Lords Sitting of 30 March 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 Sheffield.

Television: Nine o'clock Watershed
Lord Orr-Ewing Lord Orr-Ewing asked Her Majesty's Government:
Whether they will initiate discussion with the TV broadcasting authorities with a view to ensuring a voluntary postponement of the nine o'clock watershed.
Baroness Trumpington: My Lords, the nature and the timing of the watershed are among the matters which my right honourable friend the Secretary of State for National Heritage proposes to discuss with the chairman of the regulatory authorities for broadcasting.
Lord Orr-Ewing: My Lords, I thank my noble friend for that helpful reply. We debated this matter on 12th January and noble Lords on all sides of the House implored the Government to put back the nine o'clock watershed. It is unrealistic to think that little children are in bed and asleep at nine o'clock these days. Some shocking programmes are being broadcast on our terrestrial channels; for example, the programmes about the Kray brothers and the Richardson gang. Those programmes went far beyond the standards of taste and decency which are demanded of all channels by the 1990 Broadcasting Act. What can we do about the situation?
Baroness Trumpington: My Lords, I understand my noble friend's sense of disgust and he is not alone in that. However, in a free society it is up to broadcasters to show a sense of responsibility.
Lord Thomson of Monifieth: My Lords, is the Minister aware that the nine o'clock watershed has long been established and is well known to parents, who have a responsibility in this matter? Is the noble Minister further aware that two-thirds of homes in this country contain no children, and that grown-ups have rights too as regards viewing television?
Baroness Trumpington: My Lords, I know that this is a matter on which noble Lords hold strong opinions. However, I stress that parents must take primary responsibility for their children's viewing and the watershed helps parents to exercise their responsibilities. I appreciate that there are many other people other than children watching television, but I still think that care must be taken as regards setting standards for broadcasting companies.
Lord Barnett: My Lords, does the noble Baroness accept that the real issue here is not about the watershed? The majority of complaints received by the BBC do not concern excessive sex and violence in programmes but rather the excessive use of boring and
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repetitive programmes. Does not the noble Baroness agree that the big issue here is the growth of videos? I have a three year-old granddaughter who I hasten to add watches videos such as "Beauty and the Beast" rather than videos which contain sex and violence, but older children can obtain videos which most of us would deplore. As has been said, that is a matter for parental control. Is not the real problem that raising the time when the watershed starts results in a disservice to others in the community in the sense that serious news and drama programmes would have to be broadcast much later in the evening? That would constitute a serious disservice both to democracy and to culture.
Baroness Trumpington: My Lords, I shall certainly pass on the remarks of the noble Lord, Lord Barnett, to my right honourable friend.
Viscount Tenby: My Lords, does the Minister agree that the ultimate deterrent is the parental finger on the off button of the television set? Does she also agree that to move the watershed back to 10 p.m. or possibly even to 10.30 p.m. would indicate to the producers of programmes the Government's anxiety about this particular problem?
Baroness Trumpington: My Lords, I hope I can wrap up this matter. The idea of having a watershed is not to guarantee that children never see unacceptable material or to mirror precisely the times at which children throughout the country go to bed but rather to guarantee a menu of family viewing until nine o'clock and to alert parents and guardians to the need to supervise more closely children's viewing after that time.
Lord Burnham: My Lords, is it not a matter of congratulation that 30 years after the "toddlers' truce" the nine o'clock watershed should be so widely accepted? Would it not be totally counter-productive to change it, because if children are not disciplined to go to bed by nine o'clock or are otherwise prevented from watching television at nine o'clock, there is little chance that that will be any different at ten o'clock?
Baroness Trumpington: My Lords, I repeat that it is a matter for parents.
Lord Jenkins of Putney: My Lords, is not the noble Baroness aware that if the watershed were moved back much later than nine o'clock it would gravely disadvantage those of us who are approaching our second childhood?
Baroness Trumpington: My Lords, I do not know what to say to that except that the noble Lord does not look as if he is in his second childhood and I would hesitate to hazard a guess at his age.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that my noble friend's Question merely suggests that discussions should take place? In the light of all that is happening today in relation to young people in this country such discussions would show that the

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Government are aware of the problems. What harm can come from emphasising the importance of looking into the matter when good may result from it?
Baroness Trumpington: My Lords, my right honourable friend the Secretary of State wants to make sure that all is being done that can be done and that the regulators have the means to carry out their roles effectively. That is why he has instigated conversations in the near future.
Baroness Wharton: My Lords, is the Minister aware that many productions are not necessarily seen by those in charge? Surely that is a good reason for moving the watershed to a later time rather than leaving companies to regulate themselves.
Baroness Trumpington: My Lords, as I said before, this is a matter for the broadcasters.
Lord Donoughue: My Lords, most noble Lords would sympathise with anything that can be done to reduce gratuitous violence on television. However, does the Minister agree that the main problems lie, as my noble friend Lord Barnett said, in video and computer software? Does she also agree that even in relation to television it is not our terrestrial television services which present a problem—they are strongly regulated, although mistakes are made—but the satellite television channels; Sky television, and Sky movies in particular? Since those are the expanding areas and the four or five terrestrial channels will contract, do the Government have any views on how in the future we can regulate the portrayal of violence in growing areas of unregulated media communications?
Baroness Trumpington: My Lords, the ITC's programme code, which includes provisions on violent programmes and taste and decency, applies equally to satellite television services licensed by the ITC. As regards the second part of the noble Lord's question, that would be a matter for the ITC in the first instance. The ITC has asked BSkyB—and BSkyB has agreed—to look carefully at its evening scheduling on its film channels.

Easter Act 1928
2.44 p.m.
Lord Airedale Lord Airedale asked Her Majesty's Government:
Whether they have now sufficiently complied with the requirement of the Easter Act 1928 that "regard shall be had to any opinion officially expressed by any Church or any Christian body" before seeking to bring the Act into force whereby Easter would always be celebrated during the first half of April.
The Minister of State, Home Office (Earl Ferrers): My Lords, the noble Lord will not be surprised when I tell him that the Answer which I shall give him is the same as that which has been given to him and his predecessors on the 28 occasions during the past 33 years when a similar Question has been asked. The
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Answer is that it would be undesirable to implement the Easter Act 1928 in the continued absence of agreement among the Churches.
Lord Airedale: My Lords, I am very much obliged to the noble Earl for those interesting statistics. Does he not applaud the far-sightedness of our elders and betters in 1928 who foresaw the coming of the May Day holiday and strove to hold back Easter, realising that Easter Monday can occur as late as 26th April?
Earl Ferrers: My Lords, I do not see what that has to do with it. Easter is a prime religious festival and it would be inappropriate to change the date of Easter without the agreement of the Churches.
The Lord Bishop of Sheffield: My Lords, does the noble Earl not agree that as by providence Catholics and Protestants are agreed on the date of Easter, and that date is related to history, scripture, tradition, the passage of the moon and all that, and, as far as I know, there is no widespread demand for a fixed Easter —which would serve no useful purpose unless one could have a fixed weather pattern as well—it would be sensible to swallow up the 1928 Act in one of those repealing measures so that we no longer have this annual Question?
Earl Ferrers: My Lords, that would be a fairly extravagant use of the repeal mechanisms of the statute book. However, I understand the right reverend Prelate's view. The subject of Easter has been debated for years and years. Indeed, way back in AD325 the Council of Nicaea decided as its timely goal—as one of the documents of the Greek Orthodox Church said—on the bringing about of Christian unity through the common celebration of Easter. We are still struggling to achieve that. No doubt with the right reverend Prelate's aid we may be a little nearer to achieving it in a few years' time than we are at the moment.

Beaches: Local Authority Responsibility
2.47 p.m.
Baroness Perry of Southwark Baroness Perry of Southwark asked Her Majesty's Government:
Whether, in the light of the Reader's Digest/Marine Conservation Society Beachwatch Report which revealed that 11 per cent. of litter collected during a nationwide beach clean was sewage related, they intend to take action against local authorities who fail to maintain the standards of cleanliness required by law on Britain's beaches.
The Parliamentary Under-Secretary of State, Department of the Environment (The Earl of Arran): My Lords, under the Environmental Protection Act 1990 local authorities are required to keep amenity beaches down to high water mark clear of litter and refuse between 1st May and 30th September.
Baroness Perry of Southwark: My Lords, I thank my noble friend for that very clear statement. Does he not agree that too many local authorities are failing in their duty to the families and young children who

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holiday on Britain's beaches? Does he agree that the situation is wholly unacceptable when volunteers in last year's Beachwatch campaign found that more than 3½ tonnes of the debris on our beaches was made up of used nappies, condoms. tampons and other even more unmentionable sanitary items which are a dangerous threat to the health of our young children and grandchildren and to the general public?
The Earl of Arran: My Lords, of course I agree with my noble friend. It is an extremely serious matter. However, I have to say, as I said in my original Answer, that it is very much the job and responsibility of local authorities to consider how to carry out their duty in the light of priorities and the circumstances which prevail at the time. The Tidy Britain Group has surveyed all the resort beaches in Britain and will be reporting shortly with the publication of a league table. The local authorities would do very well to heed the results carefully.
Lord Dean of Beswick: My Lords, bearing in mind that some years ago the responsibility for sewage treatment was taken away from local authorities and placed with the new water companies, would it not be better if they were included in this Question as they are the biggest culprits?
The Earl of Arran: My Lords, the point is that they are not included in the Question. I believe that the noble Lord's question is for another day.
Baroness Nicol: My Lords, would it not be more satisfactory to ensure that the debris did not reach the beach in the first place? Since we refer to 11 per cent. of visible rubbish, where does the remaining 89 per cent. come from? Who deals with that? Has anything been done about the great deal of rubbish which is thrown from ships at sea?
The Earl of Arran: My Lords, the noble Baroness is quite correct. A considerable amount of debris is caused by dumping from ships at sea. As the noble Baroness is fully aware, the problem, as always, is the policing of and the detection of those ships. But each of the vessels which passes through the maritime waters of this country well knows the laws abiding in those waters. For instance, vessels are not allowed to dump or to discharge any garbage within a 12-mile limit; and they are certainly not allowed to discharge any garbage in the North Sea.
Lord Williams of Elvel: My Lords, in his comprehensive answer relating to Section 89 of the Environmental Protection Act, did not the noble Earl leave out the local authority duties? The important phrase is "so far as is practicable". If local authorities find the directive impracticable, that section is the let-out. Is it not therefore relevant to ask, as my noble friend Lord Dean of Beswick asked, that we first stop the polluters? Therefore, is it not for the Government to make sure that the water companies—which are the sewerage companies as well—meet proper standards? The water companies will have to do so if they are to meet the requirements of the bathing waters directive by 1995.
The Earl of Arran: My Lords, certainly it is very much the responsibility of the general public when visiting and bathing in these waters not to leave litter around. As regards the bathing directive, the noble Lord will know that, of the £30 billion being spent by the end of the century, £2 billion is being invested in clearing up the bathing waters in this country.
Lord Williams of Elvel: My Lords, that may be the case. But the fact is that the Government are committed by 1995 to meeting the standards under the bathing water directive. If the bathing waters do not meet those standards, they will be taken to court and there will be yet another mess which the Government will leave behind which we shall have to clear up.
The Earl of Arran: My Lords, the Government do not leave behind messes for the Opposition to clear up. The noble Lord knows perfectly well that we shall endeavour under the European directive to fulfil the commitment by the year 1995.

Scotrail Franchise
2.53 p.m.
Lord Taylor of Gryfe Lord Taylor of Gryfe asked Her Majesty's Government:
When they expect to invite bids for the Scottish region of British Rail (Scotrail) and what is the anticipated return on assets which will be the basis of Railtrack charges on this service.
Viscount Goschen: My Lords, it will be for the franchising director to invite bids for the Scotrail franchise. My right honourable friend the Secretary of State for Transport has set him a target for the award of the first six franchises, including Scotrail, by the end of 1995.
Access charges for Scotrail will reflect Railtrack's overall financial regime. Railtrack will be set a target real rate of return on its assets of 8 per cent. to be achieved by 1997–98.
Lord Taylor of Gryfe: My Lords. I thank the Minister for that reply. Is he aware that, despite the presentations including ministerial visits, the Edinburgh financial community has shown little or no interest or enthusiasm for investing in Scotrail?
Secondly, if he anticipates an 8 per cent. return by Railtrack on investment, can I assume that the valuation on that investment will be at replacement value? If that is so, what charges will Scotrail have to assume on the replacement value at 8 per cent. on the Forth Bridge, which is now 100 years old? Will the Minister give us some idea of what kind of burden will be placed on investors in Scotrail based on those calculations?
Viscount Goschen: My Lords, I can reassure the noble Lord that there has indeed been a substantial amount of interest in the Scotrail franchise.
On the second point, Railtrack will maintain accounting information both on an historic cost basis and on a basis which reflects the effect of changing prices on tangible assets.
Lord Bruce of Donington: My Lords, would it not be better if the Government were to publish their own detailed calculations on the matter rather than presenting everyone with a fait accompli based on what may conceivably be phoney figures?
Viscount Goschen: My Lords, I do not accept the noble Lord's point. Railtrack's newly appointed auditors, Touche Ross, have been asked to advise on the opening values to be ascribed to Railtrack's opening balance sheet.
Lord Peyton of Yeovil: My Lords, can my noble friend indicate whether there has ever been a time in railway history when it has been possible to earn 8 per cent. on the kind of assets that will be transferred to Railtrack? Does he agree that, if Railtrack's earnings are to be at that level, the charges which it makes to train operators will make running trains very expensive indeed, and travelling in them even more so?
Viscount Goschen: My Lords, the point is that the level of access charges levied by Railtrack, and hence its return on its assets, will be commensurate with its being set up as a commercial organisation. The franchise agreement with the operator will take account of the level of those access charges.
Earl Attlee: My Lords, would it not be more efficient to allow Scotrail to be vertically integrated and therefore in full control of all its costs?
Viscount Goschen: My Lords, both Houses of Parliament have passed the British Railways Act. We feel that the very best future for railways in this country will be through the privatisation process which we have developed.
Lord Skelmersdale: My Lords, is my noble friend aware that, in a recent Monopolies and Mergers Commission inquiry into the workings of British Gas under the Gas Act 1986, the MMC recommended a figure of between 4 per cent. and 4.5 per cent. on existing assets? Why should Scotrail be any different?
Viscount Goschen: My Lords, I believe that the noble Lord may possibly have misunderstood the issue. The return that we refer to is to be made by Railtrack. That is its return on the value of its assets.
Lord Carmichael of Kelvingrove: My Lords, does the Minister agree that an 8 per cent. return on Railtrack will mean that other parts of the railway network will be under considerable pressure? For instance, does he realise that the subsidy at present given to the Strathclyde regional passenger transport executive—an area which accounts for two-thirds of the Scottish rail passengers—is guaranteed to increase in the first year to meet the charges? Without that important area, the whole system will be in great difficulty. Can the Minister assure us that the subsidy will be guaranteed by the Government until the viability in which the Government believe actually occurs?
Viscount Goschen: My Lords, the Government have given categoric assurances both to the Regional Council and to the PTE about the level of funding to be provided for rail services in 1994–95 and thereafter.
Lord Mackie of Benshie: My Lords, does the Minister expect a big rush for the franchise from Inverness to Wick? Is that in the Minister's brief?
Viscount Goschen: My Lords the Scotrail franchise will be awarded as one unit. Indeed, as I have already stated, there has been considerable interest in that franchise, not least from the Scotrail management team.
Lord Taylor of Gryfe: My Lords, perhaps I may return to the question which was put much more succinctly by the noble Lord, Lord Peyton of Yeovil. If we assume an 8 per cent. return on the assets of Railtrack, and those assets are calculated on replacement values, as in any other business, how can Scotrail possibly carry such charges and run an economic railway which will attract investors on the one hand and give reasonable fares to the public on the other?
Viscount Goschen: My Lords, the franchising director, of course, has in his power the ability to offer subsidy. That will be taken into account in the negotiating arrangements for the franchising agreement. No doubt the successful party which is awarded the franchise agreement will be happy with those financial arrangements.

Business
2.59 p.m.
Viscount Ullswater: My Lords, at a convenient moment after 3.30 p.m., my noble friend Lord Mackay of Ardbrecknish will, with the leave of the House, repeat a Statement that is to be made in another place on the road programme review.

British Railways (No. 4) Bill
Read a third time, and passed.

Sunday Trading Bill
Earl Ferrers: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That it be an Instruction to the Committee of the Whole House to whom the Sunday Trading Bill has been committed that they consider the Bill in the following order—
Clause 1, Schedules 1 and 2, Clause 2, Schedule 3, Clauses 3 and 4, Schedule 4, Clauses 5 to 9, Schedule 5.—(Earl Ferrers.)
On Question, Motion agreed to.

Local Government Commission
3 p.m.
Lord Cornwallis Lord Cornwallis rose to call attention to the work of the Local Government Commission in the light of the recent High Court decision reaffirming that the status

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quo is an option, and to the cost of implementing any changes arising from the Commission's recommendations; and to move for Papers.
The noble Lord said: My Lords, since putting down my name to the debate, I have been inundated with paper from all parts of the British Isles. My telephone has hardly stopped ringing with offers of advice and consultation. I feel. in consequence, that I have arrived at the moment of speaking in much the same muddle and confusion as is being caused by the Local Government Commission in the review. I believe that the review was originally instituted to deal with change in three specific places, since when it seems to have spread like an epidemic of measles across the country. Was it ever intended to do that? Has it, like Topsy, just grown?
The government guidelines, before the High Court decision with regard to options, presented little opportunity to consider the status quo since this was seen to be outside the remit. It was in the light of the High Court decision making the status quo an option and what seemed to me to be increasing alarm and despondency about the whole exercise that I was prompted to put down the Motion. I believe that there would be some doubts among your Lordships as to whether the High Court ruling has made any difference at all to the attitude of the Government towards the commission. The belief that the overall objective is to bring about change for change's sake remains firmly fixed in most people's minds.
County councils were brought into existence over a hundred years ago in response to a changing society. They developed and evolved to meet the needs of local communities, providing vital services, including schools, care for the elderly and transportation planning. The system of county government is continuously evolving to meet the changing needs of its residents. One has to ask why we are contemplating the wholesale destruction of such a flexible structure that has served so well over the last century.
The previous reorganisation of local government was, and still is, seen by many as a disaster. In some cases the final re-allocation of buildings and disposal of others has only been completed in the last few years. The larger district councils created have become far more remote from those they are expected to serve, and the burden of work on individual councillors has considerably increased. Yet it would appear that the basic intention of the present review is to create larger authorities with fewer councillors, which would seem to indicate an even further removal of contact from the electors.
In my own district the embryo suggestions would mean that my local authority, in a well populated rural area, would stretch for nearly 45 miles from end to end instead of the current 20 miles, and with fewer councillors. How does that put me in closer touch with my council? Overall democratic accountability will be weakened. For example, in my own shire county it is proposed that the existing number of elected members will be reduced from 805 to 375. This is at the same time
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as we are witnessing an increasing number of appointed bodies. What does this change in the balance between elected and appointed bodies portend?
So who is this expensive exercise designed to benefit? It surely is not going to benefit the local taxpayer who will have to foot the bill—a bill conservatively estimated at £1.1 billion, a figure which I have not heard disputed. Many estimates of the cost believe that this figure may well in the end be doubled. Savings are supposed to accrue but I seriously doubt whether there will be any. In my own county, the transitional cost of seven new unitary authorities is estimated at £75 million, with an annual saving of £700,000. It will take 100 years to produce the recoupment and I would hazard that there will be another scheme to reorganise local government long before that. My experience tells me that costs always escalate and that savings never materialise, so that is money down the drain.
The changeover computer cost in Kent is estimated at £40 million. We now have an established system with county-wide information. No doubt that is replicated in all other shire counties across the country. Is all that to be fragmented and will the new system work as effectively? The London Ambulance Service's experience with new computers is hardly encouraging.
There may well be particular difficulty in splitting the child protection and adoption registers, with potentially fatal consequences. This must be a major concern to the NSPCC and others, and must be of deep concern to us all. Co-ordination of social services and community care will still be needed and essential, So voluntary co-ordination between the new authorities will need to be established. But, on the whole., voluntary co-operation does not work, as London boroughs have found out. So why replace a statutory working arrangement with something less reliable and effective?
Nor can it be claimed that this review is wanted by people or organisations throughout the country. Public opinion canvassed in the review areas overwhelmingly is for no change. That view is supported by many of the vital voluntary organisations which carry out such good work.
What about the problems of specialist education for the disabled? What about archives, the repository of family and local history extending over far wider boundaries than district councils? I personally have archives in Kent, Essex and Suffolk. Are those to be fragmented too? And who will look after them? There has been a huge increase in the users of archives over the past decade, due to the popularity of genealogy and the development of local studies in universities. Archives require specialist accommodation and specialist knowledge and advice. Many records were lost at the time of the 1974 reorganisation and cannot now be replaced. They require major investment in micro-filming for protection and computerisation for comprehensive information. To replicate what is currently held by the counties and their partners would be enormously expensive arid dangerously vulnerable to future financial pressures.
In referring to Kent, I have not touched on the European dimension, which is of considerable

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significance. But I am sure that other speakers will refer to that aspect of Kent County Council's activities and their regional development across the Channel.
Of course, there is room for improvement in the present two-tier system. There is always room for improvement and development. But there is no way in which I can be convinced that there is a case for wholesale destruction. It is my understanding that the Local Government Commission is independent. Yet the Government seem determined to deny that independence by refusing to support its recommendations. Why are the Government so determined to force through change—change which, if Sir John Banham's recent letter to The Times is anything to go by, the chairman of the commission is by no means convinced is necessary? Refusal by the Government to accept the commission's recommendations for Derbyshire, Durham and Gloucestershire can only lead one to believe that they will only accept recommendations that coincide with their own pre-conceived wishes.
But why? Are they determined that they shall have only one tier of local government with which to deal? Do they believe that new councils will be more amenable or less powerful than the present structure? Have they a hidden agenda, hoping that the change will bring about ineffective local government which they can sweep away at some future date in favour of appointed regional councils staffed and/or run by Whitehall? What is the objective? It cannot be economy. It cannot be democracy because representation is reduced. It is change for the sake of change—additional change to that to which county councils continually respond.
Many noble Lords whose names are down to speak have far wider experience of local government than I. I hope therefore that we shall have a wide-ranging, interesting and informative debate. Before I sit down I must ask one question which has a bearing on this subject even if it is not strictly relevant to it. Have this Government and Europe become legislation mad? We may no longer be men and women, we have to be persons. We may no longer encourage people to buy British or, so far as I can see, to be British. This whole exercise seems to cause a crisis of identity. Have the Government seriously considered the implications of this legislation for the wider well-being of the country? People have long-standing historical allegiance, pride and loyalties to their county and its organisations. Are those too to be destroyed in favour of becoming a rootless, faceless, footless European "person"? I am prepared to bet that there are no European persons in France. My loyalties are to my immediate neighbourhood and my county, not to the district council. I am a Man of Kent, not a man of Tunbridge Wells—although at the moment I may well qualify to be that much quoted person "Disgusted of Tunbridge Wells". Are we to be told that the county society must be "persons of Kent" and "Kentish persons"? Will "fair maids of Kent" be a matter of sex discrimination? Are we to lose all colour to our lives and the basic, fundamental structure of the country that makes the nation tick?
Yes, there may be a need for change in some places. But is that need for change so immense anywhere that
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it requires wholesale destruction of the existing systems? My plea is to let those areas where change is genuinely needed apply to the commission and consult with it as to how best change can be introduced. But otherwise, let us please drop the whole unnecessary, expensive upheaval. We have the foundations of good local government. Let us build upon them and develop from them. I repeat: let us build on the foundations that we have and develop from them. People want to keep their local pride and loyalties. My Lords, I beg to move.
3.15 p.m.
Baroness Hamwee: My Lords, I must take a moment of my five minutes to thank the noble Lord, Lord Cornwallis, for instigating this important debate. There must be many noble Lords who wish, as I do, that we were not "starting from here" in the embarrassing game of ping-pong that the local government review has become. Perhaps I may remind noble Lords that the original statutory criteria were that it should reflect the identities and interests of local communities and secure effective and convenient local government. At the time of the passage of the Local Government Act many of us had in our minds models of what local government might be. Perhaps those models were too idealistic and too unrealistic. I believe that it is defensible for us to learn from the experience of the review. If we do not learn from that experience, what is consultation all about?
By definition, if the recommendations of the commission are challenged by court proceedings they have not fulfilled the statutory criteria. Yet out of 10 of the areas that were reviewed, three await judicial review, and all the others on which the Government have decided, save one, have been referred back to the commission.
The public are not making a clear call for change. The outcome of the MORI polls is that the public want to see unitary authorities but in practice they cannot agree on the boundaries. They do not want the cost of change. They want the money to be spent on services. For instance, the £1 billion plus that was estimated by Sir John Banham compares quite neatly with the £1 billion that we learn may be needed to give us universal nursery education in this country.
We cannot have truly local government unless we also have an appropriate strategic tier. If that fails, the result must at best be an uneasy compromise. One outcome of the review is the increasing recognition of the value of regional government. I hope that the Government will respond to that as a positive move. Regional government will come to us whether we like it or not because of Europe. Europe is a Europe of the regions. If we resist that, we shall lose out. The Government may say that they recognise that fact in the setting up of new integrated regional offices. I welcome those offices. But to integrate a number (not all) of Whitehall departments is a very poor substitute for democratic government. Indeed, the new bureaucracy could be very dangerous in blurring what is a gaping hole.
One of the dangers in the review—one to which the noble Lord, Lord Cornwallis, referred—is that of the

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democratic deficit. Relying on joint working, as must be anticipated, will not solve that problem. Voluntary partnerships are to be welcomed, but not shotgun marriages, nor reluctant partnerships with partners who want to spend as little time as possible in each other's company.
I do not believe that strategic matters can easily be dealt with by joint arrangements. I am most familiar with strategic planning. I know that it cannot be separated from other matters such as transport, economic development or minerals working. I know that joint working depends on the good will of the individuals concerned. Personality is important in every realm of life. It oils the wheels. But it is too fragile to support a democratic structure.
The joint committees will contribute to the democratic deficit. If one objective of unitary local government is to improve accountability, it will be undermined if major responsibilities are carried out by only indirectly elected representatives. They will be as strong as their weakest link and may well sink to the lowest common denominator.
Some people may say that if the Government wanted to continue a programme of centralisation in Westminster and Whitehall they could hardly have found a better way. I hope that that is not the motive of the review. It could certainly be a possible outcome, whereby services are not easily accountable and are transferred to yet another quango.
My time in the debate is already beginning to run out, but I must point to the short-termism that inevitably affects those who are the subject of review. Just when long-term perspectives are needed, those who should be thinking long term for our services—for instance, community care, linking local government, health and the voluntary sectors—now have councillors and staff who are demoralised and who think, "Why should we bother if we have seen the future and we know that it will not work?"
My final and major point, which I make in all sincerity to the Government, is that this review has not been entirely negative. The Government could hold back now without feeling that all had been in vain. Many areas are calling for what might be a contradiction in terms; namely, a modified status quo. The review has forced councils at every tier to talk to one another, to see how they can iron out overlaps, devolve functions and so on. If the review were to stop tomorrow, the review and the Government would have achieved perhaps truly voluntary joint working, better communications and better services. If the Minister halts the review, the councils themselves might well show that they can sort out the confusion voluntarily without wholesale reorganisation and without creating new structures which many noble Lords fear will not stand the test of time.
3.20 p.m.
Lord Jacques: My Lords, the 1972 legislation was based upon a minority report of the Royal Commission. Unfortunately, that legislation included the merger of substantial county boroughs with the shire counties. It merged Portsmouth and Southampton with the shire
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county of Hampshire. The needs of Portsmouth and Southampton are quite different from the needs of the rural county of Hampshire. Furthermore, it was obvious from the beginning that there would be some overlapping and in the end a great deal of dissatisfaction.
A recent MORI poll in Portsmouth showed that 74 per cent. of the population thought that the city should manage its own affairs. In particular, the people were of the opinion that as the city raised the council tax, it should be responsible to the electorate for spending that tax. It should not have to remit most of it to Winchester.
The poll also found that many matters were not understood by the population. For example, the city is responsible for the collection of waste. But if a site is required in the city for the disposal of waste, that is not the responsibility of the city but of the county and the decision is not made in Portsmouth but in Winchester. That is not acceptable.
It is true that the cost of conversion is considerable. But that is the price that we are paying for the mistakes that were made in 1972. The sooner that we put right those mistakes the better. It should also be remembered that, although the cost will be considerable, there will also be substantial savings. I believe that those are real savings. Certainly that is true in the case of Portsmouth and Southampton. In the case of Portsmouth, in the document that we are submitting to the commission, we give the figures for what the cost and the savings are likely to be. The cost will be absorbed in approximately three-and-a-half years. I believe that that is a reliable estimate.
The city of Portsmouth is unique in that professional management manages the city's affairs. We have a city manager who is responsible to the council for the conduct of the city's affairs. We have the lowest council tax in the county.
We do not ask for any extension of our boundaries. We ask only that within our boundaries we should he allowed to manage our own affairs and be responsible to our electorate for what we do. So long as the present position continues, we shall agitate for that freedom. We shall ask the commission to give us that freedom on our 800th birthday. This year is the 800th anniversary of our city. We want a birthday gift from the commission in the form of freedom.
3.25 p.m.
Lord Blake: My Lords, I shall say something that is rather eccentric for a member of the modern Conservative Party. It will be almost heretical. I am in favour of the status quo. I agreed with almost every word that the noble Lord, Lord Cornwallis, said in opening the debate. Two-tier government seems to me to have worked reasonably well. No doubt it has its defects and the system is not perfect. But what system is or ever could be perfect?
The question is not whether two-tier government has its imperfections. It is rather whether the defects are so bad and so grave that the entire system needs to be revamped. For let us make no mistake about it, reconstruction is bound to be expensive, time-consuming and disruptive. We are told that the

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transitional costs of setting up a new system will be cancelled out by the savings made when the new system comes into being. All that I say is, tell that to that allegedly credulous body, the marines. I believe that change is justified only if the present system has glaring, scandalous defects which cry out for reform.
A marginal preference for unitary government expressed in a MORI poll is not a sufficient reason for embarking on drastic change. For that reason I welcome the decision by Mr. Justice Jowitt, who decided in the case of the Derbyshire and Lancashire County Councils to rule as ultra vires the Government's attempt to add a third statutory criterion to the requirements of the committee, stating the expectation that a recommendation in favour of the status quo ought to be exceptional.
I also welcomed Sir John Banham's letter to The Times on 22nd March (which has already been referred to), in which he declared that the status quo of two-tier government was a valid option. I believe that what he said bears verbatim repetition:
"In my experience, administrative change in the public service invariably takes longer, costs more and delivers less than enthusiastic proponents of the change ever anticipate … It will be most unwise to press ahead with changes to create unitary authorities unless there is clear local support for change and there are local champions for particular local situations. There are advantages to the existing two-tier structure [particularly in rural areas]. If it is to be replaced, it must be with something better".
Those are not mere idle words. Among the 10 county areas so far reviewed, the Commission has recommended the status quo for two of them—namely, Gloucestershire and Lincolnshire —and partial two-tier government for two others, Derbyshire and Durham. Of course, the Government may not accept that recommendation, but that remains to be seen.
Lord Melbourne, who was not a Conservative, was wont to say, when some bright young radical spark in the Cabinet suggested reforming this or that institution, "Why not leave it alone?" Well, why not leave local government alone, or as much of it as one po Lord Melbourne, who was not a Conservative, was wont to say, when some bright young radical spark in the Cabinet suggested reforming this or that institution, "Why not leave it alone?" Well, why not leave local government alone, or as much of it as one possibly can?
3.30 p.m.
Lord Kingsdown: Ten years in a central bank, my Lords, may not seem to provide much in the way of credentials for speaking on local government and its reorganisation, and I feel that I may have to ask for more than your Lordships' normal measure of patience and tolerance for this maiden speech on that account. But I am grateful to my noble friend Lord Cornwallis for initiating this debate. Like him, I am a Man of Kent and it would be dissembling if I did not declare that I share his anxiety about the future administration of our ancient and, in some important ways, unique county.
I was closely involved in the reorganisation of 1972 to 1974, since I was then chairman of our county council. At least then we were concerned with reorganising a pattern of local government which had grown up over a period of 90 years and which was in many ways out of date due to population growths and economic change; now we are undertaking exactly the same exercise after an interval of only 20 years. I find it fascinating to observe that the questions and issues are
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just the same now as then, and a single ideal pattern of local government is just as elusive, particularly if there are aspirations for uniform councils.
The nub of the matter, in my view, is that the range of services nowadays committed to local government is so broad that it will only be in special circumstances than one council can be large enough to fulfil all the functions, and especially the broader strategic functions, without seeming too large and remote in its administration of the more personal services. It is interesting, indeed significant, that our predecessors over the past century—no doubt driven by pragmatism—have not found it easy to install with conviction a pattern of unitary authorities except where a large city or conurbation is clearly at the centre of a region into which its influence and resources naturally reach and operate. Such an authority has obvious attractions: natural recognition as the heart of the regional area, ease of identity as the source of all functions, and simplicity.
But that simplicity is at the mercy of local geography and local loyalties. Many councils of more than medium size could manage most functions, but it is in the upper range—by that I mean strategic planning, transport infrastructure and economic development—that most is required in terms of resources and expertise. If local government is to be worthy of the name and not rolled over by central government, it must at some level have the scale to perform that strategic role effectively; and scale involves geographic size, population numbers and resources of finance and expert personnel.
I know that resort has been had to joint bodies to deal with such strategic matters reaching beyond normal council boundaries. But I do not believe that the experience of such bodies has always been satisfactory. Moreover, resorting to them cuts into the principle of direct responsibility and it hardly supports the unitary principle.
In conclusion, perhaps I may return to my native county. Kent has had a good record of resisting invaders from across the Channel, at least since Roman times. However, it has not been so successful in guarding its North-West Frontier against the intrusions of Greater London at the hands of local government reorganisation. That may have been inevitable. But I hope that now, for Kent and indeed for the whole country, this local government review will be seen to have been sympathetic rather than intrusive—sympathetic to local history and local loyalties, prudent in its financial implications and soundly enough based to endure undisturbed and unreorganised for many years.
3.35 p.m.
Lord Thomson of Monifieth: My Lords, it is a particularly personal pleasure for me to have the duty of congratulating the noble Lord, Lord Kingsdown, on his maiden speech. It was an excellent maiden speech on a subject of which he has unsurpassed knowledge since he had distinguished service on the Kent County Council for 16 years and was the chairman for many years. It is not the only field in which he is a distinguished expert and we look forward to future speeches on wider national, financial and economic matters.

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For my part I wish to concentrate on one specific aspect of the case for preserving the status quo in Kent. Improbably enough, like the noble Lord, Lord Kingsdown, I too am a Man of Kent in these days and have been for a number of years. I want to concentrate on the strategic case—I believe it to be an extremely strong one—for retaining Kent County Council in its present role.
Kent has a special geography; it is a peninsula pointing directly to the narrowest route across to mainland Europe. Therefore the preservation of a single strategic authority is of vital interest not only for the people of Kent but also for the rest of the country. Kent has 5,000 miles of road, with traffic flows that are twice the national average carrying goods through Kent from the Channel ports to the rest of Britain. That traffic will increase markedly with the opening of the Channel Tunnel. Without the Kent County Council there would be no democratic means of conducting a coherent campaign for the high speed railway with adequate environmental protection, and piecemeal planning of what are transport issues of national importance would be disastrous.
Kent County Council has played a leading part in making the most of British membership of the European Union. The noble Lord, Lord Cornwallis, whom we thank for initiating this debate, said that others may mention that aspect, and it is on that that I shall concentrate my remarks.
Round about £36 million has been secured by the Kent County Council from European sources over the past seven years for important Kent projects. That includes help for young people, the long-term unemployed and people with disabilities. Together with Nord pas de Calais, Kent forms the Transmanche region. My noble friend Lady Hamwee mentioned the importance of regions in the European Union. There is also a wider grouping known as the "Euro-region" which, in addition, brings in the three regions of Belgium. Those links have proved invaluable financially and also in terms of greater mutual understanding.
Kent's French and Belgian partners suggested that they would not be interested in links with smaller unitary authorities, and the European Commission also expressed its preference for dealing with larger local authorities. Kent County Council keeps an office in Brussels to influence European Community policy and to guide bids for funds through the right channels. Those are important considerations in the special circumstances of Kent. They are distinctive reasons for maintaining a county-wide council in this part of South-East England.
But one final more general thought perhaps echoes what the noble Lord, Lord Blake, said. For this Government the slogan "Status quo is not an option" seems to have become their theme song. It has a certain lilt about it and one can imagine Mr. John Selwyn Gummer singing it heartily. But a wiser slogan for any government, Conservative or otherwise, would be, "If it ain't broke, don't fix it", if an existing structure, like the Kent County Council, with its partnership with the district councils, has been tried and tested over the years. No doubt it can be improved, and my noble friend
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Lady Hamwee was right to say that one of the results of the review has been to make the various local authorities discuss these matters together, with an increase in mutual understanding about how matters may be improved. However, I think it would be folly to engage in change simply for change's sake arid to destroy, in this case, a shire council that has served its region of South-East England well.
3.40 p.m.
Lord Bottomley: My Lords, it is a pleasure to follow my noble friend Lord Thomson. We worked together on Commonwealth matters for many years and now we are dealing with local government.
When, towards the end of the year, the Local Government Commission recommended local government reorganisation for Cleveland I warmly supported the proposition. The commission recommended a four-district solution, which means that Middlesbrough will return to something like its old status as a county borough. Nothing that has been written or said in the: many intervening months has changed my opinion. In fact the capacity of Middlesbrough and its neighbours to deliver the full range of local services and the support of local people for their own borough councils have become clearer as time has passed.
Middlesbrough, which I have known through a long association, particularly as a Member of Parliament for the district, makes a contribution to the industry and the economy of this country. In the recent past it has undergone many changes. Huge improvements in the fabric and environment of the town have been made, but it has suffered grievously from unemployment. In many respects the town is at a crossroads. I believe that its future prosperity and the welfare of all its citizens will rely heavily on their having a local authority which speaks clearly and vocally for them and which operates at the community level.
The reorganisation has provided the opportunity to establish such a council. For the sake of all the people of Middlesbrough it should not be missed. The case for unitary or all-purpose borough councils has been clearly made out. They can provide the framework of local democracy for the foreseeable future.

Road Programme Review
3.43 p.m.
The Parliamentary Under-Secretary of State, Department of Transport (Lord Mackay of Ardbrecknish): My Lords, with the leave of the House, I should like to repeat a Statement which has been made in another place by my right honourable friend the Secretary of State for Transport. The Statement is as follows:
"I announced in August 1993 that we intended to review the road programme. Today I want to set out our proposals for a revised and prioritised programme that will ensure a more efficient, better managed and speedier delivery of the improvements we need, and which is compatible with the principles of sustainable development. My target was to

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complete the review in time for it to provide the basis for the new Highways Agency, which is being launched today. The review is now complete and copies of the report have been placed in the Vote Office and the Library.
"This Government have an excellent record of investment in delivering increased motorway and trunk road capacity, which is so vital to the economic well-being of the country; and in providing bypasses which remove heavy traffic from the centres of towns and villages, with immense benefits to the residents and for their environment. We plan to spend about £2 billion a year on trunk roads over the next three years, which is almost double, in real terms, the level in 1979. Fifty-seven major contracts are currently under construction, and last month I announced our intention to start work on a further 22 major contracts during 1994–95, worth over £1 billion in total.
"It is, however, worth reminding the House that altogether my department is currently spending 50 per cent. of its budget on roads, which accounts for 90 per cent. of all inland journeys in the UK, and 40 per cent. on public transport which accounts for 10 per cent. of journeys; this demonstrates the importance we attach to rail and urban transport systems.
"The review does not affect the three-year national roads expenditure plan announced at the time of the Autumn Statement; nor does it cover local authorities' road programmes. It has its origins in the package of measures I announced to deliver road schemes faster.
"In the past it has taken an average of 13½ years to get from the entry of a scheme into the programme to its opening. I aim to cut this time by up to a third. We are already making good progress. I have recently announced consultation on much-needed changes to road scheme public inquiry rules. The new Highways Agency, aimed at a more business-like approach to the delivery of the roads programme, is also now launched. The most important measure in the package, however, was a review of the national trunk road construction programme with the aim of speeding up the delivery of projects with the highest priority.
"The review has been the most wide-ranging and in-depth for many years. There was a clear managerial need for establishing priorities. Until now all the schemes in the road programme have been taken forward with the same degree of effort and many of them at the same speed. This does not make the best use of resources; it wastes money and time and creates uncertainty.
"But the opportunity has also been taken to go much wider. It is no part of this Government's policies to tell people when and how to travel. On the other hand, we must be aware of the consequences, if people continue to exercise their choices as they do at present. There is no realistic possibility of simply halting traffic growth. What we can seek is to bring home its full cost. We must enable people to enjoy
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access to goods, services and other people while reducing the amount of movement needed to achieve that aim.
"Increases in fuel duty, and motorway tolling, will help people to make more informed choices about the cost of using their cars. Planning guidance just published will also help reduce the requirement to travel to reach goods and services. But even a reduced rate of traffic growth will not remove the urgent need we face already for new bypasses, wider motorways and safer junctions.
"The review therefore provided the opportunity to check that each scheme was still essential, was on the proper scale and accorded with the high standards now expected of our road improvements in a way that reconciled the needs of industry and the economy with the needs of the environment. Each scheme in the existing programme has been examined carefully to confirm, among other things, that it produces a high rate of economic benefit in comparison with its cost; that it has the minimum effect on the natural environment; and that its priority accords with the importance of the relevant route to the national strategic road network.
"The review concluded that most resources should go on the two priorities of improving key routes, primarily motorways, likely to experience stop-start driving conditions in the foreseeable future; and on bypasses. The number of new trunk routes proposed in the publicly-funded programme, particularly those through open countryside, will be reduced still further to a total of six. Major urban road improvements should be very limited in number in the light of the continuing substantial government investment in urban transport initiatives and the priority attached thereto. Schemes for which there was no acceptable environmental treatment, and those whose priority meant they were not likely to be built in the foreseeable future—49 in all—are being withdrawn to reduce blight and uncertainty. Work on them will cease immediately.
"The new prioritised programme represents a substantial agenda to take us into the next century. It has been drawn up as a rolling programme, which allows schemes to be added to the higher priorities as and when needs become pressing and funding is available. The highest priority schemes will receive the most urgent attention; the longer-term schemes will be taken to the next suitable stage in their preparation, and work on them will then only be resumed as the programme rolls forward.
"The new Highways Agency is being given specific responsibilities for environmental treatment of road schemes and for reporting its performance in this field. We now employ, in-house and through consultants, a large number of landscape architects and environmental specialists to assess and advise on the best design and environmental treatment of national road schemes. I have therefore concluded that the Landscape Advisory Committee, which has done such valuable work in the past, has been superseded by the skills now available to us. I wish

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to express my thanks to the chairman and members of the Landscape Advisory Committee for all the work they have done.
"I turn now to some specific proposals that will be of particular interest to the House. The proposed east-west route from the M.40 to the haven ports has received a special scrutiny. As already announced, work on the A.418 Wing bypass and the A.418 west of Aylesbury bypass schemes has been suspended pending the outcome of a new strategic study from the A.5 to the M.40 in the Oxford area. The central section of the route (A.5 to Stansted) has now been withdrawn from the construction programme because it was unlikely that an environmentally acceptable route would be found. The eastern section of the route from the haven ports to the M.11 and Stansted will still be taken forward, and should remain part of the trans-European road network. The rest of the east-west route will be withdrawn from the trans-European road network in the current revision of the network. The TERN route from the haven ports via Stansted to Holyhead and beyond will in future follow the existing M.11, A.604, A.14, M.6 and M.54 TERN routes. Around Oxford, the two schemes on the A.40—Headington bypass and the north of Oxford scheme—will also be withdrawn from the programme, as will the proposed M.12 new route from the M.25 to Chelmsford.
"We have also re-examined our proposals for improving the M.25. I have concluded that plans to widen 80 per cent. of the M.25 in the next four to five years to dual four lanes and provide capacity beyond that in the south-west sector are still the only appropriate response to growing congestion. We will therefore publish draft highway orders and an environmental statement for the proposed link roads between Junction 12 and Junction 15 on 7th April. The public will be invited to comment on the proposals. All views will be put before an independent inspector and considered at a public inquiry, probably later this year.
"Work will also now progress towards publication of draft orders and an environmental statement for link roads between Junction 15 and Junction 16. A public inquiry will follow, probably in 1996. I consider that there will also be a need for capacity beyond dual four lanes between Junctions 10 and 12 in the next decade, but work on this project is still at an early stage and no decisions have been taken on the design. However, as a result of this review, work on increasing capacity beyond dual four lanes between Junctions 16 and 21A will be deferred.
"I have also decided that two proposed strategic studies in the South East, the Kent-Hampshire study and the M.3 to M.40 study, will not now go ahead. This decision underlines my commitment to minimising the number of new routes.
"This review gives the new Highways Agency an up-to-date agenda to deliver the road improvements we need most with maximum speed and efficiency. Our motorway and trunk road network needs to be maintained and improved to secure our economic well-being; to secure environmental benefits, in
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particular by keeping through traffic away from local roads; and to go on improving our already good safety record. The review has had to balance the motoring aspirations of the 1990s' family with the consequences; the needs of industry and the economy with the needs of the environment. I commend it to the House."
My Lords, that concludes the Statement.
3.53 p.m.
Lord Clinton-Davis: My Lords, I first thank. the Minister, in what I know has been a very busy day for him, for repeating the Statement made in another place. Obviously we shall need a considerable amount of time (as I believe he will) to digest the details of so complex an announcement. I hope that he will convey to the Government's business managers the anxiety of the Opposition that inadequate time was given in handing over the Statement to us, particularly a Statement of this nature. I received it less than 30 minutes ago, which was something like 20 minutes before the Statement was made, which really is not good enough.
The Minister has referred to the Highways Agency. Would he indicate how that agency is to be accountable to Parliament?
I wish to turn primarily to the broad issues which have been raised in the Statement. Despite the rhetoric, particularly that about the environment, is it not clear that this policy constitutes a further example of just how purblind transport Ministers are? They seem to be unable to see the need to think of transport policy in its widest sense. They seem to think of it being equated to a roads programme, refusing to recognise the logic of their own statistics that road traffic is likely virtually to double over the next 30 years and in consequence quite intolerable environmental burdens will ensue, and that without a far more radical approach to the provision of effective, accessible public transport, accompanied by other schemes of mitigation, the Government's alleged commitment to sustainable development is just another effort to hoodwink the British public.
In his Statement the Minister said:
"The review provided the opportunity to check that each scheme was still essential, was on the proper scale and accorded with the high standards now expected of our road improvements in a way that reconciled the needs of industry and the economy with the needs of the environment".
Each scheme is said to have been examined carefully to confirm that it produces a high rate of economic benefit in comparison with cost and has the minimum effect on the environment and that its priority accords with the national strategic road network. Who carried out that examination? What are the criteria that the Government have applied in order to establish those alleged objectives? Surely what is really needed is not simply an assertion of that kind by the Government but a re-ordering of priorities much more heavily loaded than the Government suggest in favour of public transport.
The Government have said that their budget provides spending for 50 per cent. on roads and 40 per cent. on public transport. We are not satisfied that that is other than a bit of "Waldegravia". In any event, it is not right that public transport expenditure in this country bears little comparison with that in Germany, France,

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Holland, Denmark, Switzerland and many other places on the Continent of Europe. Is it not clear that, despite what the Government have said, the overwhelming majority of the Government's already swollen roads programme remains intact? What percentage of the schemes have been totally abandoned? What is the cost of those abandoned schemes as far as public finance is concerned? As a result of this announcement, how will any more freight be transferred to rail; and what relief will urban residents enjoy from rising pollution, danger and increased congestion?
Are the Government not capable of recognising that the logic of their thinking as regards road congestion is simply—as it was put in a newspaper the other day—
"To speed large volumes of traffic as quickly as possible from jam to jam"?
Is not that the view which is taken by a large number of Conservative Members of Parliament when it comes to their own constituency problems, including, surprisingly enough, the Minister for roads himself, who has dissociated himself from some of these considerations for that reason?
Why then are the Government persisting in these extraordinary schemes? I refer, for example, to the relief roads for the M.25 around London. What is the cost of that? There is also the M.62 around the north and west of Manchester which I understand is going to cost £270 million for 11 miles of road. Instead, by electrifying the trans-Pennine rail link at a cost of £170 million, a good deal of passenger and freight traffic could be diverted from the M.62.
What is to be the new annual spending level on roads as compared with the previous predictions? Was it not said to be £2 billion before and is it not said to be £2 billion now? Wherein lies the change? What change, if any, is there to be in the application of environmental criteria as far as road schemes are concerned? Is it not clear that, however the situation may be dressed up by the Government at present, the current cost-benefit analysis for the provision of roads fails to take environmental considerations fully or properly into account, and that that situation will continue to prevail? In the submission of the Opposition, a considerable opportunity to produce much-needed radical change has been missed yet again.
Lord Rodgers of Quarry Bank: My Lords, I too thank the Minister for the Statement. I sympathise with him because it was a long Statement, taking rather over 10 minutes to deliver, but it says very little. I am afraid that I do not share the view of the noble Lord, Lord Clinton-Davis, that it is complex. It seems to me to be alarmingly simple. It makes three announcements: one relating to cross-country roads, one relating to the M.25 and the third relating to new reviews. However, it says nothing substantial about the role of the road programme within transport policy as a whole.
One paragraph stated:
"The review concluded that most resources should go on the two priorities of improving key routes … and on bypasses".
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Those have been the priorities of successive governments over 25 years. Surely it did not need a review on this occasion to state what must be obvious to the House.
The Statement arises from political expediency (because some of the Government's previous proposals were unpopular) and, we must assume—but I should like to hear more about this from the Minister—from financial necessity. It is an advantage to be able to demonstrate to the Treasury that some schemes are being dropped—if they are being dropped and not merely postponed—and in the present political climate, there is also an advantage in suggesting that, as a result of the review, certain schemes are not to go ahead.
The key statement—and, to me, the most interesting—came about a third of the way through the Minister's speech. The Statement noted:
"In the past it has taken an average of 13.5 years to get from the entry of a scheme into the programme to its opening. I aim to cut this time by up to a third".
That is a worthy and desirable aim, which successive Secretaries of State for Transport have shared, but there is nothing whatever in the Statement to explain precisely how that will be done. There will be better management and more priorities, hut, as the Minister must know, given the consultation process—unless that is to be abandoned in some way—and the hazards of road construction, if we are to see the time reduced "by… a third", we must know precisely how that will be achieved. I should be most grateful if the Minister could tell the House much more precisely than in the Statement the proposals by which the time will be reduced "by … a third".
I should like to ask the Minister the following further questions. It is not plain from the Statement the extent to which there will be a reduction in spending on roads, but I have assumed that that will be the case. Indeed, I thought that the Minister was somewhat disingenuous and trying to have it both ways by arguing that some roads will not now be built as a result of the review while at the same time maintaining a very substantial road programme. What is the result of the review? What percentage fall in the cost of the road programme may we see on the basis of the new priorities over the next five and 10 years? My question relates to current expenditure, not to any reduction in the programme.
My other question relates indirectly, as I suggested, to the point about reducing the time that it takes to commission and build a road. Is the Minister satisfied that the present consultation processes enable road building to take place with the maximum public consent—and only with public consent? If he is not wholly satisfied, and if he wishes to propitiate opinion in this respect, what are his proposals to improve the consultation process consistent with a reduction in the time that it takes to build roads?
Lord Mackay of Ardbrecknish: My Lords, I thank both noble Lords for at least appreciating that this is a complex and detailed subject and for not asking me detailed questions about various trunk roads. If they had done so, I think that I should have had to refer them to the text of the book rather than try to answer them at the Dispatch Box.

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In answering some of the points made by the two noble Lords, I advise the noble Lord, Lord Clinton-Davis, that the Highways Agency will be accountable to the Secretary of State and, through the Secretary of State, to Parliament. That is the line of accountability for that agency, as for other agencies. I suspect that the noble Lord was telling your Lordships' House that the policy of the Labour Party might be to cut the road programme considerably. He questioned me about the priorities that we give to the road budget, as opposed to other forms of transport. I repeat what I said in my Statement: 50 per cent.—half of the budget of the department—goes on roads, but 90 per cent. of all journeys undertaken by people and goods in the United Kingdom are by those roads. Clearly, therefore, we are not spending an amount on roads that is proportionate to people's use of them. In fact, we are concentrating 40 per cent. of the budget on the 10 per cent. of inland journeys that are currently undertaken by public transport. We are thereby endeavouring to increase the number of people and goods carried on public transport.
The noble Lord asked me about who carried out the examination. It was carried out by officials of the Department of Transport, led by my right honourable friend Mr. MacGregor and my honourable friend Mr. Key, the Minister for Roads and Traffic. I repeat what I said in the Statement: they have spent some time examining every project against the criteria that I mentioned in the Statement.
I was asked about what reduction there has been in the programme. Some 49 schemes have been dropped entirely. That represents one-tenth in number and one-seventh by value. The total value of all the schemes that are left in the programme after that reduction is £18 billion now as opposed to £21 billion previously. That is the reduction.
Both noble Lords—the noble Lord, Lord Rodgers, and the noble Lord, Lord Clinton-Davis—asked me about the next three years. I repeat that the next three years will see expenditure of about £2 billion every year, as has already been announced.
The noble Lord, Lord Rodgers, asked me about the attitude that we have taken on environmental matters to some of the projects that we have cut. One of the points that I made in the Statement was that we have taken out a number of the projects that would have run through open countryside. We have reduced the new trunk road routes through open countryside to only six.
In order to reduce substantially the 13½ years that it takes to complete a new road, we intend to prioritise the schemes. I think I mentioned in my Statement that all schemes go ahead with the same urgency. The review creates Priority I groups and Priority 2 groups. The 80 schemes in the Priority I group will be given the highest priority and first call on both the financial resources that are needed to build the schemes and on the other resources that are needed to develop them. That is the way in which we hope—and expect—to cut the programme.
At the end of his remarks, the noble Lord, Lord Clinton-Davis, said that we had missed an opportunity to take radical steps with the road programme. Although I should not like to put words into the noble Lord's
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mouth, I think that he meant, "To cut the road building programme fairly drastically". I do not think that that is possible. People who use our trunk roads expect us to try to take out of the system the particularly difficult bottlenecks on the motorway and trunk road systems. People who live in towns which are currently crossed by major routes expect the benefits of bypasses—and they are considerable benefits.
One has to balance the needs of the environment carefully against the need of our people and economy to use the roads. In the book available in the PPO, your Lordships will find in greater detail what I have outlined in the Statement. I believe that you will then agree that we have the balance right between the needs of our economy and of people for a decent road system and the need to protect the environment.
Lord Clinton-Davis: My Lords, before the Minister sits down, will he give an answer to a question that I have put? What is the cost of the schemes which have now been abandoned and which clearly went ahead without sufficiently careful preparation?
Lord Mackay of Ardbrecknish: My Lords, I imagine that I am being asked what are the technical preparation costs of the 49 schemes that have been abandoned? No work on the ground has been started. The schemes about which I am talking are those which are being abandoned in the planning and detailed drawing process, not the construction process.
4.11 p.m.
Lord Boyd-Carpenter: My Lords, was consideration given to the shortage of petrol refuelling stations and service stations on a good many of the major motorways which causes great difficulty to motorists? Is consideration being given to increasing the availability of those stations? Secondly, from my noble friend's general observations I believe that he will have the figure, but will he say what will be the result of the changes in roads expenditure over the next two or three years? Is it up or down? If so, by how much? Thirdly, in view of the great importance of this matter which affects every part of the country, as the Government Chief Whip is here, perhaps I may ask that we be given an early opportunity for a full day's debate—not time limited, please—on this subject.
Lord Mackay of Ardbrecknish: My Lords, I am sure that my noble friend the Chief Whip has heard what my noble friend Lord Boyd-Carpenter has just said about a full day's debate. I might prefer to have a full day's debate rather than to try to get all this into a Statement.
As to the two specific points my noble friend mentioned, on expenditure I can assure him, as I have already said, that expenditure each year over the next three years will remain at about the £2 billion already announced. Motorway service stations are another issue which my right honourable and honourable friends did not address in the roads review. I am aware that steps have been taken to try to improve the network of motorway service stations to overcome the problems that my noble friend mentioned.
Lord Allen of Abbeydale: My Lords, the Statement made it clear that the Government intend to prioritise—a word which is a new horror to me—the proposal to have 14 lanes of concrete or asphalt between Junctions 12 and 15 on the M.25. Does that mean that they have rejected the alternative proposals put to the Secretary of State by some distinguished members of his own party? We are assured that when the inquiry is held the inspector will he independent. If he is persuaded by the evidence, will it be open to him to recommend that the whole scheme, devastating as it is to the environment by way of noise, pollution, encroachment on the green belt and so forth, should be abandoned?
Lord Mackay of Ardbrecknish: My Lords, in all inquiries the inspector makes the recommendations to which he is drawn by the evidence. No pressure is put on an inspector by the department to come to one conclusion or another. That would negate the whole object of having public inquiries. On the M.25, I have, as I have said, announced today that there will be a public inquiry for the link roads between Junctions 12 and 15. That inquiry will go ahead later in the year. I understand those people who think that we should not extend or do any more work on the M.25, but the simple fact is that people need that important link. If it is not there to carry the traffic, the traffic will go increasingly onto local roads. On 12th April the Department of Transport in Marsham Street hopes to mount a little exhibition showing what is planned for the link roads and the other improvements to the M.25. I hope that those of your Lordships who are interested will come along and have a look.
Lord Harmar-Nicholls: My Lords, while I understand my noble friend's request that he should not be probed at this stage about individual items, perhaps I may ask him in which priority the West Midlands figures, because the M.6 is rapidly reaching the point at which everything will come to a standstill. Large sections of it which are elevated 100 feet or more above road level are not easy to widen, but it is necessary to keep open that route to the industrial part of Britain. In which priority is that likely to come?
Lord Mackay of Ardbrecknish: My Lords, it is difficult to find the right page in a fairly complex document covering many roads. I invite my noble friend to read the book rather than listen to the actor, if he does not mind me saying that. The M.6 widening from Birmingham to Stoke, Manchester is a Priority I scheme. As he knows, the M.40 is now complete. The Birmingham northern relief road is intended to be privately financed. That of course will relieve overcrowding on the M.6, and that is going to a public inquiry in June.
Lord Mackie of Benshie: My Lords, following the question asked by the noble Lord, Lord Boyd-Carpenter, I wonder whether the Minister has sent his investigators over to the nice new roads in France, where not just full-blown service stations but many convenience stops are placed up and down the new roads, which are convenient both for the old and the very young.
Lord Mackay of Ardbrecknish: My Lords, as I said to my noble friend Lord Boyd-Carpenter, the department has previously announced proposals for improving the situation with regard to motorway service stations, but I shall draw the noble Lord's concerns to the attention of my honourable friend the roads Minister.
Lord Burnham: My Lords, I listened with especial interest to my noble friend as I live in the middle of an area that is in the cat's cradle of the new roads which he has said are about to be built and those which he said are not to be built. With regret, I did not hear in his Statement any emphasis on the need to complete a unit of new road. The whole length of a road should be completed and made better for transport. As an example, and purely as an example, he said that the M.40 is now complete. The M.40 is far from complete. The motorway was built at High Wycombe in the late 1960s. It is in four or five stages, and the latest is to be completed this summer at Uxbridge. It will reach as far as Hanger Lane, but there are two more stages to go. We have been travelling up and down those roads. One gets through one blockage, but when that stage is complete the blockage merely moves down the road a mile or so. I ask for some emphasis to be placed on completing a whole unit so that the whole length of a road may be completed.
Lord Mackay of Ardbrecknish: My Lords, I understand the point that my noble friend makes, but unfortunately one can do these projects only one step at a time. It would be expensive and disruptive if one were to attempt to reconstruct in one go the whole length of a major road. But I greatly appreciate the point that he is making. It is one of the matters to which the new Highways Agency will have to attend to ensure that it is not disturbing the same traffic over and over again. I shall look at the point that my noble friend makes, and if I have anything helpful to say then I shall write to him.
Lord Carmichael of Kelvingrove: My Lords, the Minister referred to the fact that there would be a transfer of money from roads to other forms of public transport. He will be aware of the Question asked today about British Rail (Scotrail). Knowing his background, I am sure that he must have asked whether there will be a Statement on the roads programme in Scotland reasonably soon. I know that my question is slightly wide of the mark, and I would not have asked any other Minister, but the Minister's ordinary curiosity must have made him ask that question.
Lord Mackay of Ardbrecknish: My Lords, I resisted my ordinary curiosity. Dealing with the road network system in England was more than enough for me and I did not ask questions about the road network in Scotland. I cannot answer the noble Lord's question. I shall draw it to the attention of my noble and learned friend Lord Fraser of Carmyllie who will take steps to provide the noble Lord with the answer.
As regards the first part of the noble Lord's question, I reiterate what I said. I did not say that we were diverting money from the roads' programme to the railways; I said that 50 per cent. of the programme is

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spent on the roads and 90 per cent. of the journeys are made on the roads. Therefore, the accusation that we favour the roads programme above all else is not justified by the figures.
Baroness Faithfull: My Lords, can the Minister be certain that a mistake such as that made in respect of the A.34 to Bicester will not be made? It is made only of concrete and has no overcover and, as a result, there is considerable noise to villagers round about.
Lord Mackay of Ardbrecknish: My Lords, I am well aware of my noble friend's worry about noisy road surfaces. Indeed, work has been done to ensure that road surfaces are quiet in addition to everything else that one expects of them. I can assure her that, in addition to the impact on the countryside, one of the environmental aspects of the review has been the noise impact on people. I am certain that as we move to new and improved materials, the noise aspect of environmental pollution will be reduced. I shall draw the attention of my honourable friend Mr. Key to my noble friend's concern.
Lord Finsberg: My Lords, is my noble friend aware that his Statement announced that steps were taken earlier to change some of the arrangements for public inquiries? He said that he hopes they will not take 13½ years from start to finish. Does my noble friend accept that a growing number of people in this country are getting sick and tired of the length of consultation? Following what was said by the noble Lord, Lord Mackie of Benshie, will he look at how things are done in France, where roads are built more quickly than we can ever hope to do under our present system?
Lord Mackay of Ardbrecknish: My Lords, we are clealing with a consultation document which was issued on 22nd February relating to highway inquiry procedures. Consultation ends on 25th May. The rules must be made by my noble and learned friend the Lord Chancellor, and it is hoped that they will be implemented in the summer.
There is in respect of any public inquiry a difficult balance between the need for speed, which for financial reasons is important both to the applicants and the objectors, and the need for people to consider that they have been given a fair hearing. I hope that the current consultation will find ways to improve the situation.
I am unable to comment about France. I shall certainly draw to the attention of those in my department the fact that France appears to be getting a great deal of credit for the speed with which it builds its roads.
Lord Stoddart of Swindon: My Lords, is the Minister aware that I and many other people are anxious about the new Highways Agency because it might be considered that it will promote road transport and road building? However, what is needed is a transportation authority which will ensure that the needs of the country use all forms of transport in a balanced way. Would not that be a better proposition?
Lord Mackay of Ardbrecknish: My Lords, it is just that balance of approach that the Government seek to achieve. The Highways Agency's task will be to deal
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with highways. The department and the Government will continue to decide on the balance of the programmes and the balance between the different forms of transport in this country, together with the priority given to them and the money spent on them.

Local Government Commission
4.25 p.m.
Debate resumed.
Baroness Platt of Writtle: My Lords, I am most grateful to the noble Lord, Lord Cornwallis, for the terms of today's Motion and for his excellent speech. I am also grateful for the maiden speech of the noble Lord, Lord Kingsdown. I share their predilection for the status quo. I have experience as a county councillor and a district councillor. My husband served as a parish councillor. I am no longer a councillor and therefore I have no axe to grind. However, I believe deeply in the importance of all three levels, which in my view form a bastion of democracy in our country.
In some parts of the country where there are large centres of population there may very well be good reason for change. In the debate in February 1991 my noble friend Lady Blatch said that nothing is ruled in and nothing is ruled out. More recently my right honourable friend the Prime Minister said:
"There is no national blueprint".
I wholeheartedly share those sentiments. In 1991 I spoke in favour of three-tier local government in shire counties, and I shall not repeat myself.
The initial voice of local democracy on the basis of subsidiarity must be the parish councils, where lines of communication are easy for individual citizens. Higher councils must then pay proper regard to their viewpoint. There is undoubtedly more room for more co-operation among all levels of local government; but that: can be done within the present structure. I believe in improvement and not in wholesale and expensive reorganisation where the status quo is working reasonably well: "If it ain't broke, don't fix it."
In my experience, local people are not clarnouring for reorganisation in my county of Essex and in many shire counties. The appearance of the commission's local inquiry will create conflict where what we need more than anything throughout local government is cooperation to provide services for people that are most sensitive to their needs and to do so most efficiently and economically. I am glad that the process is to be speeded up so that the period of dissension is minimised; but the retention of the status quo must receive proper consideration.
Economy and efficiency in providing local services has been the driving force of our Government and of sensible local government for the past 15 years. Notable developments in the concept of enabling authorities have gathered momentum. If there is to be reorganisation, it must be seen to be more efficient, more economical and more democratic than the existing structure.
A careful survey was carried out in Essex. It showed that dividing it into four unitary authorities or fewer

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might save money in the long term, but it would be at the clear expense of democracy. It would halve the number of councillors to serve local people on the commission's basis of 1:4,000 representation. Above that number of unitary authorities, expense mounts up and there is no possibility of payback. If money is available, let us spend it on better services and not on reorganisation, as everyone would agree.
Essex has existed as a county for more than 1,000 years. People relate to their county and in rural areas to their village or local town. Putting a number of market towns together does not create unitary authorities. All the local communications work against that theory, creating just the unitary myth that the commission wishes to avoid. Local people will see no point in it and it will cost them money in higher rates and taxes, which they can ill afford. That goes diametrically against the present Government's policy.
Local government needs to carry out strategic functions as well as local ones. Essex is large enough to do that through the structure plan, the road system, the organisation of education, the fire brigade, the library and the archives. All those functions are efficient, well organised and widely respected. It would be a tragedy to break them up, and certainly it would not lead to greater efficiency or economy. If run by joint committees, there is no accountability, and weak compromises are arrived at. They are known not to work well and they would certainly not improve the present system.
With the principles of subsidiarity in operation in Europe, the German länder and French départements are playing a greater role and balancing more adequately the power of Brussels. Counties like Essex, Kent, Hampshire and others can provide a British point of view at the same level. Regions could not command the same local loyalty. Let us not destroy our own strengths—literally shooting ourselves in the foot—at a critical time in Europe.
I hope that the commission, in considering shire counties, will adhere to its stated policy of avoiding excessive costs and widespread joint arrangements in reorganisation and—most important—that the existing two-tier structure should be replaced only by something better.
Viscount Ullswater: My Lords, it may be for your Lordships' convenience to know that the debate is now due to end at 8.41, and therefore the Minister should be able to rise to reply at 8.16 p.m.
4.31 p.m.
The Earl of Carnarvon: My Lords, I have worked within local government for around 40 years and I am now chairman of SERPLAN, which includes all the London boroughs and representatives of the district councils and all the shire counties in the South East, covering a population of 17.5 million people. Interestingly enough, that is the same area as the Paris Basin region. However, today I am speaking about Hampshire.
The first question for the commission is whether any change should be made, and the first option to consider
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is, therefore, the maintenance and improvement of the present arrangements. The Government's preference, however, is for unitary authorities; that has been stated by Ministers on many occasions. However, it must be remembered that, apart from planning, county councils are unitary authorities. I have a feeling that this preference for smallish unitary authorities has gone too far, and the Government's enthusiasm is leading to the overriding of public opinion and to the creation of some major difficulties. We should be very careful about making changes where the public do not support change. As has already been said, restructuring is always expensive and the cost of change has to be paid for out of money which would otherwise go to the services.
A small unitary authority will find some areas of activity too difficult to deal with because they cannot be settled within its own boundaries; for example, minerals and waste disposal policies where all the easy options have been taken up. Minerals can only be obtained from where they lie and have to be exported to the places of need. Waste is a problem of major significance and is transported from Bristol to Bedfordshire, or from Newham to Mucking in Essex. I cannot agree with the noble Lord, Lord Jacques, that Portsmouth could look after its own waste. As regards the conservation of the New Forest, the management of over 10,000 acres of country parks, the river valleys and the coast and the sensitive management of the Solent waters, small unitary authorities would simply not have the resources to achieve anything except basic coast protection where engineering solutions are the norm and insufficient regard is paid to conservation issues. I am also very concerned, as is the noble Baroness, Lady Hamwee, as to how regional guidelines for planning and transportation would operate within a fragmented local government. Local government needs to make best use of European funding and to do that, it needs to play its part in the European initiatives.
I hope that the Commission and the Government will not lose sight of partnership with the voluntary sector referred to by the noble Lord, Lord Cornwallis. There are myriad organisations which operate on a county scale and proudly call themselves by the name of the county. I am president of the Hampshire Association for the Care of the Blind, which cares for over 4,000 partially sighted people. It looks to the county council for substantial financial support each year.
The voluntary sector as a whole in Hampshire receives £10 million each year from the county council and those funds help to unlock the skills and time of volunteers. The county council has encouraged the formation of councils of community service and has created independent trusts such as the Hampshire Buildings Preservation Trust, the Hampshire Gardens Trust and the Hampshire Museums Trust and the Hillier arboretum. These initiatives have been replicated elsewhere in the country, but it is difficult to see that these developments could have taken place without the spur of the county council.
There are some specialist functions which have been a particular feature of county councils which would be too easy to overlook and yet whose absence would be a

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very sad loss. Specialist support is an aspect of experience in services provided by the counties, and I would instance the specialist teams in historic buildings, architecture, information technology, library service, archives, research and so on. Hampshire leads the country in archaeological and archive services, and there must be a serious risk that these services would disappear or be sadly diminished should the county council be abolished.
My conclusions in all that are that the Government should not show impatience about the review because there is no need for haste. More attention should be given to the eventual costs of the exercise as it looks to many observers that the Government are indifferent to the likely cost.
I maintain that the strengths of the existing two-tier system should be recognised, coupled with a resolve to make improvements in this where they are necessary, so that we are not faced with an approach of change for change's sake, which I fear is an all too likely outcome.
4.36 p.m.
The Lord Bishop of Sheffield: My Lords, I speak on behalf of that most endangered species, the County of Humberside. As Bishop of Sheffield, part of my diocese is in Humberside.
The attack on Humberside has gone on for five years and more now. It began with the boundary commission, whose first review told us that the county was working well as a unit and supported its survival, although it admitted that it had failed to attract loyalty. That response was rejected by Nicholas Ridley who, under some pressure, came up with the recommendation that Humberside should be split between Yorkshire and Lincolnshire.
That was overturned by the events of the 1991 review. There, of course, Humberside falls victim to the contradictions between the two aims of that review. It is difficult both to reflect the identities and interests of local communities and also to secure effective and convenient local government.
In June 1993 the review's first recommendation was that there should be no Humberside. Goole and Selby should go to a revived East Riding, and police and fire services should continue as at present on a Humberside basis. That was reversed largely in December 1993—all change. Police and fire services are to be divided between Yorkshire and Lincolnshire; the town and port of Goole was to go to the new West Riding—an extraordinary authority stretching away across the Pennines to Settle.
That bothers me because I believe that the wrong questions have been asked and, therefore, the wrong answer has been arrived at. People have been asked, "Do you think of yourself as a Yorkshireman, a Lincolnshire man or a Humbershire man?" The only answers are, "I belong to Yorkshire", or, "I am a Lincolnshire yellow belly". But that is not the right question. When a politician sees that question, it becomes dangerous because, as part of our understandable response to disliking living in a global village, we live in a period of passionately revived local loyalties. The politicians are tempted to build on that revival of
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local loyalties with the dire results that we have seen in Yugoslavia, Russia and now, I suspect, Italy. I beg us not to start playing that game.
It should be recognised that we are riot talking about Yorkshire and Lincolnshire but about the administration of a wide range of services over an area which has geographical and economic unity around the Humber estuary and Humber basin. We then begin to see that the answer to the question, "Do you want to be a Yorkshireman or a Lincolnshire man?", is irrelevant:
"For forms of government let fools contest;
Whate'er is best administered is best".
I go along with the noble Baroness, Lady Hamwee, that we should stay where we are and preserve the status quo, with modest amendments. A modest amendment is the revival, as an ornamental or ceremonial unit, of the ancient county of East Riding. Let us knock the heads together of the Post Office and the like which will not allow us to write "East Riding", "Lincolnshire" or "West Riding" on our envelopes and force us to put "Humberside". It is that which has made the unit unpopular, not its performance.
If we had time, I could regale the House with the extraordinary achievements of Humberside over the past 20 years, not least—I say this with a certain bitterness—the achievement, as it is called, of turning Humberside from a North Country deprived county into a southern county, where growth and amenities are up to the level of the South. There is much else; for example, there is no criticism of what Humberside has achieved. The criticism is directed at the fact that it is not in Yorkshire or in Lincolnshire.
There is a sense of urgency in all this. For five years we have been under attack. Dr. Johnson tells us that the knowledge that one will be hanged in a fortnight concentrates the mind. The sight of the block and the executioner standing by is not good for an efficient, strategic planning authority. It is difficult for a crew when they feel that a torpedo has already struck a ship and it is doomed. What we need, above all, is a hasty decision and a decision that preserves the status quo so that the splendid work that Humberside has built up over the past 20 years is not destroyed.
4.40 p.m.
Lord Cavendish of Furness: My Lords, I join other noble Lords in welcoming this debate. I congratulate the noble Lord, Lord Cornwallis, on the eloquence with which he introduced it. I can understand that there may be a logic in making unitary authorities of a dozen or so of our larger cities in England. However, I concern myself this afternoon with the shire counties and especially my own county of Cumbria where for some years I served as a county councillor and where I still keep in touch and am involved in local government affairs. I ask only one thing today and that is that there be no change, either structural, boundary or electoral, to the existing two-tier framework of local government in Cumbria. I was pleased to read that I am strongly supported in this view by my noble friend and fellow Cumbrian Lord Whitelaw.

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At the start of the review the chairman of the Local Government Commission, Sir John Banham, remarked, as has already been quoted,
"if it ain't broke, don't fix it".
That seems to me a common sense view. But nevertheless my plea to leave the status quo well alone deserves an explanation. I do not defend the status quo on the basis that local government is perfect, still less that it could not and should not be made better. Plainly much can and should be done. Nor do I feel that the review has been a wasted exercise. Here I echo the words of the noble Baroness, Lady Hamwee, who I see is just resuming her seat. The review has certainly changed my mind. I claim that the improvements that are needed can be achieved more easily, more cheaply and more successfully by other means.
The only consensus for change in Cumbria has been between South Lakeland District Council and Barrow Borough Council which have arrived at an admittedly well argued proposal to join forces as a unitary authority in the south of the county. While I have some sympathy with their views, they themselves acknowledge that their solution fails to meet one of the Government's key criteria in respect of "community identity". That leaves the rest of the county with no plans as viewed by those in the south of the county.
Cumbria County Council's submission argues for the status quo. It stresses, among many other things, the dangers of fragmentation, especially as it applies to strategic planning and—this is important—the region's ability to be effectively represented at a European level. That matter was discussed ably by the noble Earl, Lord Carnarvon, and others. I have placed both submissions from these councils in the Library of the House.
Of the many options looked at in Cumbria, only two showed any significant financial savings. It comes down to either creating a single county unitary authority or dividing the county into two: north and south. Neither option would command public support. Neither would meet the criteria of community identity and both would lead to reduced accountability.
There was indeed a period when some local authorities spent and otherwise acted irresponsibly, and to their credit the Government acted both to protect people from these excesses and to avoid damaging the national economy. But all of us, and all local government, had to pay for the delinquency of a minority. Now, in the four years since I left Cumbria County Council, I have seen tremendous improvements in the performance of local government at all levels. Much duplication and overlap have been and continue to be addressed. It is becoming all the time much less partisan; and every year sees an enhancement of its enabling role, especially in the matter of employment. That point was ably covered by my noble friend Lady Platt of Writtle. I believe that this trend is replicated elsewhere through the shire counties.
I wish to say a few brief words on a neglected area of local government activity; namely, its capital programmes. Central Government acknowledge the importance of investment in industry and yet mysteriously seem oblivious sometimes to the needs of infrastructure in the
1104
regions. If the Treasury sees advantages—as it seemed to do—in not being able to distinguish between revenue and capital, and therefore to have no understanding of the nature of capital, then the least it could do is unshackle local government, which does understand it—and has done so for nearly a century—and serves its communities extremely well.
It is time to end the war of attrition between central and local government. This review is centralising in its effect —it is time to decentralise. It is time to give local government some encouragement and it is time to give the men and women who serve in local government some encouragement. They are people of all parties and of none. I believe it is time to abandon this review.
4.46 p.m.
The Earl of Lytton: My Lords, I add my thanks to the noble Lord, Lord Cornwallis, for giving us an opportunity to debate this matter. I will make only general comments as far as possible. I believe that the noble Baroness, Lady Hamwee, was right when she implied that we were perhaps all labouring under a misapprehension as regards how the review was going forward. It seems to me that there are two fundamental principles here. One is the provision of services at retail level direct to the public and the other is what might be called the wholesale or strategic provision of services.
Having read the guidance to the Local Government Commission, I wonder whether that particular principle has been recognised. I am certainly not convinced that this distinction is understood by the general populace and that seems to be evident from the results of the various MORI polls which I have seen. I am concerned that the essential guidance to the Local Government Commission was couched in terms which perhaps favoured a particular end result. That is a matter of some regret, although I must add that it is always easy to have 20–20 vision with the benefit of hindsight. However, I believe that the guidance made an artificial distinction in its analysis between direct and indirect services.
I am afraid I could not understand that distinction because all these matters are costs which ultimately fall on the council tax payer. I do not believe there is any dispute about that. A financial model was established which was impossible to unravel, and certainly I have not been able to unravel it to my own satisfaction. Certain costs were excluded. They were referred to as transfer costs because they were assumed to be self-cancelling. However, they would only be self-cancelling if they were dealt with on a national scale. They would certainly not be self-cancelling at local level. I question whether the analysis in the guidance was correct in that that particular model was not transposable to the local level.
The creation of a unitary authority in a rural area—I live in a rural area—immediately destabilises the county model as a whole and it cannot be otherwise. We would do well to be aware of the warp and weft that holds together the two tiers which are similar in many respects to the multi-tier approach on the Continent. However, there is an essential difference between the aspirations of the metropolitan areas on the one hand and a rural district on the other. Their needs are

1105
different. It may be highly appropriate for Portsmouth, for example, to have unitary status, but it would be difficult for other rural areas competently to discharge those sort of functions. There is a difference, and I do not believe that one single model can be imposed as a solution.
I admit that there is an advantage in bringing local government nearer to the people. However, that relies on the commitment of the local populace—the man in the street. It relies on a continued strategic interrelationship and fluid interaction between authorities. I believe that there is further to go on that interaction between authorities, if for no other reason than, taking one district with another, their local plans do not agree with each other. They often have different emphasis and different priorities. We need to take that aspect as far as we can before we start a wholesale reorganisation of the present arrangements.
I was born in Somerset. I am very proud of that fact. I still have strong family and business ties in that location. The commission proposes to create three authorities in that county which will have no social or geographical meaning to me or to any of my circle of acquaintances in the area. I now live in Sussex, where my family roots go back at least 300 years. I am proud of that too. I am proud to live within the county of Sussex. I reside within the district of Horsham. Under the unitary schemes which have been proposed for other areas, the very necessary modernisation of Horsham town centre, which resulted from the assiduous pursuit by the council of commercial objectives, would not have been achieved.
I do not wish to be asked to distinguish between a county to which I relate at one level as against a district which I support at another. That is simply not a proper line of inquiry. I want both to be efficient, if necessary to compete as appropriate with one another, and to be responsive to local needs. I recognise that their different areas of concern are not always reconcilable, but I certainly do not want to pay for change unless it is absolutely necessary.
4.52 p.m.
Lord Ezra: My Lords, I should like to take up the point made just now by the noble Earl, Lord Lytton, in his very impressive contribution, namely the distinction between the local and the strategic responsibilities of councils.
There is not the slightest doubt that on the one hand it is highly desirable that councils should be near the people in the discharge of local responsibilities. On the other hand, the smaller the council the more difficult it becomes to discharge what have been described by many noble Lords as the strategic responsibilities. The cost of making a large number of unitary bodies which would then have to combine together in voluntary arrangements to discharge their strategic functions would be substantial.
I was very interested that the noble Earl mentioned the town of Horsham, near which I also live. I find myself in the same situation as the noble Earl. I have acquired a close interest in the development of that town and in the operations of the district council. At the same
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time I have been able to reconcile with that the strategic activities of the West Sussex County Council. While no doubt there could be improvements in the relationship between the county and the district, having studied the possible alternatives being considered it seems to me to be far better to improve what exists than to replace it with something totally untried.
For example, there is talk of creating in West Sussex three unitary authorities. That would mean blending the town of Horsham with Crawley and mid-Sussex. Horsham would totally lose its identity. At the same time that new entity could not effectively discharge a suitable proportion of the strategic functions now being conducted in Chichester, where the county council is located.
In that particular case, as in the other cases which have been mentioned—in relation to Kent, Essex, Hampshire, Cumbria and Somerset—the approach which my noble friend Lady Hamwee mentioned at the beginning of the debate, and which has been repeated by many noble Lords during the debate, of a modified status quo seems to be the right one.
It was widely reported that in July of last year the Secretary of State for the Environment recommended that the whole process of local government reorganisation should be based on the principle of opt in. "Opt in" and "opt out" have become fashionable phrases. Underlying the principle of opt in was the notion that where there was sufficient local consensus for change, change should take place, but where there was not such a consensus, the present system should continue. That seems to me to be an eminently sensible proposition. It is regrettable that it was apparently not accepted by the Cabinet. Let us hope that in the light of this debate—and I believe that a consensus is building up, although we are only one third of the way through the debate—they will think again.
I am particularly concerned about some of the strategic operations which are now conducted at county level. Among them is the question of trading standards. During the passage of the Bill on local government reorganisation in Wales that issue was raised by the noble Lord, Lord Elton, myself and others. Trading standards are an essential part of our life. We have to safeguard people's interests in, for example, what they buy and use. That has local implications. It also has wider strategic implications. Trading standards officers deal with large commercial organisations; they also have to cope with sophisticated systems of counterfeiting which are unfortunately becoming prevalent these days. It is difficult to see how such operations could be conducted effectively at purely local level. They need a strategic arm in which to operate. It is suggested that that problem could be overcome by voluntary arrangements on a wider basis, but such voluntary arrangements rarely survive.
Therefore, I feel that we must ask the Government to think again about the thrust of this inquiry into local government reorganisation. It must be done on a more practical basis. What is working effectively but could perhaps be improved with modification should be so improved. Where there is a consensus for major change let that change take place.
4.57 p.m.
Lord Aldington: My Lords, not for the first time, I find myself in almost full agreement with the noble Lord, Lord Ezra. In particular I join with him in saying that if one wants an improvement in local government one should try to improve what exists. The noble Lord and I joined together on another inquiry into another matter, where we came to the conclusion that one cannot improve what one has destroyed. I also agree with him about opting in and opting out.
I am the fourth noble Lord to speak about Kent. All of us in Kent are very proud of the noble Lord, Lord Cornwallis, who introduced this debate in a masterly fashion. I thank him for doing so, as I thank my noble friend—if I am allowed to call him that—Lord Kingsdown for his maiden speech. I thought it a model of all good maiden speeches; whether it was made by a central banker or a chairman of a county council does not matter.
There has been support for the existing structure, or the status quo, from Kent, Hampshire, Cumbria, Essex and from my noble friend Lord Blake. It should be remembered that the Foreign Secretary was reported in the Financial Times last week as having called for the structure of local government to be left alone in Oxfordshire. He said:
"I have come to the firm conclusion that the right answer is to leave things as they are".
He would find, as on many issues, a number of friends among your Lordships.
I wish to concentrate on Kent. It would be costly madness to make a change from the existing structure. There would be £78 million in transitional costs. Practically no savings are anticipated in seven unitary districts other than the savings that one obtains from reducing the number of councillors in Kent by 630. If that is the form of democratic local government advocated by my noble friends on the Front Bench, I have to say that I am very surprised. Of course costs will be involved in other matters—in standards, and dispersals. Cost has already been shown in conflict, inside all three parties, between parts of the local government machine. We want to get rid of that conflict.
I should very much like to see the review abandoned. It would save a lot of money and much disruption. However, I wish to speak for a moment on the strategic point with regard to Kent raised by other noble Lords, in particular by the noble Lord, Lord Thomson of Monifieth. I find myself once again wholly in agreement with him.
With far-sighted vision, Kent County Council made special links with the Nord-Pas de Calais region and with three Belgian regions to form a Euro-region. As a result, the Kent economy for important Kent projects has already gained by £37 million, with a total sum committed of £46 million. Seven unitary districts or authorities could not have achieved that, any more than they could have achieved the great advances in environmental, structural and economic planning generally throughout Kent. Joint bodies will not face up to hard decisions. They do not have democratic
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accountability and authority behind them. Under the seven unitary districts system no councillors would be elected to take such a decision.
The real alternative is not between county councils and joint bodies but between county councils and Whitehall—whether regional Whitehall or central Government Whitehall does not matter. If we believe in local government, as I do —and we in Kent are blessed with a good system of county council and districts—we want to keep the power and the responsibility for strategic decisions among locally elected people of Kent. Therefore I ask my noble friends on the Front Bench to convey the feeling of the House to their colleagues and to the Cabinet. The existing structure is what we want; and the sooner we stop the disruptive activities outlined in the review, the better.
5.7 p.m.
Viscount Tenby: My Lords, we are all grateful to my noble friend Lord Cornwallis for raising this topic today and for making a quite excellent speech in kicking off the debate, as did my noble friend Lord Kingsdown in his very distinguished debut. The debate is particularly timely for it takes place while there is still time to ensure that the Local Government Commission fully understands the concerns throughout the country on the question of change in local government—concerns reflected by the large number of speakers in the debate today.
I have to say that I do not understand this Government's readiness to dismember a system which has stood the test of time. I have not been aware of mobs in the street shouting, "Give us single unitary authorities". Try selling that idea in Greater London, my Lords. Nor in my locality has the main topic of conversation been the importance of local accountability. The truth is—it may be regrettable, but there it is—that people care passionately about the results of local government: what they get from it, value for money, and so on; but very little about how those ends are achieved. To reinforce that point, one needs to look no further than the local election turn-out figures for which 30 per cent. of the electorate voting is regarded as nothing out of the ordinary.
However, local government is important. That makes Government attempts fundamentally to change it for the first time in more than 100 years all the more questionable. Forget for the moment the many reasoned arguments about the immense cost of the changes for a frail economy to shoulder. Put to the back of your minds the undoubted truth that every reform costs far more than originally forecast, and that the period over which those costs will be amortised is always optimistically calculated. Ignore even the fact that some issues will be so large that they will in future only be able to be dealt with by joint arrangements between consenting authorities (if I may so call them), with all the dithering and non-accountability that that would inevitably entail.
Forget, but only for a moment, all those persuasive arguments. Perhaps I may instead concentrate on the situation as it is today, in which counties are confronted with immense demands on their expertise and experience as a direct result of new legislation

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introduced by this Government. I refer to care in the community, the new schools' curriculum and new arrangements for police authorities and magistrates' courts, to name but a few. Councils are only just beginning to get a grip on those problems. Is it seriously suggested that now is the right time to put all those initiatives at risk by entrusting them to new and largely inexperienced authorities?
I do not doubt that in some urban areas a case can be made for single unitary authorities. In my own area of Hart, for example, I have received an excellent presentation on the projected benefits such a change would bring to the district. But that has to be set against the overall picture in the county of Hampshire—which incidentally is a rather older unit of government than England, but we shall let that go—and where I should mention that I sit as a magistrate member on the police authority, which is a sub-committee of the county council. Let me give one brief example of how, under a county regime, all relevant services can be brought together.
In Hampshire, the chief constable is a voluntary—I stress the word "voluntary"—member of the county Chief Officer's Management Group, thereby ensuring an important police contribution to initiatives in the areas of education and social services in particular. With fragmented authorities, such an overview and contribution to interlinked planning will almost certainly be lost.
The Local Government Commission has said that it will take into account the views of the people, and that is welcome news. Indeed, as the noble Lord, Lord Blake, has already said, Sir John Banham himself has recently written that, if the present system is replaced, it must be with something better. That is again welcome news. I hope, however, that the commission will do even more than that. I hope that it will use common sense in weighing up the advantages and disadvantages, many of which will have been highlighted in the debate. Above all, I hope that it will not be deflected in its purpose by any Government pressure to come up with the solution which, for whatever obscure political reasons, the Government themselves want.
5.8 p.m
Baroness David: My Lords, the review is about important questions of how our country should be governed and how powers and duties should be distributed across local government. But it has to have proper regard for how major services are organised and paid for within the local community. It has to consider cost. For education it is simply not the case that the service would be better supported by a much larger number of much smaller authorities. The original guidance to the commission said relatively little about about the organisation and delivery of services, and next to nothing about education, the biggest of all local government services.
At that time, the Government thought that GM school numbers would have increased massively by the time the commission finished its work, to the stage where LEAs would be left with a modest clutch of residual responsibilities which could be exercised effectively by small authorities, if necessary on a partnership basis.
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Two things have happened. The rate of opting out has slowed markedly—less than 4 per cent. of all the schools—and the Government have rapidly speeded up the review making their preferred solution of a GM system even more improbable by the time that the review's conclusions were to be implemented.
LEAs' responsibilities under current legislation are far from minimalist. Surrey, never a make-work interventionist authority, recently listed 68 statutory duties that the authority was obliged to perform. Many of these things can only be done well, and with reasonable economy, in authorities of considerable size—not necessarily an argument for the status quo, but a strong argument for authorities with substantial expertise in educational matters. Concerns are great for the future of special education in a Balkanised education service. Take the availability of specialised teachers of the deaf in Inner London after the the carve-up of ILEA There are now 13 separate London boroughs: nine employ one peripatetic teacher of the deaf; one employs two; one employs three; one employs four; and one, none. Compare this with the position in one large county which employs a specialist co-ordinator and 14 peripatetic teachers and has a number of centres providing intensive help for children with hearing difficulties. Smaller authorities will have difficulties in maintaining specialist schools for those with particular learning difficulties.
Will smaller authorities be able to provide as good quality curriculum advice, psychological services, music and arts provision, transport and libraries? The library service is very important. Will smaller authorities be able to maintain the residual adult education colleges and be able to keep their specialist teams? Counties play a leading part in European partnerships. Their break-up may put at risk the benefits of this for language teaching and European understanding.
The department now talks of joint or lead authorities. How would that model work? Would each authority be free to leave or join a consortium with a single lead authority at a time of its own choosing? Who would pay the budget? Would participation and paying a large bill be voluntary? How would participatory authorities form a view on whether the budget shares decided by the lead authority were appropriate, or being spent properly? Would each have to maintain its own in-house scrutiny arrangements for both professional and financial aspects?
If a voluntary system of lead authorities is judged impractical, might it be reasonable to suppose that participation might be compulsory? On that model, a single lead authority or a joint authority would have to have powers which bound all participants and have effective right of precept on all. Do the Government really see that as the way forward for education?
Sadly, the debate so far about the costs of reorganisation has been largely in terms of the costs of restructuring the management of local government. It has not made any attempt to address the knock-on costs arising from reduced efficiency and service delivery. Education will cost about £17 billion next year, and more than half of it is spent in county authorities. If

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fragmentation creates inefficiencies of even a few per cent. it would not be long before another billion pounds of avoidable expenditure has been logged up on top of the billion or so commonly mentioned as the cost of restructuring. My Lords, there are surely better ways of spending such sums on education.
5.15 p.m.
Viscount De L'Isle: My Lords, I wish, like many other Peers, to congratulate the noble Lord, Lord Kingsdown, on an eloquent maiden speech and trust that we shall hear from him often in the future. Like him, and many other Peers in their seats today, my family home is in Kent. The noble Lord, Lord Cornwallis, has given us a timely opportunity to debate the local government review. Many noble Lords are far better placed than I to put the case for the many aspects of local government which must be considered. As time is short, I shall confine my remarks to the effects on the rural areas and their economies.
The recommendations which the Local Government Commission makes for individual areas must have regard to the wishes of local populations and geographic locations. I shall model my examples, as five other Members of this House from Kent have done, on the needs of Kentish Men and Men of Kent, which, of course, includes women in both cases.
Currently in Kent the county council is able to take a strategic overview to solve the problems of rural residents dependent on the rural economy. Rural areas by their nature are disadvantaged relative to the towns through isolation, inadequacy of services and vulnerability of traditional rural enterprises, such as the decline in agricultural and related employment and the phasing out of other primary sector industries such as mining, in our case in the East Kent coalfield.
The county council acts as a redistributive agency between East and West Kent through its concern to meet relative need both at the macro level of differing resource bases of east and west down to the special needs within the community of social services and education. The county council has been particularly successful in lobbying central government and the European Commission in achieving rural development status for the East Kent coalfield and Romney Marsh-South Ashford areas and Objective 5b status for Thanet, so achieving grant aid for particular needs in rural areas.
We have heard from my noble friend Lord Aldington of Kent County Council being in the vanguard in approaching other European regions in the Nord-Pas de Calais and Belgium. That has led to gaining European Union Interreg funding, a practical action, not posturing, which is so often the case.
Planning regulations in the rural parts of Kent are stifling appropriate development needed to assist the move away from the traditional industries. Personal considerations of a vociferous minority are restraining the much needed move away from the primary and related industries into the technology of tomorrow, when information will flow down data highways rather than commuters on grossly over-used roads and railway
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tracks, exacerbated by the Channel Tunnel links. If unitary authorities inherit local planning decisions, liaison will be necessary between authorities if we are to avoid economic strangulation.
Many noble Lords will know from military experience that there is a great difference between strategy and tactics and the consequences of trying to deal with both simultaneously in the same headquarters. For the past 100 years, we have had two tiers of local government, which has not been stagnant, but evolved to meet the needs of the communities it serves. Continuing evolution will serve the population better than radical surgery, which cuts out the strategic overview currently managed by county councils. Kent County Council is acknowledged to be doing that exceedingly well.
Right honourable and honourable Members of another place have their constituency boundaries drawn on wards and districts, so it would be no surprise for that place and Ministers to favour the abolition of county councils, taking to themselves the strategic role. However, they are too far removed from the point of delivery to make effective decisions on strategic matters and the philosophy of "Big hand small map" will prevail.
A uniform prescription from the centre either for unitary authorities or status quo will not meet local needs everywhere. There are advantages to the two-tier structure, particularly in the rural areas. If it is to be replaced, it must be with something far better. In the case of Kent, I do not believe that there is an alternative to the existing structure, which should be allowed to continue to evolve.
5.19 p.m.
Baroness Masham of Ilton: My Lords, I thank my noble friend for this timely debate. The number of speakers illustrates the importance of the subject.
When I had the privilege to become a Member of your Lordships' House in 1970, I took as my title, Masham of Ilton in North Riding of our County of York. When local government was reorganised, it became North Yorkshire. That was acceptable. The commission has now proposed a most crazy idea of Masham and Mashamshire being in West Riding, there also being a West Yorkshire. Can your Lordships imagine what a muddle that would cause? West Yorkshire has always been associated with industrial areas and cities famous for commerce, as has the West Riding. Our part of North Yorkshire is rural farming countryside which has totally different needs. Yorkshire is a very big area. We are in the north and we want to remain there.
Rural areas have special needs. The people who live in those areas need to be understood. Splitting North Yorkshire into three will no doubt fragment services. For example, there is now one expert who inspects the kitchens of North Yorkshire schools. With three units, there would no doubt be three such experts. That would treble the cost.
I serve on the North Yorkshire Family Health Service Authority. We are worried that the proposed changes will cause loss of coterminosity with the county council social services department. The care in the community

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reorganisation makes it vital that there are good working relationships between health and social services departments.
Coterminosity significantly aids the ability of health and social services authorities jointly to plan the purchase and provision of services. A county structure in North Yorkshire enables the development of strategic planning. Management costs of both health and local authorities would increase if smaller authorities were created since additional effort would be required in joint planning and commissioning with several authorities at the same time. Boundary changes could present difficulties for general practitioners, who could potentially have patients who are resident in different authority areas with different standards and procedures.
The proposals do not seem to bode well for the effective delivery of social services in North Yorkshire. The disruption and instability alone will destroy so much that has been achieved in recent years.
The county council supports the retention of the current two-tier arrangements. They ensure that services which are best administered and planned on a strategic basis remain at county level. What is best done locally can be promoted through the current network of district councils. Those should be clearly defined and can be improved.
It seems to me that we need a period of stability rather than continual uncertainty. The major changes in community care services, and maintaining highly specialised areas of work such as child protection, can be more difficult to deliver in a county such as North Yorkshire. With the added problem of increased rural crime, we need the county to pull together, not to fragment.
There is a growing tide of concern among many national bodies about the recommendations of the commission. I have also had representations from Cleveland county. Cleveland feels that if the area is split into four there will be a deterioration in services, especially for minority groups such as adults with disabilities and children with learning difficulties.
I have heard that the cost of implementing the proposed changes could be in excess of £1 billion nationally. In Cleveland increased administration costs could he as much as $10 million a year. Is it not better to spend people's taxes on much needed services?
5.23 p.m.
Lord Rodgers of Quarry Bank: My Lords, if nothing else comes out of this debate, I hope that it will at least be an endorsement of the remark of the noble Lord, Lord Cavendish of Furness, that it is time to end the war of attrition between central and local government. That is a tremendously important message. It underlies so much of what has already been said in this debate.
I am deeply sceptical of all local government reform. It is rarely justified on merit. It seldom improves anything and is usually a disaster. It is always claimed that it will bring local government close to the people; that it will deliver better services; or that it will be more cost-effective; or all of those things. It turns out to be disruptive, expensive and pointless. Everything that we
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have learnt today about the present review confirms that this will simply be one in a most unfortunate, unhappy sequence of attempts to reform local government.
There was a warning which I think we all noticed when the review was set up and when the 39 pages of policy guidance were published in July 1992. Perhaps may remind the House —although I believe that noble Lords will be familiar with it—of the statement that the Government do not wish to impose a blueprint for reform but that they expect to see a substantial increase in the number of unitary authorities. That is quite extraordinary. It is a definition of freedom, provided that you produce the right result. I was surprised at the time, and I am surprised now, that Sir John Banham and his team were prepared to accept such extraordinary terms of reference.
There is no ideal or perfect way of organising local government. There has to be a fine balance of advantage either way. As has already been said in the course of this debate, the optimum solution depends entirely upon local circumstances. That optimum solution includes whether there should be one tier or two and which tiers they should be.
As has been acknowledged, there is a case for ad hoc change in specific cases from time to time to take account of demographic changes or the provision of services. But that is quite different from a nationwide root-and-branch review of the kind that we are having now. It is one that is based to an extraordinary extent on the outcome of opinion polls conducted by the MORI organisation.
The shortcomings of this review, which have already been referred to in specific cases, are of particular interest to me in the case of the county of Cleveland. In 1968 the borough of Teesside was created by local consent and agreement out of six existing boroughs and districts. That was a proper way to conduct reform. In six years the borough has established itself. But in 1974 it was threatened with total dismemberment unless Hartlepool joined it in a shotgun marriage. The matter was only settled when it changed its name to Cleveland—which I must say was previously associated in my mind not with the North of England but entirely with Ohio. I am sure that no noble Lords in this House have any doubt, but the public often wonder where the county of Cleveland is. That was in 1974.
Now in 1994 we have a new proposal. The Cleveland of 1974 is also threatened with total dismemberment. In its final report the commission does not explain the reasons in any way that would be recognised as having intellectual substance. There is no instinctive understanding of the nature of the place. As I said, there are no intellectual arguments underpinning the extraordinary conclusion reached in the report. Twelve out of the 17 principal pages of the report are concerned in whole or in part with the outcome of opinion polls. This is entirely a matter of change for the sake of change, or change because the Secretary of State wants it.
I hope that the Secretary of State will think long and hard before accepting what has been offered in respect of Cleveland, just as I know noble Lords want him to think long and hard about what is proposed in respect of

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other parts of the kingdom. I would prefer the retention of the present structure and to have no change. Alternatively, I would prefer a single Cleveland county. If neither of those options is satisfactory or acceptable to the Secretary of State, I hope that the compromise that is proposed by the county council will be accepted. Effectively it would mean a return to the 1968 boundaries which were established by consent. That solution would make good sense. It would be acceptable to Teesside and to Hartlepool; it would be cost-effective in the delivery of services; and it would involve a genuine identity that is relevant to the people.
5.29 p.m.
The Earl of Selborne: My Lords, I have been heartened by the debate so far. There has been a great deal of consensus. Perhaps I may summarise the position so far. We agree that there is no ideal format for local government. If one tries to attempt to find a solution which will embrace all areas of the country, one will fail. Secondly, we all agree that the public at large is interested above all in value for money and quality of service. Clearly, people are also concerned about local accountability and would like to see local government working in a partnership with central government. They do not want to see a constant war of attrition between central and local government. To the extent that so far the discussion has generated a sterile debate between the tiers of local government, that is seen to be extremely unfortunate. We agree about that also.
But it is not entirely fair to say that the debate has been wholly sterile. It is most important to recognise that on those who suggest that a root and branch change is required lies the onus to demonstrate firmly and clearly where the advantage lies. It will be for the commission to weigh those arguments very carefully and err on the side of caution. Speaker after speaker has quite rightly expressed a degree of caution about whether one can predict accurately the consequences of major reform.
The local government review itself said that a consensus of view must be tested against a local champion. There must be a strong body of support for any new proposal. If there is a consensus then clearly there will be that support. Where there is not a consensus, there must be a local champion who is seen to be viable and effective. The cost is critical. One hears so much about the transitional costs. The long-term costs have to be weighed up and, as the noble Baroness, Lady David, reminded the House, the cost of the diminution of services which has to be costed. Above all, will those changes stand the test of time? If those questions cannot be answered, one should not change it.
The dilemma is that if one is looking for a local champion, the more discrete and smaller the authority, the greater the sense of identification. One only has to move one district council away to get a completely different reaction. In my area of East Hampshire there is a strong wish to have a unitary authority along the boundaries of the existing East Hampshire District Council. As soon as one says, as would clearly be the case to my own mind and indeed to the Association of
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District Authorities, "That is not a runner. That does not work. You have to move to Winchester or to the Test Valley", people say, "That is not what we meant by local accountability". I am quite certain that in those situations the champions of unitary authorities will say, "Come back two tiers. We did not mean this".
Noble Lords may look, as I have done, with some care at the proposals which come out of the 13 district councils in Hampshire. They do not all conform, at least in their first preference, with the proposals of the Association of District Councils for Hampshire, which in any case fudges the issue by not being able to agree whether it wants five or eight bodies. So they say, "We will leave it to the local government to decide". For example, the Test Valley proposal is not compatible with eight districts. So there is a very great deal of incompatibility. Quite frankly, I feel that it is irresponsible of umbrella associations to put forward proposals which are incompatible and yet to try to claim that there is widespread support.
Anyone who has listened to this debate from the beginning will recognise without a shadow of doubt that, as one goes into the rural areas, one is bound to conclude that the case for two tiers stacks up more and more heavily. Because of the strategic issues and the need to take in a wider area than can conveniently be put into a unitary authority, where there are the specialist and personal services for which one can call on the council offices, that may well work. I have no hesitation in saying that two tiers is an option which must exist for the local government review in many and probably most cases. For the Secretary of State to try to determine the outcome of the review by suggesting that there should be a presumption for unitary authorities was quite irresponsible.
5.35 p.m.
Lord Craig of Radley: My Lords, members of the Armed Forces, and least of all this airman who is more familiar with the unbounded regions of the air than county council boundary affairs, do not want to be thought to be attempting—or too strongly attempting—to influence the geographic shape or the electoral make-up of local government. As individuals, service men and women share with the rest of the community the right to vote, but as individuals and not as formations or squadrons of Her Majesty's Armed Forces. That said, the services have a major presence in several county areas.
The services rely on good local government around them and have many links with their council neighbours. Those links have played a very important part in the life and traditions of all three services, whether it is in the raising and nurturing of a battalion which proudly carries the name of the shire from which many of its personnel are recruited; or the centuries of close bonds with naval establishments and with Her Majesty's ships which crossed the oceans bearing a name long associated with a locality; or the highly valued council support enjoyed by Royal Air Force stations and squadrons from end to end of England (and of Scotland, Wales and Northern Ireland too.)

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I am sorry to have to inform the noble Lord, Lord Cornwallis, and the noble Lord, Lord Kingsdown, whom I must congratulate on his fine maiden speech—another noble bowman of Kent—that defence cuts seem to have been unable to provide us with an HMS "Kent". We have a very fine Type-23, HMS "Norfolk", the county where I now have my home. I know of no plans for an HMS "Mashamshire".
All those connections, so ably and enthusiastically maintained by local people, mean much to the services. They give our professional (career) Armed Forces a chance to meet and mingle with many who are unfamiliar with service life but who take an active role in local government:. The servicemen's lives are enriched by those contacts, as I know from my own experience. The friendships formed also give local councillors a unique chance to understand the traditions, values and, above all, professional competence of the soldiers, sailors and airmen whom they meet.
In war and crisis there is no shortage of media coverage of the Armed Forces. The public is well informed. But when—as we all hope—we are not at war and the only publicity may be adverse, the value of the civil-military contacts to set such issues in their true context will also help understanding.
The collapse of the Cold War has allowed civil defence to wither away. But there will still be local difficulties, disasters and tragedies which will require the closest co-operation between military and civil authorities. Help to the civil power, or assistance to the local communities in the wake of a natural disaster will continue, as will the need for planning and exercising to deal with them between the military and the civilian authorities.
The military has not been untouched by reorganisation and the trend for military districts has been toward the larger geographic solution. They must be seen to dovetail with local arrangements. Indeed, the Local Government Act of 1992 speaks of the commissioners having regard to the need:
"to reflect the identities and interests of local communities".
The Armed Forces are a part of that local community.
The previous Secretary of State for the Environment was quoted as saying that efficiency, coupled with local sentiment and tradition, are the criteria for reform. Many in the Armed Forces will want to see those long-standing traditional values and loyalties sustained and nurtured. They will want the new local government structures to continue to give strong support to the effectiveness of their operations. I hope that the commissioners will be encouraged to take full account of all that in their work and that Her Majesty's Government will ensure that they do.
5.40 p.m.
The Earl of Winchilsea and Nottingham: My Lords, I should like to insert into this debate a plea from my own county of Somerset which joins pleas from other counties that have already been made today in your Lordships' House; doubtless there will be others after I sit down.
A lot of people were greatly encouraged by the recent High Court decision reaffirming that the status quo is an
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option. I start my plea with that comment because, following on from that, the Association of County Councils seems equally encouraged by the resolution overwhelmingly adopted at the recent Liberal Democrat conference in Cardiff. At the risk of detaining the House, I shall read the entire Motion. It says:
"Conference notes the successful result of the judicial review of the guidance issued by the Secretary of State to the Local Government Commission and observes that the Government is moving further and further away from the principle that reform should only take place where such reform is in line with the clearly expressed wish of the local community, and that overall it is undermining local democracy, increasing the democratic deficit and causing chaos and confusion in many areas.
"Conference therefore calls on the Government to accept and to proceed with only those reforms that have demonstrable and overwhelming support in the communities concerned".
The Local Government Commission made its recommendation for Somerset on 20th December 1993, that the present Somerset County Council and district councils should be replaced by three unitary councils. The proposal for Somerset is stoutly resisted by Somerset County Council as it singularly fails to meet any of the criteria set out by the review because, first, it is not wanted by the general public; secondly, the new areas do not have any greater community identity—in fact the reverse; thirdly, it does not save money—again the reverse; and, fourthly, it does not improve service effectiveness.
With regard to the first point, the commission recruited MORI polls to conduct a survey to discover the level of public support that existed in Somerset for the commission's own recommendations. The results were conclusive and convincing; only one in five people in Somerset want it; four in five emphatically do not. In relation to the second point, there is no clear community identity in the proposals for the new areas. In fact, it would appear crystal clear that the present Somerset County Council enjoys a far stronger identity than four of the five present district councils. In addition, it is right to point out that the new areas will be made up by combinations of bits and pieces of those districts.
In relation to point three, it will cost up to £65 extra per Somerset household, or a total of between £7 million and £12 million, to set up. The commission's estimate of the running costs range from an estimated saving of £3 million per year to an extra cost of £2 million per year. I wonder how long it would take to recover those set-up costs. Indeed, would they ever be recovered? The people of the county of Somerset doubt it, as do I.
In relation to the fourth point, instead of one county authority, county services will have to be broken into three. There will be three education departments; three social services departments; and three library departments, to name but a few. No wonder the scheme is unwanted and unwelcome; it is totally daft. However, there are many things at present county level that simply cannot be split into three and those will have to be organised on a shared basis. In other words, the county will simply be reinvented to accommodate the police, the fire service and waste disposal—again to name but a few. Those services will be controlled by a committee of representatives from the three unitary authorities with no direct accountability to the electorate. Somerset County Council is quite right to point out that in Europe

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county government is looked on as the regional tier, the one below national government. Removing it and making the regional authorities smaller will greatly reduce their influence at European and national level to the detriment of local people.
There are many other areas of Somerset County Council responsibility which will either cease to exist altogether or would, at best, be seriously reduced if the proposals contained in the commission's recommendations are steam-rollered through and over Somerset County Council despite massive local opposition.
5.45 p.m.
Lord Dixon-Smith: My Lords, it was the assertion of local rights over the central executive that gave rise to Magna Carta—a key stage in the evolution that created our present Parliament. Times change, but in one sense that relationship lies in a different way behind the work of the Local Government Commission. The results of its work will not simply shuffle the pack of administrative functions between different groups of squabbling councillors; nor will they simply redraw the administrative boundaries. Inevitably change will affect the relationship between central and local government with consequences that are likely to be both profound and unpredictable.
The commission is required to have regard to two key and conflicting criteria. First, it must pay attention to the need to reflect the identities and interests of local communities. Secondly, any change should secure effective and convenient local government. It is not required to consider the two main causes of tension between central and local government. They concern what are the proper local functions of local government and, arising from that, how the costs of those functions are to be met. In relation to those points, the work of the commission is a distraction and I am afraid that tension will continue.
What is a community? In that context we do not need to be concerned about being European or being British. We are concerned with locality. For the commission it may be possible to obtain a helpful answer in the major cities. However, in most shires, if one asks, the answer is, "I live in such-and-such a town or village in such-and-such a county". Under the terms of the commission's writ, the town or village is too small to secure effective and convenient local government. The county appears to be too big for the Government—if I can put it that way. A solution to the dilemma that results from the multiplication of the first or the division of the second has scant regard for people's sense of place and little regard for the need to secure effective local government.
We know that in future the police service will be likely to require joint arrangements for its supervision. We have devoted considerable time recently to that subject. We know that joint arrangements will be statutorily required for the fire service so that its existing structure will be maintained. Much was made of the problems faced by services such as the archive service and other specialist services like the central libraries. We know that strategic planning, particularly in the
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highways and transportation field, cannot be undertaken except on a wide scale. Will larger numbers of smaller authorities be able to resource the specialist services in education—the greatest of local government services in spending terms—for such things as in-service teacher training or advice to schools following an Ofsted report? Not without joint arrangements. Where is accountability if so many services—my list is not comprehensive—require an intervening structure between the local authority and the service for which it is nominally supposed to be responsible?
Finally, there is no system of local government working anywhere in this country today where all local government functions are the direct and exclusive responsibility of a single local authority. The unitary principle does not exist in practice even in the most metropolitan of areas. Sir John Banham and his commissioners deserve our sympathy. Their own opinion polling, while recognising the appeal of the unitary principle, also reveals that there is no clear majority in favour of specific changes. On the contrary; in most areas, the status quo receives most support. The commission has an impossible task. Significantly, a letter in The Times from Sir John Banham on this subject was followed by one from the leader of the London Borough of Waltham Forest. The implication of that letter was clear. The London boroughs have realised, too late, that London as a whole has lost out through not having a strategic authority. Do we really want to inflict that on the rest of the country? I fear that we will be visiting this subject again and again in the future.
5.50 p.m.
Viscount Monckton of Brenchley: My Lords, first, I thank my noble friend Lord Cornwallis for introducing this Motion and, secondly, I congratulate my noble friend Lord Kingsdown on his maiden speech. I confess also that, like him, I am a Man of Kent.
I have only two points to make, which I am sure will be a relief to your Lordships. The first concerns youth organisations, for which I have worked voluntarily for 30 years and which without the county youth service would not really work. The second concerns archaeology. For the past 50 years I have been working in Kent. Again, although we have two units in Kent, a county council archaeological unit and a rescue service, both of which are doing very well, there is no doubt that eventually, in all counties, archaeology should rest with the county.
I said that I would be brief. I have taken up not even a minute. But am I the only one who wonders what the hell we are doing here when we all think exactly alike and we want only one word from the Government—stet?
5.51 p.m.
Lord Digby: My Lords, I am afraid that I shall repeat my message of three years ago when your Lordships last debated this issue. My message was to reorganise the finances, which has been done through the council tax, but to leave the structure alone. Judging from this debate I am no longer alone in this view. Can we not learn the

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lesson of 1974, when the cost of local government shot up—not only the transitional costs but also the basic long-term costs?
Governments have always underestimated the cost of change. They are doing so again. That cost is already beginning to show in the loss of trust and confidence between councils. People in Whitehall and those who read the press may think that councils are always in disagreement, but that is not the case. The co-operation and trust between, say, counties and districts has been very real and constructive. However, that is endangered now as each is having to fight its own corner, and constructive co-operation is a thing of the past. I have been assured of this deterioration from many sides.
Why then are the Government hell bent on reorganisation? I suggest that it is because of pressure from the old county boroughs which lost many of their powers in 1974. I certainly sympathise with them and think it was a mistake. But hard cases make bad laws. Counties and boroughs have learnt to live together and, until the present uncertainty arrived, co-operation was producing a good service.
Having made it quite clear that I believe the status quo should be maintained, I should like to turn to the position of the counties. Should county councils be abolished in favour of smaller unitary authorities? One of the complaints of the old county boroughs was that they had no control of their approaches. Counties can and do provide the strategic highway planning. In the sphere of social services and education the county provides several specialist services and staff. For instance, my county council has a child protection team which does a vital and difficult job. Not only would three unitary authorities be unable to fund a team each, but such a team works in close liaison with the police specialist child protection teams, which are undoubtedly organised on a county-wide basis. The same applies to liaison with health authorities, the probation service and the voluntary sectors. Practically all organise on a county basis.
It is also important that the geographical counties should be maintained, even if they have no county councils. Most voluntary organisations, the police, magistrates' courts and many other bodies are organised on a county basis. It is vital that that should be maintained even though their funding would be obtained from several unitary authorities. The confusion that would result from tinkering with county boundaries would be catastrophic. Perhaps I may give an example. We have taken five years to organise Dorset magistrates' courts on a county-wide basis. The system is now running smoothly. Should Bournemouth become a unitary authority and be returned to geographical Hampshire, my committee would be quite unviable and five years' work would be wasted. Counties are not just entities that can be discarded without cost.
5.55 p.m.
Lord Stoddart of Swindon: My Lords, I cannot claim to be a Man of Kent although I lived there for a few years. I have lived most of my life in Reading. Noble Lords will know that Reading is in Berkshire. We have a very interesting situation in Berkshire. There has
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been a joint submission to the Local Government Commission by Berkshire County Council and six of the seven principal councils for the abolition of Berkshire County Council and the establishment instead of unitary authorities based on major towns and centres of population. Here we have a county council that is prepared, because it believes in unitary authorities, to abolish itself.
What are its reasons? First, unitary authorities are the best way to deliver services in Berkshire; secondly, the two-tier system has caused confusion since 1974; thirdly, there is support from the community; and, fourthly, unitary authorities will be closer and more accountable to the communities they serve. I support this initiative because it accords with my own view and indeed with my own experience, which is based on having served as a member of the Reading County Borough Council for 18 years and as leader of the council for some years. I know the benefits of administering an all-purpose authority; the benefit of administering all local services; of administering housing as well as children's matters—the two are tied together. People knew where to go. They knew who to go to see. What is more, when things went wrong, they knew who to blame. He was their neighbour. They would see him in the street. They would go up to him and say, "What's this all about? Let's have some action on this matter". Councillors are known to the people in the area.
I am sorry that my noble friend Lady David is not present because she might be interested to know that in Reading we ran a first-class education system for 125,000 people. We pioneered the teaching of the deaf. People moved to Reading in order that their deaf children could be taught. That did not happen in the county. The idea that one needs 500,000 people to administer an education service is quite wrong and indeed it led to the disaster of the 1974 reorganisation.
We have noticed a big change from county borough status to the two-tier system. It has become extremely difficult, first, to get things done and, what is more important, to get to the people who make the decisions even, if like me and Members of Parliament in Berkshire, one knows one's way around. That is altogether unfortunate.
I was also the Member of Parliament for Swindon which was not a county borough. At first it was an excepted district but after 1974, it was an unexcepted district. We had the situation of this large area known as Thamesdown providing 30 per cent. of the population and 40 per cent. of the finance, but having to follow policies which it believed to be inimical to the best interests of the people it served within the district. It was also subject to delays and frustration in service and planning. I hope that the Local Government Commission will, as it surely must, give Thamesdown unitary authority the status which it deserves and which it should have had years ago.
Finally, the successful future of local government depends on going back to the old partnership which used to exist between the local authorities and government before so many services were centralised under what I call "undemocratic centralism". There is a need to

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return powers to the local authorities. Above all, there is a need to give to authorities, whatever they may be, the opportunity to finance themselves properly. That means giving them new sources of finance, including the return of the business rates and allowing them to spend their own capital receipts without let or hindrance from central government.
6.1 p.m.
The Earl of Swinton: My Lords, I too should like to thank the noble Lord, Lord Cornwallis, for introducing the debate in such an excellent manner. I make no apologies whatsoever for concentrating my remarks on North Yorkshire. It is very difficult to read the commission's recommendations on the reviews and in any way to read the letter of Sir John Banham to The Times—which was largely quoted by my noble friend Lord Blake—and think that it could be the same person speaking. In his letter to The Times he completely contradicts all the recommendations which he makes as far as North Yorkshire is concerned.
North Yorkshire County Council is efficient and popular. Perhaps I should declare an interest because I was on it for a number of years, but that has nothing to do with either its efficiency or its popularity. Sadly, it is now a hung council three ways, so the leadership from the members has not been forthcoming in quite the way one would have hoped they would have reacted to the recommendations.
As far as North Yorkshire is concerned, the recommendations are highly artificial and contrived. There is some travesty in trying to reintroduce the Ridings for tiny parts of North Yorkshire—calling them the Ridings, I suppose, to try to gain popular support for what are otherwise pretty unworkable suggestions.
One good thing which comes out of the report is that for the first time in 20 years in your Lordships' House I have been able to agree wholeheartedly with my noble kinswoman Lady Masham. I do not believe that that has ever happened before. I support what she said about Masham, which is a small place. Before the reorganisation in 1974 it was in fact the smallest and one of the cheapest rural district councils in the country. For its entire history it has been either in North Riding or North Yorkshire. We look on the West Riding rather as Lancastrians look on Yorkshiremen or Yorkshiremen look on Lancastrians. The idea of putting Masham in the West Riding defies belief.
The most worrying thing which comes out of the recommendations is Recommendation 14 which states:
"There should he joint authorities established for each of the police and fire services, covering (1) the new unitary authorities of East Riding, West Riding (Dales and Vale), North Riding and the Cities and Counties of York and Kingston upon Hull".
What an amazing police force! To take the great port and city of Kingston upon Hull and put it in with vast rural areas which are some 150 miles away is quite extraordinary. But this recommendation was made without the commission consulting the chief constables of North Yorkshire or Humberside, Her Majesty's Inspectorate of Constabulary or the two police authorities. Surely any changes to a complex
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organisation such as policing should be made on the basis of operational requirements, and that the commission simply has not done. The police authorities have enough uncertainty under the current Police and Magistrates' Courts Bill which has had a somewhat chequered career here. Surely there is no need for more uncertainty caused by this report.
The fire services also come under this. For instance, the training of firefighters in North Yorkshire is currently under review. It must be unwise at least to contemplate major capital expenditure if such restructuring is in prospect.
I hope and suspect that the Secretary of State will reject the recommendations of the boundary commission as far as North Yorkshire is concerned. I am sorry that my noble friend Lord Arran is not in his place. But I am sure that the noble Viscount will make notes. I do not expect him to give an answer today because this matter is not in his department, although he speaks for the Government. I sincerely hope that he will discuss with his noble friends and right honourable colleagues this very strange proposal. If it could be dismissed as soon as possible in order to remove the uncertainty hanging over the police and fire services in our part of Yorkshire, that would be extremely helpful.
6.6 p.m.
Lady Kinloss: My Lords, I have never been a parish, district or county councillor and I have always sat on the Cross Benches, so, as they say, I have no axe to grind. All the same I am very concerned for the future of local government in the beautiful county of North Yorkshire where I have lived for many years.
The work of the Local Government Commission which we are discussing today is a difficult and emotive subject. No matter what the commission recommends or suggests should be done, it will be wrong in the eyes of some. At the same time, the commission seems to have been quite curiously blinkered.
At public meetings held in North Yorkshire the commission made it clear that the views of the district council and county council members and officials carried little weight and were seen as tainted by self-interest. Members of parish councils also felt themselves lumped together with the rest and their views regarded as of lesser importance than those of the general public. It would seem to be particularly unfair to parish councillors, who receive neither pay nor allowances, with the exception of the parish clerk, who receives a small honorarium.
I realise that the parish councils are not being altered, but all the same they are an important link between local communities and local authorities. In our village parish councillors attend meetings assiduously and give an account of their proceedings every month in the village news. They are democratically elected. Their interest in the structure of local government is only so far as it is likely to affect the quality of services in their area. They know what the people are thinking, they differ from the general public only in having a much better insight into the processes of local government. Far from being lightly dismissed, their views seem to me to be particularly important.

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The Yorkshire local councils associations report that, with the exception of two parishes, they have heard no one say anything other than that they wish to see the present system retained. Everything that is being said at present to the associations indicates that the proposals are out of touch with public opinion, for the concern of ordinary people, including councillors, is with services and costs and whatever works best.
At no time did the commission show that a unitary system would be better, more cost-effective or provide better services. This was also the view of the county treasurers. A similar view is held by the Audit Commission, which stated:
"The actual transitional costs may well exceed the predictions of the Local Government Commission's model".
I attach great weight to the Audit Commission's opinions as well as to those of the county treasurers.
The Ridings issue seems to me to be a smokescreen, just using the names for the proposed authorities. They are not truly similar to the old Ridings geographically. The idea that they should be separate for ceremonial purposes no doubt appeals to traditionalists but cannot have any reality in modern-day local government.
As for the beautiful and historic City of York, I fully understand that a city that probably had its first charter in the reign of Henry I in the 12th century would wish to regain the same identity that it enjoyed before the 1972 Act.
I can find little comfort in the commission's publications on specific and voluntary services. Education for people with special needs, family support facilities and community care in general are services which need a large population base to justify them financially. The county council has a wide range of facilities, but several new authorities would necessitate splitting them up. None, it is thought, could have a full set of services, nor enough clients in their area for those they had. Consequently, they would have to agree to make each other's services available to each other's clients. Joint agreements, assessment and transfer would be cumbersome, bureaucracy would inflate costs and could even put some services at risk because there would be no overall plan.
The North Yorkshire Education Service has a very good reputation. It spends a good deal above its standing spending assessment in order to support the large number of small schools in what is the largest rural county in England. I note that the reason for keeping the status quo in Lincolnshire was that, like North Yorkshire, it has a pattern of small market towns and villages and is very rural. Some people are puzzled why, if Lincolnshire is to have a two-tier system on such grounds, the commission should find that the same is not suitable for North Yorkshire. The county council has an excellent relationship with its voluntary sector and the health authority in its planning for community care which should not be upset.
In 66AD Petronius wrote:
"We need to meet any new situation by re-organising, and a wonderful method it can be for creating the illusion of progress, while producing confusion, inefficiency and demoralisation".
In view of the fact that the final recommendations on the future of local government in North Yorkshire, Hurnberside and Lincolnshire were published in January
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of this year and the new policy guidelines in February of this year, would the Minister ask his right honourable. friend the Secretary of State for the Environment to refer the recommendations back to the commission for reconsideration?
6.11 p.m.
Lord Willoughby de Broke: My Lords, the commission already seems to be limping rather badly. Its timescale was drastically reduced last year, while this year one of its central guidelines was knocked away by the recent High Court decision. Listening to noble Lords' speeches, it seems that it is your Lordships' wish that this lame duck should be put out of its misery as quickly as possible.
The central issue is whether the commission's recommendations will lead to improved quality in local government, improved accountability, less bureaucracy and lower costs. The unitary option, which is much touted in the report, is, after all, a bit of a myth. As the commission acknowledges, there would have to be joint arrangements for fire, police, planning, waste and various other services, not to mention for the special services. I am thinking of, for example, county libraries. I do not know how a county library could be chopped up into three, four or more different unitary authorities and which would get which books. That could cause quite a lot of dispute. Any so-called "unitary solution" would have to be two-tier. It could not be otherwise.
The unitary structure would produce less democracy because, as my noble friend Lord Aldington pointed out, there would be fewer councillors serving many more constituents. I wonder how many of the "broadly representative individuals" for whom the commission calls would be available and willing to serve given that they would be required to devote very much more time to serving a greater number of constituents. Given those demands on their time, I think that it is unlikely that enough people would come forward.
I believe that most people identify with their village or neighbourhood and then, as has been pointed out particularly by the Men of Kent, with their county. I yield not to the Men of Kent; I am a man from Warwickshire. I am very proud of coming from Warwickshire. Surely that two-tier feeling should be reflected in the structure of local government.
The commission's report emphasises that there should be change only with general agreement and when local communities are convinced of the need for change. It then notes rather plaintively that so far there seems inadequate support for the unitary solution. Its own poll shows that most people are in favour of retaining the status quo. Indeed, paragraph 119 states:
"There are advantages to the … two-tier structure. If it is to be replaced, it must be with something better".
There is nothing to show that the unitary option will offer anything better, while, as many noble Lords have pointed out, the costs of change will be considerable. In the case of Warwickshire, they are estimated at over £10 million. Why should local people and businesses be saddled with the costs of some sort of reorganisation, the benefits of which are at best questionable, and which the polls show that people do not want?

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The way forward must be improvement in the existing system. Local government should address this as a priority and make people aware of who is responsible for doing what. That is always one of the complaints about local government. Local government should also improve access and accountability and sort out the maddening and confusing overlaps in responsibility. That can be done by district and county councils between them. They are matters of organisation and of having the will to carry out that organisation. We do not need a wholesale restructuring process.
I believe that the commission will have played its part if it spurs on the county councils and district councils to concentrate their minds on what they should be providing for their electorates. As many noble Lords have said, the existing local government arrangements are not perfect, but the will to improve is there—certainly in Warwickshire. We should not throw out the baby with the bathwater and change to expensive, uncertain and unwanted alternatives.
6.15 p.m.
Lord Rochester: My Lords, I have lived in the county of Cheshire for nearly 50 years and, in my opinion, it would be deplorable if Cheshire County Council were to go out of existence.
In my industrial experience, administrative problems are not generally solved by tampering with organisation. It is usually much better to build on what is already there and to seek to improve it. If being radical means seeking solutions to problems by for ever tearing things up by the roots and starting again, I have long since concluded that I cannot be a radical. In any case, I am not convinced that there is a problem to be solved in Cheshire. Local government is working well there and is capable of further improvement under the existing structure.
There are conflicting estimates of the cost of introducing unitary authorities in the county. For my part, I am satisfied that the transitional costs would be considerable and that even long-term savings are, to say the least, highly doubtful and may be non-existent. What cannot be doubted is that change would bring disruption to services which, in my view, cannot be justified. Indeed, preoccupation with the effects of the possible change must already be impeding the efficient delivery of certain services.
It is widely acknowledged that for many years Cheshire has had one of the best education authorities in the land. The authority has certainly been helpful to me on a number of occasions. As a member of your Lordships' Select Committee which considered unemployment years ago under the chairmanship of my noble friend Lady Seear, I recall that it was to the director of education for Cheshire that we looked for advice when framing some of our recommendations concerning long-term supply-side remedies. With the best will in the world, I do not think that the unitary authorities which might replace Cheshire County Council would be able to administer the function of education nearly so
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effectively, particularly if in doing so they had to rely on confusing and undemocratic arrangements such as joint boards or committees.
Much the same considerations apply, in my view, to the need for strategic planning in a number of areas, particularly with regard to the provision of social services. The Government have given social service authorities substantial additional responsibilities for community care just at the time when those authorities are threatened with reorganisation. Given all the other ways in which the Government have recently brought trouble on themselves, I find it almost incredible that they have not clearly established the role and the function of local government before getting enmeshed in this structural review.
I am one of the great majority of Cheshire people who have said that they are proud to live in the county. I do not believe that a sufficiently strong case has been made out to justify changing the existing structure of local government in Cheshire. I urge the commission, and the Secretary of State when the time for decision comes, to leave well alone.
6.20 p.m.
Lord Peyton of Yeovil: My Lords, I believe that the noble Lord, Lord Cornwallis, as has often been said during the debate, has earned the gratitude of your Lordships. If he wishes to add to that gratitude, he might send special copies of the report of the debate to each member of the commission, and might also go so far as to arrange special readings for them.
It was some time ago that the Government conceived as a suitable target the evolution of a system of local government which was both effective and convenient. I have long thought how nice it would be if we had a central government who set those two adjectives up as targets to aim at for themselves and for their own organisation and left other people alone for a bit. The Government set up a commission. They gave it a fairly powerful nudge in the direction of unitary authorities, which they wanted the commission to take. Later that nudge, which obviously had not been detected sufficiently clearly by members of the commission, acquired something of a greater imperative and they were told firmly that it was the Government's earnest hope that two-tier authorities would be the exception in the future.
Well, as is well known, the courts intervened, called the Government to order and said that they had done wrong. But the fact remains that the Government have spoken, the commission has heard and, to a certain extent, the commission has obeyed. So it is difficult for the slate to be wiped effectively clean. I realise that the Government must be nervous of all the rather silly accusations which governments face when they make sensible changes of mind: that they have done a U-turn; they have been inconsistent. They might also be accused of being ungrateful to the commission for having so far conducted itself in an obedient fashion. Those accusations will be as nothing compared with the other much more dire charge—that they had destroyed things of immense and lasting value.

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I have a good deal of respect for Sir John Banham. I supported his view entirely when he suggested that for Cornwall there should be a single unitary authority (the county council) because otherwise a county such as Cornwall would be unable to punch its weight. I agree with that. I also agreed with Sir John Banham, incidentally, when he called, as he did recently, for the abolition of the Treasury. What a noble work that would be But I felt it right to part company with him when he allowed members of his commission to recommend the dismemberment of Somerset, which is very much on all fours with Cornwall.
It seems to have been a bit of a lottery as to who one received from the commission. In the case of Somerset there was a senior and respected civil servant who lives in suburban Surrey and a lady councillor from Lambeth who has the reputation—deserved or not, I do not know —of being an ardent supporter of small unitary authorities. Somerset will now be saddled with three of them. The sad thing is that the three bits of what was Somerset will have no meaning for anyone, save for a few people who look for a career in local government or the Government themselves who might find small authorities easier to handle.
The report claims, quite wrongly, that there is evidence that the people of Somerset have shown a decisive preference for what has been recommended. That is rubbish. The evidence is that at least 80 per cent. of the people in Somerset wish to retain a county tier. There is no time to expand on this, but what on earth will happen to the quality of services offered in respect of education, social services, libraries and so forth? If the Government feel that they are doing a wise thing in allowing that recommendation to go through and sweeping away yet one more symbol that people find understandable and attractive and one to which they can owe their loyalty, they will be making a cardinal error which they will not be allowed to forget for many years.
6.25 p.m.
Lord Bancroft: My Lords, like many other speakers, I shall concentrate on two issues. The first is the purpose of the commission; and, the second, its costs. First, the purpose: we are bound to ask why the Government embarked on this rather curious exercise when there was no demand for it and no need for it, and when they had no idea of what the costs and benefits (if any) of an alternative structure would be.
The existing two-tier system in the shire counties was established just two days short of 20 years ago by the then Conservative Government—and not without controversy, as some of us remember. It has proved, on the whole, to be workable and adaptable, give or take two or three ministerial whimsicalities such as the creation of Avon and Humberside, which were redundant, and which could easily be removed. Cleveland, on the other hand has proved to be successful in giving identity and clout to Teesside. I know that from personal experience. Its projected dismemberment would be cruelly retrograde as the noble Lord, Lord Rodgers, and others have implied.
It is pointless to reorganise the structure without allowing for some redistribution of functions. Yet the
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commission is not allowed to consider that, except for strategic planning. A sensible course which noble Lords have advocated would have been to retain the two-tier system but to allow county functions to he transferred to those districts that were competent to take them on, and perhaps to allow unitary status (that is, county boroughs) for the largest cities, as some noble Lords have suggested.
The commission has been given ambiguous terms of reference, and no clear or consistent guidance. Professor John Delafons has applied Walter Bagehot's definition of the Lords and Commons to the least worst outcome of the reorganisation. The counties would be the dignified part of local government and the districts the efficient part. One doubts though whether the counties would be satisfied with the former and whether some districts would be capable of the latter. In practice, Professor Delafons concludes that the result could be an arbitrary patchwork of counties in some areas and unitary authorities in others, dictated by nothing more than ephemeral local alliances between self-interested districts or by self-induced failure to agree on any solution.
I turn to costs on three levels. First, relating to the commission; how much has the operation cost to date? What is likely to be the final cost? How much are its operations costing local authorities? Judging by the amount of glossy material that has reached me, the answer is, "an awful lot". Secondly, what will be the implementation costs to local government? We have all heard figures of upwards of £1 billion. Thirdly, what will be the ongoing cost and all benefits? After all, it is an open secret that at least twice the Government have considered abandoning the review. Why not stop it now?
Failure to act decisively will result in two more years of conflict, controversy and confusion. That is debilitating for local government. Furthermore. healthy and effective government is a necessary part of our democracy and is not to be meddled with capriciously. It is an essential counter balance to a wilful and over powerful central government. I do not necessarily agree, but the late Lord Acton nearly said:
"Power tends to corrupt, and indefinite power corrupts indefinitely".
6.31 p.m.
Lord Montagu of Beaulieu: My Lords, unitary authorities may well be very appropriate, in particular in urban areas. However, as a former chairman of English Heritage and as former president of the Museums Association, I am concerned with the effect that the breaking up of traditional rural counties will have on heritage conservation, not forgetting libraries, museums, archives and support for the arts. I hope that there will not be too many groans around the House, especially in view of the fact that my noble friend Lord Ashburton will speak next, but I intend to refer to Hampshire. I take my own county as an example because what pertains to Hampshire can be repeated throughout England.
Hampshire is a very large county with extensive prehistoric remains. There are more than 600 scheduled

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monuments, numerous defence works on the coast, 10,000 listed buildings and numerous conservation areas from thatched cottages to historic defence complexes. One must not forget the historic cities of Winchester, Southampton and Portsmouth. I agree that the latter two have a good case for unitary authorities. With its Historic Buildings Bureau, the Hampshire Buildings Preservation Trust and the Hampshire Gardens Trust, Hampshire County Council shows such high standards of excellence in conservation and archaeology that it is probably fair to say that it is pre-eminent in this respect among existing county councils. It enjoys the commitment of a highly qualified and experienced professional staff, matched with appropriate funding and policies. They all work closely with English Heritage in all respects.
With the Countryside Commission and English Nature, it promotes an integrated strategy for countryside conservation and management. It maintains the Country Sites and Monuments Record and, unusually, a Marine Sites and Monuments Record. Recently, a splendid new archive centre was opened in Winchester, perhaps in the nick of time. In no way would a unitary authority have conceived or built that building.
The county has a number of significant heritage properties from Danebury Hill Forts and Basing House to the Solent Forts. It gives great support to tourism and to the arts and theatres on a county basis. As regards the future, it is essential that the size and structure of any new authority is adequate to provide for all those services to continue.
Fundamentally, I feel that each local authority must have formalised and effective access to advice on conservation planning, tourism and the arts from suitably qualified and experienced staff who should, where possible, be brigaded in multi-disciplinary teams which can cover a range of specialist topics.
As the review is progressing, there are some areas of special concern; in particular, the danger that the abolition of county authorities will lead to the loss or disintegration of a range of vital heritage services caused by the consequent loss of the critical mass required to sustain expert teams. Expertise is vital but expensive, even if available, and will sometimes be beyond the means of smaller authorities. Joint arrangements for the latter could be shared or bought in, but they would be vulnerable to cuts and the ability of smaller authorities to sustain major historic property portfolios must be in doubt. As regards tourism, I well know as president of the Southern Tourist Board how difficult it is to get agreement and co-operation from the existing number of local authorities we have to deal with. If that number is doubled, how much more difficult it will be.
In the break-up of county councils, it is difficult to believe that the Government's aim of improving the co-ordination and quality of services can properly be met. I am certainly not encouraged either by some of the final reports, which have already been produced, or by some of the submissions that I have seen from various local authorities. As regards heritage, these reports and
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submissions proved disappointing with minimal or no reference to either conservation generally and its role in the planning process or for the arts and tourism. Most references have been passing ones; for instance in relation to archives and other heritage services they have stressed the need to maintain county-wide services, if possible without reliance on joint arrangements. That is almost an encouragement to people not to have joint arrangements.
The advice of English Heritage appears to have been ignored. Therefore, I anticipate the outcome of future reviews with trepidation. If unitary authorities are set up, it is vital that appropriate safeguards for the heritage, arts and tourism are put in place at the outset. That might, for example, include a new statutory requirement on all authorities to provide certain basic services in those areas; for example, a sites and monuments record supplemented by the use of a current provision to empower the Secretary of State to require district level councils to submit to him their arrangements, either in-house or bought in, for obtaining specialist advice on their statutory control and enforcement work in connection with listed buildings and conservation areas but extended to cover archaeological advice. Those could be monitored by English Heritage. Similar undertakings should be made on behalf of archives, museums, libraries, support of the arts and tourism. In my mind, there is no doubt that giving more authorities responsibility in these areas will not only cost more but will be less effective.
6.36 p.m.
Lord Ashburton: My Lords, I wish to begin by tipping my hat—if that is a suitable parliamentary expression—to the noble Lord, Lord Kingsdown, by saying how nice it was to hear his maiden speech today. I have heard him debating for more than 52 years. I am conscious of the fact that in seeking to speak to your Lordships' House today, I am in a sense a lay person; perhaps a "lay Lord". I have never been involved in local government either in an elected or official capacity. My experiences, both good and bad, have therefore been as a member of the public.
When one finds oneself in broad agreement with the consensus that has developed, there is a temptation not to speak but to let the message be carried by others. However, it is important that we should all lay our brick in the wall that is being built and therefore I have decided to continue but to shorten my remarks. I hope that your Lordships will forgive the rhetorical imperfection that will flow from the reconstruction of my remarks.
Reorganisation is an extremely disturbing process and an extremely expensive one in terms not only of physical change but also of time and disruption to the participants. Fundamental reorganisation should only be inflicted on people who work for any local or national institution, or indeed any business, as rarely as possible —and then only when the benefits to be gained are incontrovertible and outweigh the inevitable costs and disruptions.
Though the questions of cost and effectiveness are of vital importance, the perceived democratic legitimacy

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of whatever layer or layers of local government there may be in any given area of the country is a sine qua non of its suitability. Without a local sense of belonging, of influencing, of some measure of control, of the ability to exercise one's vote on who should represent one on matters of local interest, that layer of government will suffer from a reduced legitimacy.
Of course, the question of adequacy of scale of a local authority is a necessary component of its ability to operate effectively. Without scale, which I suppose implies both size of electorate and geographical area, there is no way in which that authority can deliver the services it provides in a cost-effective way. There is every chance that the legitimate local interest of its electors will not be effectively upheld against the demands of more powerful measures. Nor is it likely to be able to take a sufficiently broad view of issues to carry weight nationally.
Those three factors need to be kept in mind in deciding upon the desirability or otherwise of change in the structure of local government in any given area: perceived legitimacy, scale and cost-effectiveness. I should not wish to spend much time disputing their order of importance, although I should put the legitimacy point first.
Since the present review of local government appeared over the horizon and I realised the implications that it might have for me, I have been fascinated by some of the papers that I have been sent and have had the opportunity to read. Perhaps the first and most striking thing which emerged is that it is clearly possible for any two people to proceed from an objectively identical set of facts to completely opposite conclusions. The facts of geographical size, population, housing, industrial growth, schools, transport and roads and a host of other factors cannot really be disputed; but the conclusions drawn are remarkably diverse.
Now there has to be a quantity of assertion and emotion involved to explain those divergent conclusions. It is not altogether a surprise to realise how difficult it is to be objective. I may well not appear to be as objective as I should be.
The second point that is clear, which is much to be welcomed, is that most people, including Sir John Banham, accept that a diversity of solutions is right for a diversity of different areas. That is surely sensible: horses for courses.
I live and have lived for over 60 years in rural Hampshire. At the moment, the men of Hampshire seem to be catching up with the Men of Kent. I am not here to argue that local government in general or in Hampshire is perfect, because it certainly is not. It cannot he. If one wanted to put the matter cynically, one could say that what we should be interested in is the achievement of what is the least imperfect.
I believe that Hampshire is a county which the electors happily identify as their first allegiance. That was shown in the public opinion survey undertaken in the preparatory stages of the local government review. Its geographical size and population is undoubtedly large enough for its county council to exert the influence and authority which seems to me important. It is sufficiently diversified for it to take a larger view of
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strategic issues than a smaller and perhaps more undiversified authority would be able to. And I have no fundamental quarrel with the cost of the services delivered.
Other noble Lords have already quoted an appropriate and pithy way of expressing my feelings:
"If it ain't broke, don't fix it."
I do not believe that Hampshire is in need of fixing. I hope that the Local Government Commission and Her Majesty's Government will recommend the retention of the county council as the top tier of local government and will not try to cobble together a unitary system which would not in my view be a reliably better alternative.
6.43 p.m.
Lord Crathorne: My Lords, I am going to talk about the commission's recommendations for Cleveland. Cleveland has not had nearly such a good run as Kent or Hampshire, and the noble Lord, Lord Rodgers, who spoke about it was 16 speakers ago. Therefore, perhaps I may be forgiven for repeating some of what he said.
I live on the Cleveland-North Yorkshire border and perhaps I should declare an interest as I am a deputy-lieutenant for the County of Cleveland. So far the recommendations of the Local Government Commission have been accepted only for the Isle of Wight and Cleveland. Cleveland County Council has obtained a judicial review of the commission's recommendations and the Secretary of State's decision. That review is to take place at the end of May which provides a breathing space for a reconsideration of the decision as regards Cleveland.
This debate has given us a welcome opportunity to discuss the work of the Local Government Commission; to highlight the threats that the recommendations pose for many vital services; and the costs which will be involved.
The commission puts great emphasis on the concept of "community" and where people identify with; but certainly in the case of Cleveland, it has ignored evidence about how people behave in their everyday lives: their patterns of movement to work and leisure; their shopping and business preferences and so on.
There have been numerous shortcomings in the commission's report on Cleveland. There have been extremely uncertain costings with very wide bands. The options that people were given in the consultation exercise excluded the retention of the status quo and excluded having a single unitary authority. There has definitely been inadequate consideration of how key services—for example, education and child care—will be protected. I do not believe that any individual unitary authority could afford to retain staff of the required calibre and it is improbable that any workable form of co-operation will emerge from the districts to create a regional team to provide today's level of service.
The view that the commission's proposals for Cleveland have commanded widespread support is mistaken. We have heard that also about other areas. The MORI poll for the commission showed that the most popular choice, even though it was not one of the

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commission's options, was the status quo. Indeed I believe that almost every speaker today has demonstrated that he would prefer the status quo above all else.
When one looks at responses sent directly to the commission, over half of Teesside respondents favoured a single unitary authority for Teesside. That fact was not included in the commission's final report. Certainly, a single unitary authority for Teesside would be infinitely more acceptable than the present proposals.
There has been opposition to the commission's recommendations from many sectors of Cleveland opinion, such as employers and industrialists of the area, the chamber of commerce, the regional CBI, the Teesside Small Business Club and the major local evening paper. None of those sectors is a natural political ally of the county council's administration, but all sectors fear the fragmentation which will follow the implementation of the commission's proposals for four districts in this small conurbation. All the health authorities, many health professionals and voluntary organisations in the area have also expressed serious anxieties about the commission's preferred option.
At this point, I should mention that my noble friend Lord Gisborough is particularly sorry that he cannot be here today because he has similar views about the commission. However, as Lord Lieutenant of the County of Cleveland, he is escorting the Prince of Wales, who is visiting Cleveland today.
My noble friend was good enough to show me letters that he had received— and I have a whole batch of them here—from some of the bodies that I mentioned, and many others too. They all express anxieties about the commission's findings and they all wish to retain Cleveland or, if the name is changed, Teesside as the focus for the area.
The Secretary of State indicated that he wishes to see the Cleveland proposal implemented in April 1995. The task of the commission is to create a structure of local government for the next several decades. Even if we accept the commission's changes, why is there such haste? April 1995 is only one year away and is an impractical if not impossible deadline. If imposed, it will cause chaos with the major services which must be dismantled and reassembled.
Fresh elections will be impossible so that district councils elected on platforms relating to a narrow band of services will be determining service structures that are, in expenditure terms, five or six times the size of their present responsibilities. Members and officers with little or no experience in crucial areas such as education and social services will inherit those services. I do not believe that that is right. Whatever the outcome of the judicial review of the Cleveland case, more time must be allowed to permit elections and a rational process of reorganisation.
My final point is to urge the Secretary of State to reflect again on the whole process. Few would argue that local government cannot be improved. But it has had to assimilate massive and almost continuous change throughout the past decades. In my part of the country, "Teesside" was created in 1968 from parts of North Yorkshire and County Durham. In 1974, the somewhat
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larger Cleveland came into being. A period of stability is required, not more change. Only a year or so before the current review was first mooted, the Secretary of State at the time stated firmly that a restructuring was needed:
"like a hole in the head".
My Lords, he was absolutely right.
6.50 p.m.
Baroness Gould of Potternewton: My Lords, not all of us in your Lordships' House are in favour of the status quo. I believe the reason for that derives, partly, from where we are based. I come from what was a county borough area prior to the local government reorganisation in 1974. I come from the City of Leeds which had a unitary authority which was extremely competent and managed its own affairs and services. It also had high quality staff. It is because of that experience and because of the way in which that authority was able to provide services for its electorate that I believe the best structure for local government is that of unitary authorities and devolved regional government. While I appreciate that there have been many changes in the functions of local government since that time, I have not changed my view that unitary authorities are essential to provide strong, vibrant, self-confident local government which can respond quickly and efficiently to the requests and demands of the local community.
The separation of local services and the overlapping of services between the different tiers is still not understood and continues to cause confusion to the recipients. As my noble friend Lord Jacques said earlier, this confusion is a result of the 1974 local government changes which I felt at the time were disastrous. I still believe those changes have caused problems which have never been resolved.
Unitary authorities are in a better position to develop new roles for local authorities, such as improving access and accountability, community leadership, developing partnerships both locally and with government, monitoring public bodies and being advocates for the local area. They are in a better position to offer customer contracts covering the whole range of council functions, to set and publicise quality standards and targets and to co-ordinate environmental initiatives and management.
The Labour Party has had a consistent policy since the early 1970s in favour of unitary authorities. Its 1992 general election manifesto stated:
"To simplify local government in England, we will establish 'most purpose' authorities generally based on district councils. In some areas a county-wide authority or the amalgamation of districts may be appropriate".
Our subsequent document Opportunity, Quality, Accountability recognised that although we were aiming for a unitary structure, we should approach local government reorganisation in a "spirit of flexibility", understanding that councils covering largely rural areas such as Cornwall would inevitably function rather differently from those governing a major city. I believe that that is absolutely the right approach. The document further recognised that it would be appropriate to transfer functions of a strategic or regulatory nature

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from counties to a tier of regional government which would draw its main powers and functions from a devolved and decentralised central government.
There is a fair amount of consensus between the Government and the Labour Party on this issue, but we believe there have been a number of flaws in the way in which the Government have approached the review. We believe that the Government have acted on a politically partisan basis. They have failed to define the role and functions of local government and— as is their usual reaction to local government— they have dealt with the review on a piecemeal basis. The timing of the review has been flawed. There should have been a shorter timescale with a proper starting date, so reducing upheaval and stemming the tide of uncertainty, particularly for the staff. There has also been a failure on the part of the commissioners to lay down at the commencement of the process any basic ground rules for parliamentary boundary changes, such as population size and the maintenance of historic connections and traditions.
A point which has not so far been mentioned in this debate but which is of concern is that the earlier presumption in favour of all-out elections for all new authorities has been overturned, with a government Minister able to determine when elections will be held for successor authorities. That is an unusual and unhealthy degree of discretion which could be misinterpreted. All new unitary authorities should be subject to a fresh and full mandate, whether or not they are successor authorities. This should be followed by annual elections as a key ingredient for the democratic renewal in local government ensuring regular accountability, especially in respect of the council budget.
The Local Government Commission has had a difficult job but it s essential that councils are small enough to relate to people's sense of community but large enough to deliver key services directly. In my view this can be achieved only by most-purpose unitary authorities across the country with annual elections so that the views of the electorate can be regularly heard. In that way we will have strong local government which is a precondition for a properly functioning modern democracy.
6.55 p.m.
Baroness Faithfull: My Lords, I, too, wish to thank the noble Lord, Lord Cornwallis, for introducing this debate. I wish to congratulate the noble Lord, Lord Kingsdown, on his splendid maiden speech. I join with the noble Lord, Lord Bancroft, in asking my noble friend the Minister why this commission was set up. I do not think any of us really know why it was set up and it would be helpful to know that. I hope that Sir John Banham will not take this amiss but I believe that it would be a good thing if he and his commission were quietly, gently and without fuss put to rest.
I wish to take up the point of the county councils such as Somerset, Cleveland and Humberside and consider why it is thought that they should be done away with and small district unitary authorities set up. I believe that that would be a retrograde step. For instance, under the proposed system instead of having one director of
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social services in an area there would need to be four and that would be expensive. The various different authorities, particularly in the realm of social services, have to set up costly projects run by highly skilled people for those vulnerable people who are in need of help. That would mean that no one, small, unitary district authority would be able to afford such provision. All the various authorities would have to co-ordinate with one another to decide which one of them would set up various different projects. I believe that that process would be expensive and would lead to a lot of time being spent in co-ordinating committees as between the four authorities.
I believe that no one has referred to my next point. I am quite sure that it would be turned down hurriedly. If the Banham commission is quietly put to rest, what will happen? I speak now as someone who has been a local government chief officer for 18 years and who has served in both the Ministry of Health and the Home Office. I believe that the time has come for a Royal Commission to be set up to look into not only local government itself but all the local government services such as the fire service, the police, magistrates and the courts. At the moment those services overlap. If one is a chief officer, one must often get in touch with several health authorities, for example, rather than just one and one sometimes has to get in touch with several police forces rather than just one. I believe we need to set up a Royal Commission to consider the whole of local government— not just local government itself but all the other services that are provided on a local basis.
If such a Royal Commission were to be set up, it should also consider the relationship between central and local government. Many of us are saddened by the fact that local government has been greatly diminished in past years. That is not a natural state of affairs. It is natural for local people to want to be involved with their local government. I suggest that such a commission should be set up to look at the total picture of local government with all its ancillary services and also the relationship between central and local government and the way in which financial arrangements are made. I know that that suggestion will not be accepted, but I put it to the House.
6.59 p.m.
Lord Cobbold: My Lords, perhaps I may begin by congratulating the noble Lord, Lord Kingsdown, on his maiden speech and on leading the Men of Kent today. I am the first person from Hertfordshire to speak in the debate, but the noble Lord, Lord Brocket, will speak shortly.
I live in the village of Knebworth, but if I am asked by a stranger where I come from I would normally answer that I come from Hertfordshire. I believe that that is a fairly common reaction. Except for those who live in large cities, loyalties to counties are strong—and not merely for cricketers. There is no such loyalty or affinity with districts.
As my noble kinsman Lord Lytton pointed out, the problems and needs of towns and rural areas differ and different solutions are appropriate for local government at each level and in each environment. Diversity at that

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level seems to be wholly desirable. But the interests of both rural and town communities come together at the strategic level, and the concept of tiered government is therefore both logical and human and not at all necessarily inefficient. The Government subscribe to the doctrine of subsidiarity at the European level and should, I believe, apply it also at the national and local level.
At the strategic level the counties have served us well and have a long and proud tradition. In Hertfordshire we are fortunate in having one of the most efficient and effective county councils in the country. It is most famous for its education department. The Hertfordshire County Council delivers 85 per cent. of all local authority services in the county. Its budget is £ 600 million a year compared with £ 10 million each for the districts and boroughs. Its administrative overheads are about 6 per cent. of its total budget compared with an average of 16 per cent. for the districts and boroughs. That is not, I suggest, a good advertisement for unitary authorities at the district level.
The prospect of splitting up those 85 per cent. of local services provided by the county between groupings of district councils is a nightmare of unnecessary cost, increased bureaucracy and reduced quality of service and reduced democracy.
Some of the less obvious services must not be forgotten. I should like to cite in particular the case of the voluntary bodies, many of which are organised on county lines. Those bodies are very anxious about the level and quality of service and support that they would receive from enlarged district councils. I should also like to cite the heritage services mentioned by the noble Lord, Lord Montagu, and in particular the library services and the county record offices. Those are all examples of services which could not easily be split.
Where there is an efficient service it is a great pity, as many noble Lords have said, to tamper with it. The counties are large enough to take a strategic view. They have long histories and can punch their weight at national and European level. Indeed, Hertfordshire has recently received special assistance from Brussels to support redundant aerospace employees.
At the district level rural areas are often disadvantaged by the changes which were made in the last reorganisation. My own former rural district council in Hertfordshire now includes three largish towns— Hitchin, Letchworth and Royston. To double its size into a new unitary authority would make it even more remote from the people, particularly those living in rural areas. It would also have no cultural identity, no geographical history and nothing to which people could feel attached.
Therefore, I urge the Government to respect the status quo in Hertfordshire. If a unitary authority has to come about, it should be based on the existing county council, with perhaps a strengthening of town and parish councils at the grass roots level.
7.4 p.m.
Lord Teviot: My Lords, this has been a very enjoyable and informative debate. I shall reserve my comments for two small areas and shall then draw some more general points which I believe must not be overlooked in the debate about the future of local government.
I shall begin by making some comments about archives, which have been mentioned by various noble Lords. This House recently considered the proposals for local government reform in Wales. My noble and learned friend the Lord Advocate acknowledged the deeply-felt anxieties about the proper future provision for the care of archives and undertook to draw the matter to the attention of the Secretary of State for Wales. In the event, the Government accepted the principle of an amendment moved in this House and are to introduce a similar amendment in the other place. I very much hope that the Secretary of State for the Environment will think it appropriate to make the same provision in relation to England.
Record offices are specialised institutions, most of which provide a direct public service at county level. Recently new highly technical and purpose-built record offices have been built in Chichester, Northampton, Nottingham and Winchester. There may be others.
It would not be an answer to suggest that record offices could somehow be linked to libraries or museums in order to save costs. The disciplines and the needs of the users are very different, as I can testify from considerable personal experience. I have also heard recently that one of the proposed unitary authorities wishes to grab its own archives for the area and is suggesting that the archives could be fitted into a room just off the library. That would be totally unacceptable.
In the East Sussex Record Office, which I know well, it has been calculated that over one-third in bulk of the archive holdings relates to the entire area of the present county and is physically, as well as morally, indivisible. Major groups of records relate to past systems of local government and to the local agencies of national government. They cannot be split up, any more than the unified records of the central government of this country could be split up in the event that some enlightened decentralising administration of the future were to decide to revert to the kingdoms of the old Anglo-Saxon heptarchy.
That is one example of what would be damaged or inadequately resourced if a series of unitary councils were to replace counties.
My involvement in the second of my case studies was in connection with strategic issues on transportation in Sussex. We pressed the case for improved road and rail links along the south coast in association with the coming of the Channel Tunnel. That was not only in the interests of the counties concerned but also in the regional and national interest because, if a significant proportion of tunnel traffic could be diverted on to east-west corridors to the south of the main links via London, that would relieve some of the capacity problems on those routes and thereby benefit London and regions north of the Thames. I am glad to say that

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a number of Government schemes either originated from that campaign or at least were brought forward because of it. The programme published today is a case in point.
That demonstrates the crucial point that one or two counties working together can take the wider strategic view necessary to make a case for testing proposed government action with enough weight to be heard. Equally important is the fact that those views are firmly founded in the local democratic process via elected county councillors rather than the regional offices which the Government are setting up.
The Council for the Protection of Rural England has backed the county scale of local government as the right scale of operation to strike the important balance between strategic thinking and over-parochial concerns. It says:
"Without the strong strategic planning functions carried out by the counties, the Government would be left with a huge gulf between the district councils and the Secretary of State, into which he will be dragged with increasing frequency to resolve controversial planning problems".
Rushing to set up the so-called unitary councils is no panacea, as the very proximity of major issues to the location of decision making is a real inhibitor of strategic thinking. I shall mention a well documented example. Just after the abolition of the Greater Manchester County Council the metropolitan districts—which I suppose we should call unitary districts for the purpose of this debate—were faced with a multiplicity of applications for a large out-of-town shopping development. All 10 districts in Greater Manchester agreed to commission a joint shopping study from a firm of consultants. Their report concluded that there was scope for one large centre in the area. But when it came to deciding where that centre should be, agreement broke down and districts fought each other at a public inquiry. Similar problems over waste disposal ended in deadlock, resolved finally by the Department of Environment which imposed a joint board on the area.
The message from those observations on my two practical examples is clear. We must ensure that local government has the right scale of operation to deal locally and democratically with its own dirty washing and with matters which require a larger scale perspective. It will therefore be no surprise for your Lordships to hear that I believe the High Court to have been absolutely correct in ensuring that the two-tier arrangement of local government must remain a serious contender in the review, possibly with some improvements. It represents the best way forward in most areas.
7.10 p.m.
Lord Alport: My Lords, over the past 20 or 30 years, each time we have set out to reform local government the ensuing legislation has contained two features: the first comprises measures to rectify the mistakes made as a result of the previous efforts at reform; and the second is to make a series of new errors of judgment which will require another spasm of legislation to put it right at a later date.
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There is no reason to suppose that the forthcoming results of the present local government review will be any different. The only hope is that the able judgment of Mr. Justice Jowitt will help to prevent too many anomalies arising from the effort at reform which is now being undertaken. There are two passages in that judgment which struck me particularly. He said that the commission was required to answer the question:
"Does the need to reflect the identities and interests of local communities and to secure effective and convenient local government make it appear to the Commission desirable to recommend a particular change in order to satisfy those needs or some or any of them".
Later he said:
"A very large area, such as most counties is unlikely to provide a suitable basis for a unitary authority because of the problem of remoteness".
That means that in making its recommendations the Local Government Commission should not be hound by some ideological Treasury prejudice in favour of unitary authorities but have regard to the importance of ensuring that each local authority is designed to meet the needs and character of the community which it administers, and, further, is as local as possible in the proper sense of that word.
My noble friend Lord Dixon-Smith, for many years a distinguished chairman of Essex County Council, and my noble friend Lady Platt of Writtle, a former vice-chairman, have given their opinions from the point of view of the county council.
It is natural that the views we give to your Lordships today should derive from our local knowledge of the communities in which we live. I am concerned with the Essex district councils, and the borough of Colchester in particular. Essex is a very large county. In 1991 it had a population of 1,500,000. As many noble Lords will know, it stretches from the edge of suburban outer London, into which part of the county was incorporated in 1974, to the estuaries and saltings of the East Anglian coast and north to the pleasant towns and villages on the Cambridge and Suffolk borders. Its different areas have little in common with each other.
There is today a strong majority among the 14 district councils that they wish to become unitary authorities and that those unitary authorities in Essex should number either eight or nine. That would not mean that the historic county of Essex would disappear from the map. The Essex county cricket team would still win the county championship— not with regularity, in some cases— and the lieutenancy would continue to exercise its historic functions. The archives would remain in Chelmsford at the Essex Record Office.
What it would mean is that local government in Essex would become truly local. For the services we receive, and in order to register any complaints we wish to make, we would look to one council and one councillor, not two. The demarcation between the responsibilities of county and district are not easy at present for ordinary people to understand.
The financial consequences of the change to unitary authorities in Essex would partly be met by the disposal of the redundant county assets and party by ongoing

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savings over the present system. But, most importantly, in the spirit of Mr. Justice Jowitt's judgment, local government in Essex would become really local.
I have been a non-playing member of the Colchester Corporation for nearly 30 years, serving with mayors and councils of all parties. I have the utmost confidence that if Colchester became a unitary authority with its present boundaries, it would provide for its 150,000 inhabitants an administration not only closer to the people but more responsive and efficient than the present dyarchy.
I am sure that the same would apply to the nine other districts of Essex which have voted to become unitary authorities. Perhaps then on this occasion—as distinct from the past—we would not need another reorganisation of local government in Essex for many years to come.
7.18 p.m.
Lord Brocket: My Lords, I believe that the principle of unitary authorities is based upon a mistaken idea of what most people want, and on the almost naive economic view that one organisation must be cheaper than two because of savings. That is not reality. It is not what happens.
I am from Hertfordshire, as the noble Lord, Lord Cobbold, said. We probably have the best record of any county in this country as regards the cost of the services that we provide. If the unitary scheme goes ahead, perhaps I may point out a few problems which will arise in Hertfordshire.
First, the estimated cost in Hertfordshire of carrying out the proposal would be £37 million. There would be even higher running costs. That is not the end of the story. The question which has not been answered is this. How will those costs be repaid? They will have to be repaid. The subject seems to have been brushed under the carpet.
A recent Ernst & Young report concluded that if more than two unitary authorities were set up, the cost would be greater than the present two-tier system in Hertfordshire.
As my noble friend Lord Cobbold said, there is no scheme in law to make the unitary authority responsible for supporting the voluntary sector. As each authority will be looking after its own patch, I do not believe that the voluntary sector would receive the proper support.
At present in Hertfordshire there is one councillor per 1,800 population. Under the unitary proposals there would be approximately one councillor per 4,000 population. The councillors would have a greater workload. If one talks to councillors, they have enough on their plates already— and they would have more. Community care would undoubtedly suffer.
At present, only 20 out of 500 schools in Hertfordshire have opted out. That is a vote of confidence for the local education authority in Hertfordshire.
Business Link, of which I am chairman, is the only one-stop shop south of Birmingham to receive DTI support. That would not have occurred under a unitary system.
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I believe that the consistency of enforcement of regulatory standards would be much in doubt. The present system has simplified the tendering at all levels. There is normally one contract at county level. However, under the unitary authority bidding companies would have to take contracts out with five or six different authorities. That adds to a difficult situation.
Lastly, people do not want such a system. I was completely amazed when I read some of the earlier MORI polls because the trick was in the question. The question asked, "Which would you prefer? One authority or two?" What a ridiculous question. The answer is, "One". However, if you ask the question, "Would you like one authority or two?—and here are the costs of changing to just one authority", indicating some of the pitfalls, one would receive a totally different answer. The question was unfair.
I am disappointed that the Government's attitude seems to smack slightly of "nanny knows best". I say that for two reasons: first, their brief to the commission I thought frankly was disgraceful— and that is almost not too strong a word. It is like saying: "We would like an unbiased report; but this is what you will say". Thankfully, the courts have addressed that. Secondly, there is the reaction that has taken place to the 10 recommendations which have already been made. The Government looked at half of them and sent them back to the umpire, saying basically: "These are insufficiently unitary". Teacher is saying that she does not like the answer in the exam paper because it does not suit her view of whatever the subject is. So she says, "Try again and then we will see whether the answer is right".
It must also be borne in mind that Hertfordshire is a big county, our population is 1 million. It is worth noting that our future is to be decided by a commission that is headed by a parish councillor from—and I have to get Kent in somewhere here!—Womenswold in Kent, which has the enormous population of 319. Curiously, I notice that he is assisted by Mr. Alan Dick. The commission does not fill our county council with great confidence.
It is clear in my mind that there are good cases for unitary authorities; the Isle of Wight is one, and some other conurbations should undoubtedly be unitary authorities. I fully see the sense of that, and perhaps we should reinstate a strategic authority for London so that we have a sensible strategy and direction on infrastructure and services. It might also get the West London Air Terminal sign removed from the Cromwell Road which has been there for a good few years.
In summary, I believe that people's general reaction should be a warning to Government that if they ignore common sense, reality and the will of the people, if they persist in blindly pursuing this dogma— and if we are honest, it is driven by the excesses of a few authorities — the minor result will be that the Government will pay dearly. However, the major and much more important result will be that local people will suffer in a serious way. I do not think that this is the time to experiment with people's lives.
7.22 p.m.
Baroness Williams of Crosby: My Lords, this seems to be a time when everyone declares their loyalties. First, I live on the borders of Hertfordshire and Cambridgeshire and it appears to be the Men of Kent and the men and women of Hertfordshire who are involved. I appreciate that. Secondly, both Cambridgeshire and Hertfordshire have made tremendous efforts over the past few years to consult widely. They are both democratic counties which have gone out of their way to ask the opinions of their citizens on a wide range of matters: transport, planning, education and much else. In many ways, they are excellent examples of just how good local government can be.
Before I start on the details of the debate, I have always been impressed since I joined this distinguished House that from time to time, regardless of party and local connections, the House of Lords finds a common voice. On this occasion and in this debate, out of 41 speakers, 36 have found that common voice and said that they do not believe that we want or need the widespread review of local government. Instead, noble Lords in all parts of the House have said that there may be a case in particular instances for change. I echo what the noble Lord, Lord Brocket, said about the possibility that some conurbations might well be unitary authorities. But, with almost no exceptions, noble Lords have made it plain that they do not believe that there should be an attempt to impose uniform unitary authorities in a widespread way on England and, for that matter, on those who would suffer from the imposition.
One other point before I turn to the detail relates to what the noble Lady, Lady Kinloss, said about the issue of consultation, which was echoed by the noble Lord, Lord Brocket. Consultation based upon carefully carpentered questions is not true consultation at all. The noble Lady said that the views of parish councillors—the people closest of all to local opinion—were given little shrift by the review committee. She also pointed out that there was little attempt to try to find out what was the opinion of local people. So one can say with regard to consultation that, first, we see emerging more and more clearly a mood of rejecting the proposals made so far.
The second point I wish to make concerns costs to which many noble Lords have already referred. It seems to me that a cost ranging between £1 billion (Sir John Banham's estimate) and as much as £1.5 billion (the estimate of the Association of County Councils) is an incredible figure for us to consider throwing away on local government reorganisation at a time when the country is crying out for such things as nursery schools, better transport and efforts to provide more training for our young people. It beggars imagination that we should consider it possible to spend such a sum for this essentially frivolous purpose.
The third point I wish to make is that the services that are most affected—and several noble Lords have already referred to this—are not likely in a single instance to be improved by the changes. The noble Baroness, Lady David, referred to the excellent record of some county councils. I make it plain that I differ
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considerably from the noble Lord, Lord Stoddart, and the noble Baroness, Lady Hollis, who has yet to speak, on the appropriate size for an education authority. However, I very much doubt whether it is as low as 125,000 people, which the noble Lord, Lord Stoddart, mentioned in the case of Reading. That is borne out by the fact that the Secondary Heads Association as well as the association of chief education officers plainly say that in their view it would be both inefficient and much less likely to produce a high quality of education if local authorities went down to a unitary level of 100,000 or 150,000. If one looks at the need for special education, special provision for gifted children, those with handicaps and learning difficulties, and children with language problems where the mother tongue is not English, it is ludicrous to try to destroy county councils which are endeavouring to raise the standards of education.
I turn briefly to community care and its relationship to the National Health Service. At the very moment when the National Health Service authorities are trying to draw themselves into a relationship of close harmony with the county councils, a change on this scale would put at risk the whole of the Government's own policies of care in the community. We have the evidence of the noble Baroness, Lady Faithfull, and others to that effect.
A third area was referred to by the noble Earl, Lord Swinton. I found it not only amazing but appalling that it should be possible to impose local government reorganisation without even consulting the people at the heart of the battle against crime: namely, chief constables and senior police officers. I could not help asking myself whether the great efforts made in this House to try to retain the local responsibility for policing in England were being lost at the back door, having been won through the front door. I wondered whether we were seeing the likelihood of the destruction of police authorities as a result of the work of the Local Government Commission.
Lastly, I turn to the issue raised by a number of noble Lords—the noble Lord, Lord Kingsdown, particularly, in a remarkable maiden speech, and the noble Viscount, Lord Tenby, and others—about the strategic role of regional and county authorities. I wish to make two points about that. First, we had an illustration in the House earlier today of a total failure to consider the strategic needs of counties. The Minister who kindly repeated the Statement on the roads programme was unable to say that there had been full consultation with those affected: namely, the county councils. I very much doubt whether it is right or proper to go ahead with major transport plans without full consultation with those most likely to be affected.
Secondly, as the noble Earl, Lord Winchilsea, and others said, the county council level and, in Europe, the regional level are increasingly becoming centres of the most exciting economic regeneration of all. I have just returned from a meeting at the OECD in Paris. That organisation is, of course, not the European Community, but the Organisation for Economic Co-operation and Development. A whole programme, the so-called local initiatives programme, has been mounted in order to help local government directly at

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regional level to regenerate local economies, to start all over again, especially with old industrial areas like the Pas de Calais and parts of Italy and Belgium and, for that matter, many parts of the United Kingdom.
It seems to me absolutely tragic that, at the moment when more and more structures of government, investment and financial assistance are moving to the regional level, we in Great Britain should be talking about moving in the opposite direction to a level of local government where the thought of strategic economic development may just as well simply go out of the window.
I had the impression that there was a very wide consensus of support in this House for the idea that we were not against all change but we believed that there was a test to be passed before change should be instituted. That test was the test of strong local opinion in favour of change. It is a basic talisman of democracy. It is what underlies the Motion that was read out by the noble Earl, Lord Winchilsea and, in an eloquent speech, emphasised by my noble friend Lady Hamwee.
I believe that the local government review body now faces something of a crisis of credibility. We know that there had been strong indications from the Government that its findings should be of a certain form, or, to put it bluntly, that its conclusions need not have too much relationship to the evidence that it had considered. The chairman of that review, Sir John Banham, is a public servant of high standing, great credibility and very considerable status in our society. I simply want him and members of the review body to consider very carefully whether their independent advice should not be weighed most carefully in the balance; and whether, when issues are referred back to them, as in the case of Gloucestershire, Durham and Derbyshire, when they have reached a conclusion which is then rejected by the Government, they ought not very seriously to consider their own position.
7.32 p.m.
Baroness Hollis of Heigham: My Lords, first, I thank the noble Lord, Lord Cornwallis, and Kent County Council for the wide-ranging, topical and fascinating debate that we have had today on the structure of local government. We much appreciated the wise and stylish maiden speech of the noble Lord, Lord Kingsdown.
Some noble Lords have argued that we should first determine what local government does, and only then decide what structures would best fit it. Functions and tasks come—for example, economic development; arts and tourism; conservation; and care in the community —and others go: for example, health; water; and further education. Functions come and go, but communities endure. That is why the 1972 reorganisation, as the noble Lord, Lord Cornwallis, accepted, has proved so disastrous. It fractured the connection between local communities and local government by imposing a two-tier structure across shire England which has warped services, diluted local accountability and undermined our sense of place.
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In 1972, some services—planning, leisure, arts and recreation, economic development—were made concurrent. They were to be carried out by both tiers. That caused the bureaucracy to double. It doubled the delay and gave rise to additional cost and much confusion. Other services which should be brought together were, however, splintered between districts and counties. Youth services were separated from community services, although they both operated out of the same community centre. Planning was separated from highways. Environmental health was separated from trading standards. And housing was separated from social services.
As a result of those changes, if a pork pie is mouldy and underweight, you take it first to the district environmental health services because it is mouldy; then you take it 25 miles across county to the trading officers at county hall because it is underweight. County trading officers are responsible for animals at the market, but district health officers are responsible for those same cattle as they come to the abattoir. As a highways authority, Wiltshire County Council was responsible for cutting the first three feet or so of the grass verges along its highways on grounds of road safety. Thamesdown District Council then cut the next six feet of grass on grounds of amenity.
Above all, housing was severed from social services. The elderly found that their bungalows were built and staffed by the district council, while their home helps and day care came from the county council. Those who are least able to cope with the problems of care in the community—namely, the elderly, the vulnerable and the handicapped—are precisely the people who are least able to cope with the splintered structures that we set up in 1972 to help them.
As the noble Lord, Lord Alport, so rightly wondered how can the ratepayer know who to turn to for help in a two-tier structure? How can ratepayers tell whether they are getting value for money? Whom do they hold to account if things go wrong? What do local government and local democracy mean if you do not know who does what, at what cost, to what standard and under what accountability?
We need unitary authorities. But we also need authorities to be as close to their communities as possible. The second wretched mistake of 1972 was the belief that "big is beautiful". Yet, from Redcliffe-Maud in 1972 to the Audit Commission today, there is no evidence at all, even in education—the noble Baroness, Lady Williams, notwithstanding—that bigger is either better or cheaper. Indeed, in counties which are 40 miles by 70 miles in size there are real diseconomies of scale. As a county councillor, I closed schools that I had not visited, put yellow lines on roads that I could not name and adjusted the tariffs for car parks that I did not use. And I called it local government. I might just as well have been sitting in Whitehall.
So much officer time is spent travelling and liaising that most counties wisely accepted that they were too large and county hall was too remote to deliver personal services. What did they do? They set up district local offices for education and social services, thus conceding the need to bring services down to district level—

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without, however, giving the districts any democratically elected accountability for them and leaving the public still further confused.
One consequence—as my noble friends Lord Stoddart of Swindon, Lord Jacques and Lord Bottomley said very eloquently—was that within such large county authorities the distinctive needs of the local communities got lost. Everything became homogenised. Historic cities, as I know, found that their services were levelled down. And as the noble Lord, Lord Cobbold, rightly said, rural communities did not gain the peripatetic services that they needed. Yet the countryside is not simply "thinned out town"; it is different. Towns are dense. They manage traffic. Rural communities are sparse. They need transport. After all, if communities were all alike, we would not need local government at all.
That is why the Local Government Act of 1992 that was passed by this House so rightly insisted that the new framework of local government should for the most part be unitary, and should be built on local communities. That reform of local government had the support of both Houses and all parties. As my noble friend Lady Gould said, the position of the Labour Party has been consistent and principled over some 15 years, through some five party conferences and several party manifestos. Indeed, the Labour team led by Mr. Blunkett in the other place pressed the Government to include the requirement for unitary authorities in the Bill. The Government must now bitterly regret rejecting that amendment since it would have obviated any High Court reviews.
We supported, and support, the Local Government Commission, although, as my noble friend Lady Gould said, we are critical of some of the ways in which the process has been handled. We have also pressed for the democratic agenda, annual elections, all-out elections to shadow authorities and enough councillors to do the job so that they may remain part-time and integrated into their local communities. We have also argued for no mechanical minimum size for the new authorities, something which the noble Lord, Lord Peyton, himself urged on the Government at Committee stage of the relevant Bill.
We also insisted that if this was to be a reorganisation that would survive, have staying power and take us into the next century, there must be no cherry picking and no political gerrymandering of boundaries. But we believed—at this point we departed from the views of the Government, as did the Liberal Benches—that elected regional authorities were essential. They were necessary not as a prerequisite but as being complementary to local government reform. They are essential for the strategic planning for which counties are now too small, as we enter a Europe of regions; to accompany devolution for Scotland and Wales; and, above all, to corral the quangos which now far outspend local government, thus democratising the regional government that we already have in this country. We on these Benches believe that regions, together with unitary districts, ate the way forward.
What then are the fears and arguments about such a structure of local government that have been expressed
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this evening? First, there is the damage that it is feared may be done to specialist services, such as museums and conservation bodies, mentioned by the noble Lords, Lord Teviot and Lord Montagu. That is not so. After 1996 the county borough towns, where reference libraries, museums and archives are sited, will be lead authorities, as many of them were before. 1972. Their archives, antiquities, artefacts and expertise will not be scattered but will be lovingly cherished. After all, the towns and cities, not the counties, led the way in so much of our conservation.
The second argument that we have heard, particularly from the noble Lord, Lord Aldington, and the noble Baroness, Lady Hamwee, is that districts are too small and will require so many joint authorities that accountability will be blurred. There are two points to make here. Norfolk County Council produced a fearsome list—I have it with me—of 107 such functions which would need joint arrangements. I studied that list. It includes items such as bridge design. One every seven years, would you say? What about aerial photography for museums? How many flights, do you think'? There is special education for travellers' children—all 30 of them. I doubt whether, on my calculation, those joint functions would represent 5 per cent. of the budget. The other 95 per cent., as the county council itself said—for schools and generic social services (which are not my words but the words of the county council)—can fully be provided by districts.
The second point about joint arrangements is that most of those 107 services, despite the speeches of noble Lords this evening, would not be run by joint committees. Those days have gone. Items such as music education would be bought from lead authorities. As the Audit Commission reminded us, buying a service from another authority is no different from buying it from a private provider, which is what compulsory competitive tendering requires all local authorities now to do. Let me quote from the Audit Commission itself:
"Accountability in the case of one authority purchasing a service from another need be no different from the authority purchasing the service from a private sector provider".
That is what we are now all under the obligation to do. Compare that with the blurring of accountability between two tiers. It would have been interesting if we had heard more of that. Over the past live years local government has become an enabling and contracting local government, well fitted to take on such responsibilities.
The third worry that has been addressed by noble Lords this evening is that of cost. It was mentioned by the noble Earl, Lord Lytton, and the noble Lords, Lord Bancroft and Lord Ashburton, among many others. Some of the literature that I have seen put out by some authorities when talking about cost moves from the merely fallacious to the downright mendacious. Most reputable estimates suggest that there will be about 14 million per county in one-off costs, offset by capital receipts of some £10 million and respectable revenue savings.
Let me again quote the Audit Commission—not me, nor the ADC, nor the district councils. The Audit Commission was required to comment on the financial

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implications of the first tranche options. Speaking about the Cleveland reorganisation it said that cost differences did not provide:
"a sufficiently robust basis for decision … The structure … which best fits community realities and creates the most favourable conditions for effective management is likely to perform best in terms of the three Es".
Quite so, my Lords.
The fourth argument that we have heard tonight is that we should have and respect a proper attachment to historic counties. Like all the other Lords Lieutenants and Deputy Lieutenants who have spoken tonight, I also, as a Deputy Lieutenant, share that view. One of my complaints is that only 12 of our administrative county councils now have boundaries that are coterminous with their historic county areas. I want to restore the historic identity of Yorkshire and, with the noble Lord, Lord Peyton, the old boundaries of Somerset. But that does not mean that they should be administrative units for local government as we go into the 21st century. Administrative county councils are now too large for personal services and, as the noble Earl, Lord Carnarvon, recognised, simply too small for strategic planning.
The next argument voiced by the noble Lord, Lord Ezra, and many noble Lords on the Liberal Benches is that there should be no change unless there is overwhelming local consensus for it. I know that we are all now experts on qualified majority voting, but I have to ask: what does that mean? Does it mean that five out of eight districts could press forward a review? Or, what happens if all the districts agree but the county council does not agree? Nor, given the strength of vested interests, can we cherry pick. Let us take Essex as an example. If we take out the cities and the former county boroughs in Essex pressing for unitary status, we are left with a two-tier county in which some of the districts, such as Tendring, would not even share a common boundary with any other district within the county jurisdiction.
The final argument tonight has been that instead we should go down the path of a modified change to the status quo. That argument was pressed by the noble Baroness, Lady Hamwee. Does that mean that we keep districts and county councils and—which I understand the Liberal Benches rightly support—parishes and community councils below them; and in addition, which we also support, a regional tier above them? Are we offering to the people of this county a four-tier structure of parishes, districts, counties and regions? If so, we shall be the most over-governed country in Europe.
In conclusion, the problems of local government and local government structure will not go away, precisely because they are inherent in the 1972 Act. Derail that commission and one merely elongates the confusion. This country needs a new settlement for local government, as the noble Lord, Lord Dixon-Smith, and the noble Baroness, Lady Faithfull, were absolutely right to say, so that communities may again define and meet their needs in a democratic and pluralist way. But for that to happen structures must matter. They determine our perceptions of what we can do. The policies that flow from that shape our sense of place, our
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community and our local commonwealth in which we first learned the meaning of citizenship and which so many of us went into local government to serve in the first place.
7.50 p.m.
The Earl of Arran: My Lords, this has been an extremely long debate, not devoid of considerable frankness and I am, as always, grateful to all those who have spoken and put their views so cogently and succinctly. While it has been a long debate, it is now the turn of the Government to speak equally frankly and equally honestly. I want to state very clearly our policy and the reasons for it and I should like to take up many of the points raised in your Lordships' House over the past five hours.
Much of the criticism made today clearly stems from a belief that there is no good reason for the Government to be reviewing local government at all. So what are we doing and why? A great chorus of questioning on that subject hit the roof of your Lordships' House. But let me quote from an announcement made in another place by Michael Heseltine on 21st March 1991, when he said:
"There is, therefore, now an opportunity to think afresh about the structure of local authorities. But the Government do not see this as an opportunity to impose a new pattern of local authorities according to a national prescription. Nor do we believe that it is necessary to have a uniform pattern of authorities in every part of the country. Local people should have an important role in determining what structure of local government best reflects their community loyalties. That does not mean, therefore, the wholesale abolition of either county councils or district councils, nor even unitary authorities everywhere. It means arriving at the right solution for each community. We intend to adopt a practical approach in response to local views and local conditions, but it seems likely that we shall move to a larger number of unitary authorities".—[Official Report, Commons, 21/3/91; col. 401.]
I can say to my noble friend Lady Faithfull that that is the nub; that is the kernel of that which we are attempting to do. The Government's position has not altered since then. We have not asked the commission to draw up a national blueprint for change—a point well recognised by my noble friend Lady Platt. The Government have consistently stated since that time that local government structure in the shire counties is for the commission to consider and that it is open to the commission to recommend status quo, two-tier or unitary authorities. Surely my noble friends Lord Blake and Lord Selborne agree that the Government's position must be clear by now.
The current structure of local government has existed for 20 years. It is not enshrined in ancient history. What is enshrined in ancient history is the division of England into counties, and we are not proposing to abolish counties. On the contrary, we intend to listen to local people's views on their loyalty to traditional counties and to see whether new structures can be more in tune with those loyalties—a point emphasised so eloquently in his maiden speech by the noble Lord, Lord Kingsdown.
Since the reorganisation in 1974 the role and nature of local government has changed. I can say to my noble friend Lord Willoughby de Broke that key changes have, we believe, strengthened rather than weakened local democracy; for example, the new emphasis on partnership with other local organisations—commented

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upon by the noble Baroness, Lady Gould—both the voluntary sector and the private sector, and the constructive results that can ensue which the noble Earl, Lord Carnarvon, mentioned.
The move from direct service provision to a role as enablers has freed local government from business management issues best left to practitioners and given them a clearer role in setting standards and monitoring performance. Those changes are profound and it is only common sense to reconsider local government structure in the light of them. If we were starting a local government system from scratch we would be asking searching questions about the appropriate size for strategic planning. transport and European issues. We would also be looking for a system which decentralised personal services. The need to look at those issues does not go away just because we are not starting from scratch. The existence of the current system is a crucial factor because the benefits of change will need to outweigh the costs of disruption. But that equation is precisely the one on which the Government is asking the Local Government Commission to make a judgment.
Despite the clear message that the Government are not looking to impose change everywhere, there is clearly a widespread feeling that in many areas of shire England it is unnecessary even to consider change to local government structure. We disagree. We believe the potential benefits of change are such that it would be wrong not to ask the Local Government Commission to look at them. What are those potential benefits and why do we need to consider them now? In headline terms they are better use of resources, more local involvement, improvement of services, a clearer focus for local interests and clearer accountability.
First, in relation to better use of resources, clearly if one can do a job with one layer of central support services rather than two, one will be able to concentrate more on the front line. Local government money will go further. Secondly, with regard to more local involvement in council activities, if people identify with their council they will be more interested in what it is doing. A key theme of reorganisation is getting the right area for a local authority—an area which "feels right" in terms of history, geography, working and travelling.
Then there is the improvement of services to consider. If all services are under one roof there is considerable scope for co-ordinating them from the consumer standpoint. We could bring together housing and social services issues so that the person who has needs which cross the two functions does not get shunted from one set of officials to another. We could co-ordinate development control and transport issues much better from the citizen's point of view.
Fourthly, with regard to providing a focus for local interests, again, getting the right council area which brings together interests naturally is the key to having credible local leadership. Finally, there is the need for clear accountability. People need to know who is responsible for what.. That makes the ballot box much more effective: when services are delivered well—or indeed if they are delivered badly—then the voters' message will be clearer if there can be no confusion as to which tier of local government was responsible.
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There has this evening been much anxiety expressed about costs. We expect local government reorganisation to be worthwhile and cost-effective over time. We are expecting substantial savings in the long term to follow from the commission's reviews, in spite of the doubts of the noble Lord, Lord Comwallis. Estimates of costs and savings for the changes agreed so far—Cleveland and the Isle of Wight —look good. Council taxes for 1994–95 in both areas include nothing for transitional costs. But of course there will need to be some investment to secure future savings. For example, in Cleveland the authorities estimate that £2 million on redundancies will secure savings of £1.5 million a year thereafter. No change would indeed mean no transitional costs; but it would also mean no long-term savings. The actual costs in any area will, of course, depend on the nature of reorganisation in the area and the incidence of costs between years.
We anticipate that, in general, savings from reorganisation in any area will meet a significant part of transitional costs. Capital receipts generated by the disposal of surplus assets will meet the remainder. There may, of course, be a mismatch in any year between costs and savings. We intend therefore to issue supplementary credit approvals, up to a limit, to allow authorities to borrow to meet transitional costs until sufficient savings and receipts are available.
I have already stated that the Government do not want a national blueprint. But there has nevertheless been speculation about the size and shape of new authorities. Let me state clearly the Government's position: there is no maximum or minimum size for an efficient enabling local authority. Having said that, we do not intend that there should be a host of small unitary authorities. Of course there might be some, because in some areas local history or population distribution or some other factor is likely to point in that direction. But if local government is to retain credibility in exercising strategic functions, then authorities must be of sufficient size to tackle strategic issues effectively without the need for statutory joint authorities which would undo many of the benefits of unitary authorities, a point I make to my noble friend Lord Dixon-Smith. Of course local authorities will not work in isolation, and in looking at options the commission will take full account of proposals for voluntary arrangements between authorities—not only to ensure the most effective approach to strategic functions but also to pool expertise and avoid the break up of centres of excellence.
Our message to local authorities has been to talk to other authorities in their area; to discuss individual services and overall local community patterns; to come up with several ideas that are imaginative; and not to fall back on the status quo just because it is the least upsetting. We have told local authorities that if their area has special features which mean that the benefits of retaining two tiers outweigh the benefits of unitary authorities, they should spell them out so that the commission can look at them.
I shall now spend a few minutes on the many points which noble Lords have raised this evening. I lost track of those who mentioned the county of Kent. Among them were my noble friend Lord Aldington, the noble

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Viscounts, Lord De L'Isle and Lord Monckton of Brenchley, and the noble Lord, Lord Thomson. After a time I began to feel rather sorry for those counties that were not mentioned in the debate this evening. As regards Kent, it would be wrong for me, as your Lordships would expect, to comment on a desirable local government structure for Kent while the Local Government Commission is conducting an independent review of the county. The important factors which your Lordships have referred to this evening—the county's vital links with Europe, the county's economic development needs, strategic and local planning, the appropriate number of councillors to serve the community and the historic loyalties of the men and women of Kent to the county—will all be looked at carefully by the commission in framing its recommendations.
Many speakers, including Lord Cornwallis, Lady Hamwee, Lord Kingsdown, Lady Platt, Lord Carnarvon, Lord Lytton, Lord Dixon-Smith, Lady Masham, Lord Montagu of Beaulieu and Lord Rochester brought up the subject of county-wide functions. Our advice on functions to the Local Government Commission is set out in our policy guidance. We have drawn the attention of the commission to the fact that strategic, regulatory and enforcement functions will often be promoting the welfare of the wider public. We have also said that special consideration should be given to the maintenance of teams of experts, such as child care workers, and specialist assets, such as archives. But we have also reminded the commission that one of the benefits of unitary authorities will be the greater scope for bringing related functions together and clearer accountability. Both of those benefits would be diluted by statutory joint authorities for specific functions other than the law and order services and fire. We are encouraging authorities to develop voluntary arrangements for dealing with functions. Statutory joint authorities would be very much a last resort.
The noble Lord, Lord Cornwallis, and many other noble Lords brought up the subject of costs. We do not accept the Association of County Councils' estimate of £1.1 billion. The Local Government Commission will assess the costs and benefits of its proposals case by case. The noble Baroness, Lady Hamwee, spoke on the need for regional offices. We do not accept the need for another layer of bureaucracy. We believe that voluntary arrangements do work and do not weaken accountability. Accountability in voluntary arrangements remains clearly with each individual directly elected local authority.
The noble Lord, Lord Thomson, spoke on Kent and Europe. I very much appreciate the work done by Kent County Council to secure European funds. I appreciate, too, the key position of Kent in relation to Europe. But there is no reason why the authorities would not co-operate to achieve equally good results. I make the same point to my noble friend Lord Cavendish of Furness.
I entirely agree with my noble friend Lady Platt on the need for co-operation between authorities and the
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need to minimise uncertainty by keeping up the momentum of the review. However, up comes the noble Earl, Lord Carnarvon, to disagree. He said that there was no need to be hasty and to rush too much. The noble Earl, Lord Lytton, referred to the costs model. But the model was developed especially for local government spending and has since been adapted by the Local Government Commission itself. It includes provision for specific local items as well as the general model.
My noble friend Lord Aldington commented on the statement of my right honourable friend the Foreign Secretary. I have to point out that my right honourable friend was speaking about Oxford as a local Member of Parliament, and not about the review generally.
Lord Aldington: My Lords, he might still have been speaking the truth.
The Earl of Arran: My Lords, I have pointed out to my noble friend precisely what happened there.
The noble Baroness, Lady David, referred to education and special needs. We are still considering with the Department for Education and local authorities implementation details. There will be a mixture of local authority and joint arrangements. We hope and expect authorities to co-operate.
The noble Baroness, Lady Masham, commented on the North Yorkshire proposal. We are very conscious of the noble Baroness's concerns. We received a substantial number of representations on this set of recommendations from the commission. We cannot comment, but my right honourable friend the Secretary of State is still considering the commission's report.
The noble Lord, Lord Rodgers, and my noble friend Lord Crathorne spoke about Cleveland. As they know, my right honourable friend has announced his decision on Cleveland—the abolition of the county and the establishment of four unitary districts. Implementation must await the outcome of the judicial review.
The noble and gallant Lord, Lord Craig, made an important point about the need to maintain the relationship between the services and local authorities. I can tell him that the commission takes that into account in its consideration. If it will reassure the noble and gallant Lord, I shall reinforce that position by passing on his comments to Sir John Banham.
My noble friend Lord Swinton and the noble Baroness, Lady Williams, brought up the subject of future police and fire services. The police authorities must be consulted by the commission. It is statutorily required to do that in its draft proposals.
The noble Lord, Lord Bancroft, referred to a patchwork of unitary authorities. We regard this as a strength rather than a weakness of a process which is intended to produce structures which meet local circumstances and local needs.
I am certain that there are many other points which I have not addressed.
Lord Peyton of Yeovil: My Lords, my noble friend is making an interesting and quite lengthy speech but he is giving the impression that he has not digested during the whole of the afternoon and evening the message of

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profound anxiety which many of us wish to communicate to him and which we would now ask him to communicate to his colleagues.
The Earl of Arran: My Lords, of course I understand precisely what my noble friend is saying about the message which has been conveyed by your Lordships this afternoon from, I believe it is reasonable to say, all sides of your Lordships' House. My noble friend can certainly have the assurance that I will pass on his comments and those of other noble Lords to my right honourable friend as soon as I can. I close by saying that it is important to appreciate and understand that, as the Government, we are firmly committed to structures which meet local needs. Our aim remains to give local people a structure of local government which meets their needs and wishes and one that can use its resources with good sense and sound reason.
Baroness Masham of Ilton: My Lords, before the noble Earl sits down, perhaps I may say to him that it is a great pity that he cannot give any more assurance to local people living in North Yorkshire because nothing could be less local than a West Riding, which has now been named "The Banana Republic", which goes down as far as Hull.
The Earl of Arran: My Lords, perhaps I may respond to the noble Baroness by writing to her on that point. She will realise that every consideration has been taken into account.
8.11 p.m.
Lord Cornwallis: My Lords, I congratulate my noble friend Lord Kingsdown—I have great difficulty in getting his name right—on his maiden speech. It was very kind of him to support me on this occasion. I also congratulate the noble Baroness, Lady Williams, on her summing up, with which I agree in almost every word. I believe that she set the scene perfectly and has saved me from attempting to do any such thing. I thank her very much indeed.
I was totally mystified by the speech of the noble Baroness, Lady Hollis. I do not see that there is any difference between a two-tier government with regional authority or a two-tier government with county authority. They both seem to me to be two-tier government. If we are going to play a part in Europe —which we seem to be endlessly and constantly reminded is our prime duty these days—I cannot believe that the regions in Europe, or for that matter the European Commission, are going to mess about dealing with the unitary authorities which will be set up under this scheme. It is simply pie in the sky and I believe that pie to be half-baked into the bargain.
If one asks someone to look for change, change will be provided. That is what they have been asked to do, and that is an absolute certainty. I do not believe that any speaker in the debate today has said that no change is necessary. If they have, then I have not heard them. They have all said that there may be circumstances and places where there should be change. So why cannot we let those people who believe that there is cause for change make their representations to the commission
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and leave the rest of us who do not want change alone? I do not see why we cannot have an opt-in as opposed to the current situation.
I hope that the Government are not going to carry this matter through on the basis of support from a preview of the Labour manifesto which we have heard of this evening. Until then we had had a debate in which no politics had arisen. I thought that this was a great expression of local people putting forward their views about local problems and trying to convince the Government that their concern was real and that this should be looked at carefully again.
I am afraid that the noble Earl's speech was a good deal of governmentspeak and not too much of what we were perhaps hoping to hear from him. If he and the Government will not listen to the noble Lords who have supported me today, perhaps they might listen to the noble Lord, Lord Bancroft, who was a permanent secretary at the Department of the Environment. If nothing else, let us look at what I said at the end of my opening speech. We have a good foundation for local government. Please let us look at building on that. Let us have change where change is necessary, but not change for change's sake.
If there is one thing that we have achieved today which is positive, it is that we have managed to produce unanimity in the House of Swinton. I again thank all those who have taken part in this debate and who have contributed so splendidly. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

State Hospitals (Scotland) Bill [H.L.]
8.16 p.m.
The Marquess of Huntly: My Lords, I beg to move that this Bill be now read a second time.
I must first apologise to the House that I was not able to move the First Reading of this Bill. I am grateful to my noble friend Lord Lyell for doing that on my behalf.
The Bill brings all powers for the provision, control and management of state hospitals in Scotland in to the National Health Service (Scotland) Act 1978 and will enable the Secretary of State for Scotland to set up a special health board under Section 2 of that Act to provide for the care and treatment of patients within such hospitals.
Granting special health board status will, I assure your Lordships, be welcomed by the general public, the Carstairs staff and the wider National Health Service as the final step in fulfilling the Government's long-standing commitment to do all they can to change lingering perceptions of the State Hospital, Carstairs, as an extension of the prison system and instead complete the conditions in which it can come to be properly regarded as a health facility.
At present the provisions for the control and management of the State Hospital are set out in the Mental Health (Scotland) Act 1984, whereas the Secretary of State's power to constitute health boards is set up under the National Health Service (Scotland) Act 1978. As there is no statutory link between the two

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pieces of legislation, this Bill is intended to bridge that gap and create the conditions in which the Secretary of State for Scotland can apply special health board status to Carstairs hospital.
The National Health Service and Community Care Act 1990 created powers within the 1978 Act for the Secretary of State for Scotland to create and transfer functions to special health boards. Quite properly, of course, only those functions that are set out within the 1978 Act can be transferred. In order to transfer the full range of provisions attaching to the state hospital service to the special health board that is to be created, it is necessary to transfer the legislative provisions covering the control and management of the State Hospital, Carstairs, from the Mental Health (Scotland) Act 1984 to the 1978 Act.
Your Lordships may be interested in some background to the state hospital service in Scotland. The State Hospital at Carstairs is a secure hospital which is administered for the Secretary of State for Scotland by an appointed management committee. Carstairs is the only state hospital in Scotland. It serves as a special hospital and regional secure unit for Scotland and Northern Ireland. The hospital cares for an average of 220 or so patients who are admitted under requirements of the Mental Health (Scotland) Act 1984 and related legislation, including in particular the Criminal Procedure (Scotland) Act 1975, because of their dangerous, violent or criminal propensities.
The hospital treats patients admitted suffering from a range of mental disorders. The staff expertise is held in high regard by all who make use of the hospital's services. They are expert in dealing with potentially dangerous people suffering from mental disorders or indeed patients who have proved themselves very difficult to manage elsewhere in the National Health Service. The facilities at the hospital are designed to allow people to be cared for in secure conditions and to minimise the potential danger to themselves, to staff and, of course, most importantly, to the general public. Like all hospitals in the National Health Service, at Carstairs the patients' needs must come first.
The patients fall into two categories: the Secretary of State patients—that is, those admitted from the courts under a restriction order and who may be discharged only with the approval of the Secretary of State for Scotland—and the non-Secretary of State patients—that is, those admitted either from the courts but without a restriction order or as ordinary detained hospital patients, usually on transfer from National Health Service hospitals, who may be discharged or transferred with the agreement of the Carstairs management committee. There are also patients in both categories who are transferred from prison for treatment at Carstairs.
I have already mentioned that the granting of special health board status will fulfil a long-standing commitment and your Lordships will be interested to know that over the past three years all other available steps have been taken towards the creation of health board status for Carstairs. For example, the State Hospital management committee has been restructured
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along health board lines. Her Majesty's Treasury has agreed to the approach made that from 1st April 1992 the hospital should no longer have its own Vote but should be part of the main Health Service Vote and be subject to the same financial regimes as apply for all other health boards in Scotland. Also, the State Hospital has developed its own strategic objectives and is subject to he same accountability review process as the other health boards in Scotland.
Much progress has therefore been made. For instance, I can give two tangible examples of the significant change and improvements made so far at Carstairs in response to the initiative to transform the state hospital service from its custodial and punitive past into a hospital where the emphasis is properly on care therapy and rehabilitation.
More recently, in fact in February this year, the British Standards Institution awarded the hospital its British Standard BS5750 certificate in recognition of the commitment to quality at Carstairs. The State Hospital, Carstairs, was the first National Health Service hospital in the UK to achieve certification by the British Standards Institution for its entire operation, which is no small achievement and an indication of the progress made by the staff for the benefit of patients and their relatives.
As I have explained, this Bill brings all the Secretary of State's powers for the provision, control and management of state hospitals in Scotland into the National Health Service (Scotland) Act 1978. This is a technical Bill, running to just three clauses. Clause 1 re-enacts in an extended form Section 102 of the National Health Service (Scotland) Act 1978 to include the provisions dealing with the control and management of state hospitals in Scotland currently provided in the Mental Health (Scotland) Act 1984. Clause 2 deals with consequential amendments and repeals. Clause 3 gives the powers to make an order which will commence the provisions of the Bill. The Bill has no financial effects, no effect on public sector manpower and no compliance cost implications for business. I commend the Bill to the House.
Moved, That the Bill be now read a second time. —(The Marquess of Huntly.)
8.23 p.m.
Lord Carmichael of Kelvingrove: My Lords, we should be grateful to the noble Marquess, Lord Huntly, for introducing the Bill and explaining it so thoroughly. I am grateful also to the Minister of State at the Scottish Office for sending me an explanation of it. We have been waiting for such a Bill for a long time and for the changes that it will introduce.
I know Carstairs reasonably well. Like the noble and learned Lord, Lord Fraser of Carmyllie, I was a constituency Member of Parliament in the area for quite a long time and have visited Carstairs once or twice. I agree with the noble Marquess, Lord Huntly; whenever I visited the staff were extremely attentive. I do not think that that was a show; I think that they were really concerned and interested. Therefore, if we can do anything to take away the old stigma from that hospital, we shall have done a very good job.

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I should like to make another point to the Minister in the hope that at some point in the future something can be done about it. I know that there must be a certain amount of security in any institution—prison or hospital —of the nature that Carstairs will become. However, as a member of the Penal Affairs Group in the other place and as a chairman of SACRO for some time, I have visited nearly all the prisons in Scotland and I must tell the Minister that what got me about Carstairs was its fencing. I found it offensive. I know that such things can be expensive to change, but if the opportunity arises, I hope that the Minister will seriously consider it. It must be very depressing for relatives to see that double fencing. I imagine that they would rather see a wall.
Having said that, however, I am delighted that this short Bill has been introduced. I hope that we can proceed with its remaining stages quickly so that the Bill will reach the statute book soon.
8.26 p.m.
Baroness Carnegy of Lour: My Lords, I did not put down my name to speak on this Second Reading because I was not sure that I would be present in the House when the Bill was introduced. However, I should like briefly to congratulate my noble friend on introducing the Bill and on the clear way in which he has moved the Second Reading.
Anyone who has been an honorary sheriff in Scotland knows the importance of having the right sort of secure state hospital in our midst. Anyone who follows, as I am sure noble Lords do with interest, the advancing state of medicine and who has an understanding of mental illness will realise how important it is that the status of such hospitals should be seen somewhat differently than has been the case in the past. I believe that the Bill will bring about a change in public perception which will be extremely helpful, above all, to the patients, as well as to the staff and the patients' relatives. That is an important part of my noble friend's purpose. I congratulate him and hope that the House will give the Bill a fair wind.
8.27 p.m.
The Minister of State, Scottish Office (Lord Fraser of Carrnyllie): My Lords, I join the congratulations that have been extended to my noble friend Lord Huntly on the way in which he has simply but eloquently explained the desirability of the Bill that he has just introduced. I am delighted that the noble Lord, Lord Carmichael of Kelvingrove, and my noble friend Lady Carnegy of Lour should have joined in the approval of the Bill.
When introducing the Bill, my noble friend described it as "technical". In some respects he is correct, but he should not underestimate its importance to those who work at Carstairs in what are difficult circumstances from time to time. I have no doubt that it will be a great encouragement to them that my noble friend has introduced this Bill and that every indication has been that your Lordships' House supports it. As my noble friend said, the hospital recently secured the BS5750
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certificate. That is very important. I have no doubt that the great improvements that have been made there in recent years will enable that progress to continue.
A further matter of encouragement to the staff and all those who are interested in this matter is that, while my noble friend has introduced the Bill in this House because it is non-controversial and essentially non-political in nature, I understand that the Member of Parliament for Clydesdale, Mr. Jimmy Hood, whose constituency contains Carstairs, is now prepared to take the Bill through the other place if it secures the approval of your Lordships. I have no doubt that that combination will be of further encouragement to the staff.
The only problem raised in this short debate was one mentioned by the noble Lord, Lord Carmichael, with regard to the fencing. Difficult security issues have to be dealt with, not least so far as concerns the local community. I have no doubt that he will be interested to know that, while at present the State Hospital, rather curiously, is located on both sides of a public road, the proposal is that in the near future the site on one side of the road should be abandoned and the hospital should be contained on a single site. I have no doubt that that will not just make security better but in many respects what is in place will look less oppressive to those who work within the hospital and to the local community. It is a great encouragement that the Bill so clearly commands the support of your Lordships. I, too, commend the Bill to the House.
The Marquess of Huntly: My Lords, am most grateful for the support that I have received this evening. I am pleased that I have been able to be involved in bringing forward the Bill. I commend it to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Road Traffic Regulatiion (Special Events) Bill
8.31 p.m.
Lord Brabazon of Tara: My Lords, I beg to move that this Bill be now read a second time.
I am very pleased to have been asked by my honourable friend the Member for Hexham, Mr. Peter Atkinson, to take this Bill to your Lordships' House. That will mean, I think, that I shall have taken at least one transport-related Bill through the House every Session since 1986. I do not know whether that is some kind of record. The Bill fulfils a need to clarify the law in respect of road closures and traffic regulation for large sporting and social events and entertainments on the highway. The effect of the Bill is to confer new powers on traffic authorities to make orders imposing temporary restrictions or prohibitions on traffic to allow large events to take place on closed roads and also to regulate traffic on surrounding roads to minimise the consequent inconvenience and disruption to road users.
I shall describe the Bill's provisions briefly. Clause 1 will have effect by inserting three sections into the Road Traffic Regulation Act 1984. Section 16A permits traffic authorities by order to make the type of

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restrictions which are available elsewhere in the Act when, for example, road repairs are required; that is, road closures, making streets one way, parking suspensions, speed limit restrictions and so on. However, it does not allow any closures which would prevent pedestrian access to premises. Section 16B limits the duration of an order to a maximum of three consecutive days and their frequency to not more than once in any calendar year unless allowed by the Secretary of State. Section 16C makes it an offence to contravene an order. The penalty is level 3 on the standard scale (currently £1,000). That section also empowers the Secretary of State to make regulations covering the procedure for making orders, including the giving of notice and consideration of representations. Clause 2 is the standard expenses clause, necessary because of the different incidence of expenditure under the new powers. Finally, Clause 3 and the schedule make consequential amendments and give the short title and extent of the Bill (England, Wales and Scotland but not Northern Ireland).
In the absence of any provision to the contrary, the Bill will come into effect immediately upon Royal Assent. Notes on clauses are available. They give a fuller description than the one I have given should any noble Lord be interested in looking further into the matter.
The Bill is necessary to safeguard the visit of the Tour de France Cycle Race in the summer, two stages of which are to be held in England on 6th and 7th July in Kent and East Sussex and in Hampshire respectively. However, the Bill also fulfils a long-felt need for adequate powers to be conferred on traffic authorities to regulate traffic in connection with major spectator events held on public roads such as the London Marathon, the Great North Run and the Lewes Bonfire Party. It will of course be of benefit to tourism. I have no doubt that my noble friend Lord Mountevans will wish to say something on that subject.
Although highways are used primarily to get from place to place, there are long-standing rights to use highways for pleasure, and many sporting and social events have been regularly taking place on the highway and giving considerable pleasure to large sections of the population for many years. However, the powers available to the police and to local authorities to restrict and regulate traffic are now considered to be inadequate for the extensive traffic management measures that need to be taken to minimise the danger and inconvenience that would otherwise result at these well attended events.
The existing powers that have been used to close roads for events on the highway date, for the most part, from the last century when, for better or worse, motor vehicles and the associated volumes of traffic legislation had not yet appeared. Limited powers are to be found in provisions such as Section 21 of the Town Police Clauses Act 1847 and Section 52 of the Metropolitan Police Act 1839. Those provisions give the police general powers to direct the route to be taken by
"Carts, carriages horses and persons … in times of public processions, public rejoicing or illuminations".
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Those powers will continue to be available to deal with the traffic aspects of many public events held on the highway. However, at the time when those powers were created no one could have foreseen the degree of personal mobility that the motor car now provides, enabling huge numbers of spectators to attend some of the more popular events, and creating the need for widespread traffic management measures, not only on the roads on which the event is taking place but also on surrounding roads. The Bill, if passed, will permit traffic authorities to put such traffic management measures in place as are necessary to minimise the disruption and inconvenience that would otherwise be caused.
I believe, and I am sure your Lordships will agree, that it is most important that we ensure that large public events which traditionally take place on the highway are allowed to continue. The Bill will reinforce the right to use the highway for pleasure and will safeguard the future of those popular events requiring road closures which by their very popularity attract such large crowds that special traffic regulation is required on associated roads.
I wish to reassure the House that the Bill does not permit gratuitous closures of roads, nor permit roads to be closed for undesirable purposes. The use of the powers in the Bill to permit motor racing events on public roads is specifically ruled out for the very good reason that that would encourage imitative behaviour by more easily influenced drivers when a road is reopened. Sadly, that was borne out by the experience of last year's Isle of Man TT Race, when over the fortnight 10 motorcyclists were killed out of competition on reopened public roads. The Bill will also not permit roads to be closed for any cycling race or motoring event which has not been duly authorised.
Another brake on the use of these powers is in the frequency of their use, limited as they are to a maximum of three days per calendar year for any particular stretch of road without the consent of the Secretary of State. I also understand that if the Bill is passed the Department of Transport will make regulations requiring traffic authorities to consult widely and with good notice on any proposals to use those powers so that full account may be taken of any representations made by those who will be most affected.
In conclusion, I ask the House to support the Bill, which will allow local authorities, after due consultation and consideration of representations, to take such measures as they consider necessary to ensure that these large-scale events continue to take place safely and with the minimum of inconvenience for all.
Moved, That the Bill be now read a second time—(Lord Brabazon of Tara.)
8.38 p.m.
Lord Mountevans: My Lords, I am delighted to be able to speak in support of the Bill so ably introduced by my noble friend, and—dare I say it?—long-time transport sparring partner, Lord Brabazon of Tara. While I can think of reasons for supporting the Bill which would take me 20 minutes to say, I shall focus on just three. I shall concentrate first on the fact that the Bill is a mainland-wide Bill, and I shall return to that point;

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secondly, on the fact that it is an enabling Bill rather than a Bill that forbids and complicates; and, lastly, on the fact that it will have an enormous impact on tourism.
The nationwide element is important because the Bill does away with the need for a number of individual and specific Bills which might crop up in the future.
My noble friend reminded us that road motor racing is specifically excluded. However, some noble Lords will recall that, when the City of Birmingham wished to promote on-highway motor racing, it was put to considerable difficulty when it sought to get an individual and specific enabling Act through Parliament. One has in mind events such as the Monaco Grand Prix or the Le Mans 24-hour race. They are conducted legally and with decency.
Henceforth, such individual Bills for specific events will be unnecessary; this Bill makes them so. Those who wish to promote events of a major scale—for instance, the Tour de France or elements of it—will have the opportunity to fall back on the powers which they will enjoy in the Road Traffic Regulations (Special Events) Act 1994.
I turn to the enabling element of the Bill; the positive element. So much of the legislation that we discuss is needed in order to restrict public or private conduct. On the other hand, this Bill simplifies the regulation of major —perhaps I may say "international"—events. Not only is that good administration, it is also a matter of enabling events to take place which will bring enormous pleasure to many, whether they be present in person or derive their pleasure via the media.
Finally, I welcome the Bill on the grounds of tourism —and here I must declare an interest. The events which the Title describes as special will surely contribute to the growth of domestic and foreign tourism within or to the United Kingdom. Tourism can be looked on as our fastest growing industry or, potentially, as our biggest employer. That is already the case in Scotland. But beyond the employment position is a balance of payments "plus" of great importance. Special events of the kind that we are discussing will encourage our fellow citizens to stay at home. By doing so they will not add to the imports side of the balance of payments ledger.
At the same time, events of this nature—for instance, the visit to Southern England of the Tour de France—will in the short term give rise to considerable foreign visitor traffic. But, in the longer term, such an event will generate exceptional media coverage. It is positive coverage which reaches millions of enthusiasts and many more millions of potential visitors in a way which the tourism industry—be it the government-supported tourist industry such as the British authority or the commercial sector—could never hope to finance. The Bill before us may be short and specific but its potential impact is, in the promotional sense, enormous and general. It deserves our wholehearted support and I am delighted to offer that.
8.43 p. m.
Lord Carmichael of Kelvingrove: My Lords, we are grateful to noble Lords who have spoken. The noble Lord, Lord Brabazon of Tara, explained the Bill in a
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more succinct way than it was explained in another place. He should realise that there is a difference between this House and another place. First, the Bill was introduced on a Friday, when Members take their last chance of the week to make a speech involving their constituency. Naturally, they send a copy to the local paper and they had probably had representations from constituents. Also, the second debate on that day was about women in Parliament. There are still many male chauvinists in the other place and I should riot have been surprised if they had tried to delay the Bill
Perhaps I may illustrate the way in which the Bill was treated in the other place. I calculate that the Second Reading took 57 columns in Hansard. A week later the Committee stage amendments, Third Reading and Report stages were conducted in less than one-third of a column. No one spoke and the Bill was passed. That indicates the feeling in the other place, leaving aside the relaxation of Friday debates. It was, nevertheless, a. serious issue.
I was worried about the possibility of local objections, a point raised in the other place. The noble Lord, Lord Brabazon, made it clear there will be consultation with local authorities and local people. I am delighted that the Tour de France is coming to this country. I saw it once in Paris, when the whole of France stopped. The excitement that it generated was the same as that which used to occur at the Oval and Lords. I do not think that the people there are now so enthusiastic. The race was a wonderful spectacle and I hope that it will be a fitting addition to the celebrations that we shall have for the opening of the Channel Tunnel.
It is interesting to note that certain events rely on legislation that is perhaps 100 years old. Only when a big event such as this comes along is it realised that the law has to be changed. Therefore, the Bill provides two benefits. The first is that it allows the Tour de France to come to this country. The second is that it makes our law more flexible in handling other such events. We are grateful for the experience of the noble Lord, Lord Mountevans. Wearing his tourism hat, he said that he too believes that the Bill will help to create a spectacle that will attract tourists to this country. I am grateful for the opportunity to speak in support of the Bill.
8.47 p.m.
Viscount Goschen: My Lords, I am grateful to my noble friend Lord Brabazon of Tara for introducing the Bill in such a clear and succinct manner. 'The Government fully support the Bill.
The powers to close roads and to regulate traffic for sporting and cultural events on the highway are outdated or obscure. I am pleased that this Bill will ensure that the visit of the Tour de France goes ahead in July and will safeguard the future of many more traditional events in this country. As has been mentioned, there is a long-standing right in this country to use the highway for pleasure. That is the case, which is enshrined even in the most recent Highways Act. However, when considering a Bill of this kind, it is most important to ensure that a balance is kept between those who wish to use the highways for events such as those mentioned and those who wish to use them to go about their

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ordinary daily business other than for recreation. Therefore, while the sporting and cultural events which attract a large number of spectators should continue to take place, there should be certain controls on the use of the powers in order to ensure that they are not abused or used gratuitously.
If the Bill is passed, regulations will be made to cover the procedures to be followed when making traffic regulation orders under these powers. The regulations will be concerned in particular with public consultation before orders are made. That is a key issue in maintaining the good will of local people in the areas where sporting events are to take place. It is they who may be caused inconvenience. It is important that the people who will be most affected by road closures receive good notice of the intentions of the traffic authorities. For that reason, a period of notice of up to 12 weeks would perhaps be appropriate.
It can be seen from the face of the Bill that at no time can pedestrian access to premises be suspended by a traffic regulation order. The traffic authorities must consider representations, including whether an event even needs to take place on the highway in the first place. When authorities have satisfied themselves that it should, they must consider the safety and convenience of alternative routes. Of course, the Bill does not permit any road to be closed for more than three days in any calendar year without the consent of the Secretary of State. All that is a considerable improvement upon the present situation where such powers that do exist do not require anything like the same level of consultation and consideration before a road is closed.
The Bill is a wholly appropriate measure. It balances the rights of those who wish to participate in or watch great events from time to time and those who must use the highway for more traditional purposes on a day to day basis. If it is passed, it will safeguard events on the highway for the future and it will also help to make them safer both for participants and for spectators.
8.51 p.m.
Lord Brabazon of Tara: My Lords, I am grateful for the all-round support that the Bill has received from my noble friend Lord Mountevans, the noble Lord, Lord Carmichael, and indeed the Minister. My noble friend Lord Mountevans concentrated in particular on the impact on tourism which this Bill could have and the coming to this country of the Tour de France in July —or as it will be known in France, the Tour en Angleterre.
That is the largest sporting event in the world in terms of spectators with an estimated media coverage of some 1 billion people—if one can believe that. We expect also that it will attract a considerable number of spectators over its two days in England. That may exceed 1 million people. That is a major opportunity for international publicity for the United Kingdom and will be a boost to tourism which the local authorities strongly support. It will come within a few weeks of the official opening of the Channel Tunnel and the cyclists
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will travel through the Channel Tunnel (although not on their bicycles but on the train) in order to take part in the event.
The noble Lord, Lord Carmichael, has read, as I have, the Second Reading debate in another place which took place on 4th February. I found it an extremely amusing debate. It is not often that one laughs out loud when reading a debate; but, as the noble Lord said, that may possibly have had something to do with the business that was to follow on that Friday morning. However, I commend that debate to your Lordships. The noble Lord mentioned also the need for local consultation. The Minister covered that point extremely clearly when he described the regulations which the Secretary of State is minded to produce in that regard.
Once again, I am grateful for the reception which the Bill has received, and I commend it to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Export Promotion
8.53 p.m.
Viscount Waverley Viscount Waverley rose to ask Her Majesty's Government what are their current policies and activities in the field of export promotion, and whether they could be made more effective.
The noble Viscount said: My Lords, because of the late hour, I hope that I shall be excused for motoring through my delivery.
Every responsible government must seek to develop sound strategies in the field of export promotion. Exports will lead to economic growth and bring stability and prosperity to the nation. We must continue to identify and explore avenues to improve trade performance both in traditional and new markets. In this House we must play our part in assisting UK business to achieve sustained increases. This Question serves to draw attention to the need for continual discussion on such matters and frequent assessments of the Government's role and performance in this area.
A primary responsibility of government is to create the right macro-economic conditions at home to allow our companies to be competitive abroad. Essential objectives must be to maintain low inflation and low interest rates combined with stable competitive exchange rates. Her Majesty's Government must also establish and sustain friendly relations with countries important to the trade programme, and continue to influence trading partners in areas such as tariffs and standards.
Sound in-depth market knowledge is important. I can inform your Lordships that the Institute of Export has been instrumental in proposing a preliminary study of support services for small and medium enterprises, commonly referred to as SME's. An evaluation of six European countries in phase 1 of its report has been approved. That is encouraging, although I believe that phase 2 would be of equal interest, when countries of the Pacific Rim and Latin America are expected to be included. Much can be learnt from export-driven

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success stories such as Japan and Brazil. We need to instil the same sense of urgency into our exporters, with early recognition of opportunities and quick responses.
Advice for domestic and export issues will be channelled through the Business Link operation, of which there are expected to be 200 offices in place over the next three years. It will serve as a sign-posting operation to specialist advisers, either in the Chamber of Commerce movement or elsewhere. One must be allowed to query the efficacy of this: Business Links presently displays little knowledge of the export arena, whereas the DTI is a veritable storehouse of vital information. Indeed, I commend the Minister on the recent addition of 60 officers to the complement of DTI officials in market branches. That ensures that there are enough staff to allow for at least one dedicated desk officer for each of the UK's top 80 export markets.
It may be that the Minister is able to assure us of plans for close liaison and co-ordination between the DTI and Business Links to consolidate expertise. A period of some confusion while that programme is in its transitional stage would be detrimental to credibility and future viability. Is Business Links to succeed DTI regional offices? There then follows the question of guaranteed funding for Business Links after the three year set-up period. I ask the Minister to address this tonight, as many are concerned about this point.
A principal conduit of the Government's policies is the 70. of a proposed complement of 100, so-called export promoters. Their purpose is to liaise between UK and overseas companies, identifying projects and markets, and advising business people on local conditions and requirements. They can assist in determining the viability of schemes, and the reliability of partners. Using local knowledge and experience, coupled with multinational company training, they help exporters and investors to make a success of their endeavours.
Initial reaction to the scheme has been cool in some quarters, possibly as a result of not being well marketed. I believe that it is making a valid contribution. The job description is open-ended, allowing development of the export promoters' own ideas, and they are able to point out weaknesses in the system, bridging gaps between office-bound civil-servants and the world outside.
Perhaps the Minister would tell us something of the number of enterprises visited, and outline some successes that can be attributed to the effectiveness of the export promoters. It would also be useful to be apprised of the future prospects of this scheme. Most are on two-year assignments, some shorter, with others due for renewal shortly.
The Overseas Projects Board has formed groups to match specific major overseas project opportunities with their respective UK commercial sectors. Would the Minister share some of the success stories under this scheme, and tell us something of the strategies designed to increase those successes? Are there sufficient promoters covering such key markets as Latin America and the Pacific Rim?
Exporters must be encouraged to work more closely together, even bidding jointly for large projects, if UK Plc is to take the lead, ahead of France and Japan, in
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establishing conditions for companies to bid competitively for, and win, large international contracts. To illustrate: North West Water and Thames Water lost a large contract in Buenos Aires to Générale des Eaux of France after competition between them led to neither arranging export finance in time.
That highlights the Minister of Trade's point, that:
"a single bid will improve the UK's chances of securing major business, on the selection of one company, or one group of companies, putting forward the most effective national bid, when several companies are competing for a particular project."
I had been concerned that there was no single point of contact and co-ordination for all the initiatives. I am therefore delighted to learn that a director general of export promotion has now been appointed. I understand his job will be to co-ordinate all the overseas trade services export initiatives and to ensure that the resources devoted to exporting are utilised to full effect. Will he be working closely with the Whitehall export promotion committee? If so, this should promote the integration of departments in Whitehall and the co-ordination of the export promotion programme. Co-ordination would also be enhanced by granting responsibility at Cabinet level for all export promotion activities in all relevant Ministries to the President of the Board of Trade.
It is essential that the drive is well informed and supported by the Foreign Office. Emphasis must be away from consular services—now possible with future joint operations with our European partners—and towards trade development. With the transition to a single market and the opportunities that present themselves to British companies as a result of the completion of the last GATT round, our missions in worldwide capitals must lend themselves to the drive to increase British exports in world markets.
I hope the House will allow me to comment on a recent fact finding visit I made to the Directorate General for Trade and Investment in Dusseldorf. I was favourably struck by the quality of senior civil servants working there to maximise British exports to Germany. They operate in a highly professional manner with dedication and in-depth knowledge of their market. We should recognise those attributes. I would encourage any exporter to draw upon those resources, and similar offices located in such diverse economic centres as New York and Milan. Budgets should be utilised to increase the coverage by commercial staff, in bare-bones operations, in less-obvious target areas around the world than at present.
Locally employed personnel are an excellent alternative to complement transient British commercial officers; they are cost effective and give continuity and local knowledge. Leipzig is an example of a new-look lean operation, and the prognosis is good. The importance of inward investment must not be forgotten, and our commercial staff in posts around the world must always encourage companies to base their European manufacturing bases in the UK. Some 40 per cent. of the total Japanese investment into the European Union comes to our shores. We should become fully aware of the reasons for this and capitalise upon them.
The old Export Intelligence Service is now distributed by Prelink. It is a service that relies

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essentially on the publication of quality and timely export leads. The information is collated from 200 posts worldwide, at the average rate per post of one new inquiry daily. This is indeed a valuable system in theory, but there still continues to be criticism, which is not aimed at Prelink directly, but at the quality of information emanating from the posts.
Information must be sent more expeditiously, and be complete in content. Application of the inquiry, more detailed specifications and information on the potential client would offer valuable additional assistance to our exporters. This service needs improvement and monitoring. There is a lack of resources to obtain intelligence information. Part of a mandatory national registration fee could be used to invest in more detailed coverage of overseas markets. If there were linkage between the coding procedures of Prelink and registered exporters, tremendous potential could be developed and exploited. Is current information, for example, circulated gratis to all exporter promoters?
There are many advantages of a registration scheme. UK businesses need to be well prepared for the opportunities which come about from an active export programme. British exporters are at a disadvantage in being unable to have their international marketing efforts supplemented by a system of dealing with sourcing inquiries which targets potential suppliers accurately and quickly. This is a well known criticism, and we are losing considerable market opportunities. Voluntary schemes have failed and leave UK commerce and industry at a disadvantage. In a modern and competitive economy we must provide a solution to incomplete business information.
At the same time both trade associations and the Chambers of Commerce movement are in need of a major overhaul. Proposals for the Association of British Chambers of Commerce to set performance standards are to be actively encouraged. If it has been assigned an important part to play in the new Business Link strategy, it is imperative that it be positively vetted and standards maintained.
I turn now to the subject of credit guarantee insurance. Ability to qualify, its availability and cost, are causing concern. To what extent are low-risk countries subsidising those that are high risk, thereby ensuring more comprehensive worldwide coverage?
British firms are losing millions of pounds of potential export business because their European competitors are securing more attractive terms. Options to help smaller exporters to protect their business must be examined and developed, either on a loan guarantee basis, or by offering greater access to managed credit insurance, or a mixture of grants and loans. The Government would doubtless wish to discount the theory that they do considerably less than other governments in this area. Is the amount of ECGD support available for the next three years going to be sufficient to meet increased demand as a result of the export drive? Additional amounts must be increased by the Treasury as exports multiply.
Is it the case that the majority of ECGD support is focused on the top 10 per cent. of companies which
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produce 60 per cent. of British exports? If so, what support are the medium-sized exporters receiving? I shall illustrate that point. A signed contract for £900,000 to Pakistan was unable to receive ECGD cover because the line was fully utilised owing to a pending large contract that was due shortly.
A Written Answer addressed to me stated:
"a new three year rolling strategy to provide for high exposure markets, enabling industry to plan ahead, has been detailed. £2 billion of extra cover is also to be made available, with an additional £1.4 billion of reinsurance cover for exports on short term credit".
Nevertheless, I fear that there is a gap in the export initiative here, and growth will be restricted unless these problems are anticipated and addressed.
Trade missions are an invaluable method by which companies can travel in like-minded groups and have doors opened which may otherwise be hard to achieve alone. Trade missions and trade fair support should be targeted to those most in need in the small and medium enterprises sector. It is said there are too many visits too close together; moreover, the DTI now announces the programme of trade missions at six monthly intervals, instead of an annual programme. That could cause problems for the larger chambers in forward planning. In the interest of information sharing and target marketing, mandatory debriefing after such trips should be obligatory.
A DTI initiative to focus on the importance of language skills to the exporters would offer additional benefits on those trade missions. The British are not widely recognised as great linguists and so often fail to gain real understanding of other cultures which would offer a business edge. In tandem with expressing the need for greater proficiency in languages, Her Majesty's Government must further, whenever possible, the global spread of the English language.
In a list of the top 20 of the world's largest trade fair sites the UK appears once only, offering a mere 125,000 square metres. That compares with Germany's huge 1.7 million square metres. No one would deny the benefit of permanent sites to display to the world the best of British. What we are lacking is the necessary space in easily accessible locations. I suggest to your Lordships that if the Commonwealth Institute loses its struggle for survival and funding is withdrawn after 1996, consideration might be given to transforming that building into a permanent exhibition centre for avant garde British products.
Our aid policy should, for the greater part, be designed to encourage trade. An exception is humanitarian aid. Information about bilateral and multilateral aid finance procurement opportunities must be circulated to UK companies with as much advance notice as possible. Competitive UK companies should be the beneficiaries of those contracts.
I mentioned this evening the recent matter of the trade difficulties with Malaysia only to urge all the parties to spare no effort in reaching an early amicable solution.
The media obviously have a tremendous role to play in this export drive. Circulation could be boosted by

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reporting the many success stories of British industry overseas and instilling a sense of pride about our achievements.
To summarise, the DTI's export promotion services generally appear to be highly valued, and I believe that there is all-party support. The Government must convince the country, however, that the measures are a carefully constructed programme designed for the long haul and should identify for clarity the precise sections of industry targeted. A clear goal would be more pro-active marketing of the services to non-users. Not enough companies are aware of those services or how to access them.
There may be merit in a sessional Select Committee being organised, with reasonably broad terms of reference targeted directly towards the export arena. I realise that that might impinge on the Select Committee on Trade and Industry in another place, but in line with the President of the Board of Trade's desire to separate export promotion from trade policy, considerable benefits could derive from a regular interrogation of export initiatives and the airing of the concerns of our exporters and allied services.
I ask the noble Lord, Lord Strathclyde, to share his thoughts on that and the other points raised this evening.
9.10 p.m.
The Earl of Limerick: My Lords, 26 years ago—from the very Bench from which the noble Viscount, Lord Waverley, opened this debate—I made my maiden speech, on the subject of invisible exports. We should be grateful for the lead that the noble Viscount has given in this discussion. He has approached the subject in a comprehensive and analytical manner which will lead to useful conclusions being drawn and useful lines being followed.
Since that day I retained some connection with the export world. For two years I was in the DTI, having responsibility among other things for the ECGD. I spent four years as chairman of the British Overseas Trade Board followed by seven years as chairman of British Invisibles. For the past 10 years I have been president of the Institute of Export.
That gives me a problem because with that background it would be assumed that one would know all the answers; but I am quite conscious that I do not. Between times I was working on the other side of the fence as a client of those services, generally seeking finance for projects overseas.
It might be interesting to look in retrospect at what has changed over those years. In the 1960s and early 1970s without doubt Britain was at the forefront of development of techniques for export support, witness the formulation of the buyer credit guarantee backed by ECGD. I had a part in negotiating the first contract financed by that means, which was for an oil pipeline in Algeria. If my memory, is correct, the sum involved was £7 million, which seemed mind-bogglingly large in those days. A very good job was done by the department, working closely with the clients, in developing those new techniques.
Sadly, there has been a change. That change occurred when the world fell into economic decline in the 1970s.
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ECGD had operated independently because as an agency it commanded its own reserves—about £60 million at the peak, which again seemed a lot of money. But shortly thereafter came the problems—not in millions, tens of millions but in hundreds of millions of pounds—of the bad and doubtful debts; and the Export Credit Guarantee Department fell into the thrall of the Treasury.
The story continued in that way until about two years ago when privatisation became the watchword. Developments have taken place which on the whole have been constructive although in some sense such developments have yet to bed down and show that they are fully competitive compared with what other countries are able to offer.
Meanwhile, as one would expect, the system was regularly reviewed. I refer to the Duncan review, the Berrill review (which, happily, was not much implemented), and the increasing role of the FCO. The process started with the unification of the Foreign Office, the Commonwealth Office, and the old Trade Commission service, with the recognition that part of the career path of a foreign servant was. to become expert in and adept at trade promotion. Nowadays ambassadors who wish to discuss their roles as they move to new posts tend to say, "I am there primarily to promote trade. If not, I don't quite know why I am going". Most have had some previous commercial experience; and that is a welcome message. Therefore we have witnessed a raising in the standard of service that we receive from our representatives overseas. That should immediately be acknowledged.
There has, too, been a steady development in the other services available to exporters. The noble Lord, Lord Ezra, and I have sat together on a trade board. He will remember the discussions year by year about the development of the Fairs and Promotions Service, the export intelligence service, and so on.
The noble Viscount, Lord Waverley, dealt with the EIS and its successor Prelink, and made some valid comments. The numbers have changed; hut in the days that I remember the EIS had about 7,000 subscribers. That seemed a devisively low number compared with the number of companies known to be engaged in exporting. The cards that were sent out at that time cost about 35p including first class postage. They now go by more rapid means. The hit rate for export orders—I do not refer simply to inquiries—was one in 10. Why would anyone not use a service which was at the front end, collecting information overseas, bringing it to one's desk and saying, "There is someone out there who says that he wants to buy what you say you want to sell"? If one bought 10 cards, one had an export order for £3.50. That would not get you to your local town to see your bank manager.
Why was that service not used more? The noble Viscount referred to criticisms. They were of a distressingly familiar kind. I suspect that they have not changed. People said, "This service is not relevant. It gives us material that we do not want". There was never more than one answer to that criticism. It was this. "If you receive information that you do not want, that is your fault. You define your own profile. You get what

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you ask for and pay for. So first look at what you have profiled yourself to need and see if the difficulty lies there".
It was also said that the information came too late. That is a perpetual difficulty. Commercial officers in posts overseas, sadly, have become thinner on the ground as cuts have bitten into the service. They cannot be up and about all the time. They are often supported by first class, locally employed people—a breed whose merits are substantially underestimated but who can, under the right conditions, provide an invaluable, upfront, eyes-and-ears service.
I endorse the noble Viscount's comments about classification. If that can be sharpened, the complaint about information not being relevant might be expected to fall away.
I wish to touch on some current issues which affect the exporting community. The first is the use of the aid and trade provision. In markets such as China currently, that can be the key to vast opportunities. I very much hope that such provision will not be downplayed, still less written off, as a result of the spotlight that has recently fallen on Pergau. The use of aid funds in properly defined conditions, alongside trade credit in countries which have needs and which can be seen to be needful of such extra assistance, is not only respectable but highly desirable.
Equally, I hope that the arms to Iraq fiasco will not inhibit the thought process whereby the Government plan to assist exports; or alternatively plan to assist exporters. The two are not always the same.
It is clearly difficult to devise regimes that cater, at one end of the spectrum, for the first time SMEs who are looking to venture overseas and at the other end for the companies engaged in vast project bids which are undertaken by the likes of GEC, Rolls-Royce and Balfour Beatty. I therefore echo the need for selectivity in bid support and add to that a plea that there should be enhanced team work—it is pretty good, but there is always room for it to be improved —between the specialists concerned in the FCO, the Overseas Project Board, the Projects and Export Policy Division of the DTI, ECGD, ODA and others.
It is a recurring theme that our overseas competitors receive more of that kind of assistance than we do. The focus shifts from time to time, frequently it is on the French. Evidence of that is hard to come by; attempts have been made and I was party to one a couple of years ago when from the guild of world traders we financed a thesis by two PhD students on the subject of the level playing field. They came up with some helpful insights which we shared with the departments concerned.
The question is not only the one suggested by the noble Viscount, Lord Waverley, on whether an export insurer should subsidise bad risks with the premiums from good risks, but it also goes beyond that, it is the subsidy implicit when credit insurers write what in commercial terms would be uninsurable risks. That has been done by all exporting nations to a degree at some time. It is our belief which can be well substantiated that we do less of that now than others. One can see that in comparing the premiums quoted, for example, to British
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companies bidding in South Africa with the premiums quoted for identical finance to our French competitors. In that case, it was four or five to one in favour of the French, and not just a matter of a few per cent. A differential of that kind will destroy any prospect of profit on an overseas contract bid, other things being equal.
The noble Viscount was right when he said that we should look at the issues on the basis that we will do what is reasonably required in line with what other countries are doing. It is well and fine to take the moral high ground and say that we are doing the right thing; others will come and join us. It is well and fine, but not so good if you stand there proclaiming the purity of your policy and starve because no one has joined you.
Of the issues currently on the agenda for discussion, it is worth commenting that the services now provided by the DTI export promotion team are highly valued by existing users. Those who are engaged in them are seen as both proactive and productive, and we are fortunate in having a trade Minister —Richard Needham—who sees that clearly and is very responsive.
We need to try all the time to market the services more effectively to non-users, to get more companies into the exporting frame of mind. We should like to see the progress of the current strategic plan left unimpeded by too much influence from outside. The DTI has been putting this together with an overarching strategy embracing about 80 sub-plans. That is against the background that there is a large number of departments of Government which have an interest in exporting. I need only mention health; defence; MAFF; environment; education; and many agencies —up to 15 by some accounts—which are in one way or another engaged in this same exercise. It is tempting to ask: why do we not do as the Japanese do; namely, put all those areas together in a ministry of international trade? That would be one answer. It has never been thought to be the British answer. We have to do the best that we can by getting a high level of co-operation, and, it should also be said, a level of non-overlap and non-interference. It is quite confusing when there are Ministers from many departments going around commissioning their own studies. One hopes that the mechanism of co-ordination will be improved.
I hope that the DTI will be encouraged to continue with the process of seeking inward secondments for experienced people and developing professional career structures for its own staff.
I have one final word, on the subject of resources. Ever since I can remember, available resources for export promotion purposes have declined in real terms. The officials in government departments and in the agencies that work alongside them are in the main dedicated, hard-working people. They are supported by literally hundreds of businessmen who give up their time, in the area advisory groups, for example, which support the British Overseas Trade Board, in chambers of commerce around the country, in the Institute of Exports and in all sorts of other ways. That is a vast and under-appreciated asset. It needs a modicum of resources to enable it to do its job. The quest for

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economy has gone rather too far. There is a strong case to be made for restoring a small incremental value to the budget that is available to assist those efforts.
9.27 p.m.
Lord Sefton of Garston: My Lords, the House should be very grateful to the noble Viscount for introducing this subject. When I say "the House" I hope that all noble Lords who are absent will read his speech with great care. One thing is absolutely certain. Despite the poor attendance and the lateness of the hour, the subject that we are discussing is considerably more important than the one that was debated for five hours this afternoon. Upon this kind of debate depends whether or not we have a local government in this country. I extend my thanks to the noble Viscount. But I would not dream of moving down the same path. I am neither capable nor experienced enough to deal in that field. I am very content to leave it to him. When I was asked to take part in this debate I thought that that would be the situation.
That does not mean that as a layman I do not appreciate the importance of exports. I am quite sure that there is no disagreement on either side of this House as to the importance of manufactured goods being made in such a way that they can be exported to the rest of the world and help us to earn our living. That is a simple statement. It is a statement of social and economic fact that everybody should continue to emphasis. We are moving into a very serious situation.
I do not want to talk about those kinds of exports at all tonight. I should like to concentrate on other exports. Some of them were not very welcome among the exports from this country. I refer particularly to the machine tools and the various methods of production that were snapped up in sales when the manufacturing industry in this country was being run down for one reason or another and they were moved to the Pacific Rim. The same machine tools were being used with cheap labour. And now where are we? The goods produced by those machine tools are in some cases coming back to this country.
In discussing the economy with the noble Lord, Lord Wade, in this House, I mentioned that in the place where I lived at least 15 major factories had been producing goods for over 40 years. I do not talk about it being in my lifetime because I am getting too old to talk about lifetimes, but in a short time all except one of them had completely gone. That one factory was the Bryant and May's match factory. So there was still one factory, but now that too has gone. If noble Lords want matches, they will have to buy foreign made goods. They cannot buy any matches made in Britain because no matches are being made here. That is a bad situation.
That story ties in with what has happened recently with regard to BMW and Rover. I thought that the partnership which developed between Honda and Rover was an excellent relationship. For their part the Japanese were committing themselves to a long-term presence in England. The Government rightly boasted about it. The Japanese thought of it as an entry into Europe. It was in their interest to develop that long-term relationship. But, as I said in my maiden speech in this House in 1978
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—it was a long time ago and we were discussing devolution—when people spoke about the devolution of power in this country they were laughed at. The same happened when they spoke about devolution of power to Scotland or Wales or even to parliamentary government in Westminster because real power rested in the hands of those who ran industry.
At that time I pointed out that there was a very real danger that power which had moved down from the North to the South would move from the South East of England and might even jump the Channel and go to the north coast of France. People said that I was only a layman who knew nothing about the matter. In a subsequent speech, when debating the Budget, I said that we should not kid ourselves that the financial centre of London was as secure as one might think. In that same week the Financial Times opened an office in Frankfurt. That newspaper knew what was happening.
In 1979 I forecast that there was a very great danger that because of the chaos that existed in London at the time, we could well frighten away the financial world. Nobody believed me. But is not that happening? Is it not true that there is a danger to the financial centre in London and that Frankfurt may take over its functions?
I come back to my point about BMW. I do not know whether the Government knew what was happening with BMW and Rover. I never had any doubt about it. I was always of the opinion that as soon as British Aerospace could do so, it would sell off Rover in order to put money into its coffers. The company would say that it was done in order to develop a new model. It would say that it was done for the core business. I say, as the noble Lord will no doubt expect me to say, that it was done to put money in the company's pockets. Certainly it was not out of any consideration for the national interest. If one were to chose between BMW owning Rover and Honda owning Rover, there would he no doubt about that.
There is another matter that we ought to reflect upon. We should ask ourselves whether or not the permanence of the motor industry is as secure as we think or whether, because of the phenomenal success of Nissan —I acknowledge that the Government engineered it—which has now become our largest exporter of cars to Europe, there may well be a cut-back in the car industry.
As a driver of a Rover arid someone who refuses to drive any other car—cars like most of those I see in the car park of this venerable place—I know that BMW can compete with Rover. If there was a cut back, I know where it would be. It would not be in Britain; it would be in Germany. The company is only interested in Europe. Japan would not do that because it uses its stake here in order to get into Europe. That is a problem that needs to be considered.
I asked the Department of Trade and Industry what action it intended to take to ensure that the companies which manufacture the 125 executive aircraft—they are manufactured in Broughton near Chester, not far from Liverpool, a place close to my heart—Rolls Royce and Rover Cars, remain in British control. I received a reply from the noble Baroness, Lady Denton, and what a wonderful answer it was. She said,

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"The Government take the view that in general it is the company itself which is best placed to decide on changes in ownership or control".—[Official Report, 19/5/92; col. 549.]
Some may say that that is free enterprise and no doubt the Minister would say that too—"Leave it to them, they know how to sell those things". I questioned the Minister again on the same day, at col. 550, and asked whether it was right that,
"the Government intend to do nothing at all to prevent these firms going into foreign ownership".
I received a very blistering reply, once again at col. 550, from the noble Baroness, Lady Denton, who said,
"we are very anxious indeed about the position of industry in this country. The resource which allows our industry to continue and for new models to be developed will be focused on with fierce concentration".
I want to know whether the Government are still concentrating so fiercely on the question of BMW. There now seems to be a rift developing. In the Financial Times today it said that BMW is to enter into an agreement with Honda. The chairman of BMW is saying, "We will obtain an agreement with Honda to satisfy the employees of Rover and BMW". He does not say what Honda says about that. My guess is that it will not enter into an agreement; it will set up in competition for the same type of car. If it does, we shall be in real trouble.
I have watched factories move from the North West to the South East in a continuous steady stream. The last one will leave Garston, my birthplace—it was a match works—next month. I have seen them move to the South East where all the power is. I have warned that they will go further to where the real "golden triangle" is; that is, somewhere around Brussels.
Now the Channel Tunnel is coming. At least, it has arrived at the north coast of France; it has not yet come here because we are still hesitating about whether or not to provide a link to London. We are told that there will not be a link to Liverpool, where there is a potential capacity for 2 million passengers. We are told clearly that the Government have said there will be no link to Liverpool. The Merseyside transport network deals with 2 million people. If anybody there wants to take a train to the continent, they must go from Preston or Manchester—they must go from somewhere other than Liverpool.
That indicates that it will be much easier for people to travel by the fast railway system in the South East of England. That perturbed me, so I asked another question. I had just seen a television programme which seemed to have all the information. I asked if somebody could tell me how many factories and distribution centres were moving from Britain to the north coast of France. It is fairly cheap in that area, where many grants are available, and the French Government went in well before the tunnel was being built in order to develop it.
I asked the DTI. When I received its reply I wondered what the devil the DTI was doing over there, apart from moving from one side of Victoria to another side of Victoria and spending more than £1.5 million in doing so. I am told that it is going to spend another £1.5 million moving back to the other side. The offices will
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be refurbished by the owners —a land company—and the DTI will occupy them again. In fact, the DTI is going to spend about £85 million.
I often wonder what the DTI does because I can get the information from other sources, and evidently television companies can get the information from other sources. So again I ask the question. Perhaps the Minister will tell us tonight—he has had warning of my question—how many British factories are moving to the north coast of France; and, more importantly, how many continental factories are coming to the South East of England.
The reply I received to my question stated, "There is no central register kept in Europe so we cannot answer the question". That reply came from what was hailed as the Department for Enterprise. It was hailed as such by our friend Heseltine, who was supposed to have cured Liverpool. All he has left in the place of the Tate & Lyle sugar company is the Tate Gallery; and, my God, when I see some of the things in it, he should have kept it down here. This is the Department for Enterprise. We cannot even get a proper answer to a simple question like that. Does the answer mean that no central register is kept and that the department cannot find out how many companies have come into Kent? That seems to be the case.
I do not want to go on too long because that would be unfair.
Noble Lords: Hear, hear!
Lord Sefton of Garston: My Lords, noble Lords say "Hear, hear", but I want to get home myself. I conclude on this note. We have had a bit of fun but there are more serious issues still facing us. It is only recently that we debated the question of high electricity prices with regard to ICI. There is a real threat that if ICI cannot be provided with prices competitive with those charged to other producers, the company will be in serious trouble. I should like to know what contact the DTI has had with ICI to discuss the problem since it was discussed in your Lordships' House. I do not believe there has been any discussion. Next month ICI will be joining the rest of the chemical industries in Europe to discuss research and the pooling of resources. It could well be that, with France being much nearer the centre of the European market than Great Britain and its companies having access to cheap electricity, ICI makes a move. It is no use coming along afterwards, as in the case of BMW, and saying that we did have talks. I want to know whether or not those talks are taking place now and whether the Government are prepared to give to ICI the same kind of benefits it would receive from foreign governments.
I could ask questions on other subjects but I think it would be a waste of time. I have asked several questions of the DTI and never received an answer. I shall put down some more for Written Answer so I do not delay other people who want to go home. I conclude by saying that the lack of information coming out of the DTI suggests to me that it is not looking long term and that it is suffering the British disease of short-termism.

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Unless it livens up and does something there will be more and more losses from this country to the rest of Europe and perhaps to the rest of the world.
9.44 p.m.
Lord Wade of Chorlton: My Lords, I thank the noble Viscount, Lord Waverley, for raising this issue and allowing us to debate it this evening. It is always a great pleasure for me, as I often seem to do, to follow the noble Lord, Lord Sefton, who, as he has already mentioned, comes from the same part of the world as I do. Although our concerns about the North West are the same, our solutions are slightly different.
I should like to say to him that he raised a very important point by drawing our attention to the fact that what this is all about is competition. This country relies wholeheartedly and foremost on its ability to export and to create wealth from those exports. We have to do that in such a way that we are competitive with the rest of the world. So we have to look very carefully at our ability to produce efficiently and effectively.
I say to the noble Lord opposite—I have great affection for him because, like me, he stands for the North West—that some of the issues he raised about the change in the industrial aspect of Liverpool have to do with the fact that the companies were not competitive. Many of them were started and developed through the use of government money, but they were never efficient in world terms. The demise of many of those companies draws our attention to the fact that, if we are to have effective exports of products throughout the world, we must produce them in the most efficient way. I do not believe that the loss of those major companies is the problem or is anything like as serious as the noble Lord believes. I say that for this reason: looking at the North West alone, as those companies have failed many others have come in their place.
I intend to speak on two issues. As regards exports; one is technology and the other is food. As regards technology, I am involved with the North West Technology Centre, which is responsible for the export of technology from the North West. With the great support of the DTI—which I found enormously supportive of anything to do with this area—we have recently developed Eurotech North West. That organisation is designed to market the technology from small companies throughout Europe and the rest of the world. We had the launch meeting in Liverpool. We had identified 200 companies in the Merseyside area which had technology which could be marketed to the benefit of the North West as a whole. Over 100 companies came to the meeting. They were not large companies, but those which had been started by people who had been involved in the major industries when they were running but who have now moved out into their own businesses. They were all extremely successful in developing new technologies for the future markets which are required. I was very encouraged. A company has to pay £500 to join the scheme in order to gain the benefits. The Liverpool Corporation said that for the companies within its area it would pay half the start-up costs, which would encourage more companies to join the scheme.
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I certainly see now a reduction in the number of large companies who were the main employers in Liverpool. But all that energy and resource has moved into a vast number of smaller companies which are at the very forefront of technology and ideas. That was not happening with the major companies, which were bogged down with bureaucracy and all the activities which prevented them from being at the forefront of technology and competitiveness. Although I understand the noble Lord's problems, what is happening now is very much more encouraging than seeing massive companies which were uncompetitive in the world marketplace. That is the key to exporting; namely, to be able to produce at such a level that we can be competitive in any marketplace in the world. I believe very strongly that what the DTI is doing, to encourage new start-ups, new businesses and new opportunities is the right way to go. I have been very supportive of the great number of initiatives and projects which the DTI is now working to develop in this area.
I know that the noble Lord, Lord Ezra, will be speaking in this debate. He and I have a mutual interest in Combined Heat and Power. One of the things about which I might possibly complain bitterly to the DTI is that we are trying very hard to get its support for a trade mission to market Combined Heat and Power in Russia, but we have had very little success. We have tried on two or three occasions. It may be that my noble friend sitting on the Front Bench with his legs on the table will —when he leaves this place and when we make our next application to sell Combined Heat and Power in Russia —give us a little more positive support.
Following on from that, the other great aspect of exporting is that most people do it for the adventure to begin with. It is not easy to pack your bag and set off for a foreign country where you may know very few people, nor to create a new market by meeting people, gaining their confidence, understanding what they want and perhaps learning their language. People who do that are taking the first great risk, which is what exporting is about, first and foremost. That is something that the DTI and the Government never quite understand. We are talking about a very different sort of person with the courage and ability to go out and create a new market for a new product.
The markets that are now opening up in the world, and in which Britain must have an important say, tend to be in the more "adventurous" places such as Russia, China and the Far East. Those are places to which our exporters have not gone historically. Doing that needs a little more impetus and support than setting out for, say, Germany, where we might expect to make contacts. I should like to see much more encouragement given to help people to take that first very brave step of going to a new country and opening up and developing markets. That is why we need support for export refunds, for trade missions and for the individuals who are prepared to take the risk. That is an important early element in encouraging people to enter new markets.
I should like to refer to the food industry, which is the area in which I have had most experience in exports. I should declare an interest, in that I am now involved in a company which is a major exporter of food products.

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As I was discussing with the noble Viscount, Lord Waverley, before the debate, we can use promotions in two ways. One can think up a specific promotion in which one develops promotional activities or one may encounter a general climate which encourages exports.
The food industry has Food From Britain, which has the job of doing the actual promotion. When one compares that with what happens in any other country in Europe, one realises that it is ridiculously underfunded. In fact, it is so ridiculously underfunded as to be hardly worth while. On top of that, the organisation makes large charges to the companies that want to use its services. Britain will never have the opportunities for the export of foodstuffs that exist in France, Germany, Holland and Denmark unless we look very much more positively at the support that we give to promotional activities.
We need to look at this matter very much more carefully given the impact of GATT on food exports. Whatever way one looks at the impact of GATT, it will enormously reduce the amount of food that we shall be able to export. It will squeeze our home production. It will increase imports and squeeze exports, yet we already have a massive £6 billion deficit on the import of food as against our exports. The added value of quality British food could present us with an enormously important export commodity. However, if that is to happen, we must look seriously at the sort of support that the Government should provide, especially given the new GATT arrangements. These will put tremendous pressure on everybody, particularly those involved with certain commodities, such as milk powder, which it will suddenly not be possible to market at a profit.
I should like to refer to two other issues. It is not just a question of promotion, but of the Government's attitude to the mechanics of exporting. Great Britain could do a lot of business marketing products through EC countries to third world countries. One might, for example, ship a load of cheese from Crewe to Marseille, with another exporter then taking it on to Algeria or North Africa. Every other country in Europe deals with that problem effectively. However, our Government insist that they need to know the name of the end user. The British exporter might not know who that is. That gives our exporters an added problem that does not have to be faced by exporters from Holland, Germany or any other part of Europe. That is a matter which has been raised by the UK Provision Trade Association and many others in the business who have tried to get MAFF to look more closely at it and to simplify the procedures. That has not yet been done but perhaps my noble friend, with his renewed energy, can bring some pressure to bear to try to simplify the procedure.
I should like to refer to another problem. Cheshire has one of Europe's major salt producers. It is an efficient and profitable company which receives no support from anyone. However, a Dutch company has now decided to put up a salt factory, using public funds. This will be in direct competition with our British operation. That is another aspect of food exports, and the development of food exports, which needs to be
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studied by the Government. If there is a business in Britain which can make a profit on the open market and market throughout the world without government support, is it right to allow another European government to use their taxpayers' funds to create a company which is in direct competition with ours? I could give a number of similar examples which need to be looked at more closely.
We have debated in this House on many occasions the subject of fraud in the EC, especially in relation to food and the CAP. As a result, the Customs and Excise are more vigilant. They open and look in containers. They have gone from doing nothing to doing everything. It seems odd that companies that have been traditional and well qualified exporters for many years under the new regulations now have a large number of their containers opened at considerable expense. If a container is opened and all the products are gone through, that can easily cost £1,000. That is an area that my noble friend might look at. He could inquire whether that procedure is being carried out in a sensible and efficient way to see that we are not penalising many exporters by controlling what they are trying to do.
I believe strongly that this Government, above all others, realise the importance of exports and, through the DTI, have taken enormous steps to encourage and support the development of exports. But, as in all things, there is always more to do. In fact the more that is done the more there is to do. I hope that, in addition to the many things that the Government have done, they will continue to work at the many things that still need to be done.
9.57 p.m.
Lord Wedgwood: My Lords, I too congratulate the noble Viscount, Lord Waverley, on introducing this timely debate and on his most constructive and detailed speech. I must declare an interest as I spend much of my time travelling the globe, assisting in the export promotion of a British product. In that task I have been fortified by the knowledge of the excellence that is the proud tradition of British manufacturing.
Those of us who travel, either for business or pleasure, are constantly made aware that we live in a global village. Similar products are bought and sold wherever one goes. Undoubtedly, the customs and legislation of individual countries, near and far, will help determine the variants of pricing available for any one product, sometimes with great distortions, as we can witness in some South American countries where exceedingly high tariffs are imposed. But, in general, one can buy the same goods at competitive prices at many destinations.
However, each year our competition becomes more and more exacting as advanced technology is improved and as our communications systems become increasingly sophisticated. As my noble friend Lord Wade of Chorlton suggested, we must reinvest in our businesses continually in order to keep pace with the constant and, at times, radical changes.
Our exporting techniques must also become more creative and competitive to maintain and increase our superiority. Not so long ago this country was feeding an

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empire that had an enormous appetite for the comforts of home. That empire is now part of the global village, with a not so dissimilar appetite, consuming a multitude of products available from worldwide resources.
Many of our manufacturers have struggled and are struggling to ensure the legacies of quality and in many instances the level of skilled craftsmanship that is the envy of our competitors. While that is commendable, it is not sufficient to combat the competition. The scenario of rapid increase in world competition emphasises the paramount importance forced upon us to aid and abet this effort in a more challenging and effective manner. Manufacturing programmes must be interwoven in the efforts of the marketing and sales teams. The general trend among retailers has been to reduce inventories so that stocks can be quickly turned. The effect is that marketing and sales personnel must be efficient and knowledgeable forecasters in order to keep manufacturing in line.
It is most reassuring to see my honourable friend the Minister for Trade giving enormous support and encouragement to our manufacturing base. His genuine concern and creative approach to this problem have already paid dividends. By spearheading a number of overseas trips, especially to the Pacific rim countries, he has identified many profitable opportunities in the expanding economies that are generating a high proportion of the world growth. It is therefore essential for British manufacturers to establish a strong foothold. Your Lordships will be aware of the enormous opportunities in China—the country, that is, although I am bound to say that the ceramic products have an exciting future too. I suggest that well planned business missions to China, such as the successful November 1992 Group of 100, should be given priority.
Clearly, the President of the Board of Trade has given much emphasis to this topic. The allocation of personnel and the separation of export promotion from other activities such as trade policy will strongly assist our endeavours in overseas markets. However, we must ask whether the range of government support in this process is sufficient and whether there is appropriate accountability to make the constant necessary adjustments. It is all very well to have the grand vision and expectancy, but we must set tough goals to be achieved by our export support services. In this manner we will generate the excitement and enthusiasm that are infectious to all agencies. Around the world I can envisage our consuls and embassy staffs walking taller and straighter and shouting our praises rather than taking the softer options that are more prevalent today.
It is right that the British Overseas Trade Board has identified the United States as a key target for British firms. For more than two centuries manufacturers have enjoyed this very lucrative market, albeit with a short intermission following our dispute in 1776. Americans harbour a great respect for the quality of British products. North America is also the target of manufacturers from other countries. We can never forget that its ability to produce is constantly upgraded. Are we realistically attacking this vital area to meet the optimistic goal of a 2:5 per cent. increase in our share of the American market by 1995?
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I followed with great interest the recent visit to the United States of His Royal Highness Prince Michael of Kent. His endeavours on behalf of British products, emphasising the excellence of their manufacture, should be commended. I am not suggesting that our Royal Family should become super salesmen and road warriors of the world. But it is clear that we have an enormous advantage that could contribute to our winning edge. His Royal Highness the Prince of Wales, if given the support and direction, could enhance our opportunities dramatically. His Royal Highness already participates in this area in his overseas trips, but a more specific role needs to be developed in order to enhance and increase the support that he is able to provide.
I believe that we shall realise that the Prince of Wales is an enormous asset to this country. This time the Palace and Whitehall handlers have the opportunity to correct the mistakes and inefficiences of the past and provide a creative but respectful platform from which His Royal Highness can operate. That, coupled with his own forward thinking and sensitivity, would provide inspiration and encouragement. The Prince of Wales could then become the champion of a new and hungry generation that will support him well into the next millennium, when we can reasonably expect his accession to the Throne.
At home we are often critical of our industries' inadequacies to compete; and we have heard about that this evening. Abroad we are sometimes ridiculed for not seizing our obvious advantages. Time is running out and the rest of the world is about to catch up. It is time to take off the gloves and fight more vigorously for our share of the pie; and not only for our share of the pie, but more.
10.6 p.m.
Lord Ezra: My Lords, like all other noble Lords who have spoken, I congratulate the noble Viscount on the timeliness and importance of the Question that he has raised this evening.
There is not the slightest doubt that enormous efforts are being made by exporters to increase our trade abroad and that there is a more positive and pro-active attitude on the part of the DTI than there has been for many years. But we must see all those efforts in the context of what is happening to our overseas trade; and the position is not particularly encouraging, in spite of all those efforts.
I had occasion to ask a question the other day of the noble Lord, Lord Strathclyde, on this very issue; namely, that, in spite of the efforts, we showed last year, according to the latest figures, a deficit of over £13 billion on our visible trade. According to the Central Statistical Office, that trend is rising. There are indeed some financial institutions which consider that that figure is understated, because, as your Lordships will probably recall, there has been a complete change in the way in which those statistics are now being collected.
Exports have indeed risen from £100 billion in 1992 to £113 billion in 1993; that is an extremely commendable performance. Unfortunately, imports have risen faster, from £115 billion in I992 to £128 billion in 1993, and the gap is widening. Therefore, one

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must ask whether we are unfortunately getting back into the old familiar cycle that, as the economy recovers, so we bring in proportionately more from abroad than we send abroad. That is similar to the situation which arose some 10 years ago. It was about 10 years ago that we began to show a progressively increased deficiency on our visible trade. That situation gave rise to the establishment of a committee of inquiry into overseas trade which was presided over extremely efficiently by the noble Lord, Lord Aldington. Its report was published in 1985.
I should like to read out the reason why the committee was set up, because those words could be written today. It was explained that:
"The committee's appointment followed expressions of concern on many sides of the House that the mounting deficit in the balance of trade in manufactures required close scrutiny".
If your Lordships look at the conclusions of that report, it will be seen that many of the recommendations still need to be taken up. Some but by no means all have been acted upon. There is no need to have another inquiry into overseas trade because all that we need to know is in the report published 10 years ago.
Therefore, we must ask ourselves what we are going to do about that situation and how we can get ourselves free from the stranglehold. As many noble Lords have said, it is not just a question of export promotion; it is a question of macro-economic policies, currencies and many other factors. However, this evening we are concentrating on export promotion.
Many initiatives have been taken. For example, the noble Viscount referred to the export promoters scheme, which seems to me to be an extremely innovative proposition, though we still have to see how effective it will be. There are many other initiatives, too.
I wish to follow up the point made by the noble Earl, Lord Limerick, who has had remarkable experience in export promotion. I had the honour of serving under him at BOTB when he was chairman of that organisation. I was as concerned then as I am now about the progressive diminution in the funds made available for export promotion. It seemed to me then, and it seems to me now, that expenditure on export promotion, perhaps by someone in the recesses of the Treasury, is regarded as a residuary activity and something to be cut at the end of the day when the final few million pounds are in the accounts.
This, I am afraid, is borne out by the figures which I have drawn from the Government's expenditure plans for trade and industry for 1994-–95 to 1996–97. It is shown there that total expenditure on international trade and export promotion in 1992–93 was £63.1 million. I am sure noble Lords would consider that a modest sum but that was what it was. In 1993–94 the estimate is £56.7 million, in 1994–95 £57 million, in 1995–96 £60.3 million and so on. In other words, the funding is being progressively cut back at the very time when we require greater expansion in that expenditure.
I have examined the make-up of the expenditure and I have looked at trade fairs, to which the noble Viscount referred. I was amazed to see that while in 1992–93 support was given for 325 trade fairs—that is, for
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British exhibits—in the following year that figure was cut to 285. It is explained that the reason for that is that, with the devaluation of sterling in September 1992, there was not enough money to go round. I find that a most extraordinary conclusion to reach because the devaluation of sterling was one of the biggest boosts that our export potential could have received for many years. That situation does not last very long. One devalues the currency and one obtains a short-term benefit for one's competitiveness. That would have been the very time—if thought had been given to it —that we should have redoubled our efforts to exhibit our goods abroad, not cut them back.
I wonder who brings these two strands of policy together. On the one hand efforts need to be made—a lot of ideas emanate from the DTI—but on the other hand all this seems to be diminished by the people who hold the purse strings. Should we not for once have another look at this? Should we not start from the opposite end and decide in the light of all the many suggestions made by your Lordships tonight what we should be spending in order to close this export/import gap? Perhaps that might be done at the expense of some other item but exporting is the lifeblood of the country. I believe we need to consider seriously this aspect of the way in which we are progressively diminishing our expenditure on export promotion.
10.14 p.m.
Lord Haskel: My Lords, I, too, wish to thank the noble Viscount, Lord Waverley, for raising this important matter. I share with my noble friend Lord Sefton his views on the importance of this debate. I shall not delay your Lordships by summing up what has been said. I shall confine myself to making some suggestions which I hope will be helpful. I will try not to repeat too many of the points which have been made by other noble Lords.
I recently counted almost a dozen services provided by the DTI and the Foreign and Commonwealth Office to exporters, all of them apparently valued by the users, as most noble Lords have implied this evening. Among them are the export credit guarantee services and the services provided by the British Overseas Trade Board. There are special initiatives such as "North America Now", to bring trading opportunities to the notice of British business. There is the Overseas Projects Board. There is a Director General of Export Promotion, with a target of 100 men and women from the private sector to work on export promotion and co-ordination. There are Pre-link, Business Link and trips overseas by senior politicians, members of the Royal Family and others to promote British business. Recently those services have become better co-ordinated, as many noble Lords have pointed out, and therefore have become more effective.
For a Government who seek less involvement with the private sector and believe in leaving matters to the market, that is indeed an impressive list. It is a list for which we on these Benches have been calling for many years because of our concern about the deteriorating balance of payments. Exporting is not easy and exporters need a helping hand. They do not need hand-outs.

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The first question which must be asked is why those services were not working properly four or five years ago when our manufacturing sector was in serious decline. The high ECGD rates at that time, the lack of co-ordination and leaving exporters to fend for themselves must have caused some of the irreparable damage to the manufacturing sector to which my noble friend Lord Sefton referred. The improvement, though late, is welcome. However, there is no cause for complacency, because those improvements probably bring us up to the level of service enjoyed by our competitors.
Nor is our balance of payments deficit improving, as the noble Lord, Lord Ezra, pointed out. Last November exports were predicted to rise by 5.75 per cent. in 1994, but the latest figures released on 24th March show that they are actually falling. We must do better. I should like to suggest a few ways in which we might achieve that.
First and foremost, we must encourage more firms to use those services. According to the Institute of Export there are some 40,000 exporters in the UK, and the DTI is in touch with approximately 6,000. Perhaps a further 4,000 do not need the DTI's services because they can manage very well on their own, but what about the other 30,000? They are probably small and medium-sized enterprises which could benefit greatly from the DTI's services. We must find a way of getting in touch with them and help them to export more.
I am well aware of the need to reduce red tape and regulations, but I am also aware of the need to enlarge the use of the export services. Perhaps from the information at Companies House, the Inland Revenue and HM Customs and Excise, the DTI can identify those 30,000 exporters who can benefit from its assistance. Only the Government know whether that information is available and the cost and time involved in extracting it.
Alternatively, as other noble Lords have asked, have the Government considered registration, as on the Continent? That will be quick and accurate. Compulsory registration with Chambers of Commerce provides an accurate record of business activity which is essential for targeting. I share the doubts of the noble Viscount, Lord Waverley. This is far too important to be left to the as yet untried Business Link initiative.
There is an added bonus in that we could then seek reciprocity with Chambers of Commerce in the rest of Europe so that we could make use of their services. That would facilitate trade and provide valuable marketing information. Much business is done in Europe through the Chambers of Commerce. Companies and people do business, not government departments, but you have to know who the people are.
That brings me to Europe. The European Union is on the verge of enlargement and, if I remember rightly, the whole purpose of the Union was to create a single market. The Financial Times reported on 4th January this year that a survey of 6,400 companies found that almost 50 per cent. of the respondents felt that they had received no benefit from the completion of the single market a year earlier. That was largely because deliveries were neither faster nor cheaper, probably because of bureaucratic barriers.
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The problem seems to me that the DTI still treat; Europe as an export market. I suspect that that is because of the ambivalent attitude towards Europe of the noble Lords opposite. The Department of Trade and Industry has to make the mental leap of moving from an exporting exercise to a marketing exercise with regard to the Union.
There is a difference. If the mental leap is made, Ministers would be more careful about showing their hostility to Europe. Instead of concentrating on documentation and administration for Europe, the DTI could encourage paperless selling. With electronic data interchange, transport today does not need a piece of paper. Customs check at the suppliers or at the customers, or just check that the systems are working properly. That would encourage more marketing exercises such as Food from Britain. What about pots and pans from Britain, or home furnishings from. Britain?
The other attitude which needs to be changed is that. towards manufacturing. Thankfully the Government now accept the importance of manufacturing, but while their attention was elsewhere, the DTI may not have noticed that manufacturing itself is changing. It is changing from mass production to lean production.
Lean production has been a personal crusade of mine for many years. Of course, the famous examples are the Japanese car manufacturers and their component suppliers. But that philosophy is taking hold in every sector of business and industry world wide. Its effects are everywhere. Only last week one of our major companies, W.H. Smith, announced 400 redundancies because, in future, they will have only two layers of managers per store instead of four. That is an example of lean management where any factor which does not give added value is eliminated. That is how we shall see our economy becoming more competitive. Therefore the attitude in the DTI Exports Services Division has to adapt.
Size is not important in this new style relationship; but attitude and ability are. Knowing the Minister's enthusiasm for small and medium sized enterprises, he may find that thought of special interest.
Customers in Europe and elsewhere are anxious to buy from "lean" suppliers and to build up relationships with them. Purchasers nowadays spend a long time trying to find suppliers who can work in that way, and our Export Services can provide a very useful service by introducing them to those suppliers in the UK who can operate in that way and, if necessary, vouch for them.
The President of the Board of Trade has identified encouraging best practice as one of the ways of increasing our competitiveness, and here is a way Export Services can help. The impact on manufacturing in the UK could be important.
Once our export services adapt to lean thinking, they will find all sorts of new ways of being helpful. For instance, take letters of credit. Some two years ago I remember a survey undertaken by an organisation dedicated to simplifying export documentation. The survey found that 60 per cent. of letters of credit are rejected on first presentation. In preparing for the

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debate, I asked whether a new survey had been undertaken, and I was told no, but the reject rate still seems to be much the same.
We live in an age of "right first time" and "zero rejects". Would not the Minister agree that that record is awful? I am not sure how much money that represents, but it must be many millions of pounds. If letters of credit are cashed on first presentation, all this money, instead of being in the banking system, would be in the cash flow of the small and medium-sized enterprises which are probably the firms presenting their letters of credit more than once. Also it could make a one-time reduction in our balance of payments deficit. This must be an opportunity for specialist training which the export services division could organise.
While on the subject of money, perhaps the Minister will clear up one more question about export credit guarantee rates which many noble Lords have mentioned. Although the rates have come down—and this is welcome—how do the rates compare with those of our competitors? There seems to be no comparison made and some companies wonder whether their competitors overseas are being subsidised by uneconomic rates.
Finally, exporting of know-how and technology: the noble Lord, Lord Wade, referred to the Eurotech scheme. The GATT is yet to be fully ratified; but the problems of regulating this kind of business have been addressed by the GATT. When it is ratified, the lack of protection which has inhibited our exports in intellectual property should no longer apply and this should be an important area of business for the UK. The transfer of intellectual property is a growing sector and although ECGD cover is available, what plans do the DTI have to promote it? We seem to be quite good at marketing other people's know-how and technology as well as our own.
The export services are of value and are especially valued by those who use them. But the number of firms using them is far too low and registration is a way of targeting the services so that they become more widely used. The export services department must throw out some of their old concepts about exporting and manufacturing and keep pace with the changes. In doing so, their services will become more valuable than ever.
The service to exporters at the DTI has improved during the last 18 months and because of this a new government are not likely radically to alter them. This is important because exporting is a long-term business and exporters must be sure of continuity of service. This is why the short-term funding of some of the services causes some anxiety, as other noble Lords have said. Business Link is funded for three years and the co-ordinators for two years. If these are not self-supporting after this period of time, what is going to happen? Will there be yet another U-turn? Perhaps the Minister can reassure us of his department's long-term commitment, especially in view of the reducing expenditure so dramatically explained by the noble Lord, Lord Ezra.
The Earl of Limerick: My Lords, before the noble Lord sits down, I did not wish to interrupt his flow but perhaps I may support one point he made. It was in relation to being right first time particularly with letters of credit, and the need for training. The Institute of Export exists precisely for the purpose of delivering that training. At any one time thousands of people are taking the courses which are aimed to deliver precisely that high level of expertise. I think it would be helpful for the House to be aware of that.
Lord Haskel: My Lords, I entirely agree and compliment the Institute of Export on the excellent work it is doing.
10.28 p.m.
The Minister of State, Department of Trade and Industry (Lord Strathclyde): My Lords, it is always a pleasure to take part in a debate with so many noble Lords who have great experience and knowledge on the subject under discussion. I join others in welcoming and thanking the noble Viscount, Lord Waverley, for putting down this Unstarred Question and making an excellent and well researched speech. He raised a number of issues, many of which I shall touch on during my reply. Many other noble Lords raised questions and if I do not answer them all tonight I shall certainly consider whether I can answer them by letter.
I also wish to congratulate the noble Lord, Lord Haskel. I know that it is his first time at the Dispatch Box on the Opposition Front Bench and he takes up a notable position. I hope that he will very soon be a senior Opposition spokesman and long may he remain that: senior and in Opposition.
The noble Lord was absolutely right to raise the whole question of quality and about being right first time. I thank my noble friend Lord Limerick for the way in which he explained some of the work that is being done. It is absolutely crucial that we get things right first time.
The noble Lord, Lord Sefton, made, in parts, a magnificent speech. He started particularly well. I agreed—perhaps surprisingly to the noble Lord—with a great deal of what he said. In his brief diatribe against the devolutionists he explained that he was not so much a trade unionist as a Great British unionist.
The noble Lord spoke about cheap labour abroad and the export of jobs. Perhaps I may tell him of an experience that I had only a few weeks ago when I was on a trade mission to Taiwan. I came across a company that had a factory in the United Kingdom and one in Taiwan. That company paid its workers in Taiwan more than it paid its workers in the United Kingdom. The workers in Taiwan were 50 per cent. more productive than those in the British company. That is why the key to this whole debate about the future of British industry comes down to one word; namely, competitiveness. My noble friend Lord Wade concentrated so much of his speech on that issue. It is the key.
Many factors influence our competitiveness. I hope that in the course of the next few months we shall have many opportunities to discuss those factors. I say to my noble friend Lord Wade that I should certainly be

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interested in investigating further his question about the export of CHP, which is such a valuable technology, to Russia.
The noble Lord, Lord Ezra, concentrated on expenditure rather than on output. I believe that over the course of the past few years, and particularly since April 1992, the output in terms of the promotion that we expect for the money that we spend has been vastly improved.
The United Kingdom has always been a great trading nation. We already export 25 per cent. of what we produce, and per head of the population we export more than the USA and even Japan. Recently we have seen dramatic increases in exports to markets as diverse as Hong Kong, South Korea and the USA, but the opportunities are still vast.
As a Government, we have a key role to play in ensuring that firms find those opportunities and make exporting an integral part of their business strategy. As part of that, my right honourable friend the President of the Board of Trade is leading the most dynamic and important export drive this country has seen in decades. I believe that that fact was recognised by many noble Lords who spoke this evening.
The single most important recent event on the world trading scene was the completion of the GATT Uruguay Round negotiations. As a result of the round there will be large reductions in import duties on industrial goods. Our largest export markets will move towards zero tariffs in many sectors, including pharmaceuticals, steel and spirits, and harmonised lower tariffs on chemicals.
My noble friend Lord Wade mentioned the export of foodstuffs perhaps coming under increased pressure because of the GAIT round. I pay great tribute to the work done by Food from Britain and many other organisations up arid down the country, particularly in Scotland, Wales and. Northern Ireland, which work tirelessly to improve the overall level of our food exports. But all those exporters can of course still use the upgraded, sharper focused export services that are now provided on a national basis by the DTI and its sister bodies.
Of course the Uruguay Round was about more than just trading goods. Great benefits will also come from the export of goods to invisible trade such as services, intellectual property and investment.
My noble friend Lord Limerick mentioned invisibles. I think that he was being unduly modest about his whole role in the export world. His experience and knowledge are highly respected in this most important field. If I may say so, he brought a valuable perspective to the debate this evening. This GAIT round will be of particular benefit to the United Kingdom, which is a leading world player in the area of invisibles. Our invisible earnings in 1993 amounted to £115 billion, which is more than £315 million, earned for Britain every day.
Perhaps I may turn briefly to a subject raised by many Peers; namely, the ECGD. The noble Viscount, Lord Waverley, particularly concentrated on that issue. We have to start off from the basis that we have exceptionally favourable economic conditions currently at home. We have low inflation, low interest rates and a
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competitive exchange rate which the Government are committed to maintaining. That excellent position is due to tight control over costs in both the public and the private sectors. Low wage settlements and rapid productivity growth have increased the international competitiveness of British firms. The President of the Board of Trade and my honourable friend the Minister for Trade are driving home the message about exports to both the private and the public sectors and are involving all departments. I thank my noble friend Lord Wedgwood for recognising that.
Of course the ECGD is important. During the course of the past couple of years premium rates have on average been cut by more than a quarter. In the last Budget the Government announced a further round of reductions, some as high as 20 per cent., for certain countries. The Government have also taken substantial steps to make more ECG cover available where it is needed and to accelerate the pace for resuming cover on markets emerging from previous debt problems.
The noble Lord, Lord Haskel, asked a very interesting question about comparisons. I cannot give him an answer now. But I suspect that comparisons are. very difficult. I shall try to find out and perhaps I may write to him.
It is the partnership with business that is so vital to our strategy. The Government's principal adviser on trade promotion is the BOTB under the chairmanship of Sir Derek Horny. There is also a network of more than 200 business people with experience of markets around the world. They ensure that the needs of businesses are reflected in the Overseas Trade Services operation and help formulate specific initiatives to increase trade.
On the question of secondees raised by my noble friend Lord Limerick, export promoters are now playing a key role in all these initiatives. Some 70 have joined the DTI and are actively helping business. The Government's efforts to help UK business to win major overseas projects are also being enhanced with the guidance of the Overseas Projects Board, under the chairmanship of Sir Alan Cockshaw. We have been successful in attracting senior heads of industry to work in each sector group.
As part of the overall strategy for export promotion, market plans are being drawn up by Overseas Trade Services for each of the UK's top 80 overseas markets. These will guide the future export promotion work programmes and help ensure that resources are focused to the very best effect.
The DTI and the FCO jointly provide a first class information, advice and support service for UK exporters under the banner of Overseas Trade Services. This is confirmed by our customers, 90 per cent of whom tell us that the Overseas Trade Services are of good quality and that they would use them again. Listening to what our customers tell us they need, we have recently introduced a package of new services which are being piloted right across the world.
A number of noble Lords, particularly my noble friend Lord Limerick, the noble Viscount, Lord Waverley, and indeed the noble Lord, Lord Haskel, asked about marketing services to users, persuading more people to use export services and the whole

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problem of obtaining the right access to services to get increased penetration across so many companies that currently do not use the services available. That problem is widely recognised. That is why the President of the Board of Trade challenged, and indeed encouraged, local organisations—chambers of commerce, training and enterprise councils, local authorities and local enterprise agencies—to come together to establish the one-stop shop concept, now called Business Links. With government support they are forming partnerships for the benefit of local businesses, delivering high quality, practical and effective business support tailored to local business needs. I am glad to tell the House that today the number of Business Links around the country has doubled to 10, and when we return from the Easter break they will have doubled yet again to 20.
I am grateful to the noble Viscount, Lord Waverley, for giving me the opportunity to assure the House of the Government's firm commitment to the long-term funding of Business Links. It is an important part of our overall strategy for helping business to win, and I believe that it will be a great success.
Of course, there are many initiatives run by the Government and the DTI. For instance, the North America Now campaign, which was launched by the President of the Board of Trade last March, aims to help British industry reinforce its trading position in the United States and Canada and increase its market share by 25 per cent. over the next three years. That means increasing our visible exports by at least £3 billion. That initiative, along with the Priority Japan and Business in
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Europe campaigns, will raise the profile of the trading opportunities available to British business in our major overseas markets.
I join my noble friend Lord Wedgwood in paying tribute to members of the Royal Family who work so hard to encourage exports overseas, and particularly to his Royal Highness the Prince of Wales, who works tirelessly in many areas but who has such a great interest in our projects, our performance and our ability to export.
The services that I have described during the course of this debate so far represent only part of the ways in which we promote exports. In addition, Ministers undertake a series of high level visits each year with business representatives. Last year Ministers, including the Prime Minister, made a great many overseas visits to a wide range of world markets to great success. When the Prime Minister visited India last year he was accompanied by a team of 17 captains of industry, and as a result of that initiative over 10,000 companies have been contacted with the message that India is a market on the move offering immense potential for business development.
In conclusion, I believe that we are in a most exciting period of redefining the way that UK business is helped to export. We are committed to working together with business to ensure that United Kingdom firms are best placed to achieve rapid and sustained success when they trade abroad.
House adjourned at sixteen minutes before eleven o'clock.