe that that is the difference between us.
Lord Peston: One of the problems with democracy is that it is extremely tedious. Noble Lords are probably finding extremely tedious the interchanges between the noble Lord, Lord Strathclyde, and myself because I insist on asking the questions and, quite rightly, the noble Lord insists on answering them. The amendment deals with a matter which is merely a counterpart to what happens in this Chamber every day of the week.
I am concerned about the view which people have of our processes today. I was not able to persuade the Committee on Thursday in regard to my worries about

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the nature of the Bill, which I dislike. I regard the Bill as a threat to democracy. I know that the amendment deals with matters at a much lower level and there is no threat to democracy at that level. However, if representations are asked for, one should believe that one's time is not wasted by responding. I do not seek a reply which says, "Dear Sir, thank you very much for you representations. I am taking note". Your Lordships will see that the amendment refers to:
"bodies representative of the interests of consumers or injured parties".
I should like the director to reply by saying, "I have considered your argument and I believe that it is flawed in the following way". That is exactly how the noble Lord, Lord Strathclyde, has been arguing with me this afternoon. Whether or not I agree with him, I feel that someone has considered what I have said and that I have done my job. This amendment is a counterpart to that.
I am worried that nowadays everybody is concerned only that industry should be efficient and so on and no one is concerned about the processes in our society. I know that I am being tedious, but I believe that this is a matter of some seriousness. I believe that the director should publish his response.
This is not a technocratic matter. I am a technocrat but I believe that technocrats should no longer be able to get away with saying, "This is something which will increase efficiency; end of argument". However, I have put forward my argument and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Peston Lord Peston moved Amendment No. 73:
Page 7, line 46, at end insert ("unless in his opinion the inclusion of that matter relating specifically to that individual is necessary for the purposes of that statement or notice, as the case may be").
The noble Lord said: I agree with the noble Lord that if I am not willing to plod through the detail of the amendments, I should have stayed on the Back-Benches and then I could have sat in the park all afternoon listening to the band. I assure the Minister that I should have been infinitely happier doing that. But someone has to do this work and on this occasion it seems to be me.
In moving this amendment, I shall speak also to Amendments Nos. 82 and 83. They deal with what should and should not be in the public domain. I accept that I have had this argument twice before: once today and once last week. Therefore, I merely wish to go on record by repeating the point.
First, I should like clarification with regard to what is in the public interest in terms of disclosure. The general point is that if people wish to make statements, they should be willing to make them in public. It is as simple as that. I beg to move.
Lord Renfrew of Kaimsthorn: Perhaps I may ask the noble Lord, Lord Peston, for one element of clarification. A few moments ago he spoke with great effect and at considerable length to Amendment No. 71 on which he urged several times with great clarity that the words "in his opinion" should be omitted. And yet Amendment No. 73 includes the phrase,
"unless in his opinion the inclusion",

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and so on. Perhaps the noble Lord will tell me why the words "in his opinion" in Amendment No. 73 are so pertinent whereas they were superfluous in Amendment No. 71.
Lord Strathclyde: At the end of this short debate, the noble Lord, Lord Peston, will have an opportunity to answer that extremely pertinent question asked by my noble friend Lord Renfrew. I was struck by exactly the same thought when I studied the amendments over the weekend, I am sorry to say. The amount of work which I have to do on the amendments knows no bounds but I am always delighted to do it.
Before I turn to the amendments, it may be helpful to explain the general background to the provisions on excision which are under discussion. In each case they closely follow the wording of existing sections in the Fair Trading Act which deal with the excision of information from MMC monopoly and merger reports. Therefore, we have direct experience of how such provisions apply in practice.
Careful consideration is given to the need for excision, whether to protect the public interest or the interests of third parties. Nearly all requests are made on grounds of commercial confidentiality. But Ministers do not by any means accept them all; at a rough estimate they probably agree to around 50 per cent.
In each case a balance needs to be struck between the harm to the public interest, individual or company that might be caused by publication and the harm that might be caused to the public interest by not publishing the information. I believe that the existing provisions have been applied carefully and properly, and I am sure that the same approach will be taken under the very similar provisions we are now proposing.
I turn first to Amendment No. 73. I would wish to remind the noble Lord, Lord Peston, that we are talking here about the private affairs✶ of individuals, not their business affairs. The amendment would mean that the director need not have regard to the need for excluding information harmful to an individual, by taking it out of his published notice or proposal to the Secretary of State, where in his view that was necessary to understand the notice or proposal.
The existing text of subsection (2) in New Section 56C closely follows the wording in Section 82(1) of the Fair Trading Act, which applies to the publication of MMC reports. The director, like the MMC, must have regard to the need for excluding certain material from the published item. That includes material relating to the private affairs of an individual person, whose publication might be seriously harmful to him or her.
Therefore I do not believe that the amendment is necessary. The director need only have regard to the need to exclude such material. He does not have a duty to exclude it. It is the Secretary of State who has a duty to exclude material meeting the statutory criteria from parts of the proposal that are published, under New Section 56G(4). But the Secretary of State must also
✶For the clarification of the meaning of "private affairs" of an individual, see Official Report, 20/7/94; col. WA2.

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weigh the harm that would be caused to the individual by publication, against the harm that would be caused to the public interest by failure to publish. The existing, very similar provisions for publication of MMC reports have operated smoothly. I am not aware of any cases where information vital to understanding a report has been omitted.
Amendment No. 82 proposes that if the Secretary of State excludes material from the published statement of facts and adverse effects of the monopoly situation, on grounds of public interest under Section 56G(3), he must specify the nature of the public interest involved. Again, the provisions on exclusion of material reflect the provisions which already exist on exclusion of material from monopoly and merger reports. I can assure the Committee that it is rare to make exclusions from MMC reports on these grounds.
I do not see what useful purpose would be served by requiring the Secretary of State to specify the nature of any public interest justifying exclusion. Clearly, the kind of issues that spring to mind are those of defence or national security. But in such cases I imagine it would be obvious, from the context and nature of the exclusion, that precisely those aspects of the public interest were at stake. Why oblige the Secretary of State to state the obvious? Alternatively, it is possible that issues of national security or defence may be at stake, without that being obvious from the nature of the exclusion. In those circumstances, the effect of the amendment could negate the purpose of the excision and damage the public interest.
Amendment No. 83 would force the Secretary of State to publish information harmful to private individuals or commercially damaging to companies, even if there was no public interest in publication. There would be a public interest in publication if, for example, such information was necessary in order to understand the published statement of the facts and adverse effects of the monopoly, or the undertakings accepted. Besides doing direct damage to the interests of third parties, the amendment might deter others in future from letting their views be known if damaging information were to be released.
I do not think that any of these amendments would assist. I believe that the provisions which we have laid out provide the right balance between protecting the interests of individuals and companies, and ensuring the proper dissemination of information to the public. I hope, on that basis, that the noble Lord will withdraw his amendments.
Lord Peston: I thank the noble Lord. I must say that I have learnt quite a lot from his reply. I am doubly indebted to him because, first, I did not know that only 50 per cent. of such representations were responded to. It is useful to have that on the record. Secondly, we are discussing fair trading and competition matters. I did not realise that defence and those kind of matters were underlying this kind of provision. As someone who in an earlier existence was involved with drafting such legislation, I cannot recall that I had anything like that in mind at all. Therefore I am quite intrigued that the

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latest argument is that one cannot reveal something to do with a restrictive practice because some nuclear submarines might suddenly be exposed to a foreign threat, or something like that. However, there are never any limits to the arguments that the most brilliant of our officials can dream up in order to justify something. I am most impressed that standards are kept as high as that.
I am also interested to know that private affairs—I ask the noble Lord to confirm this—are known legally (this is all to do with law) to be a different concept from business affairs. I had assumed under private affairs one included a person's business affairs. I was not worried about what people might be getting up to in private: I was simply worried about open government. But can the noble Lord tell me whether private affairs and business affairs are concepts known in law and known to be different from each other? If he cannot tell me that, perhaps he will ask one of his officials to write to me.
I hope I may now explain the wording to the noble Lord, Lord Renfrew. Subsection (8) on page 7 of the Bill states—and this is the point—
"In this section, references to an appropriate manner, in relation to the publication of a notice by the Director, are to such manner as he considers most suitable for the purpose of bringing the notice to the attention of persons".
The relevant words are
"as he considers most suitable".
There is already reference to the director and what he needs to do. That is why the words "in his opinion" are otiose, apart from in relation to the point made by the noble Lord, Lord Strathclyde, which is that somehow this is the key which turns off judicial review, and who are we laymen to argue, so to speak. But I was simply viewing this as a piece of continuous English. As regards the words "he considers most suitable", is he going to consider most suitable something that is not in his opinion? That is why the words "in his opinion" appear in my amendment, because under that proposal the director has to take a view. That is why I included those words. Therefore I do not believe that there is any inconsistency in my proposal. I hasten to add that my phrase "in his opinion" was not included for the sake of problems of judicial review, which is a subject that, as I have pointed out to the noble and learned Lord, Lord Hailsham, I do not understand.
I have one final point to make as I do not wish to be too critical of the Government. I am fully aware that this kind of stuff goes into legislation all the time. One of the reasons I raise this matter is that I think there is some kind of memory bank in Whitehall and that in the middle of every Bill staff in Whitehall throw in some paragraphs of the kind we are discussing. I imagine the computer has a programme which states "Put in the secrecy/private interest clause at this point". The computer goes "ping" and the draftsmen put it in. No one does any thinking on that matter: it is just taken for granted that one bangs the thing in. Therefore it is increasingly the case that legislation is being written automatically. I do not criticise the Government because this has been happening for some time. I simply think that someone ought to get up occasionally—in this case it is poor old me—and query why we constantly just bang this stuff into legislation in what I regard as a

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somewhat unthinking manner. However, as always, the Committee has given me more than a fair run for my money and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Peston Lord Peston moved Amendment No. 74:
Page 8, line 31, at end insert:
("(5) Any modifications accepted by the Secretary of State under subsection (4) above shall be subject to the procedures for the consideration of representations set out in section 56B(6) (8).").
The noble Lord said: The noble Lord, Lord Peyton, referred to the tremendous foresight of the noble Lord, Lord Strathclyde. He cannot apply that to me as I thought that we were going to stop at Amendment No. 73 and go to eat. I am slightly taken aback to find that I am dealing with Amendment No. 74.
The point of Amendment No. 74 is simply—I think I can both make the point and do the Minister's reply for him—that if the original procedure makes sense, which involves all the processes of considering the provision, consultation and other such processes, if the Secretary of State then makes some modifications, what is there in the nature of the case that would cause one not to need to go through all the procedures again to discover people's views? I do not understand, and I ask the noble Lord to justify it. If it was okay on the first occasion, should this not be an iterative process? There is a feedback here to the Secretary of State who modifies what has been proposed, but should he not then ask people about it again? I accept that this, unfortunately, prolongs the process, but if it was okay to do it in the first place, why does it cease to be okay in the second place? I am just interested in the logic of the Government's position here. If it were logical to do it once, why is it not logical to do it twice, or, I have to add, several times? I beg to move.
Lord Strathclyde: The noble Lord, Lord Peston, may be surprised to hear that there is more logic in this than initially seems to be the case. The Secretary of State is enabled in this new section to make any final adjustments to the undertakings as he is ultimately responsible for accepting them. He may wish, for example, to modify the detail of reporting arrangements to the authorities or to adjust the timing for compliance with undertakings slightly. I believe that it must be right that he should be able to do so without embarking on the whole process of consultation again, which would actively work against the interests of increasing competition as much as it might work in its favour. It would be clear whether modifications had been made because the draft and final undertakings must be published.
The amendment is also unnecessary because if the changes which are made by the Secretary of State were so substantial as to change the nature of the undertakings they could no longer be termed a modification of the undertaking proposed and the director would have to make a fresh proposal from scratch if he wanted to proceed.
I hope that that is clear to the noble Lord and that he will feel happier than he was a few moments ago.
Lord Peston: Again, the noble Lord has been immensely helpful. It had not occurred to me, and I thank him for placing it on the record, that if the modifications were substantial one would have to go through the process again. My amendment assumed that modifications were of a substantial nature and would therefore go through. I take it that the Minister is saying that, if as a result of going through the first procedures the modifications are significant, the Bill requires that one would have to go through the original consultations and representations again. I shall have to think about that, because I cannot see anywhere in the Bill a distinction between large and small modifications. The amendment assumed that the modifications concerned would be major modifications. Minor modifications would not concern me at all.
If the Minister will bear with me, I shall go away and scrutinise the Bill to see where it makes a distinction between large and small modifications and where within the Bill large modifications require repetition of the representation and consultation procedure. At present I cannot see it anywhere.
I thank the noble Lord for his reply, which was particularly helpful. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7.p.m.
Viscount Goschen: I beg to move that the House do now resume. In moving the Motion I suggest that the Committee stage begin again at eight o'clock.
Moved, That the House do now resume.—(Viscount Goschen. )
Lord Simon of Glaisdale: I intervene only to point out that 50 minutes were spent on the Statement and to ask the noble Lord the Whip what rearrangement has been made of the business on this Bill in consequence.
I did not intervene earlier because I could not relate that point to any amendment that was being moved. Also, during the debate on the Child Support Bill of notorious memory, the Government put in two Statements on a Thursday during the Third Reading of the Bill. As a result the second of many government amendments was not reached until after six o'clock. When we complained about that we were promptly deprived of our supper adjournment. I wanted the noble Lord the Whip to commit himself to supper before I made this protest, if it can be called such. It is purely platonic, because the noble Lord, Lord Williams, genially said that he would not think ill of me if I left before the end in any event.
Viscount Goschen: I note the noble and learned Lord's enthusiasm for the dinner break, which I am sure is shared by noble Lords around the Chamber. It is my understanding that we still intend to complete the business which has been scheduled for today.
Lord Peston: Perhaps I may intervene to say that I am very sympathetic to what the noble and learned Lord, Lord Simon of Glaisdale, said. We often plan the business in order to ensure that important matters are dealt with at certain times. When I tried to work out

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what we would debate today I was unaware that we would also have a Statement. This is not the time to raise the matter and I do not want to ruin the dinner hour, but I am delighted that the noble and learned Lord, Lord Simon of Glaisdale, has placed this query before us. I believe that at some point we may wish to consider it further.
On Question, Motion agreed to.
House resumed.

Sale and Supply of Goods Bill
Brought from the Commons; read a first time, and to be printed.

Insurance Companies (Third Insurance Directives) Regulations 1994
7.5 p.m.
Viscount Goschen Viscount Goschen rose to move, That the draft regulations laid before the House on 24th May be approved [20th Report from the Joint Committee].
The noble Viscount said: My Lords, I beg to move the Motion standing in my name on the Order Paper.
The regulations before the House today amend primarily the Insurance Companies Act 1982. Consequential amendments are also made to numerous other pieces of legislation, including the Financial Services Act 1986.
The third directives complete the single European market for insurance by establishing the principle of the "single passport" for insurance companies. By this I mean the principle that an insurance company should be able to offer its products throughout the single market on the basis of the authorisation it receives from the member state in which its head office is situated. The regulations implement the single passport by removing EC insurance companies from the requirement to apply for authorisation before selling insurance products in the United Kingdom. In its place a system of recognition for EC companies is introduced.
The system of supervision established by the directives is largely based on the UK approach to the regulation of insurance companies, summarised as "freedom with disclosure". Many other member states currently operate more restrictive regimes. The removal of such restrictions will significantly increase the ease with which UK insurers can access markets in other member states. Insurers also stand to benefit because they will only need to meet the supervisory requirements of one supervisory authority and file one set of regulatory returns annually. Consumers within the European Union will in turn benefit from increased choice and greater competition between insurers.
These regulations represent a valuable contribution to the completion of the single European market for all goods and services. The UK has a strong and innovative insurance industry which has much to gain from the freedoms that these insurance directives provide. I commend the regulations to the House.
Moved, That the draft regulations laid before the House on 24th May be approved [20th Report from the Joint Committee].—(Viscount Goschen.)
Lord Graham of Edmonton: My Lords, my noble friend Lord Peston has asked me to say that he and the Labour Front Bench are content with the order that has been submitted to the House tonight.
On Question, Motion agreed to.

Land Drainage Bill [H.L.]
7.7 p.m.
Report received.
Clause 1 [Duties with respect to the environment]:
Viscount Addison Viscount Addison moved a manuscript amendment:
Page 5, line 37, at end insert—
("( ) In consulting the board under subsection (2) above the Minister shall have regard to the economic implications of any direction that he may give under this section.")
The noble Viscount said: My Lords, I am aware that manuscript amendments such as this are unusual at Report stage. However, I believe that the issue raised is self-explanatory and of significance. I consulted my noble friend Lord Lindsay and my noble friend the Minister before tabling the amendment. My noble friends agreed that it would be useful to have further clarification and reassurance. I hope that the House will consider that the issue deserves debate.
I am concerned about the position of farmers who hope to benefit in terms of the development and running of their businesses from drainage improvements but are thwarted by a ministerial direction which prevents the drainage works taking place and provides no compensation for their economic losses. I ask, therefore, that Ministers look very closely at the economic implications for farmers, who could be adversely affected if a direction were made preventing a drainage board from carrying out drainage improvements. I beg to move.
Lord Gallacher: My Lords, this is a Private Member's Bill and as such we express no official opinion on it from this side of the House. At the Second Reading debate I indicated my personal view that it was in many ways a worthy Bill and adopted an attitude of what I hoped would be construed as benevolent neutrality. However, coupled with that attitude is the financial prudence which one would expect from someone like myself born north of the Border. I understand that the amendment is a probing amendment in order to gain from the Minister some reassurance about the manner in which the powers of the Minister in Clause 6 of the Bill may or may not be used. In order not to stand between the Minister, the sponsor of the Bill and the House, I give way at once to hear the words of wisdom falling as ever from the Minister's lips.
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe): My Lords, I hope that I can provide my noble friend and the noble Lord, Lord Gallacher, with some reassurance.
As I have emphasised throughout the passage of the Bill, the Government's intention with regard to the

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proposed Ministerial power of direction over internal drainage boards is that it would be used only very sparingly, in exceptional circumstances and as a last resort, and only where there is firm scientific evidence that the actions of an IDB are causing or likely to cause serious damage or destruction to an environmental asset of national or international importance.
The Bill expressly states that a Ministerial direction would be given only after the Minister had consulted with the IDB in question, except in an emergency. The prime purpose of this prior consultation with the IDB is to allow the Minister and the board to discuss the nature of the perceived risk to the environmental feature in question and for the board to advise the Minister of the implications of any action to counter that risk that the Minister may be considering for inclusion in a direction.
The IDB will be in a position to explain to the Minister the consequences for flood defence and for other local interests of changes in water levels or other IDB management practices which may be contem-plated. That would include, for example, the impact on agricultural practices or other land use in the affected area. The IDB, which includes representatives of the relevant agricultural drainage ratepayers and other local interests, will be well placed to assess the likely economic implications of a direction and make them known to the Minister.
The implications for farmers who may have to change their patterns of production in response to a direction to an IDB —for example, to raise water levels —are worth noting. I can assure the House that Ministers would wish to weigh that factor against the importance of the conservation interests at stake, case by case, before deciding whether to issue a direction and indeed what kind of direction to issue. As I explained in Committee, it is very likely that directions would arise only in areas such as SSSIs, or the equivalent, where management agreements may be available to farmers and landowners. The availability or otherwise of management agreements would have to be assessed case by case and would be one of the considerations a Minister would take into account in reaching a final view.
In those very rare cases in which a direction is considered I can confidently say that Ministers will have the potential economic implications very much in the forefront of their minds—whether for farmers, local businesses or residents —alongside the flood defence implications and the conservation implications. I hope that this explanation will assist my noble friend as he considers what action to take on his amendment.
The Earl of Lindsay: My Lords, I am grateful for that very full reply from the Minister. I am grateful, too, for the support that the noble Lord, Lord Gallacher, has given to the Bill, as indeed have the noble Baroness, Lady Nicol, and the noble Lord, Lord Beaumont of Whitley, on earlier occasions.
The effect of my noble friend's amendment would be specifically to require the Minister to have regard to the economic implications of a direction to an IDB when consulting that IDB about a proposed direction aimed at protecting an environmental asset of national or

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international importance. But it is implicit that the purpose of the prior consultation with the IDB that my Bill requires, except in an emergency, before a direction is issued is to allow for consideration of the various wider implications for flood defence and for economic activity in the IDB area in particular.
The IDB is ideally placed to bring those matters to the Minister's attention. I welcome the assurances given by the Minister that Ministers would have regard to the economic implications of a direction for landowners and for other local people in businesses before reaching a final view on using it.
As the Minister said, there are a number of ways in which the economic implications of a direction could be addressed depending upon the circumstances. That will need to be looked at case by case in those rare circumstances in which a direction has been considered. In view of the assurances given by the Minister I hope that my noble friend Lord Addison will not press the amendment to the Bill.
Viscount Addison: My Lords, I too, thank the Minister for his assurances, and reassurances throughout the passage of the Bill. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Viscount Long: My Lords, I beg to move that the House do adjourn during pleasure until eight o'clock.
Moved accordingly and, on Question, Motion agreed to.
[The Sitting was suspended from 7.17 to 8 p.m. ]

Deregulation and Contracting Out Bill
House again in Committee on Clause 5.
[Amendments Nos. 75 to 83 not moved. ]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 84:
Page 10, leave out line 26.
The noble Lord said: This amendment stands in the names of my noble friend Lord Peston and myself. It introduces the question of Schedule 1 which is to do with regulators and their duties. I have two points: one is eliciting explanation from the Government; the other is a point of principle.
First, the explanation. I am speaking to Schedule 1 stand part, as well as to Amendment No. 84. In Schedule 1 I do not understand the expression "concurrently" which appears in all the duties or entitlements of the different regulators in different sectors to operate with the Director General of Fair Trading. As I understand "concurrently", trying to give the explanation in plain English, it means that the appropriate directors general of whatever utility it may be are entitled to exercise the powers at the same time, "concurrently", but not necessarily dependent on the decisions of the Director General of Fair Trading. Thus, if the word "concurrently" is as I think it is in plain English, there could be disputes between, for example, under paragraph 1 of Schedule 1, the director general of telecommunications acting concurrently but not necessarily in concordance with the Director General of Fair Trading. The word "concurrently" is pursued through the schedule.
Turning back to Clause 5, if I take monitoring of undertakings under the new clause which it is proposed to insert in the Fair Trading Act, the new Section S6E on page 8 states:
"The Director shall keep the carrying out of an undertaking".
With that phrase, we have to assume that in the case of telecommunications, the director general of telecom-munications can, concurrently but perhaps not independently and perhaps not even in concordance, conduct the same review. My question is: what is "concurrently" about? What does it really mean? I understand that the noble Lord is to respond and I should be grateful if he will explain the matter precisely since proceedings in this House determine the way in which courts interpret expressions in the Bill.
The problem of principle is that powers are given under this deregulation Bill to people who will apparently impose further regulation. So I ask the noble Lord how it is that sectoral regulators are given further powers of regulation under a deregulation Bill. How do we control the sectoral regulators?
Noble Lords have had debates about the regulation of utilities and we have no idea how the regulators are to be regulated themselves. That is a point of principle. I ask the noble Lord who is to reply—and I understand it is the Minister himself—to explain exactly how the regulators themselves are to be regulated, in addition to defining exactly what powers are to be given under Schedule 1 to the regulators of the various utilities.
The Minister may treat this as a matter of frivolity, but it is not. It is a very serious matter. I hope very much that the Government will be able to satisfy us that this is not an increase in regulation and at the same time satisfy us that "concurrently" means something which does not duplicate bureaucracy. I beg to move.
Lord Strathclyde: I can certainly confirm to the noble Lord, Lord Williams, that there is no question of frivolity in dealing with this matter. I am glad that he has given us an opportunity to discuss it. However, I suspect that he has made a mistake here—an unintentional mistake, but a mistake all the same. I understand that the word "concurrent" is the word used under the Fair Trading Act and that the sectoral regulators already have concurrent powers with the DGFT under the monopoly provisions of the Fair Trading Act. Therefore, we are not giving the regulators any greater power or any less power under these provisions than they currently possess under the Fair Trading Act and their relevant responsibilities under it.
As I mentioned earlier this afternoon, the clause provides a short cut to the right solution in straightforward cases where the solution is clear and with the opportunity for all those affected to comment.
Lord Williams of Elvel: I am sorry to interrupt the noble Lord. If that already happens as a matter of practice and of law, why is there a schedule to the Bill?
Lord Strathclyde: I understand that all the schedule does is to provide for the extension of the powers in the clauses to deal with the relevant Acts in which the regulators are themselves regulated. Extending the

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provisions to the sectoral regulators provides greater opportunity for problems to be resolved quickly where issues are clear cut. That again is to the benefit of everyone involved.
Lord Williams of Elvel: With respect to the noble Lord, that simply will not do. "Concurrently" quite clearly means "alongside", in the same time frame; it does not mean "in concordance with". It obviously excludes—it does not even possibly exclude—"in-dependently of. I quite accept that under present arrangements the Director General of Fair Trading will consult the Director General of Telecommunications, to take paragraph 1 of Schedule 1, on any decisions that he may wish to make. But to put a schedule in the Bill to say that the Director General of Telecommunications shall be "entitled to exercise, concurrently" either simply reflects existing practice, in which case there is no point in putting it into the Bill, or it has some merit in terms of the authority of the Director General of Telecommunications that he does not at present have.
Lord Strathclyde: I am obviously not explaining the situation fully. The point, as the noble Lord is no doubt aware, is that sectoral regulators have their own Acts: the Telecommunications Act, the Gas Act, and so on. All that the schedule does is deal with those different Acts in a schedule as opposed to putting them in the main part of the Act. There are provisions in the sectoral Acts dealing with consultation between the DGFT and the sectoral regulator concerned. The clause itself gives some flexibility to the regulators, who have concurrent powers already. For instance, they can make a reference or accept undertakings instead.
I am sorry that the noble Lord, Lord Williams, is demonstrating such great concern. I did not think that there was a problem here. I thought that the noble Lord would raise more general issues. However, I hope that that explains the situation as to why the word "concurrent" exists and what it means vis-à-vis this particular piece of legislation.
Lord Monks well: I really do not think that what the Minister has said to the Committee so far is quite adequate. We have to realise that in what appears on the face of this Bill the Government are creating a problem that effectively was not there before, in the sense that the Director General of Fair Trading holds his powers under the Fair Trading Act 1973 and the regulators have their powers under the relevant privatisation legislation provisions.
At the time of privatisation the very reason that the regulators came into existence was that it was obviously felt that the powers of the Director General of Fair Trading were not adequate to deal with the particular problems associated with the utilities. So the powers of the regulators are different in a significant way from the powers of the Director General of Fair Trading. But the Government are now bringing the two together. By using the word "concurrently" in terms of the exercise of the powers they are creating a problem.
Perhaps I may remind the Committee that this is the problem that I raised last week in terms of the orders that Parliament will have to consider with regard to all this

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business, in that the orders will be determined in parallel by the two Houses of Parliament, and therefore we could end up with two distinct and different decisions being arrived at. It was pointed out by the Minister that the Government envisage some mechanism—and we are entitled to wonder whether that mechanism will be adequate—to resolve any conflicts.
The noble Earl, Lord Russell, also identified a parliamentary mechanism to deal with the problem. The fact that that mechanism goes back several hundred years and may not be relevant to today's situation is again a point that we may have to consider. But the problem that we are considering now under this amendment is the one that the Government have presented to us by giving powers "concurrently" to two sets of people: to the Director General of Fair Trading and to the individual regulators. We have to recognise that each of those individuals could arrive at different decisions. What the Government have not explained is what mechanism will be used to resolve that clash. By writing in the word "concurrently" in terms of exercising powers, they have presented us all with a problem and have provided no explanation as to how that problem might be resolved. The Minister really must do better in terms of trying to explain the situation and must give us some idea as to how those possible difficulties could be resolved.
Lord Strathclyde: I think I must be more stupid than I originally thought. I did not think that there was any problem with this proposal. The reason why I thought there was no problem is that the matter is of course dealt with in existing legislation (not the bit that we are dealing with just at the moment) and is all well laid out in the different sectoral acts and in the Fair Trading Act—
Lord Williams of Elvel: Whether or not this matter is dealt with in existing legislation, there is still an answer to be made to this Committee as to how, if there is a conflict between the Director General of Telecommunications and the Director General of Fair Trading under new Section 56E, which is the new section to be inserted into the Fair Trading Act, concurrent investigations can be reconciled. What is the procedure? Now whether that is a matter of administrative procedure the Minister must tell us. But he cannot put "concurrently" into legislation in front of this House without explaining in words of a few syllables exactly how these difficulties (if there are difficulties) are to be resolved.
8.15 p.m.
Lord Strathclyde: I do not think that there are any difficulties. There have not been any difficulties in the past, and there is no reason why there should be in the future. However, the noble Lord has asked for an explanation as to how these powers operate. All that "concurrently" means is that the utility regulators have exactly the same powers in respect of their own sector as does the DGFT, and no more. The regulator and the DGFT agree on a division of responsibilities in relation to that sector. The point of this legislation is that this will apply for accepting undertakings, as it does with all

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the rest. So if there is a problem in this, then presumably there is a problem in everything else. I am saying that there is not.
Lord Monkswell: Perhaps I may—
Lord Strathclyde: Will the noble Lord please sit down? I am trying to explain. If the noble Lord keeps bouncing up and down we shall not be able to get any further.
The provisions in the existing sectoral Acts covering consultation would apply. That is the point. In each individual Act it is clearly laid out how the consultation procedures between the DGFT and the regulator fit in with each other. If, of course, two different proposals were made to the Secretary of State, he would then have to decide which to accept. I cannot foresee that situation arising. However, if it did, then quite naturally the Secretary of State would be in a position to make up his own mind. I hope that that deals with the issue—
Lord Williams of Elvel: In that case, why do the Government not produce a Bill which says that the Director General of Telecommunications shall be: entitled to exercise "together with" the Director General of Fair Trading? That would make sense.
Lord Strathclyde: I suspect that we are bound by words that have been used in previous legislation, and that to change the wording at this stage would create even more confusion. As we are a responsible legislative body we should look carefully at the precedents that have been set in the past.
Lord Monkswell: There are two points that I would make. The noble Lord says that the powers of the Director General of Fair Trading and the powers of the regulators are the same. Palpably, they are not. So far as I understand it, the Director General of Fair Trading does not have the power to determine the price of gas, electricity or water which the regulators effectively do have. There is a distinction in fact.
This section of the Bill says that the powers with regard to monopoly are effectively to be discharged separately but concurrently by the two directors—the Director General of Fair Trading and the regulators of the utilities. The Government still have not explained how a decision by the Director General of Fair Trading which may be at variance with a decision of the regulator of the utility may be reconciled. The directors general have powers in their own right and do not refer everything to the Secretary of State.
Lord Strathclyde: I think we are making much heavier weather of this matter than is necessary. The regulators do have different powers from the DGFT— that is why we have regulators—for their particular sectors. But there are many areas in which they have exactly the same powers. As I explained, the director general and the regulator will decide on sharing out their duties. If at some point they happen to disagree., then presumably the Secretary of State will make a decision. I cannot make the position much clearer than that. I hope that the noble Lord, Lord Monkswell, will agree with the proposition that I put.
Lord Williams of Elvel: Would the Minister care to move on to my second question: who controls the regulators?
Lord Strathclyde: The regulators are controlled by an Act of Parliament.
Lord Williams of Elvel: That is all very well, but so are the Secretary of State and the Minister. They also are controlled by an Act of Parliament. So are we all.
This is a serious question, which has been raised on a number of occasions. With privatisation a number of bodies are set up which are designed to regulate private monopolies. The question arises, as it always does: to whom are the regulators responsible? Quis custodiet ipsos custodes—if I may use that Latin expression. There is no guarantee under any Act on privatisation that I have ever seen—the Minister must accept that I have dealt with a number of Acts on privatisation—in which the regulator is in any sense democratically controlled. I should be grateful if the Minister would reply to the question.
Lord Strathclyde: That is a fundamental difference of philosophy between ourselves and the noble Lord and his party. The fact is that regulators are accountable. The Select Committees of another place may and do call the regulators before them. Regulators' decisions can be subject to judicial review. If the regulator cannot agree to proposed new licence conditions, the issue is referred to the MMC for its view on the public interest. There are countless safeguards on this whole issue. We have strayed beyond the original amendment and indeed the purpose of these clauses. I cannot agree that the regulators themselves are a machine out of control, beyond accountability to Parliament.
Lord Desai: I am sorry to come in so late to the debate but perhaps I could clarify the issue. The problem is that the Government have not made up their mind whether they like monopolies or whether they like competition. They like "private" rather than "public" but it is not clear whether they like competition or monopolies. Therefore they have created many private monopolies. And because they love the word "private" they have put on a rather uncoordinated system of regulators which prevents us from having overall control of any kind over the monopolies. Moreover, it is not clear that those monopolies will be forced properly to compete.
We know what the noble Lord, Lord Lawson, in his memoirs said about privatisation of the gas industry. I am sure that the Minister has read that tome and knows that the situation was scandalous. It is well known that in the United States the government enforce competition. The regulators have to enforce com-petition. I am not at all clear whether this Government want to enforce competition or merely to privatise. When they want to privatise they appoint regulators who do not have any clear regulator above them and therefore the whole system is a shambles.
My noble friend Lord Williams is entirely right when he persists in questioning whether the whole schedule is indeed correctly drafted.
Lord Strathclyde: I can assure the noble Lord that it is not incorrectly drafted. It uses as a precedent various pieces of legislation. In these clauses a similar power which will be available to the DGFT is given to the different sectoral regulators.
I shall not follow the noble Lord into a critique of the book of my noble friend Lord Lawson. Suffice it to say that transferring state businesses to the private sector has increased business efficiency, whether through competition or in other ways, has allowed many employees to take a direct stake in the companies for which they work and has led to a major change in attitudes. I know that it is not everybody's wish that we should privatise but I believe that the record speaks for itself.
On Question, amendment negatived.
Clause 5 agreed to.
Schedule 1 agreed to.
Clauses 6 to 8 agreed to.
Schedule 2 agreed to.
Clause 9 [Restrictive trade practices: registration of commercially sensitive information]:
On Question, Whether Clause 9 shall stand part of the Bill?
Lord Williams of Elvel: Clause 9 leads us into restrictive trade practices, as indeed did Clause 8, with which we have no problem. The reason that I and my noble friend Lord Peston gave notice to oppose the clause is simply that we are concerned that it does not go far enough.
There was a consultative document—I have it in my hand—which was presented to Parliament by the Secretary of State for Trade and Industry and the Chancellor of the Duchy of Lancaster by Command of Her Majesty in March 1988. The paper reviewed restrictive trade practices policy. It was reviewed by a distinguished committee which came to the conclusion:
"In sum, our present system is inflexible and slow, too often concerned with cases which are obviously harmless and not directed sufficiently at anti-competitive agreements. The scope for avoidance and evasion considerably weakens any deterrent effect the system has and enforcement powers are inadequate. The requirement to furnish insignificant agreements is not only wasteful of official resources but imposes an excessive burden on firms".
I fully understand that in the context of the Bill the last sentence is the one taken up by the Government. Nevertheless the consultative document produced in March 1988 put forward very firm recommendations. As I understand it—if I remember correctly, we debated the document at the time—it was widely welcomed and agreed by the Government. Why have the Government not used the opportunity of this Bill to put the recommendations of this document into law? We have now been waiting for almost six years. The restrictive trade practices policy badly needs revision. When will the Government do something about it? Why have they not done something about it in the Bill?
8.30 p.m.
Lord Strathclyde: Perhaps it would be helpful to explain that with this clause we want to bring the protection available for confidential information in

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restrictive agreements into line with the protection already available for confidential information in published MMC reports. This is because the existing rules on confidential treatment for restrictive agree-ments are extremely narrow. Any information on the public register is of course available to any competitors. Where information is commercially sensitive, that can be extremely damaging to companies. Yet many agreements containing such information in fact raise no competition concerns.
The clause therefore widens the criteria which empower the Secretary of State to decide that certain details can be placed in the special section of the register that is not open to public inspection. That will enable companies to protect a wider range of commercially sensitive information, but only of the same kind as can already be protected from publication in MMC reports and also only provided that publication would not in fact be in the public interest; for example, in order to understand the restrictions in the agreement.
This clause is simply an attempt to offer equal protection to information in restrictive agreements as already exists for information in MMC reports, subject to the same conditions. If publication is in the public interest, the information will still go on the public register, even if harmful. But the point is to avoid damaging companies where there is no public interest to be served by doing so.
The Government are still committed to introducing an RTP prohibition, as soon as legislative time permits, prohibiting agreements which have an adverse effect on competition subject to an exemption system as opposed to the RTP Act, which is based on the forms of agreement irrespective of their effect on the public interest. The current proposals are short term measures to ease unnecessary burdens before an RTP prohibition is introduced.
I recognise that it is a long time since we consulted. However, these things sometimes happen and we hope to legislate shortly.
Lord Williams of Elvel: The Green Paper covers many issues, such as block exceptions, which would facilitate the cause of business and would be quite in keeping with the deregulation Bill as it is presently drafted. Has the Department of Trade and Industry recently looked at the Green Paper? Has the Minister read it? If so, why are its recommendations, in so far as they contribute to deregulation, not included in the Bill?
Lord Strathclyde: Officials in the department review outstanding legislation from time to time. But I must confess that this is not an area that falls under my specific responsibility in the department. Neither the noble Lord nor anybody else would expect me to read every single consultation paper issued by the department over the course of the past six or seven years. However, I take full responsibility for all the consultation papers that I issued in the name of the Secretary of State for the areas for which I am responsible.
The Bill provides an opportunity to ease the burdens on business caused by existing law. I am advised that it would not be possible to include restrictive trade

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practices prohibition within its scope. That is why we have not sought to include other provisions and there is no time for a Bill in the busy programme for the current Session.
Lord Desai: Do I sense that in proposing the deregulation Bill the Government have been less than bold? They have left many matters lying which should have been reformed, especially the RTP. When one looks at the clause, as it is and as amended, it appears that the Government are saying, "We do not want to be too competitive; we want to leave things lying as they are". Surely it is time that they thought about this problem. Either they want competition or they do not want it. We do not want a half-way house in which the Government pretend to be for competition and are only for privatisation, which is not competition.
Lord Strathclyde: Bold! Of course we have been bold. It was the noble Lords, Lord Williams of Elvel and Lord Peston, who last week called the Bill a "constitutional outrage". If it was not the noble Lord, Lord Williams, it was certainly his noble friend. Of course we have been bold and are keen on competition. But we do not believe that to include RTP prohibition provisions in this Bill is within its scope.
Lord Williams of Elvel: I understand that the Minister has not read the Green Paper and cannot read every document that his department produces historic-ally. I understand that the Minister wishes to disavow the document because it was issued by some other Minister at some other time and the fact that the matter was laid before Parliament is neither here nor there.
But the Government drafted the Bill and, in drafting the Long Title of the Bill, they could easily have arranged for the recommendations of this document to be included. The Long Title is long enough as it is, but it could have been extended by one or two sentences. If the Minister says that the matter is postponed for the Greek Calends, then that is what he says. I accept that it is not the Minister's responsibility, but I wish that from time to time he would consult with his officials and read the document that his Government put before us in 1988. I wish also that we could have a more satisfactory reply when the Government come to draft legislation. It is no good saying that there will be a Bill when time permits; we have heard that so many times. The document is dated 1988 and we are now in 1994. Here was a vehicle to do it. Why did not the Government do it?
Lord Strathclyde: I shall not allow the noble Lord, Lord. Williams, to get away with that comment. He entirely misrepresented what I said. I was happy to admit that I do not read every single consultation paper issued by the department and I also reaffirmed the Government's commitment to legislate on this important issue when time comes available.
Clause 9 agreed to.
Clause 10 [Anti-competitive practices: competition-references]:
[Amendments Nos. 85 and 86 not moved.]
Lord Peston Lord Peston moved Amendment No. 87:
Page 14, line 38, at end insert:
("(j) explains why these undertakings are appropriate, and
(k) states what other undertakings have been considered and why they have been judged to be inappropriate.").
The noble Lord said: I congratulate Members of the Committee for keeping going as well as they have without me. Amendment No. 87 concerns page 14, line 38, and is another of my amendments to clarify the whole question of undertakings, consultation and so forth. I believe it is the end of the whole series, which will no doubt please the Minister no end.
Essentially, the subjects that we are discussing are to do with undertakings. What is not very clear is what will be the nature of the final decision that is come to. The point of the amendment is again to ask that a statement be made about the appropriate nature of the undertakings and, more interestingly, to clarify what else was considered and how the decision was arrived at. The case is overwhelmingly again one of rational decision-making in public. The case against it is not wishing to discuss these things in public; or, alternatively, the one that has been paraded ad nauseam; namely, that it all takes too long. I would rather enunciate the rule that it is better to take a bit longer if it means that the right decision is taken, rather than for it to be speeded up on the ground, "Let us get a move on". That is not to say that I am not keen to speed up all processes of this kind, but I should like to feel that at the end I have come to the right decision.
Although perhaps some distance from the kind of practical case that the noble Lord has in mind, one of the things that intrigues me more and more about his responses to criticism of the Bill is that we bring out increasingly clearly what the Government have in mind in terms of using these procedures. I admit—and I have made it clear to the noble Lord—that I had assumed that the whole point of the Bill was that major issues would be dealt with in this way, but increasingly the noble Lord seems to be saying that only minor matters will be dealt with in this way. That is, in a sense, helpful. I am not saying that I approve, but it is certainly helpful.
To give an example that I think is relevant, the noble Lord will remember—although he was not then the Minister in the department—the saga of the investiga-tion into beer by the Monopolies and Mergers Commission and all the undertakings that were given, and so on. I think my noble friends will agree on the total catastrophe that resulted. Practically nothing good has come out of it. What has always intrigued me about that is the one thing I never knew —what all the discussions were between the Minister, the Secretary of State and the brewers, and what the alternatives were. One aspect that has always been on my mind—and this is an appropriate occasion in which to bring it before the Committee—is that your Lordships will always be interested when decisions are made to know what else was considered, and why whatever else was considered was rejected.
This is probably the last of my amendments of this kind this evening. This is my last open government rational decision-making amendment, and I should like to hear once more what the answer is. I beg to move.
Lord Strathclyde: What gives me great happiness is that this is the last of the series of amendments that we have had to discuss or endure since last Thursday on this subject. Of course, the noble Lord, Lord Peston, recognises that my reply will be very similar to ones that he has already received and I am therefore not impressed by the amendment that he has moved. The published notice referred to is the means of consultation. The notice requires the director to publish a host of information, including the course of conduct that he is concerned about, the identity of the person pursuing it, the goods and services involved and the adverse effects he has identified. The intention is that those interested, whether as competitors or consumers, will be able to comment on the suitability of the undertakings.
While the clause as it stands requires him to state the terms of the proposed undertakings, he is not therefore required to justify them or to rule out others. Interestingly enough, the amendment which the noble Lord has tabled would seem to defeat the point of consultation by requiring the director already to have made up his mind. I know that that is not the intention of the noble Lord—how could it be, given what he has said in the past? The notice will contain all the information necessary to allow those interested to comment.
It is important for this process to be conducted in an even-handed and open-minded way. I hope that the noble Lord, Lord Peston, agrees with that. Perhaps his views on this are not so different from ours; what is different is the requirement to make that statutory.
8.45 p.m.
Lord Peston: I am surprised at the noble Lord's interpretation of my amendment. Essentially what will happen under this procedure is that the director will state some undertakings, and then all of this will be gone through. An alternative procedure, which I freely admit is slightly more complicated —perhaps quite a bit more complicated—and which will take a bit longer, is for him to say "I am considering this or that set of undertakings". I should have thought, in terms of the way that the director's office would work, that that would be probably going on anyway, with the director asking "What sort of undertakings should we be looking at here?"
What I am trying to bring out and to place in the public domain is some of the possibilities without the director making up his mind but saying "This is my preferred option. I did consider this other thing, but the reason I do not want to have representations on this other possible undertaking is", and he then sets out his argument. I agree that that complicates matters. It is not to suggest that he has totally made up his mind, but to suggest that he is an open-minded person considering a range of possibilities.
I agree that I am being pedantic. What could happen instead is that the director says "I am considering these undertakings" and then some outside body gets in touch with him and says "I think you ought to consider a different type of undertaking", and we get to the same end via a different route. My reason for doing it this way I think is fairly obvious. The director is, in some sense,

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an expert, and if this procedure works—and I am always willing, doubtful as I am, at least to see whether it works —he will therefore know more about what undertakings are worth considering.
I hope that the Minister does not misunderstand; these are the only amendments of this kind for this evening's meeting of the Committee. There will be plenty of time to pursue my consultation, representation and democratic objectives, which seem to be fundamental to what we ought to be about on all of this. It is simply that there are other matters that the Committee is anxious to debate and that is why I am showing a modicum of restraint, which I know the Minister will approve of. Having said that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 10 agreed to.
Schedule 3 agreed to.
Clause 11 agreed to.
Schedule 4 [Striking off of Non-trading Private Companies: Great Britain]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 88:
Page 69, line 14, at end insert:
("( be made with the consent of the members of the company.").
The noble Lord said: I warn the Committee that these are slightly technical amendments and not designed to change the schedule in any particular way. They are therefore probing. I am fractionally concerned that the majority of directors, as in paragraph 2 of Schedule 4, can apply to the registrar to strike private companies off the register without consulting the members of the company; that is, the owners of the company. I have therefore tabled this amendment in order to find out why the Government are prepared to ignore the shareholders of a company—even if it is non-trading —whose directors decide that they wish to remove it from the register. I beg to move.
Lord Strathclyde: I recognise that the noble Lord, Lord Williams, is fractionally concerned about these matters—that is the phrase he used—and I can tell him that I agree that a company should not be struck off the register if its shareholders do not want it to be struck off. Perhaps I may explain how we mean to reach that objective, which is slightly different from that proposed by the noble Lord.
The procedure provides that copies of the completed application for striking off must be sent to all shareholders, any one of whom can object to the striking off. It is therefore in the interests of directors to ensure that all shareholders are content before they send in the application. But it would be too much of a burden to require all the shareholders to consent before application. They would all have to be traced. They would all have to fill in forms or have to attend a meeting. It would cost both the company and the shareholders time and money.
What of companies where shareholders cannot be traced for their consent to be sought; companies, for example, where a shareholder has moved to another country and does not reply to correspondence or where

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a shareholder is a recluse and does not answer the door? Should companies with one shareholder like that be denied the right to take advantage of the new procedure?
The requirement for the directors to notify all the shareholders and the right for any one of them to object to the striking off is, I believe, sufficient to preserve the rights of the members of the company. It is a technical point. It was absolutely right for the noble Lord to raise the issue but I hope that my answer gives him satisfaction.
Lords Williams of Elvel: I am grateful to the Minister. Perhaps he can point me, because this is a difficult and rather technical schedule to read, to the measures proposed in the schedule which are what he expounded to us in his reply. It is a very complicated and technical schedule and I am prepared to admit that my amendment is covered by what is already in the schedule. However, perhaps the Minister can point me to those measures.
Lord Monkswell: While the Minister is trying to find the point in the schedule to which the noble Lord, Lord Williams, referred, perhaps I may ask another question. From what he said it sounded as though if there were a proposal to strike off a company and that was objected to by a member of the company, it would not take place. I may have misheard the Minister or he may not have explained himself adequately, but if it is the case that a member of the company can object and effectively stop the process, why should not members of the company be consulted beforehand and therefore save the whole procedure being gone through?
Lord Strathclyde: I had hoped that I had explained that in my first answer. We believe that it is an unnecessary burden both on the shareholders and on the company to do it in that manner. It is far easier to do it in the way we have described.
Perhaps I may point the noble Lord, Lord Williams, to new Sections 652B(6) (a) and 652C(2) (a) where he will see the words,
"a member of the company".
That is where the provisions apply.
Lord Williams of Elvel: I am grateful to the Minister. However, does that allow a member of the company to protest? If that is the case, how many members of the company are needed? Is it a majority of members of the company or can any member of the company prevent it—any single shareholder holding even one share out of 1 million? Is that the correct interpretation?.
Lord Strathclyde: It is correct that any one shareholder can object to the procedure. There are other procedures for striking off. This is a deregulatory procedure. This is a short cut. This is light touch. If the company does not get the agreement of one shareholder there are other ways of achieving the same ends.
Lord Williams of Elvel: I am most grateful to the noble Lord. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 89:
Page 70, leave out lines 5 and 6.
The noble Lord said: With the permission of the Committee I should like to speak also to Amendment No. 90. This is perhaps a somewhat technical matter. The Secretary of State can, by order, for the purposes of this sub-paragraph change a variety of things. That is not only in new Section 652B of the Companies Act but also in the subsequent section. I wonder whether it is right to give the Secretary of State those powers.
I look forward to the Minister explaining why the Secretary of State has these powers. It is very easy if one is not satisfied with the legislation that one produces simply to say at the end, in the final paragraph, "The Secretary of State shall have powers to change anything he wants". I should like to know that all the possibilities have been considered by the Government before we let this through. I beg to move.
Lord Strathclyde: I would expect at a Committee stage to be quizzed on the kinds of powers that we are allowing the Secretary of State to use. However, I do not think there is anything strange in this particular one. The Government do not want this new procedure to be used by companies which are trading, or which give their creditors and others the impression that they are trading, either before or after the application. Schedule 4 therefore sets out activities in new Section 652B(1) that the company cannot undertake in a period before application for striking off. Thus the company cannot change its name in the period before application. It must be non-trading and so on.
However, we cannot be sure that, when we have experience of the new procedure, we shall not find that a clever person has thought up some other way of pretending that nothing has changed. The delegated legislative power would enable us to close any such loophole. Furthermore, I can confirm that the Delegated Powers Scrutiny Committee has considered all the provisions for delegated legislation in the Bill and made no comments on either of these two provisions. I hope that that explains why we have asked Parliament for these powers and explains how they are going to be used.
Lord Williams of Elvel: I am most grateful to the Minister for his explanation. As he rightly pointed out, the Delegated Powers Scrutiny Committee has not taken exception to the powers. Nevertheless, we can hope—I express no more than a hope —that the department has found out every conceivable possibility that might be used by ingenious people to get round this and that the power will not be called upon. I am grateful to the Minister for his response. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 90 not moved.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 91:
Page 73, leave out lines 47 to 49.
The noble Lord said: It may be for the convenience of the Committee if I speak also to Amendments Nos. 92 and 93. These are small but slightly intricate points and it is quite right that your Lordships should deal with them in Committee. Anyone who fails to perform a duty

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imposed by the provision—it must be remembered that these clauses are to be inserted into the Companies Act —is liable if found guilty of an offence to be fined and in certain circumstances to go to prison. Are the Government really satisfied that criminalising such offences in such a manner is the right way to set about it? I beg to move.
Lord Strathclyde: What we are concerned with here is that the new procedure is not misused. We have therefore built in a number of safeguards to protect those involved in or dealing with the company. The key element in this is the creation of offences. The safeguards are there with the sole object of protecting the interests of ordinary people and businesses dealing with companies which may wish to be struck off. If they are to be effective they must be properly enforced. What would be the point of having them if people knew that they could be broken with impunity. In the last amendment I spoke about clever people who might try to find ways around the law. Likewise, if we had no protection we would be providing a rogue's charter which crooks could use to disappear from the face of the earth leaving strings of unpaid creditors and swindled shareholders behind them.
The question should be asked: why should the overwhelming majority of honest business people be penalised by having to keep a company going when it is no longer required? We are giving them a simple way to bring their business to a close. At the same time we must also make sure that those dishonest enough to use it know that there are appropriate penalties which will be brought against them. The protection is right and proper. I hope that I have explained at least the necessity for having them and that the noble Lord can withdraw his amendment.
9 p.m.
Lord Monkswell: I come in at this point because I am concerned at the precedent which is being set. The Government are saying that here we have a deregulation Bill and they are going to change, simplify and reduce the regulatory effect of the regime, but in the process introduce a new crime and penalties associated with it.
That may be all right in this part of the Bill because we are effectively talking about primary legislation. We go through the whole procedure of primary legislative consideration by both Houses of Parliament. My anxiety is that, having set the scene in this particular area of the Bill as a measure of deregulation, with new liabilities for fines and imprisonment, we are setting a precedent for the use of Part 1 provisions of the Bill for the future. Will the Government give an undertaking that they will not use them to introduce new criminal offences with the powers to fine and give imprisonment? We have to bear in mind that at that stage we shall have very curtailed parliamentary consideration of the legislative changes. Will the Government give that undertaking?
Lord Strathclyde: No, I will not give any such commitment. It is not necessary. We are providing for a new procedure in these clauses. I have explained why we need the offences. However, the offences in themselves are well precedented in the Companies Act

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and they are available under Section 652E. All these offences were well precedented under the Insolvency Act 1986 and reflect the anxiety to ensure that the procedure is not deliberately abused to avoid the penalties of that Act. That is entirely appropriate and there is nothing untoward in these provisions.
Lord Williams of Elvel: I understand what the Minister is saying and I am not unsympathetic. I have the general view that, wherever possible, Parliament should try to avoid criminalising offences. We are here discussing the "fast track", if I may put it like that, for the registrar to strike private companies from the register on application. I accept that there may be clever people who do clever things. Nevertheless, there is enough in the schedule to stop the clever people from doing clever things without criminalising it.
I very much hope that the Minister will look at this matter again before Report stage. I hope that he will discuss with the department the general problem of criminalising offences which do not need to be criminalised. Is the Minister going to give me an assurance that he will look at this matter again?
Lord Strathclyde: Naturally, without a commitment to make any changes, I am delighted to look again at this provision. The noble Lord is right when he says that we should be careful when setting up this kind of criminalisation. I spent a great deal of time this weekend looking at the proposals. The fact which convinced me that they were right was that they were well precedented in previous legislation.
Lord Williams of Elvel: I am grateful to the Minister, as far as his explanation goes. Because something is precedented in previous legislation does not mean that the Committee should pass the legislation before us. Nevertheless, I am grateful to him. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 92 and 93 not moved.]
Schedule 4 agreed to.
Schedule 5 agreed to.
On Question, whether Clause 12 shall stand part of the Bill?
Lord Williams of Elvel: The Minister will recognise that this clause raises some difficult questions which were discussed at length in another place. I do not wish to go over all the arguments which were put forward there. From this Dispatch Box I have had the privilege of talking about beer on many occasions with, not least, the noble Lord, Lord Young of Graffham, when he was Secretary of State introducing certain regulations dealing with beer.
Originally Mr. Edward Leigh, who was the then Consumer Affairs Minister—and I only quote him because he was a Minister at the time—announced on 20th December 1991 that he was intending to implement Section 43 bringing the clause into effect. He said on that occasion:
"I have fought hard in Europe to retain the traditional British pint, … my view on consumer protection is that people should get what they think they are getting and what they pay for".— [Official Report, Commons, 20/12/91]

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I do not believe that any Member of the Committee would dispute that particular statement.
But the scrapping of Section 43, as proposed in Clause 12, will effectively legalise the concept of the 95 per cent. pint. That is where we have objections. Indeed, as I understand it, the Brewers' Society is issuing guidance to its members to that effect. Of course, the brewers have said that compliance with Section 43 of the Weights & Measures Act 1985 would add to the cost of serving a pint, but the evidence has varied over time as to what the cost might be. What the brewers and the compliance cost assessment analysis which was carried out at the time fail to acknowledge is that 25 per cent. of all outlets already use beer meters and lined glasses. There is no evidence that those establishments charge more for beer. Indeed, there is an argument that says that that method of pouring beer is more efficient and less wasteful. At present customers paying for a pint are effectively—I use the word "effectively" advisedly— donating an average of 7 per cent. of its cost back to the industry.
It is clear that many beer drinkers—in fact, they number millions—already receive short measure. They are legally entitled to ask for a top-up at no extra cost, but how many will do that? In this clause the Government are asking Parliament to legitimise the serving of short measures and to endorse in law the notion of the 95 per cent. pint. We oppose that. That is why we have tabled this Motion.
Lord Tordoff: This is no laughing matter, as my late lamented noble friend Lord Winstanley would have told the Committee had he been here, when he would have said what I am going to say but much more cogently. I agree with everything that the noble Lord, Lord Williams, said. I mentioned these matters on Second Reading when I received a stern rebuke from the brewers, who set out an awful lot of information for me about how well they did for the drinking public. But I am not impressed.
The simple answer is that people are getting short measure. The suggestion that you can ask for a top-up takes me back to the old story of the person who said, "Do you think you can get a whisky into that glass?" When the barman said that he could, the customer said, "Well, why not fill it up with beer?" One is also reminded of the slogan that occasionally appears on bars which reads, "Do not ask for credit because a poke in the mouth often gives offence". I suspect that there are a number of pubs from which you would be ejected rather rapidly if you went to ask for a top-up. Of course, that would not do their trade any good next time round, but not everybody has a choice of pubs these days.
The truth is that the Government are reneging on a commitment that was made by Mr. Leigh in another place. It is perfectly simple to give people a pint of beer when they ask and pay for a pint of beer. However, for year after year (because of the size of the glasses or because of the lack of metered pumps) the British public have been defrauded by the brewing industry. I know that the industry is a friend of the Government and has been so down the centuries. I am not speaking now from the old Methodist Liberal tradition of temperance, but

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that was a great argument at the turn of the century. It was one of two great issues that divided my party from the government party. The Government were always the brewers' friends—and they are showing that again today.
It is about time that we recognised that somebody who orders a pint of beer ought to get a pint of beer. After all, it is in the Magna Charta that there should be proper measure for both beer and wine. Why are the Government trying to back out of their commitment, if not to fulfil some promises that they may have made to their friends in the brewing industry?
In my view, this almost undermines the whole basis of the Bill. It may appear trivial, but I think that it is symptomatic of the attitude that the Government have taken to deregulation on a matter with which they should not mess about. The law is as it is on the statute book, but the Government are now using this deregulation mechanism to get out of the commitment that was made to Parliament at an earlier stage. I agree entirely with the noble Lord, Lord Williams of Elvel.
Baroness Seear: I would not dream of disagreeing with my noble friend and the noble Lord, Lord Williams, but I should like one thing clarified. Is froth beer or not?
Lord Strathclyde: The noble Baroness, Lady Seear, has asked the most pertinent question of this Committee stage. The noble Lord, Lord Williams, argued his case on the basis of fair play. The noble Lord, Lord Tordoff, said that this is clearly a party political matter; that the issue had been decided in Magna Charta; and that we should go back to that. I am not sure that Magna Charta had anything to do with it. Then the noble Baroness, Lady Seear, asked the central question. Beer is not like other products since froth is a natural part of the product. Whether or not it is part of the liquid pint is another matter altogether. However, it is misleading to compare a pint of beer, which contains at least 95 per cent. of liquid, with a pint of pre-packed milk.
A further problem is that it depends on where one does one's beer drinking. People in some parts of the country like a frothy, creamy head through which they like to drink the beer. People in other parts of the country have a kind of scum on the top. Those elsewhere have no head on the pint at all and it is all liquid. Therefore, there are strong regional preferences. It is open to customers to make it clear that they want something different; for example, a full liquid pint in an area where beer is usually served with a tight, creamy head. Of course, they are already able to ask for and should receive a top-up if they are unhappy with the amount of liquid beer that they have received.
I agree with all Members of the Committee who have spoken that it is important to safeguard the interests of the consumer and the vast majority of honest licensees who want to provide good service to the public. There have been successful prosecutions where short measures have occurred. The Brewers and Licensed Retailers Association has issued a revised guidance, which should

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be helpful in combating deficiencies in future. It sets out the association's view, not as pub owners but as producers of the product, on what constitutes a reasonable head when serving beer in a brim measure. It makes it clear that after the collapse of the head there should be a minimum of 95 per cent. liquid. The effect of the repeal of the section is to allow the continuation of the existing case law that a pint of beer may consist of liquid and a reasonable head.
Perhaps I may answer the noble Lord, Lord Williams, about statements that have been made by Ministers and why we are looking again at Section 43. Against the background of the deregulation initiative we took another look at Section 43. We consulted with many interested parties and concluded that the costs of implementing Section 43 were disproportionate to the consumer benefit. We can foresee no circumstances in which this will change, which is why I recommend the repeal of Section 43 and agreement to this clause.
Lord Tordoff: The Minister gave the game away by saying that when the head has collapsed there should be 95 per cent. liquid. That provides the answer to my noble friend's question: is froth beer? Of course it is beer, but there is a lot of gas too. After the froth has collapsed one is still 5 per cent. short of what one has paid for.
Secondly, the Minister talked about consultation. What was the result of his consultation with the Consumers' Association and the Campaign for Real Ale? I suspect that they were not widely consulted on the matter and that the Minister consulted only with his friends, the brewers.
Lord Strathclyde: I shall not open up a further argument with the noble Lord, Lord Tordoff, about the head, the froth and the 95 per cent. We have given clear guidance to trading standards officers, who will be able to refer to it as regards what constitutes a pint.
Of course, the consultation was varied. We came down on the basis that the increased cost would not in the end be in anyone's interest. Of course, consumers when asked whether they want a full pint will say, "Yes, we would like a full pint". However, we must take into account the general disruption of the increased cost. That is what we did and that is why we came to our conclusion.
Lord Williams of Elvel: It is clear from the Minister's reply that he did not consult the Consumers' Association or the Campaign for Real Ale. Probably he consulted only his friends. However, the most important principle in this case is that in 1991 a Minister gave a perfectly clear undertaking and the Government are now trying to renege on that perfectly clear undertaking. Under the circumstances, I must protest and in protesting I must take the opinion of the Committee.
9.19 p.m.
On Question, Whether Clause 12 shall stand part of the Bill?
Their Lordships divided: Contents, 61; Not-Contents, 17.

Division No.2

CONTENTS

Addison, V.

Howe, E.

Aldington, L.

Kenyon, L.

Annaly, L.

Kimball, L.

Arran, E.

Leigh, L.

Astor, V.

Lindsay, E.

Balfour, E.

Long, V.

Biddulph, L.

Lyell, L.

Blatch, B.

Mackay of Ardbrecknish, L.

Blyth, L.

Marlesford, L.

Boardman, L.

Moyne, L.

Borthwick, L.

Pearson of Rannoch, L.

Carnock, L.

Renton, L.

Chalker of Wallasey, B.

Rodger of Earlsferry, L.

Chelmsford, V.

Seccombe, B.

Clanwilliam, E.

Sharpies, B.

Clark of Kempston, L.

Shrewsbury, E.

Cochrane of Cults, L.

Simon of Glaisdale, L.

Cox, B.

Skelmersdale, L.

Cumberlege, B.

St. Davids, V.

Dean of Harptree, L.

Strathclyde, L.

Denham, L.

Strathmore and Kinghorne, E.

Demon of Wakefield, B.

[Teller.]

Dixon-Smith, L.

Sudeley, L.

Elliott of Morpeth, L.

Thomas of Gwydir, L.

Elphinstone, L.

Trumpington, B.

Elton, L.

Ullswater, V. [Teller.]

Ferrers, E.

Vinson, L.

Fraser of Carmyllie, L.

Wakeham, L. [Lord Privy Seal.]

Gainsborough, E.

Wise, L.

Goschen, V.

Wynford, L.

Henley, L.

Young, B.

NOT-CONTENTS

Airedale, L.

Lawrence, L.

Bruce of Donington, L.

Macaulay of Bragar, L.

Darcy (de Knayth), B.

McNair, L.

David, B.

Monkswell, L.

Dean of Harptree, L.

Peston, L.

Desai, L.

Rea, L.

Geraint, L.

Seear, B.

Graham of Edmonton, L.

Tordoff, L. [Teller.]

[Teller]

Williams of Elvel, L.

Resolved in the affirmative, and clause agreed to accordingly.
9.26 p.m.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 94:
After Clause 12, insert the following new clause:
("Lloyd's

.—(1) Section 42 of the Financial Services Act 1986 is hereby repealed.

(2) This section shall come into force on a day appointed by the Secretary of State in an order made by statutory instrument for that purpose.

(3) Before making an order under subsection (2) above, the Secretary of State shall consult such representatives of Lloyd's and such other persons as seem to him to be appropriate.

(4) An order made under subsection (2) above shall be subject to annulment in pursuance of a Resolution of either House of Parliament.").

The noble Lord said: This is the first occasion which the Committee has had since, I believe I am right in saying, the Companies Bill, or possibly since the Financial Services Bill, as it then was, to debate Lloyd's legislation. It is certainly the first occasion that I can recall since what is known as "meltdown". It is not my purpose this evening to talk about those who have lost money because of their membership of Lloyd's. I have no intention of talking about bailing out Names, or compensation, or whatever. My purpose is to ensure, in so far as I can, that the insurance activities and reinsurance activities that are at present conducted by

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Lloyd's, or under the Lloyd's umbrella—I choose my words with some care—are put on a sure footing for the future.
If I can just draw the attention of the Committee to the importance of Lloyd's—I use the Key Facts document, which is produced by Lloyd's themselves —the Lloyd's community has contributed £15 billion to United Kingdom invisible earnings since 1983, averaging 31 per cent. of the total UK invisibles contribution. Lloyd's leads two-thirds of the insurance underwritten in the London insurance market. Lloyd's generates employment directly or indirectly for an estimated 60,000 people. It is therefore my purpose to ensure that those very important facts, and the very important position that Lloyd's has—at least businesses that are conducted, as I say, under the umbrella of Lloyd's —should be maintained in the future. Nevertheless, there is a question mark over the future of Lloyd's.
The credibility of the organisation has suffered because of losses that have been incurred. Results which have been published have suffered from a series of events—some scandals, some examples of incompe-tence—all, I believe, resulting from a failure of regulation. I would instance only one example; namely, the conduct of certain members' agencies in recruiting members for Lloyd's without telling them the full facts about what membership implied.
The response of Lloyd's has been to institute a new regulatory board of 16, of whom four are working members. A business plan was published in 1993, which is broadly similar to other business plans produced by major enterprises. It is indeed a reasonable catalogue of aspirations. In addition, there has been the creation of a company, provisionally entitled "NewCo", to come into being at the end of 1995, which would be the mechanism by which pre-1986 liabilities will be reinsured to a limited liability company.
That may or may not work. The business plan, which is a series of aspirations, may or may not be achieved. But there is one important feature of NewCo. When it is set up —and we must assume that it will be set up—it will be a United Kingdom reinsurance company required, as Lloyd's itself has admitted, to meet DTI standards on conduct, particularly on solvency. Therefore, in part Lloyd's itself has accepted the need for government regulation.
That leads me to my amendments. Section 42 of the Financial Services Act (referred to in subsection (1) of Amendment No. 94) exempts Lloyd's, and permitted underwriting agencies at Lloyd's, from regulation of their investment business carried on in connection with or for the purpose of insurance business at Lloyd's. The amendment seeks to remove that exemption.
What is "investment business"? In my view—and I have made this perfectly plain on previous occasions on which I have spoken—it is not merely management of premium trust funds or cash balances. Investment also means investment made by members of syndicates. I accept that investment in that sense is in the nature of a contingent liability and not a direct cash payment; but there is a risk, and there is a reward. If there is any doubt about whether that should be considered an investment,

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that can easily be rectified by an amendment to Schedule 1 of the Financial Services Act which, as the Committee will be aware, can be amended by an order from the Secretary of State. The Secretary of State can, by order, make an investment as a member of a syndicate in Lloyd's, an investment under Schedule 1 of the Financial Services Act.
If that is done, and if my amendment is accepted, membership of Lloyd's becomes in law an investment and therefore regulated under the Financial Services Act. It follows from that that the insurance and reinsurance activities—solvency ratios, and so on— would also in the end come to be regulated by the Department of Trade and Industry, because no investor in his or her senses would invest in either a company or a syndicate which was not properly regulated under DTI regulatory procedures.
I now turn to subsections (2), (3) and (4) of my amendment. I recognise that the amendment would lead to substantial changes both in the Financial Services Act and the Lloyd's Act 1982. I accept that those changes will take time to work out. I am advised that were my amendment to be passed without subsections (2) to (4), Lloyd's might have to cease trading. Some noble Lords might consider that that was not a bad idea. I have heard that expressed. Others might think that it was not a terribly good idea and that it was useful to seek to work out some way of making Lloyd's—I refer to all the activities which come under the Lloyd's umbrella, whether or not Lloyd's stays as a corporation—a proper organisation which will serve the United Kingdom and the financial service industry in the future.
I conclude where I started. My purpose is to provide a framework for the future for this very important industry. There is in the provision a substantial measure of deregulation. By adopting what I say, the regulatory framework of Lloyd's, which goes under the name of self-regulation, would have to be removed. So one removes one tier of regulation.
I very much hope that the Committee will look sympathetically at the amendment. I believe that it will be conducive to a proper and sensible way of running the insurance and reinsurance industry, which has been the scene of so much controversy in the past few years. I beg to move.
Lord Marlesford: In supporting the amendment of the noble Lord, I declare an interest as a victim of Lloyd's—an interest which I believe I share with over 200 Members of your Lordships' House.
I base my support for the noble Lord on a rather general principle which in a sense is my own personal Tory philosophy. I hope that the noble Lord will allow me to put it at least in its simplest form. I consider that the best economic results come from a dynamic market economy, but I believe strongly that it is a prime duty for any Government so to regulate that market that employees, consumers, investors and the environment are properly protected from exploitation.
As we know, a crucial ingredient of Lloyd's system of gearing up capacity in insurance through outside names is that those names pledge their entire resources

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in an unlimited liability based on the success or failure of underwriting. Yet for many years, I suspect, many of those names have understood little, perhaps in most cases nothing, of the detail of what is being done in their name. The system has therefore always been conducted on the basis of urberrime fidei—the greatest good faith that Lloyd's names have in Lloyd's itself. Lloyd's insists on that standard for the policy holders whose risks it underwrites. It would therefore be hard to think of a financial system in which proper regulation is more crucial for the protection of both policy holders and of names.
Yet, deplorably in my view, 14 years ago, at a time when the need for the regulation of the financial community had become all too apparent, Parliament in an Act that I can only describe as myopic, decided to exempt Lloyd's from external regulation and to grant immunity to the Council of Lloyd's and its officers. It is true that there were, I believe, voices raised against the legislation. I have an idea that the noble Lord, Lord Williams, has always been against it, and I salute him for it. I believe that my noble friend Lord Pearson also had doubts about that legislation. However, the Lloyd's Act will go down in Westminster as one of the abdications of parliamentary responsibility. I am sad that it should have been passed under a Tory Government, although I believe that it was a Private Bill.
We now know two things that were then only suspected by some. First, there were some in Lloyd's for whom self-regulation was the licence to continue their incompetent, greedy and dishonest practices. Members of the Committee may remember that I gave a number of examples of each of those when we had a debate on Lloyd's in this House a year ago in July. It has been a combination which is now proving fatal for the financial survival of many families in this country and a number of families overseas also. Secondly, we know that there were at that time already those in Lloyd's who were well aware of the potential financial disaster which stemmed from the unlimited and vast liabilities of asbestosis and pollution. Indeed, it is generally believed that there were a number of underwriters who were anxious to leave their syndicates open in 1979, as they felt that there was no way of establishing the ultimate liabilities. They were, however, persuaded by the Lloyd's establishment that it would not be in the interests of Lloyd's to do so, particularly with the Lloyd's Bill going through Parliament.
The courts will, I trust, in due course insist on the release of the minutes of the council meetings of Lloyd's held at that time which will reveal in full the failure to protect names. At present, all we know for certain is that the then Lloyd's deputy chairman, Mr. Murray Lawrence, wrote to all members' agents on 18th March 1982 that they should:
"inform their names of their involvements with asbestosis claims and the manner their syndicates' current and potential liabilities have been covered".

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As Mr. Adam Raphael said in his excellent book Ultimate Risk, which I recommend to those who are not members of Lloyd's as well as to those who may have been:
"The failure to [give this warning] led many thousands of unwitting names to join long tail syndicates throughout the 1980s. Many professionals at Lloyd's realised the dangers. Very few outsiders did".
Mr. Raphael actually quotes one estimate that during the next two decades asbestosis claims could total £30 billion or six times the present estimate of about £170,000 per name.
There is, however, one crucial area in which the Government retain the role and duty of a regulator. The noble Lord, Lord Williams of Elvel, has referred to it in his speech, and that, of course, is the monitoring of the solvency of Lloyd's. It is only if Lloyd's remains solvent that it can be allowed to continue trading. The responsibility for determining the solvency of an insurance business is ultimately that of a Secretary of State for Trade and Industry. It is an absolute duty on the DTI, I believe, to judge solvency objectively and therefore to determine whether or not Lloyd's is solvent. It is not, in this context, to take into account whether or not it is opportune or embarrassing or in any way undesirable for Lloyd's to be declared solvent.
I am rather concerned that in practice the DTI seems to rely heavily on advice from Lloyd's itself on the question of Lloyd's solvency. Ironically, I believe, several of the Lloyd's officials involved in this process were themselves formerly civil servants in the DTI.
In this context, do not let us forget the example of the Bank of Credit and Commerce International which was not shut down until 1991, a date which was the product of regulatory failure. I obviously do not claim to be in any position to judge solvency. In any case, that is not an issue of relevance to the amendment. But what is relevant are the methods which Lloyd's seems to be adopting to get through the solvency test. First, there is the extraordinary practice introduced last year of hypothecating future profits to balance current liabilities. I refer, of course, to a decision made during the first half of 1993 to allow underwriters to return to names 5 per cent. of the premium income they had signed up for in respect of 1993, as a cash payment towards the huge losses that were then being declared for 1990 or as a contribution to names' solvency. That was totally contrary to the well-established Lloyd's practice of assessing the result of any underwriting year at the. end of 36 months, which is 24 months after the ending of the year concerned. This year Lloyd's is repeating the practice by hypothecating profits from 1994 towards the massive losses that were just announced for 1991. This time it is only 3 per cent. Perhaps the DTI has been getting cold feet. Well it might. Leading accountants to whom I have spoken say that such a practice would never be acceptable in respect of any limited liability company.
I must also point out that when it comes to solvency Lloyd's seems to speak with two voices—a public voice and a private voice. Here is the public voice:
"We are confident that the solvency situation is good. Quite frankly we would not be behaving this way if it were not".

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That was Mr. David Rowland, the chairman of Lloyd's in the Daily Telegraph for 13th May. Now here is the private voice:
"By reason of the heavy losses which have been incurred in the Lloyd's market, in particular in respect of the 1989, 1990 and 1991 years of account, very substantial sums have had to be or are due to be paid to Lloyd's policy holders. Where a Name does not have funds remaining at Lloyd's and fails to put up fresh funds, his obligations are met from the Lloyd's Central Fund and Lloyd's then seeks to recover from the Name the sums paid out. At present in excess of £400 million has had to be withdrawn from the Central Fund held at Lloyd's. Until these funds are recovered, then clearly they are no longer available to pay further unfunded losses as they occur and the greater the delay in recovery proceedings the greater the risk to Lloyd's solvency and its ability to pay policy holders' valid claims…It is apparent that there has been and continues to be a wholesale effort made by certain Names to direct and dissipate funds that would otherwise be available to meet their Lloyd's obligations or to repay monies due to the Central Fund".
That is a quotation from a letter dated 23rd May—only 10 days later than Mr. Rowland's statement—from Mr. R.B.L. Prior, the deputy solicitor for the Corporation of Lloyd's to the Registrar of Civil Appeals at the Royal Courts of Justice.
I may say that Lloyd's advises me that the current value of the central fund is £904 million, of which at the end of 1993, £661 million was earmarked for solvency purposes. To put these figures in balance, Lloyd's further advises me that the total losses declared but not called for 1990 and 1991 are £2.6 billion.
We must all realise that there is some fundamental potential conflict between the interests of the Lloyd's insiders who work there and the outside names. Many of the insiders depend on the solvency of Lloyd's for their livelihood. If Lloyd's were to be declared insolvent, the best underwriters would of course simply set themselves up as limited liability companies. Indeed I understand that a number already have contingency plans to do so. But there might be many others for whom there would be little opportunity of employment elsewhere.
I hope therefore that what I have said will persuade the Government to look kindly at a specific proposal that I have for this year's solvency test by the DTI. I believe that they should recruit a panel of outside financial advisers, unconnected with Lloyd's but aware of the wiles of the world, to help them to make the solvency decision. I believe that a short report from the DTI on the solvency issue should be published to Parliament each year.
Perhaps I may now say a few words on the current outlook for Lloyd's, which is central to the crucial question of regulation and who should regulate. Sadly, the consequences of the Lloyd's Act is that never before in its 300-year history has its reputation for probity and confidence been as low as it is today. Outsiders have been wheeled in and out to try to patch it up. They identify what they feel needs doing and either find resistance to doing it or that it cannot be done. A few years ago we saw the arrival and departure of the excellent Mr. Ian Hay Davison. He was followed by Mr. Alan Lord, a former Treasury civil servant. Now we have the arrival of the energetic Mr. Peter Middleton, accompanied by the determined Miss Heidi Hutter.
Mr. Middleton has helped put forward the concept known as NewCo—to which the noble Lord, Lord

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Williams, referred—into which it is proposed eventu-ally to reinsure the liabilities of the 478 syndicates from earlier years which now remain open and which between them have a premium income capacity of over £12 billion, which currently appears to be deteriorating at the rate of some 20 per cent. a year.
I understand that Miss Hutter is finding that the record keeping and analysis of many of those syndicates which it is intended to close into NewCo are so inadequate that so far it has proved impossible to establish an actuarial basis for NewCo to be set up. That may change.
However, I fear that NewCo may be raising false hopes. Its success as a reinsurer will depend on three factors. The first is the possibility of the members of the open syndicates being able to find the funds to finance NewCo so that it can finance valid claims. I fear that a number of names, maybe many, will not have sufficient resources to do so.
Secondly, it will depend on its ability to act as a tough negotiator, forcing many claimants to agree to commute their unreasonable claims to fair levels, particularly in the United States, rather than go through a process of litigation which in the United States has so far resulted in no less than 80 per cent. of all insurance payments for pollution and asbestosis ending up in the pockets of the lawyers rather than those of the claimants. If Lloyd's does get wound up, it could perhaps protect names from direct action in the American courts. Otherwise, it could well be, in the striking words of my noble friend Lord Vinson: "Let the last millionaire turn out the lights".
Thirdly—this is crucial—unless some way can be found to transfer the unlimited liability of the original members of syndicates into limited liability for NewCo which has taken them on, then if NewCo runs out of money the claimants will go straight back to the original syndicates and thus to their names. I am afraid that is why some wag has apparently re-christened NewCo "NewCon".
Lloyd's has been busy promoting the idea that the turn-round in its fortunes will come at least partly from higher insurance premium rates which should follow from the past disasters and that that is an additional reason for names to continue their membership and "trade through" the problems. Quite apart from the fact that "jam tomorrow" has been an inducement offered almost every year since 1982, it is simply economic nonsense. Lloyd's is in no position to make monopoly profits. Already there are many new entrants into the insurance market and already rates are starting to soften again.
I have spoken probably for too long but I believe that the case included in the amendment is one which makes it desirable that the Government should at least undertake to give very careful thought to the future regulation of Lloyd's and perhaps tell us more at Report stage.
Lord Pearson of Rannoch: In opposing the amendment I should declare an interest in that I am chairman of a firm of Lloyd's brokers. As such, I believe

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that I form part of the Society of Lloyd's which the amendment seeks to bring under the influence of the Financial Services Act by removing its present exemption under Section 42.
When I first thought to speak to the amendment, it looked innocent enough on the Marshalled List. In fact I had not realised that the amendment would pave the way for a suggestion from the noble Lord, Lord Williams of Elvel, that self-regulation should be removed from Lloyd's altogether and a suggestion from my noble friend Lord Marlesford that it should be encouraged to go into liquidation.
Having declared my interest, I must say that I would suffer no personal damage if the amendment as it stands, without the various attributes added to it by the two previous speakers, were to be accepted, except as someone who works in the London insurance market —of which Lloyd's is a vital part—and wishes to see it prosper. Until I heard the two earlier speeches I thought that that was a sentiment which would be shared by all noble Lords, including the noble Lord, Lord Williams of Elvel. The noble Lord quoted some statistics from Lloyd's and the value of Lloyd's to the national economy. Those statistics are indeed accurate. But they probably amount to only half the benefit which the London market as a whole gives to the national economy. Having said that, I do not think that I can be accused of being likely to support Lloyd's blindly. Over the five years from 1978 to 1982 I was a constant, and at times vociferous, critic of self-regulation at Lloyd's as then practised. My noble friend Lord Marlesford was good enough to refer to my part in the Lloyd's Act. In fact I opposed the Lloyd's Bill through both Houses of Parliament and I objected particularly to the clause whereby Parliament eventually saw fit to grant Lloyd's a unique immunity for negligence. My view of that immunity is that it has not worked in the interests of Lloyd's or its members.
In fact this is the first time that I have spoken publicly about a matter concerning Lloyd's since 1983. I do so now only because the amendment seems to me, especially in view of what was said earlier, to be so unfortunately conceived and potentially damaging to Lloyd's and therefore to the whole London market, that I feel I must speak against it. First, there is a point of principle. Such a repeal of Section 42 of the FSA would cancel unilaterally the agreement made between Lloyd's and the Government whereby Lloyd's was permitted to retain its status as an independent SRO (unregulated by the Financial Services Act) in return for measures implementing the report of Sir Patrick Neill's independent committee of inquiry. That committee made recommendations designed to ensure that the regulation arrangements at Lloyd's provided protection for names comparable to that proposed for investors protected by the FSA. As I understand it, those recommendations were implemented in full by Lloyd's.
Secondly, the removal of the statutory exemption would have a number of practical consequences, none of which appears to be necessary or helpful; they have been given to me by Lloyd's as being particularly destructive at this time. First, managing agents, when

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managing names' funds, would have to join an SRO, probably IMRO—I must ask the Committee to forgive the jargon but it will be in the interests of speed if I carry on—in order to continue to be authorised to carry out those functions. Secondly and similarly, members' agents when placing names on syndicates would be able to continue to provide that service (because it would constitute investment advice) only if they were authorised, probably by joining FIMBRA. Thirdly, Lloyd's itself would cease to be able to operate its own financial distribution system for syndicate funds or to continue to act as trustee of the Lloyd's deposit or special reserve funds, and vital day-to-day management of names' and syndicate funds would thus cease to be possible.
Those are just some of the practical difficulties the amendment might pose. I am aware that the noble Lord, Lord Williams, may not regard them as difficulties and I shall return to that. On the other hand, Sir Patrick accepted that it would be impracticable for the Lloyd's community to comply with the proposed conduct of business rules and the financial requirements of the other SROs. Instead he recommended certain improve-ments which are now in Lloyd's rules.
So much for some of the technical inconveniences of the amendment. I accept that the noble Lord, Lord Williams of Elvel, may say that he considers them to be desirable developments which he would be happy to see forced upon Lloyd's, whatever the consequences may turn out to be. I was going to suggest to him that he had not really thought his amendment through until he went on to confess that in actual fact his amendment does pave the way for the withdrawal of self-regulation from Lloyd's altogether.
It pains me to have to speak against my noble friend Lord Marlesford on this occasion, but it does seem to me mat his speech was inspired more by the losses that he has incurred at Lloyd's—and I know that many other noble Lords have suffered grievous losses—than by this amendment in itself. It does seem to me that Lloyd's problems are caused by enormous losses which are underwriting matters—they have been matters of underwriting judgment—and most of the losses, I have to say, were on policies written well before the Neill Committee sat in 1986–87. Be that as it may, I must say that the noble Lord, Lord Williams of Elvel, seems to me to have a touching faith in the benefits which regulation by the Financial Services Act might bring to Lloyd's and her policyholders, as opposed to the regulation which is at present in store for them.
I cannot help feeling that the Maxwell Group pensioners might not share the noble Lord's enthusiasm, although I imagine that the noble Lord might claim that FIMBRA had not been going long enough to detect and expose or avoid the fraud in question. I do not know whether the noble Lord would care to comment on that point. But certainly it seems to me that Lloyd's, as presently organised, has at least as good a chance of protecting the interests that we are all concerned to protect as any that are likely to be set up by the Financial Services Act, especially in view of its record.
If the noble Lord had claimed that, I would have to put it to him that so it is with Lloyd's. The steps taken

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by Lloyd's are fully satisfactory as far as implementing the Neill recommendations are concerned, and in protecting names and policyholders' moneys. I accept that underwriting losses are a cause of great concern to many—including my noble friend Lord Marlesford and other noble Lords, who may have lost substantial sums at Lloyd's—but this amendment as it stands, and that is what we are considering, does not and could not address underwriting policy. It certainly could not correct the results of past underwriting which are now causing so much misery.
Finally, I have to urge your Lordships that this is not: the moment to mess around with self-regulation at Lloyd's. As perhaps one of Lloyd's leading rebels over many years—if I may claim that distinction—I have to tell your Lordships" Committee that I do now have confidence in the team of people who are running Lloyd's. I disagree with my noble friend Lord Marlesford when he says that the reputation of Lloyd's is lower than ever; it actually is not. It is beginning to climb and is on the way up again. Mr. David Rowland, Mr. Robert Hiscox and Mr. Peter Middleton are doing all that is humanly possible to see that a great institution, which has certainly faced a considerable crisis, survives. I very much hope that this amendment will not be allowed to stand in their way.
10 p.m.
Viscount Chelmsford: I wish briefly to speak on this matter. I have an interest to declare. For 40 years I was a Lloyd's insurance broker, and for most of that time a name. I am now a resigned name with one very small line on an open syndicate. So I am not in any way hurt. It is two years since I was at Lloyd's, since I retired.
Most of the technical points have already been made. There is one other point worth mentioning, which is that neither the FSA nor the SRO rules are at all apt for securing the protection of policyholders. I would remind the Committee that Lloyd's 300 years of successful trading is founded very much on the security of its policy.
As to the practical comments, I would merely say one or two things very quickly. First, I disagree very strongly with my noble friend Lord Marlesford concerning the position of past losses. I was an insider, and I remember only too well how often I thought that the attorneys for the assureds were over-reserving; in fact it has turned out that they were heavily under-reserving from the past. No one seems to think about this point: the best legal brains that underwriters could employ in the USA got it every bit as wrong as the underwriters of 20 years ago. That point is well worth; making.
For the rest, I would merely support my noble friend who has just spoken and say that we should not knock: the team at the moment. The whole thing is in balance. It is very important to the country's balance of payments. Lloyd's brokers alone have now reached 1 billion dollars a year of invisible earnings and they need their underwriters. Let us not knock the team while the thing is in the balance and while we have the chance of success. I ask the Committee to reject the amendment.
Lord Vinson: I had not anticipated speaking in the debate but as my name was mentioned I hope the Committee will forgive me for doing so. I have probably both benefited and lost as much as anyone from Lloyd's over the years but I am not certain that a deregulation Bill is the right place to consider the re-regulation of Lloyd's. I think that the Clerks of the House have stretched things a little far by letting this amendment get as far as it has. Be that as it may, Lloyd's has been compared to a suspension bridge between the undoubted errors of the past and the golden future of tomorrow. I happen to believe that Lloyd's can do more for this country, for its members and for its members who have made losses by being encouraged and helped in every way to cross that suspension bridge without rocking it.
It is very much a question of judgment as to what the solvency basis of Lloyd's is. I defy anyone to read the minds of the warped judges in American courts making settlements against Lloyd's which in English courts no judge in his right mind would have made and then to extrapolate that in terms of the reserves for Lloyd's in the future. Indeed, Lloyd's is suffering from its own honesty as much as anything, because by declaring that it is a society that offers unlimited liability, it sets itself up as a fat cat or fat duck ready for plucking by the litigious American attitudes. In fact it just sits there ready to be got at. There will come a time—and I hope it will come shortly and no doubt may come through NewCo—when Lloyd's will have to say, "Enough is enough. We do not intend to go on meeting bogus claims any more".
That brings me back to the questions of solvency. Any good men or women true trying to assess the solvency of Lloyd's would have the greatest difficulty. One would have to pick parameters—at the extreme allowing for death by asbestosis of a child who had slept in the arms of its parents who had worked in the asbestos mine 50 years before; to the other more rational aspect that those who genuinely suffered from asbestosis have now virtually all died out and we must be getting near the end of legitimate claims. Somewhere in between is the solvency level.
I hope that in so far as the Department of Trade has a part in assessing the solvency levels it will look at the matter, in so far as it has to take a view at all, in terms of what is fair and what is reasonable, what is best and would have been concluded under English law, and set the solvency levels from that base. I believe that if it does so the call on existing members to finance NewCo, which might perhaps be better called OldCo, will enable it to be set up with solvency levels far in excess of any American insurance company, and Lloyd's can hold its head high, trade into the future and by so trading create profits that will enable it to treat more kindly, more reasonably and more generously those who are unable to meet their obligations in terms of their personal solvency and what they owe Lloyd's.
I believe that the amendment is ill-timed. We have currently heading up Lloyd's people of the greatest distinction and capability who should be given every chance. There may come a time to re-examine the regulatory basis on which Lloyd's operates but I do not think that that time is tonight.
The Parliamentary Under-Secretary of State, Department of Employment (Lord Henley): It might be useful if I respond briefly on behalf of the Government at this stage. I agree with my noble friend Lord Vinson when I say that I do not believe that this new clause is appropriate for inclusion in this deregulation Bill. In fact, I do not accept the argument of the noble Lord, Lord Williams, that it decreases regulation, but rather I think that it would lead to an increase.
Lord Williams of Elvel: Before the noble Lord continues will he accept that it is not in the tradition of this House to criticise the Table? If the Table decides that an amendment is relevant to the Bill, then it is perfectly proper as an amendment.
Lord Henley: Will the noble Lord give way? At no point did I criticise the Table or the Table Office in any way whatever. In the end, it is for this House to decide what is relevant to the Bill and not for the Table Office.
I was giving my considered view that I did not believe that this measure was a deregulatory one, but would increase regulation. But be that as it may. I believe that the noble Lord will accept that this is ultimately a matter for the Committee to decide. I was giving my considered view on it. It is for the Committee to decide whether the matter is deregulatory and whether it should be in the scope of Bill in due course.
Let us get back to the amendment. I appreciate the anxiety felt by many members of Lloyd's over the losses which they have suffered in recent years. I do not underestimate the effect that may have had on them. I believe, however, that names have to recognise that in part the losses that have been incurred result from events which have affected the whole of the insurance industry both in this country and throughout the world.
There may also have been poor underwriting at Lloyd's in the 1980s, when capacity was high and underwriting standards just may have slipped. These matters have already been investigated, and while it is evident that mistakes were made, no evidence has been found which shows there has been systematic fraud or malpractice. But there are cases currently before the Commercial Court. I do not believe that it would be right or proper for me to say anything further on those matters which must quite rightly be for the courts in due course.
I understand the intention of the noble Lord's amendment is that the new clause extends to names at Lloyd's the protection afforded by the Financial Services Act. As was made clear by my noble friend Lord Pearson, that question was fully investigated in 1986 when the Government established the committee chaired by Sir Patrick Neill. Their specific brief was to consider what should be done to give names at Lloyd's the same protection as that envisaged by that proposed by the Financial Services Bill, now the Financial Services Act. The committee made about 70 recommendations aimed at providing the appropriate protection for names—I stress that—as envisaged under the proposed Financial Services Bill. All except one of those recommendations—I believe that my noble friend said that it was all of them—have been implemented.

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The exception is very much an incidental issue relating to the Rehabilitation of Offenders Act, which I believe is not of any great significance.
Some Members of the Committee may think that the passage of time and particularly the level of losses referred to quite rightly by the noble Lord, Lord Williams, and the changes since the Financial Services Act 1986, have shown that names still do not have adequate protection. As I believe the noble Lord is aware, the main reason that Lloyd's was excluded from the Financial Services Act 1986 was that the essence of Lloyd's was—and remains—insurance and not invest-ment business which is the main concern of the Financial Services Act.
The insurance business carried out by Lloyd's is not long-term insurance business for the purpose of the Act. The. amendment before us would only affect any investment business carried on by underwriters which is incidental to the main business of insurance underwrit-ing. To the extent that such business is being carried on, no one has suggested that there is anything wrong in the conduct of that business. It certainly has not been suggested by most of my noble friends who have spoken. I certainly see no reason for any change to the existing regime. I do not believe that a case has been made for bringing any element of Lloyd's business within the FSA. As I said at the beginning, I do not believe this to be an appropriate Bill for such a measure even if the noble Lord should feel that it is. I hope, therefore, that he will think of withdrawing his amendment.
10.15 p.m.
Lord Williams of Elvel: I take issue with the noble Lord, Lord Henley, on the point of relevance. It is a custom of this House—the noble Lord, Lord Strathclyde, may shake his head, but he had better get it into his head that it is a custom of this House—that we accept advice from the Table. If, in spite of everything and all advice we wish to table an amendment, the Table will advise the Leader of the House if the amendment is not relevant to the Bill. It is then up to the House to decide. That is the procedure of the House—and that is the procedure that should have been followed in this case if the Leader of the House had been advised by the Table that the amendment was not relevant to the Bill.
Lord Henley: I did not deny that it was the custom of the House that we should accept the advice from the Table. What I was saying was that in the end these things are matters for decision of the House or Committee or whatever. My considered advice was that it was not an amendment that decreased regulation. We are dealing with a regulatory Bill. I believe that it is an amendment that would increase regulation. However, I do not believe that this is an important point and I went on to argue thereafter the points as to why I thought that the noble Lord's amendment was unnecessary. I hope that he will not say that I was suggesting any alteration to the traditions of this House.
Lord Williams of Elvel: I am glad. The noble Lord, Lord Henley, is not yet the Leader of the House and if he were the Leader of the House, he would no doubt be

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advised as to how he should advise the Committee about whether an amendment is relevant. Until that time comes, this amendment is relevant to the Bill and will be debated as such by this Committee.
The noble Lord, Lord Henley, said, as I pointed out in my introduction, that Section 42 of the Financial Services Act exempted persons such as underwriting agents and Lloyd's as respects investment business. The noble Lord took a very narrow definition of "investment business". In my introduction I pointed out that it was up to the Secretary of State. I refer the noble Lord to Section 2 of the Financial Services Act 1986, which states:
'The Secretary of State may by order amend Schedule 1"—
which defines what an investment is—
"so as to extend or restrict the meaning of investment for the purposes of all or any provisions of this Act".
It goes on to state that that order shall be subject to the negative procedure. It is quite clear. It was passed by Parliament in spite, if I may say so, of my opposition. The provisions were passed by your Lordships—and there they are. Membership of Lloyd's can be considered by the Secretary of State, should he so wish, as an "investment" in the meaning of Part I of the Financial Services Act.
That is the first important point. I hope that the noble Lord will agree with me on that. If he wants to disagree with me, perhaps he would like to stand up and say so. All right, he agrees. Therefore, under Part I of the Financial Services Act, membership of Lloyd's can be an "investment business". That leads to all the various things that I described in my introduction. I hope that the Committee will agree that we have sufficiently discussed whether the amendment is relevant to the Bill. I do not want to go over the points that I have already made to the noble Lords, Lord Henley and Lord Vinson.
The noble Lord, Lord Pearson, said that there was an agreement between the Government and Lloyd's in 1986. Presumably the noble Lord was speaking from a Lloyd's brief. There certainly was an agreement, but it was in 1986 and a lot has happened since then. Just because there is an agreement between the. Government and Lloyd's it does not mean that your Lordships have to accept everything that the Government did in 1986. I cannot for the life of me see the relevance of that.
The noble Lord, Lord Pearson, went on to describe some of what he called the "practical consequences" of what I am proposing. Oh dear, Lloyd's agents might have to join FIMBRA. Oh dear, Lloyd's might have to become an SRO. Oh dear, what a pity. Oh dear, it might be regulated further by the Department of Trade and Industry. If the noble Lord is simply putting up the usual flag for self-regulation without any further argument, I accept that, as on previous occasions, there is a serious divide between the noble Lord and myself, I am bound to say to the noble Lord that I can think of other things that I might say about him personally, if he wants to go into that kind of game, but I do not. I do not believe that the question of whether Lloyd's or underwriting agencies joining SROs, FIMBRA, IMRO or whatever should deter the Committee from discussing the amendment in a serious manner.

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Perhaps I may say without impertinence that I was most impressed by what was said by the noble Lord, Lord Marlesford. He recited many things that I had not previously heard and I am grateful to him for bringing to the Committee the benefit of his knowledge of the subject. I say again to Members of the Committee opposite and to the noble Lord, Lord Marlesford, that my intention is not to worry about the names who may have suffered losses. My intention is simply to ensure that Lloyd's or the activities under its umbrella, if it is to be broken up, should be properly regulated and that it should have a future which takes the insurance and reinsurance business that is represented by Lloyd's through to the next century.
There was an interesting debate which was conducted entirely by Members of the Committee opposite. Apart from myself, no Member on this side of the Committee spoke. I understand that Members opposite feel rather sensitive about this whole question. They do so for two reasons: first, that as a result of self-regulation some Members opposite have suffered badly and, secondly, that other Members opposite have an interest in preserving self-regulation. I can easily understand that because as Members opposite have declared an interest they have their own interest—
Lord Pearson of Rannoch: Perhaps the noble Lord will give way. I thought that I had made it absolutely clear that I did not have any interest in self-regulation as such surviving. In actual fact, I thought that I had made it clear that I had been rather a rebel against self-regulation over the years. Will the noble Lord confirm that he said in his opening remarks that all Lloyd's troubles stem from lack of regulation? That seems to me to imply that in his view Lloyd's needs more regulation and not less. Therefore, one must put it to the noble Lord: is this an appropriate place for this amendment in this Bill?
Lord Williams of Elvel: We have dealt with the question of whether this is an appropriate place. The point that I am making is not that Lloyd's needs more regulation but that it needs different regulation. In my view, self-regulation has not exactly worked since 1986. All I am saying is that perhaps we should try a different system—
Lord Pearson of Rannoch: I apologise for interrupting the noble Lord for the last time but he should also answer a point that I put to him. Would the Maxwell pensioners agree with his view on this matter? What comfort would the kind of regulation that he proposes for Lloyd's give to the Maxwell pensioners? Was it the fault of FIMBRA, was it the fault of regulation under the Financial Services Act, or was it the fault of the board? What was responsible, in the noble Lord's view, for the Maxwell debacle?
Lord Williams of Elvel: I do not know because I have no idea what in fact went on. If the noble Lord is suggesting—and I say this in all seriousness—that I in any way had any idea of what was going on I think that

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he ought to say so outside the Chamber. He might find it rather expensive—but I am sure that he did not mean that.
The amendment that I put forward provoked a good debate, which was, on the whole, conducted by Members opposite. I do not propose to take it to a Division. I propose to read what was said by the noble Lord, Lord Henley, to look at what other Members of the Committee have said and, if necessary, to return to the matter on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 94A:
After Clause 12, insert the following new clause:
("Amendment to Insolvency Rules 1986
. For Rule 1.17(3) and Rule 5.17(3) of the Insolvency Rules 1986 there shall in each case be substituted—
"A creditor shall not vote in respect of a debt for an unliquidated amount, or any debt whose value is not ascertained, except to the extent that the Chairman puts upon the debt a minimum estimated value for the purpose of entitlement to vote." ").
The noble Lord said: This amendment deals with two identical regulations which are part of 700 pages, weighing 4 pounds, issued under one head which passed through the other place without debate. Nevertheless, they are of some importance at this time.
Members of the Committee may recall that I raised this question last week when I received an extremely courteous reply from the noble Lord, Lord Strathclyde. He said that his department was considering the matter urgently and needed to discuss it with the profession concerned.
The whole point arises from the operation of the Insolvency Act 1986 which introduced some extremely useful measures that have since been of considerable benefit to some businesses and companies in the United Kingdom. They were incorporated in Parts I and VIII of the Insolvency Act 1986. They provided means whereby voluntary arrangements could be arrived at by the creditors of companies and the directors or owners of a business. They allowed measures of reconstruction to be brought before the creditors and, subject to the approval of the court, thereafter they could be put into effect.
In general terms they have been very successful indeed. They correspond broadly to the operation of similar measures in the United States—what are called Section 11 arrangements—whereby voluntary agree-ments are reached between creditors and the directors and shareholders of companies. In the event, a considerable number of companies in the United Kingdom have been saved from liquidation and are now in business again. Quite a large number of individuals and partnerships likewise have been able to benefit from the provisions. Generally speaking, the Government's intentions have proved to be extremely beneficial and have achieved the desired objectives, with the support of Her Majesty's Opposition.
I have tabled the amendment this evening because the regulations which I seek to amend have become obsolete in view of the fact that they have been interpreted recently by the courts in a way in which it

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was never intended that they should apply; and is quite different from the way in which they have been applied during the past seven or eight years.
I shall now particularise. When the directors of a company seek to come to an arrangement with creditors, believing that the company can be saved and restored to health again, a very critical situation arises between the creditors and directors of a company. It is a matter which rests largely on trust and very often it is extremely difficult to reach agreement.
In general, on being presented with a scheme of reconstruction by the company, the creditors agree to accept a lower amount in discharge of their debts than is on the books at the time; but they receive rather more than they would receive if the company was put into compulsory liquidation and not sold as a going concern. In other words, if no arrangement was reached and the liquidation took place, unless the business was sold very quickly as a going concern to some other company, the asset distribution would take place on a non-going concern basis and creditors would get but a fraction of the amount that was owing to them. I repeat that the arrangements arrived at between creditors and the owners of businesses and directors are a matter of the utmost delicacy and it requires a considerable amount of trust for one to be arrived at because all the time individual creditors may wonder whether other creditors are getting a better benefit than they are and so on.
In so far as the debts of a company are readily ascertainable—they are the ordinary book debts of a company and they are for an agreed, ascertainable amount—no difficulty normally arises. On the assumption that the insolvency practitioner acting on behalf of the company is able to persuade the creditors that the scheme is as sound a one as can be achieved in the circumstances, and also can satisfy the court likewise, then in the normal way the reconstruction proceeds, provided of course that the debts can be ascertained.
The trouble really arises when liabilities arise, or are thought to arise, which cannot be ascertained, upon which there is no agreement and which do not appear to be quantifiable. Such cases that arise are these: cases where an alleged creditor of the company apprehends that he ought to bring action against the company for reasons that are either real or imagined. Provided that there are applications, or that notice is received by the chairman of the creditors' meeting by midday before the day upon which the meeting is held, then they are bound to be taken into account by the chairman of the meeting in determining whether the 75 per cent. majority of the shareholders do in fact agree with the scheme itself—75 per cent. being the crucial figure which, if it is accepted by 75 per cent. of the creditors, then the way lies ahead for the insolvency practitioner to commend the scheme to the court for approval.
Up to 13th May, under the provisions of the Act, the position was stated—I quote from Regulation No. 5.17(3) on companies—as follows:
"A creditor shall not vote in respect of a debt for an unliquidated amount, or any debt whose value is not ascertained, except where the chairman agrees to put upon the debt an estimated minimum value for the purpose of entitlement to vote".
It is the construction which the courts have put upon this; provision that has led to the present position. The court in the case decided by Mr. Justice Ferris on 13th May interpreted that that provision meant that the chairman had to get the agreement of the alleged creditor for the unliquidated amount to the amount that ought to be taken into account for the purposes of determining the voting rights at the meeting itself. That is what has caused the problem. It is quite contrary to the interpretation placed upon the rule over the past seven or eight years. It was not previously interpreted that the chairman had to obtain the agreement of the alleged creditor himself or herself but had only to agree to determine the amount of the debt at whatever he considered the minimum value to be.
The minimum value could vary. If, for example, the unascertained or unliquidated debt had been in the knowledge of the directors for months, that would be one consideration on which the chairman at the creditors' meeting might decide that a certain value, although lower than the amount claimed, might be put to the meeting. It would, however, be rather higher than if the debt had come to the knowledge of the chairman of the meeting only 24 hours before the meeting itself and nobody had any other indication of it.
All the amendment seeks to do is to restore the interpretation which was previously placed upon subsection (3). It does not seek to do anything new. It merely seeks to re-establish the previous position within the context of subsections (4) and (5) which give certain rights of appeal.
In the normal course, the usual way to redress the position would be by bringing in an amending statutory instrument, regulation or rule. I have reason to believe that this is a matter of greater urgency. At any one time there are 20 or 30 companies or firms in such a position. Unless something is done to correct the position to what it is generally agreed that it ought to be and that it has been taken to be in the past, it may well be that those firms or companies will suffer. That is why the amendment has been brought forward tonight. That may even be done on a purely temporary basis if necessary.
The noble Lord may say that, so far as he can ascertain, the measure will not be widely applicable and therefore it can probably await the long-term review of the 1986 rules and the Act itself, which I understand is on the cards in any event. My answer to that is that if the matter is not of particular significance there is no reason why amending action cannot be taken now without harm to anybody, on the basis that if it is passed as part of this Bill it will be unnecessary to go through the procedure of having an amending rule or, on a longer-term basis, to await the complete review of the Act.
As I indicated in my rejoinder to the answer that the noble Lord gave me last week when I first raised the issue, I made myself available to the officials in his department. It would be grossly improper of me to refer to anything that transpired, save to say that, thanks to the Minister's co-operation, I found them very co-operative. I hope that they will advise the noble Lord accordingly.
Therefore, with the object—with which I am sure the noble Lord is familiar—of offering to help the

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Government in this matter, I hope that the Minister may see fit to accept the amendment in order to speed up matters and to make matters far more convenient for himself. The ultimate review of the 1986 Act could then proceed at a more leisurely pace than would otherwise be possible, and possible injustice, inconvenience and grave concern to many people could be avoided in the immediate future. I beg to move.
Lord Peston: The Committee will be indebted to my noble friend for raising the matter today and for offering a solution to our problems. He drew the matter to the Committee's attention about a week ago. I was most concerned about the issue and the need for urgent action. Since then I have taken some advice which suggests that we ought to act more quickly rather than more slowly.
We shall not have another debate on what falls within the Long Title of the Bill. It seems clear that such a provision might help save some viable enterprises. That should be our only concern. I appreciate that there will be an eventual review of all matters to do with insolvency. At a later stage of the Committee during debates on contracting out we may deal with the future of the official receiver's office. I do not wish to go into that now.
I am not an expert. However, what my noble friend says makes perfectly good sense. His amendment makes good sense. I repeat that I am not an expert, but I assume that the department has its experts. Therefore, there are two possibilities. The first is that the amendment is correct, in which case let us accept it. The second is that the problem exists, whether or not the amendment is correct. At some time during the passage of the Bill the department must come up with a provision which does the job. If we have an opportunity to save businesses which would otherwise not be saved we must take no risks in that regard, even if a little extra work for one or two officials is involved. I hope that the noble Lord will respond positively and sympathetically to what my noble friend says.
Lord Strathclyde: I am sure that I speak for the whole Committee in welcoming the depth of detail with which the noble Lord, Lord Bruce of Donington, introduced his amendment. As I said on 16th June, there is a need to discuss the matter with the profession. The preliminary view of the Society of Practitioners of Insolvency is that while an amendment to the insolvency rules is desirable, it is not immediately pressing as the effect of the relevant ruling does not appear to be prejudicial to the majority of voluntary arrangements.
It is considered that in many cases the chairman of a meeting will be able to come to some agreement with a creditor with a debt for an unliquidated amount, or any debt whose value is not ascertained, because if the proposal is offering advantages over liquidation or bankruptcy it will be in the interests of that creditor to participate.
As the noble Lord is aware, the insolvency rules which he seeks by this new clause to amend are a

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statutory instrument and those rules are made by the Lord Chancellor with the concurrence of the Secretary of State after consultation with the rules committee.
The impact on the rules for meetings of creditors in other insolvency procedures will also have to be considered. We would wish to discuss further the issues with the insolvency profession to make sure that we have a satisfactory solution, and, if that involves an amendment to the rules, to use the prescribed and conventional route for such rule changes. I hope that the noble Lord will agree with that. I can assure him that we are taking the matter forward urgently.
Perhaps I may add, without wishing to enter too far into the debate of relevance to the Bill, that if the new clause does not decrease regulation I do not believe that it would be appropriate for inclusion in the Bill. Having said that, and taking note of what I said earlier, I hope that the noble Lord will withdraw the amendment.
Lord Bruce of Donington: I am most grateful to the noble Lord for his reply. As to the propriety of the inclusion of the amendment in this specific Bill, I shall have to leave the matter exactly where my noble friend, Lord Williams of Elvel, left it in connection with the previous amendment.
I invite the noble Lord seriously to consider one other alternative upon which he did not touch. It is quite true that most creditors would find it advantageous to row along with the remainder of the creditors if, under the scheme, they would receive more than they would were the company to go into liquidation.
The noble Lord must, however, agree that there are circumstances which occur quite frequently where a debt is alleged against the company purely out of malice, without there being any real debt. But the allegation itself is sufficient to make the remaining creditors who propose to support the scheme uneasy. Probably making the allegation at the meeting of creditors can itself secure the complete abandonment of the arrangement already arrived at. The noble Lord can readily conceive circumstances where, at a creditors' meeting, a creditor who had no real fundamental claim against the company, but who had 24 hours earlier put in a claim on a completely unascertained basis, could in effect be blackmailing the company to come to some private arrangement with him, sub rosa, in order that the remainder of the scheme could go through. That is a possibility. I am not saying it is a strong possibility, but it exists.
I therefore hope that the noble Lord will take that into account. I know it sounds unconventional, but the effect can be real and I am quite sure that he would not wish to be party, by not expediting the correction of the rule, to adding to the woes of many companies which would otherwise, on a correct interpretation of the law, be able to recover to the benefit of their creditors, their customers and their employees.
I am grateful for the assurance given by the noble Lord. He knows me well and realises that I shall return to the matter again, frequently, as a matter of urgency. In expressing my gratitude to him and his department, I ask leave of the Committee to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 13 agreed to.
Clause 14 agreed to.
Clause 15 [Building societies: direct participation in syndicated lending]:
[Amendments Nos. 95 and 96 not moved.]
Lord Sudeley Lord Sudeley moved Amendment No. 97:
After Clause 15, insert the following new clause:
("Freedom of banks to disclose information after 75 years
. In section 19(1) of the Banking Act 1979, after the word ("disclosed") there shall be inserted the words ("for 75 years after it was obtained").").
The noble Lord said: This amendment to Section 19(1) of the Banking Act 1979 has been suggested by Professor Charles Goodhart of the London School of Economics. Professor Goodhart says that, as it stands, the clause actually prevents a bank from disclosing information on a customer's affairs in perpetuity while the family or firm remains in being. Professor Goodhart says that the simplest approach would be to add another clause to allow a bank to disclose information on its dealings with a customer when those dealings were 100 years before. I have cut that interval of 100 years to 75.
Before discussing the issue generally of disclosure I have to declare an interest: the bankruptcy in 1893 of the fourth Lord Sudeley outlined by Dr. Chapman of Nottingham University in The Sudeleys—Lords of Toddington, of which there is a copy available in the Library. Dr. Chapman's paper has drawn the interest of parliamentarians in a way which crosses party lines. The noble Baroness, Lady White, suggested from it a debate in this House on the keeping and disclosure of banks' records. In another place a Conservative Member is to introduce an adjournment debate with a view not just to considering the fourth Lord Sudeley's case on its own but to pull similar cases out of the woodwork.
The view of this Committee, therefore, is prayed for to assist in the dialogue which will continue both in another place and in a public conference during the Easter of 1996 at the fourth Lord Sudeley's second home, Gregynog, in Powys, which is now part of the University of Wales.
The fourth Lord Sudeley held political office under the Liberal Government. He contributed to this House on naval affairs; he was a pioneer in the fruit industry; and he was largely instrumental in getting guide lecturers in museums. Apart from Gregynog, most of his land lay at Toddington, in Gloucestershire, which has been held by the family for nearly 1,000 years. The new Toddington was personally designed by the first Lord Sudeley, who was chairman of the commission for the rebuilding of the Houses of Parliament.
As a landowner, the fourth Lord Sudeley was a victim of government policy and of its failure to introduce protection during the agricultural depression at the end of the last century. Far too late, in 1903, Joseph Chamberlain advocated domestic protection for industry and agriculture and imperial preference and 30 years later, during the depression of the 1930s the policies which Chamberlain advocated were accepted. This story is very well told by the noble Lord, Lord Amery, in his biography of Joseph Chamberlain.
To protect himself during the agricultural depression, the fourth Lord Sudeley diversified. He planted 700

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acres at Toddington with fruit. In 1893 he should have been able to reach an accommodation with his creditors to carry out his intention of selling the Gregynog estate and selling Toddington with its orchards. Instead of that, the blow fell whereby he lost the entire family inheritance when Lloyds Bank filed a petition for bankruptcy. Dr. Chapman says in his paper that the formal reason for the bankruptcy was liquidity, but adds that to find the real reason we need to probe below the: surface, where there is no answer. Lloyds Bank is adamant that it does not know.
The law of libel constricts debate outside Parliament on whether, in point of fact, Lloyds Bank has this information but it does not suit the bank to let it out On this question, I have found opinion to be divided; but if Lloyds Bank indeed has the information it brings us to the problem of how the bank is in total control of its own information and, if it stonewalls, what is anybody going to do? We are left with an area of speculation which falls into three parts: first, that the fourth Lord Sudeley was the scapegoat when, after the Baring crisis which shook credit to its foundations, scapegoats had to be found; secondly, foul practice on the pan of the bank in collusion with outside parties which could acquire our assets on the cheap; and thirdly, that the petition for bankruptcy was the work of an enemy. Banks can be sensitive to political pressure, and the Liberal Party at the time was riven by a feud between the old Whig aristocracy like the fourth Lord Sudeley and middle class radicals headed by Joseph Chamberlain. The feud was exacerbated by Gladstone when he changed his mind in favour of home rule for Ireland. I hope that in this area of speculation the worst of it is untrue.
To leave the fourth Lord Sudeley's case and to speak of the significance of this amendment generally in regard to the disclosure of bank records, on the credit side banks already give access to records, unaware of the nature of Clause 19(1) of the Banking Act 1979 as Professor Goodhart gives it. This is the view of Mr. Malcolmson of the records held by the Public Record Office of Northern Ireland, which has two large scale holdings deposited there, the Northern Bank and the Ulster Bank, and the law clearly needs to be altered so that such banks do not fall on the wrong side of it. In an important article in the Times Literary Supplement for 18th January 1985 Dr. Chapman says that much progress has been made in opening up the archives of banks, in particular the Bank of England, Barings and Rothchilds.
On the debit side, Dr. Chapman complains in his article in the Times Literary Supplement that the Bank of England has declined to publish any list of its holdings. Here it is worth remarking that the Bank of England is a public institution, indeed an instrument of the Government. Barings and Rothchilds, Dr. Chapman says, place severe restrictions on access. Barings refuse access to its information on capital profits and acceptances and Rothchilds refuse to reveal information on capital and profits, so no serious history can be attempted.
The disclosure of banks' records cannot be separated from the keeping of them, so it may be appropriate if I conclude with a few remarks on that. The old argument

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that the banks cannot throw the expense of storage on shareholders is now greatly weakened, owing both to the ease and economy with which information can be stored with modern computer technology and the willingness of public repositories to take banks' records with access controlled by the bank.
Apart from the Public Record Office in Northern Ireland, which I have already cited, there is the Guildhall Library, the records of Huth's at University College London, and the records of Brandt's with the London School of Economics and London University. In such repositories records have a chance of being much better understood than by bank archivists. Dr. Chapman complained in the Times Literary Supplement that many bank archivists lack the necessary knowledge of financial history and the skills of the trained archivist.
How should banks be encouraged to keep further records? The Secretary of the Royal Commission on Historical Manuscripts wrote to me that his commission disfavours the imposition of further statutory control since it would lead to the concealment and early destruction of the records which it was sought to preserve. However, his commission would welcome the preservation of further historical material.
What kind of material should it be? In canvassing the views of economic historians, I found that R.O. Roberts of University College, Swansea—I endorse his view —would like to see preserved full information on all the major decisions which banks take. In a case such as the filing for bankruptcy against the fourth Lord Sudely, that must include internal memoranda, reports to directors, and so on, to disclose the information on which the major decision was taken and the discussion which ensued prior to it. In the case of the fourth Lord Sudely, it is very galling simply to be given the bare entry from the Board Minute Book of Lloyds Bank that the petition for bankruptcy was filed and not to be told why.
I hope that this amendment and any debate on it will assist toward the fuller keeping and disclosure of bank records. This is a subject which, in the view of Dr. Chapman, is largely uncharted territory for economic historians. I beg to move.
Lord Henley: The new clause would not achieve the effect that my noble friend Lord Sudely intends. The section of the Banking Act 1979 which it seeks to amend was in fact repealed by the Banking Act of 1987 and replaced by the provisions in Part V of the 1987 Act. Therefore this clause, if agreed, would have no legislative effect.
But leaving the drafting to one side, perhaps I may address the points made by my noble friend. Obviously I sympathise with the difficulties that the noble Lord's forebears may have experienced as a result of that decision by Lloyds Bank to file a petition for bankruptcy against the fourth Lord Sudely. But my noble friend will probably understand that I cannot comment directly on a commercial decision taken by a bank, especially one taken 100 years ago.
If the intention of my noble friend is to impose a requirement upon banks to disclose information about

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their commercial dealings 75 years after the event, it would be a proposition with which I should have a great deal of difficulty. There are no precedents of which I am aware for introducing a statutory requirement for anyone—whether a bank, some other commercial enterprise or an individual—to disclose its reasons for taking a particular commercial course of action after some period has elapsed. I believe that such a provision would appear to imply a requirement to keep records for that period. Despite what my noble friend had to say, I believe that that could entail unnecessary costs and would certainly have no place in a deregulation Bill. Obviously, it it were simply a matter of law, back in the 1890s the parties concerned no doubt could have sought disclosure within the statutory code of limitations through the courts in the usual way. But I suspect that the cause of action of the noble Lord's predecessor, the fourth Lord Sudely, lapsed some time ago.
Perhaps I may also point out that Section 19 of the 1979 Act and Part V of the 1987 Act dealt with the treatment of confidential information obtained by the Bank of England in the course of its supervisory functions and not with the confidentiality of information held by the commercial banks. So even if Section 19 had still been extant, the effect of my noble friend's clause would not have been the one that he appears to seek.
While expressing sympathy with my noble friend for the troubles that his forebears experienced some time in the 1890s, I hope he will agree that this amendment is not the appropriate amendment for tonight. I hope therefore that he will consider withdrawing it.
11 p.m.
Lord Sudeley: I thank the Minister for his reply. I shall continue. There is a conviction in some quarters that the bank holds the information. That opinion was expressed to me by the previous chairman of another bank. There are of course many other aspects of the fourth Lord Sudeley's case which will be debated in another place and also at the conference which takes place in 1996 in relation to whether banks should force immediate payment of debts when creditors can reach an accommodation, and so forth.
I thank the Minister for his reply. As the Minister acknowledged, with computer technology it is now so much easier to store information, and possibly at some stage consideration can be given as to whether statutory regulation on that aspect of keeping banks' records might be introduced. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 16 agreed to.
Lord Peston Lord Peston moved Amendment No. 97A:
After Clause 16, insert the following new clause:
("International ports
. In the Licensing Act 1964, after section 86 there shall be inserted—
"International ports.
86A.—(1) At a port where this section is in operation section 59 of this Act shall not apply to licensed premises which are located at an approved wharf within the meaning of the Customs and Excise Management Act 1979.
(2) The Secretary of State may by order bring this section into operation at any port which appears to him to be one at which there is a substantial amount of international passenger traffic.
(3) Before the Secretary of State makes an order bringing this section into operation at a port, he shall satisfy himself that arrangements have been made for affording reasonable facilities on licensed premises located at the approved wharf concerned for obtaining hot and cold beverages, other than intoxicating liquor, at all times when intoxicating liquor is obtainable on those premises, and if it appears to him that at any port where this section is in operation such arrangements are not being maintained, he shall revoke the order with respect to that port, but without prejudice to his power of making a further order with respect to that port."").
The noble Lord said: At Second Reading I told the Minister that this was a matter to which I would return and it concerns something which I believe the Government should be tackling in the Bill. It relates to the anomaly which recently came to light in the way in which different forms of cross-Channel transport are treated by the present liquor licensing regime.
At airports the Secretary of State may make an order under Section 87 of the Licensing Act 1964, the effect of which is to enable alcoholic beverages to be served outside the permitted hours as defined in Section 60 of that Act. All major UK airports are the subject of such orders. In the case of those travellers wishing to cross to the Continent by sea they at present have a choice of conventional ferries, hovercraft or sea catamarans. Soon, of course, the Channel Tunnel will provide a quite different possibility. As competition for cross-Channel trade intensifies, so the services which can be offered to travellers on each system of transport become increasingly important. One such service, at least for the time being, is the supply of duty free goods.
A conventional ferry operating outside territorial waters may sell duty free beverages on board the vessel. The size of those vessels—they are now quite enormous —means that a wide range and quantity of goods may be carried. On the other hand, hovercraft—being much more akin to aircraft—do not have the space to carry bulk supplies of duty free drinks such as beers and lagers, and bulk purchases are therefore made at duty free shops located at the UK hoverport.
As a result of the hovercraft application of enactments order 1972, Section 87 of the Licensing Act 1964 has been extended to cover hovercraft and hoverports. The result is that cross-Channel hoverports such as Dover may sell duty-free drinks to travellers waiting to use any of the hovercraft services, including —and this is an essential point—the early morning and Sunday afternoon crossings which would otherwise fall outside the permitted hours.
The anomaly which was recently discovered concerns the treatment of SeaCats. Those passenger and car-carrying catamarans are capable of achieving much higher speeds than ferries but are considerably smaller. Those excellent vessels—I have already pointed out to the Committee that they are my preferred way of crossing the Channel—are not designed to carry substantial quantities of alcoholic drinks for sale duty-free on board. Instead, only a limited supply is carried primarily for immediate consumption, as is the case with aircraft and hovercraft. However, the

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Folkestone duty-free shop is unable to service the needs of customers using the early morning and Sunday afternoon crossings because Section 87 of the Licensing Act does not cover SeaCats. At Dover, where there is also a SeaCat service, the restrictions do not apply because hovercraft also use the port and the Secretary of State's exemption order covers the duty-free shop at the hoverport. The position at Folkestone is being saved at present by what is known as a justice's occasional licence; but that is seen as a temporary measure.
The anomaly I described is heightened by the fact that under Section 11 of the Channel Tunnel Act 1987 the appropriate Minister has power to make an order which excludes or modifies the Licensing Act 1964 in relation to the Channel Tunnel. He is therefore: able to disapply the prohibited hours restriction in the case of duty-free shops at the tunnel terminal at Cheriton, therefore placing Eurotunnel in the same position as airport or hoverport operators. I understand—and perhaps the noble Lord will remark on this —that such an order is indeed likely to be made for Eurotunnel.
The point is that it is quite apparent that there is no conceivable policy reason for imposing a more restrictive duty-free regime upon those of us who choose to travel by SeaCat—and I have declared an interest; "those of us" certainly includes me—than upon those who decide to take a hovercraft or a Channel Tunnel shuttle-train.
All noble Lords present will agree that the legislative background to this is arcane, but the deleterious consequences of the present state of affairs are all too real. If a form of transport is unfairly discriminated against, both the public and those whose jobs depend on the service may suffer. The Bill represents an ideal opportunity—entirely in the spirt of what the Government are choosing to do more generally—to remove the present anomaly by, in effect, extending the power in Section 87 so as to enable the Secretary of State to make an order in respect of Folkestone and any other international SeaCat terminal such as Holyhead.
I freely admit that there are several ways in which one could approach the matter. My amendment has the merit that it is the simplest and most straightforward approach. It inserts into the Licensing Act 1964 a new section conferring upon the Secretary of State the same powers in respect of international ports as he has under Section 87 in respect of international airports. This approach has the advantage that it is not necessary to define what a SeaCat is. This is very important because ferry technology is advancing rapidly, and it is quite possible that other, even faster, forms of carrier will be introduced in the next few years. It is better not to produce legislation that will soon be out of date and which because of its unduly narrow scope will create new anomalies. This is precisely the problem with the Hovercraft Act 1968 and the orders made under it.
My new clause would enable the Secretary of State to disapply the ban on sales outside the permitted hours where he considers that circumstances at a port warrant it. The new clause, like Section 87, is in permissive terms. It does not require him to act, but it gives him the

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power to do so in the case of Folkestone and in any other port which would otherwise be at a competitive disadvantage.
The new clause focuses on the Customs concept of an "approved wharf" which, as the Minister is aware, is used in the Hovercraft (Application of Enactments) Order 1972. Otherwise, the clause follows the form of Section 87, omitting material which is irrelevant in the present context.
The new clause contains an important requirement, which is also present in Section 87. The Secretary of State cannot lift the permitted hours restrictions at the approved wharf unless he has satisfied himself that arrangements have been made for affording reasonable facilities in the licensed premises for obtaining hot and cold beverages other than intoxicating liquor at all times when intoxicating liquor is obtainable on those premises.
My central point is that every operator of a cross-Channel or other ferry service should be afforded an equal opportunity to provide the best service to customers as he or she possibly can. I am certain that that is the Government's view. The amendment that I have moved would enable this to happen. If a particular form of transport such as the SeaCat is penalised purely because of a legislative quirk—and everybody who has looked at this matter agrees that that is what this is— ultimately customers can suffer and jobs be put at risk.
The Bill presents an excellent opportunity for eliminating the anomaly that I have described. Those running SeaCat services—and I must say that I am not in the least involved with them; in other words, regretfully, it is not a firm that I own a share of or have been appointed to the board of—should not have to wait for an order to be made under Clause 1 of the Bill. I hope that I have persuaded the Committee that there is a problem and that it can be rectified in the Bill without delay and worries over vires questions and other potential difficulties.
I hope very much that the Minister will respond positively and sympathetically to my amendments, and I look forward warmly to what he has to say.
The Parliamentary Under-Secretary of State, Department of Transport (Lord Mackay of Ardbrecknish): The noble Lord, Lord Peston, has proposed a new clause which would give the Secretary of State powers to grant exemptions to licensing laws at international sea ports similar to those powers which he has in respect of airports. The noble Lord explained the background to his new clause, which he foreshadowed at Second Reading. As he mentioned, the issue concerns the high-speed catamarans, dubbed SeaCats by one of the operators, Hoverspeed. It is important to say for the record that Stena Sealink also operates international high-speed catamaran services from UK ports.
I share the noble Lord's interest in catamaran services and have travelled on the one from Stranraer to the centre of Belfast. I was extremely impressed by both parts of the journey. At the risk of boring the Committee further, I share the noble Lord's interest a little further in that I am to open a conference and give an address on

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the whole question of fast vessels with twin hulls. However, I shall not go into that any further. It is a fascinating subject.
Lord Tordoff: Will the noble Lord tell us where this exciting event is taking place and how we can get free tickets?
Lord Mackay of Ardbrecknish: The noble Lord will certainly not get free tickets. He will have to pay if he is coming to listen to me making a speech outside this House.
I understand the sentiments behind the new clause. It is a complex issue and it is not quite as simple as it first seems. It goes beyond the SeaCat question at Dover and at Folkestone which was originally raised at Second Reading by the noble Lord, Lord Peston. Operators of high-speed catamarans want to be able to offer to their customers the full benefits of duty-free shopping which are available on conventional ferries. But space limitations and the need to keep weight down, which is another important aspect, together with the speed of the passage, prevent a comprehensive service on board SeaCats. Passengers wishing to make duty-free purchases must therefore use the facilities available at the SeaCat terminals.
There are no current powers for the Secretary of State to grant licence exemptions at sea ports. There are powers that cover airports and, as the noble Lord said, hoverports, under Section 87 of the Licensing Act 1964. As a hoverport, Dover is covered by this provision. Alternative arrangements are currently in place at Folkestone, as he explained, which allow the licensed premises there to remain open outside normal licensing hours. Sea Containers, which is Hoverspeed's parent company, would now like to see these arrangements formalised.
However, the clause before the Committee goes a little wider than that. It would allow exemption powers to be used at any port, not just those used by SeaCats. I should like to look closely at the implication for the whole ferry industry and indeed the Channel Tunnel. The noble Lord asked about the Channel Tunnel. I can tell him that the Secretary of State will want to consider the Eurotunnel case for special treatment regarding licensing hours under Section 11 of the Channel Tunnel Act. He will want to consider that case very carefully in the light of all the relevant competition, licensing and Customs and Excise issues. That he will be doing. But beyond my direct interest as Transport Minister in this issue, there are, as the noble Lord will be well aware, wider issues of licensing and duty-free matters which will also need careful consideration.
It has not yet been possible to consider fully the implications of this clause in the limited time available. However, for that reason I hope that the noble Lord will agree to withdraw the new clause tonight and give me and my colleagues an opportunity to go into this issue in greater detail. I am fully aware of the issue raised by the noble Lord. It is a perfectly justifiable issue to raise and a justifiable complaint from the operators of the SeaCat. We should like to study the issue carefully before coming to a final decision. I shall certainly keep

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the noble Lord informed of where our various deliberations are. On that basis, I hope he will be able to withdraw the amendment.
Lord Peston: I thank the noble Lord. As he knows, I have been sitting on this Front Bench for a great many hours being rebuffed on amendment after amendment. But it has been worth waiting until 11.15 to hear a positive and constructive response to my anxieties.
I thank him for what he has said. I hope that he will be able to return to your Lordships with a proposal sooner rather than later because, as he rightly said, it is a matter which concerns the operators. It is a question of fairness in competition. I appreciate that there may be other technical difficulties. I shall be delighted if at any

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point when he is making progress the Minister invites me to talk about it. But there will be time between now and Report stage. I say with total sincerity, and the biggest thanks that I can give the noble Lord, how much I appreciate his response. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Viscount Goschen: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
House adjourned at sixteen minutes past eleven o'clock.