Lords Sitting of 18 October 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 Norwich.

Baroness Rawlings
Miss Patricia Elizabeth Rawlings, having been created Baroness Rawlings, of Burnham Westgate in the County of Norfolk, for life—Was, in her robes, introduced between the Lord Carrington and the Baroness Chalker of Wallasey.

Lord Gladwin of Clee
Derek Oliver Gladwin, Esquire, CBE, having been created Baron Gladwin of Clee, of Great Grimsby in the County of Humberside, for life—Was, in his robes, introduced between the Lord McCarthy and the Baroness Gould of Potternewton, and made the solemn Affirmation.
Lord Stratheden and Campbell—Lord Stratheden and Campbell— Sat first in Parliament after the death of his father.

Milk Marketing Reorganisation
3 p.m.
Lord Carter Lord Carter asked Her Majesty's Government:
What benefits the consumer of milk and milk products can expect from the reorganisation of milk marketing.
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe): My Lords, consumers will benefit in the longer term from the increased competition brought about by deregulation of the milk market. The opportunity now exists for processors to supply what the consumer wants and to secure supplies of raw milk to meet the demand for their products.
Lord Carter: My Lords, I thank the Minister for that Answer. However, if the price of milk per farmer is to increase—and it is—if the dairy companies and the major retailers protect their margins, as they surely will, and if the supply of milk is artificially restricted by quota so that the market cannot in fact work, how is the consumer supposed to benefit from the shambles which has resulted from the Government's so-called deregulation of the milk market?
Earl Howe: My Lords, the consumer can expect a number of benefits. In a more competitive environment the dairy companies will have more incentive to provide what the consumer wants, and a processor with a product which is in demand should be able to obtain a guaranteed supply of raw milk without having to worry, as he does at present, that supplies will be cut off on the so-called "equality of misery" principle. It is up to processors to respond to the market, and in time we may
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see a wider range of high value dairy products of British rather than imported origin on the supermarket shelves. There may also be more regional or other niche products.
Lord Mellish: My Lords, the Minister referred to the long-term effects of the increase, but what about the short term? Are newspaper reports correct in saying that milk will increase by anything from 3p. to 6p. a pint as a result of the amalgamation?
Earl Howe: My Lords, I see no justification for the claims made by some dairies that Milk Marque prices will lead to a rise in the price of a doorstep pinta of between 2p. and 3p. I must say that I have not seen figures quite as high as those quoted by the noble Lord. I suspect that the companies may be preparing for price rises under the current arrangements and that they are seeking to blame them on the changes arising from deregulation. In itself the new system should cause little change in the price of a pinta—a price which, incidentally, is considerably lower in real terms than it was 10 or even 15 years ago.
Lord Mason of Barnsley: My Lords, can the Minister tell to the House what is the future for the existing small co-operatives of dairy farmers under the reorganisation?
Earl Howe: My Lords, the opportunities open to small co-operatives will, I believe, be even brighter than they are at present. They will be free to source their supply from anywhere they like. They will be free to sell in a way that they themselves agree with their customers. Moreover, there will be no imposition of a levy as there is at present on direct sales of milk and that will be a considerable benefit to the small producer.
Lord Desai: My Lords, can the Minister explain why there is no completely deregulated milk market in any region in the United States? Can he cite any other country in which milk deregulation has been practised?
Earl Howe: My Lords, I am not an expert on what happens around the world. I only know what is best for Britain. The deregulation of the milk market is very much in the national interest. A major part of the justification for it is our desire not to see the market for high value dairy products handed on a plate to our continental competitors at the expense of dairy processors at home.
Lord Willoughby de Broke: My Lords, does my noble friend agree that the problem is that British dairy farmers are well able to supply our market but they do not have the quota that allows them to do so? Can he perhaps tell the House what are the prospects for inter-country trading of quota, that is making quota tradable between member states of the European Union?
Earl Howe: My Lords, my noble friend has put his finger on an important point. The UK does not have enough quota to meet its needs and that is why we have successfully resisted recent proposals by the European Commission to cut quotas. We secured a small quota increase last year and we continue to argue for freedom to trade quotas across member state borders. I cannot,

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unfortunately, hold out any immediate prospect of success in that area principally because, as my noble friend will be aware, quotas are currently tied to the land and therefore cannot be treated as a freely tradable commodity.
Lord Richard: My Lords, the Minister says that he does not see any justification for an increase in the price of milk. Does he expect an increase in the price of milk?
Earl Howe: My Lords, that is up to the dairy companies to decide after 1st November. However, I do not expect an increase of the order that is quoted in some newspapers.
Lord Bruce of Donington: My Lords, can the Minister give the House any really good reason why the Government for once should not leave well alone?
Earl Howe: My Lords, I have already explained the benefits to consumers. There will be benefits throughout the industry. All the industry will enjoy the same commercial freedoms enjoyed by those in other sectors. They will be able to take their own business decisions in a normal commercial environment; producers will be free to sell their milk to whomsoever they wish and processors will have the freedom to decide from whom they buy their milk. This can only be to the advantage of the industry generally.
Lord Carter: My Lords, the Minister used the phrases "the long term" and "in time". How long is the long term?
Earl Howe: My Lords, it is longer than the short term.
Lord Geraint: My Lords, I am sure the Minister will agree with me that the Milk Marketing Board has given excellent service to consumers and producers alike for the past 50 years. Will he give an assurance to the dairy producers of this country that their interests will be safeguarded under the present regime?
Earl Howe: My Lords, I am on record as saying that the Milk Marketing Board has served this country well over the 60 years of its existence, but times have moved on and the market is now very different, as the noble Lord will know. One of the requirements under the Agriculture Act 1993 was that Ministers should be satisfied, before approving the Milk Marketing Board's reorganisation scheme, that Milk Marque's trading practices take account of the interests of purchasers of milk. They were so satisfied, and I am confident that all in the industry will seize the opportunities that now lie ahead.
Lord Whaddon: My Lords, perhaps I may assist the noble Earl in his definition of the long term. Does he recall that John Maynard Keynes defined the long term as "when we are all dead"?
Earl Howe: My Lords, it will be sooner than that as far as milk is concerned.

Housing Benefit: Policy
3.7 p.m.
Lord Dean of Beswick Lord Dean of Beswick asked Her Majesty's Government:
Whether they have any plans to change the present method of, or criteria for, payment of housing benefit.
The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, the Government are carrying out a review of housing benefit. No decisions have been taken yet except with regard to the rules for payment of housing benefit for convicted prisoners. Subject to parliamentary approval, from April 1995 benefit payments will be reduced from a maximum of 52 weeks to 13 weeks.
Lord Dean of Beswick: My Lords, I am grateful to the Minister for that Answer but is he aware that the figures I have show that during the past financial year the total housing benefit paid was £8.5 billion? That benefit is still rising. While one cannot switch all that money to a house building programme, is the Minister aware that that sum would build between 250,000 and 300,000 houses for rent by local authorities and housing associations? When will the Government end this stupid policy of stopping councils building houses and embark on an increased house building programme which would help the building industry, the housing situation and the country's economy as a whole?
Lord Mackay of Ardbrecknish: My Lords, I believe the noble Lord ignores one important point. If the £10 billion—it is £10 billion—spent on housing benefit this year, 1994–95, were removed from housing benefit and used to build houses, many people who currently rely on housing benefit to pay their rent would find themselves without houses.
Baroness Hollis of Heigham: My Lords, when the DoE decontrolled private rents and forced up social rents by 5 per cent. a year in real terms, what did the Government expect would happen to the housing benefit bill? Did the DoE tell the DSS that for every pound the Department of the Environment saved in housing subsidy the DSS would have to pay out a further 75p in housing benefit? In other words, is not the problem of housing benefit entirely one of the Government's own making?
Lord Mackay of Ardbrecknish: My Lords, the Government made no secret of the fact that as a result of two of the major decisions made over the past 15 years housing benefit would increase. First, we accepted that as we withdrew the subsidies on bricks and mortar and concentrated more on helping the individuals who require help housing benefit would increase. Savings were made in that transfer of resources. In addition, we always acknowledged that the deregulation of the private rented sector would increase the housing benefit bill. Our concern is to make sure that it does not

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continue to increase to an extent that means that the total social security bill increases beyond the taxpayers' ability to pay.
Baroness Hollis of Heigham: My Lords, does the Minister recognise that as a result of his policies he has forced many more families into dependency on benefit, thereby making it harder for them to move into work?
Lord Mackay of Ardbrecknish: My Lords, the noble Baroness ignores the fact that one major result of our policy is that there has been an increase in the number of privately rented tenancies becoming available. That is an important aspect of our policy. We were prepared to accept that housing benefit costs would increase as a result of more privately rented housing coming on to the market.
Lord Desai: My Lords, is not the Government's policy very bad economics? Is the Minister not aware that as a result of freezing council house sale receipts of approximately £7 billion and not allowing that money to be spent on further house building the Government are having to spend another £10 billion to support the homeless? Is it not the failure of private house building and renting which has caused the homelessness in the country?
Lord Mackay of Ardbrecknish: My Lords, as I said to the noble Baroness a few moments ago, the private rented sector has increased since 1988.I believe that the noble Lord confuses two figures: first, the capital receipts from our splendidly successful policy of council house; sales (which the party opposite has always opposed) and, secondly, the amount being given in housing benefit to those people who require help with their rents. That is the kind of policy which I should have thought the Labour Party ought to approve.
Lord Stoddart of Swindon: My Lords, does the noble Lord agree that the more houses that are built, whether by the public or the private sector, the lower rents are likely to be? Surely he knows the theory of market forces. Would it not therefore be as well and encouraging if, as my noble friend suggests, local authorities were allowed to use their own money to build more houses, as they want to do? Finally, does he not agree that the present situation gives rise to a new phenomenon of Rachmanism subsidised by the Government?
Lord Mackay of Ardbrecknish: My Lords, the noble Lord asked me a number of questions. As I said before, the money recovered from council house sales is not exactly the same as the money which is spent annually on helping those people who require help with their rent. As the noble Lord knows—the question has been answered often enough—the issue of allowing councils to spend the money they receive from council house sales is tied tip with the total amount of public spending in the country. We have always made it clear that that has to be a decision for the Government in the decisions that we make annually about the capital spending of local authorities.
Lord Dean of Beswick: My Lords, the Minister totally misunderstood the thrust of my supplementary
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question. I did not for one moment suggest that £10 billion could suddenly be switched into a building programme. I suggested that within the review which is taking place the Government should be considering making more finance available, perhaps from that total, in order to finance a building programme. There are half a million building employees on the dole, houses are needed, and that action would also provide finance for the Government's own coffers.
Lord Mackay of Ardbrecknish: My Lords, we already finance a building programme via the Housing Corporation. The expenditure in this financial year on new build will be of the order of £1.5 billion. When added to the private investment which comes into the housing association sector, that means that approximately 55,000 homes have been provided for families who would otherwise have remained homeless or living in inadequate accommodation.

Private Finance Initiative
3.14 p.m.
Lord Ezra Lord Ezra asked Her Majesty's Government:
What progress has been made with the private finance initiative in adding to the level of investment in public sector projects.
The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Henley): My Lords, good progress has been made. In the last three months several steps have been taken covering a range of projects with a total capital expenditure of £3.75 billion.
Lord Ezra: My Lords, is the noble Lord aware that, while the Government's pronouncements on the issue of the private finance initiative are very clear, serious administrative delays are being encountered in particular projects, even relatively small ones? Is he also aware that there is a real problem in the apportionment of risk on these projects because some of the risks are not quantifiable in commercial terms when they verge on the political? Therefore, does he not agree that until those two issues of administrative delays and the proper apportionment of risk are overcome further progress could be impeded?
Lord Henley: My Lords, I am sorry to hear the noble Lord's allegations of delays owing to administrative procedures. Certainly, I shall take that on board and look into the matter. As regards risk, I ought to make it clear to the noble Lord that obviously there has to be a genuine transfer of risk before any private finance initiatives can go ahead. I accept that there has to be a proper apportionment of risk. The Government are looking to share risks, but obviously not all risks can be transferred to the private sector. I must make clear to the noble Lord that there must be a genuine transfer of risk to those involved in the private sector.
Lord Clark of Kempston: My Lords, does my noble friend agree that, as a result of the economic policy of this Government, overseas investment in the UK has been far greater than it has been in any of our European partners? Does he further agree that if Her Majesty's

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Government were to adopt the Social Chapter, our competitive position would be impaired and inward investment would dry up?
Lord Henley: My Lords, with all respect to my noble friend that is not, strictly speaking, relevant to the Question on the Order Paper. However, I can assure my noble friend that of the order of 40 per cent. of all inward investment from both Japan and the United States to the European Community comes to this country.
Lord Kingsdown: My Lords, does the noble Lord accept that, if the private finance initiative is to cut the burden of capital expenditure on the public sector borrowing requirement, PFI financing must be as attractive to public sector bodies as other forms of finance? Does he agree that that will not be so if those bodies can obtain non-repayable grants on which there is no capital charging, and perhaps not even notional capital charging?
Lord Henley: My Lords, I think I understand the point made by the noble Lord. Certainly I accept that it has some validity. Obviously we want to see a level playing field between the public and private sector here. As I made clear to the noble Lord, Lord Ezra, we want to see a degree of shared risk between both the public and private sectors.
Lord Williams of Elvel: My Lords, can the Minister explain what he means by the expression "level playing field" between private and public sector investors? What is the meaning of "transfer of risk"? How is "apportionment of risk", to use the noble Lord's phrase, to be determined? Is it not all determined by the Treasury in the end? What are the rules which the Treasury applies to this particular procedure?
Lord Henley: My Lords, I think that the noble Lord will find that the expression "apportionment of risk" was used by the noble Lord, Lord Ezra. I tried to make clear that we want to see a degree of transfer of risk to the private sector. If people are going to put money in, there must be risk involved. If there is no transfer of risk to them, there is little point in seeking private sector finance.
Lord Williams of Elvel: My Lords, I am sorry to press the noble Lord, but I cannot understand the expression "transfer of risk". Either there is risk in the sense of an equity risk, or there is no risk because the Government are standing behind the project. How does the noble Lord apportion or transfer—whatever expression he uses—risk in one sense against certainty in another sense?
Lord Henley: My Lords, there is never absolute certainty. Those who put money in risk that money. They may not receive the return they expect. In the case of, let us say, the Channel Tunnel railway, will investors receive the return they expect on the money they have put in? That is what I mean by a transfer of risk. There will be a degree of risk. Those people putting in money might lose that money.

Armed Forces: NATO Commitment
3.20 p.m.
Lord Molloy Lord Molloy asked Her Majesty's Government:
What effect the recent Brussels summit will have on the number and deployment of personnel in the United Kingdom armed forces; and whether they are satisfied that the United Kingdom is able fully to meet its NATO requirements.
Lord Henley: My Lords, the decisions reached at the Brussels summit in January will have no direct impact on the number and deployment of personnel in the United Kingdom armed forces. The decisions will, however, influence the future development of our defence policy and may thus affect the posture of our forces indirectly. I am satisfied that we are able fully to meet our commitment to NATO.
Lord Molloy: My Lords, I am grateful to the Minister for that welcome and satisfying reply. Nevertheless there are still grave suspicions that the British Army in particular is greatly stretched. Some of the decisions made at Brussels could make it extremely difficult for our army to carry out all the responsibilities unfairly imposed upon it.
Is the Minister also aware of the anxiety of our American and Commonwealth allies about the tremendous growth of the German nation, now our allies? Is the Ministry in touch with those countries to discuss that somewhat unattractive element in NATO?
Lord Henley: My Lords, I should remind the noble Lord that the Germans have been our allies for many years. I expect them to continue to be our allies within NATO which, after all, has had over 40 years of success in providing security for this country. I trust that the Germans will continue to be our allies in NATO for many years to come.
As to the noble Lord's first point, I accept that our armed forces are asked to undertake a great many tasks and that sometimes some individual units and servicemen will be sent on unaccompanied tours more frequently than is desirable. However, as to whether our armed forces can meet our commitments and whether there will be sufficient stability, I think it best if I repeat the assurances my right honourable friend gave yesterday to another place. He emphasised that one of the themes for the remainder of this Parliament will be that the Government now offer stability so far as concerns the fighting strength of our armed forces.
Lord Renton: My Lords, as the Government have wisely recognised that our reserves and territorials are a vital part of preparedness for any future emergency—as

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indeed they were in the past —can my noble friend give an undertaking that in order that they may be effective their equipment and training will be kept up to date?
Lord Henley: My Lords, I thoroughly endorse everything my noble friend says. I had lunch today with representatives of TAVRA who briefed me fully on the needs and requirements of the Territorial Army.
Lord Richard: My Lords, there is no such thing as a free lunch.
Lord Henley: My Lords, the noble Lord the Leader of the Opposition says that there is no such thing as a free lunch. However, I listened carefully to everything that they had to say. I can give an assurance that the Territorial Army and the other reserves will have the training and equipment necessary for them to perform their role.
Lord Bruce of Donington: My Lords, does the noble Lord anticipate any objections from Belgium to the United Kingdom army being able to obtain ammunition when required? Have the Government made arrangements with our partner Belgium to be able to obtain ammunition in the future should they need it?
Lord Henley: My Lords, I can give an assurance to the noble Lord that the Army will have whatever ammunition it needs on whatever occasion. As regards the tone of the noble Lord's question, I slightly regret the inflection that the noble Lord put on his words about, again, an ally and another member of NATO.
Lord Boyd-Carpenter: My Lords, is the noble Lord aware that many of us are a little unhappy about the recent reductions in the strength of the infantry, in particular the elimination of the second battalion in several of the Guards' regiments? Is he really happy that it will be possible for us to curry out our commitments with that reduced provision?
Lord Henley: My Lords, I am satisfied, as are other Ministers and Service chiefs in the Ministry of Defence, that we shall be able to meet our commitments in the future. I certainly understand my noble friend's concern. It is a worry that he expressed in the defence debate last summer. I can only repeat the assurance that my right honourable friend the: Secretary of State gave yesterday to another place that we now wish to see stability so far as concerns the fighting strength of our armed forces, and that includes the infantry.
Lord Williams of Elvel: My Lords, the Minister has responded to a number of questions about overstretch. Indeed, overstretch is a problem that your Lordships have recognised. Perhaps I may refer to the press report of a speech by the Secretary of State for Defence, Mr. Rifkind, to the Royal United Services Institute on 27th September. He stated:
"Parliament, and in particular the Public Accounts Committee, quite rightly in my view, expect Ministers and officials to take responsibility for, and explain, decisions taken years before. The excuse that this was someone else's responsibility is, quite simply, not acceptable".
Does that mark a change in government policy?
Lord Henley: My Lords, I do not believe that it marks any change in government policy. I do not think
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that I have sought to hide behind the decisions of those who went before me, whether they are members of the party of which I happen to be a member or of the party opposite.
Lord Craig of Radley: My Lords, will the participation by the Royal Navy and Royal Air Force in NATO exercises this winter be in any way curtailed due to the demands made on the air transport force by the recent crisis in the Gulf?
Lord Henley: My Lords, I am not aware of any plans to curtail participation in the exercises. However, I prefer to take advice on the matter and I shall write to the noble and gallant Lord.
Baroness Strange: My Lords, will the Minister tell us when there is likely to be a chance of 24 months between unaccompanied tours?
Lord Henley: My Lords, I prefer to give what might be described as an evasive answer and say, shortly. That would be easier than giving a more precise figure.
Lord Mottistone: My Lords, will the noble Lord tell the House whether there is likely to be legislation in the next Session which will ensure the flexible use of the Territorial Army in the event of various crises?
Lord Henley: My Lords, obviously I cannot comment in advance on the Queen's Speech at state opening. I can inform my noble friend that units of the Territorial Army of platoon strength are due to serve, or are serving at present, in the Falklands.

Deregulation and Contracting Out Bill
3.27 p.m.
The Minister of State, Department of Trade and Industry (Earl Ferrers): My Lords, I beg to move that the Bill be now further considered on Report.
Moved, That the Bill be further considered on Report.—(Earl Ferrers.)
On Question, Motion agreed to.
Clause 64 [Functions of Ministers and office-holders]:
Earl Ferrers Earl Ferrers moved Amendment No. 81A:
Page 54, line 41, leave out ("subsection (2) or").
The noble Earl said: My Lords, with the permission of your Lordships, perhaps I may speak also to Amendments Nos. 81C, 81K, 82C and 82D. It may be for the convenience of your Lordships if at the same time we consider Amendments Nos. 81HB, 81HC, 81D and 82B all of which are in the names of other noble Lords but refer to the same subject matter.
In Committee the Government undertook to reflect further on the list of functions which will be excluded from the order-making powers of this part of the Bill and to bring forward amendments to extend the list. Government Amendments Nos. 81A, 81C, 81K and 82D fulfil that undertaking. The amendments are in response to particular concerns which were expressed about the status of the courts and tribunals under Part. II of the Bill.
The Government share the concern of your Lordships that courts and statutory tribunals should not be, nor be seen to be, susceptible to any outside pressure or influence. We made that clear in Committee. Indeed we had thought it unlikely that any truly judicial functions of courts or tribunals would fall within the scope of the power at all. Already in Clause 64(2) we have excluded the functions which are an exercise of the jurisdiction of certain courts. We did not make that exclusion because those functions fell within the scope of the power. The exclusion was made, as my noble friend Lord Strathclyde explained in Committee, in recognition of the importance of the principle of judicial independence and our commitment to it.
I once again reaffirm our commitment to that principle. However, in recognition of the concerns which were expressed at Committee stage about the adequacy of the list of courts and the absence of any exclusion for tribunals, I am moving these amendments to make it clear that any exercise by an office-holder of the jurisdiction of any court or tribunal which exercises the judicial powers of the state could not be the subject of an order under Clause 64 and could not, by that means, become susceptible to contracting out. I hope that that will reassure your Lordships.
With regard to Amendment No. 82C, concerns were expressed at Committee stage about the proposed power of my noble and learned friend the Lord Chancellor to contract out the functions of court service staff who are currently appointed under Section 27 of the Courts Act 1971 and who are by law civil servants.
As my noble friend explained at the time, my noble and learned friend the Lord Chancellor has been consulting the senior judges about what functions it might be inappropriate to contract out as a matter of principle. The outcome of those consultations is to be found in Amendment No. 82C. The effect is to exclude from possible contracting out of the functions of the court service any function which amounts to an exercise of judicial discretion or of judicial decision-taking or advising in the exercise of such a discretion or decision-taking, together with any power of arrest.
As to other functions, only those which are prescribed in an order to be made by my noble and learned friend the Lord Chancellor could be contracted out and the amendment would require him to consult the Lord Chief Justice, the President of the Family Division, the Vice-Chancellor and the Master of the Rolls before the order is made about what its effect, if any, may be on the proper and efficient administration of justice.
We believe that this amendment will preclude the inappropriate contracting out of court service functions, while providing for flexibility to consider other proposals on their merits. The discussions with the senior judges have shown that it is easier to decide whether a particular activity could be appropriately contracted out, rather than to define in advance in general terms that which is appropriate. The order-making power arrangement will mean that specific proposals will each be afforded an opportunity for consideration and this seems the most practical way to decide on their appropriateness.
As has been made clear before, the Government are determined to uphold the probity of the judicial process and the proper working of the courts. We believe that the statutory requirement to consult the senior judiciary and the power of Parliament to annul any order should ensure that these factors are given full weight when any particular proposal is being considered on its merits. I beg to move.
Lord Williams of Mostyn: My Lords, we are, of course, grateful for the steps that the noble Earl has outlined, but there still remain serious questions about whether or not—I take his phrase—the probity and independence of the judicial process will be secured by these proposals. Amendment No. 82C states:
"The Lord Chancellor may, with the concurrence of the Treasury as to numbers and salaries, appoint such officers and other staff for the Supreme Court and county courts as appear to him appropriate for the following purposes, namely … maintaining an administrative court service … discharging any functions in those courts conferred by or under this or any other Act … and … generally carrying out the administrative work of those courts".
I think that most of us who have either practised in the courts or sat modestly part-time in the courts or, in the case of many noble and learned Lords present, who have sat full-time in various courts, would conclude that it is not appropriate to separate out those who serve the courts in an administrative capacity entirely from those who serve the courts in a judicial capacity. It troubles us to read the words:
"The Lord Chancellor may, with the concurrence of the Treasury … appoint such officers and other staff … as appear to him appropriate".
What happens if the Lord Chancellor and the Treasury do not agree? Who is to decide? That is, I regret to say, a recurring theme throughout the debates that we have had on this and related topics in your Lordships' House. There is a real prospect that decisions relating to the judicial process will be dictated by the Treasury, will not be protected by the Lord Chancellor or his department and that wholly inappropriate powers will be contracted out, without judicial scrutiny, without judicial control.
To go further with the amendment as it stands, new Clause 27(3) states:
"the Lord Chancellor may enter into contracts with other persons for the provision for the purposes mentioned in subsection (1) above"—
which I have just read—
"whether by those persons or by sub-contractors of theirs, of officers and staff for the Supreme Court and county courts".
That should not, as a matter of deep principle, be the subject of subcontracting to private companies or individuals. The deep principle for which I contend is that the provision of judicial legal services ought to be a public service with the particular ethos that that requires.
Even the lowliest clerk in the most obscure county court or district registry, in my experience and deep belief, recognises a duty to the judicial process quite beyond the mere fact that he or she is a salaried employee. If one destroys that ethos—and there is a significant danger that that will happen—we shall come to regret it.

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The functions of those employees, however lowly they are, are extremely important to the public. They deal with insolvency, bankruptcy, challenges to local election results. They deal, for example, with quite important and delicate matters, confidential matters involving children in family cases and deeply confidential matters relating to public interest immunity. All those matters are far too important to be contracted out in the way which is specified in the amendment.
I recognise, of course, that the Minister has tried to meet our concerns and I regret to say that, for the reasons I have indicated quite briefly so far, those concerns have not been allayed. To reiterate and endorse what Lord Justice Purchas said on a recent occasion, judicial independence is not narrowly confined to the independence of an individual judge trying a particular case. It is infinitely more subtle than that and it depends on the whole of the court service being accountable in a way which will not be provided.
One looks further at the new Clause 27(3):
"the Lord Chancellor may enter into contracts with other persons".
Will they be contracts of the kind that we have seen with the prison service? Whenever a parliamentary Question is put to the appropriate Minister the answer comes back preordained: "These are questions of commercial confidentiality". If that is the route set out for our journey, we on this side of the House are not willing to embark upon it.
Is this really simply a device to pave the way to the privatisation of the courts' services which will be subject to the discipline of an inappropriate market? Is it really intended simply to begin to raise court fees in accordance with the demands of contractors and subcontractors? Will that not mean that the person of modest means—that is, the person who has more than £70 per week disposable income and who will not obtain full legal aid—will simply be excluded from our civil justice system? I regret to say that the new clause shows all the lamentable characteristics of so many others in the past two years—I limit that to my own experience of your Lordships' House—which is a dogmatic approach to matters which are not susceptible of dogmatic treatment.
A previous Lord Chancellor, the noble and learned Lord, Lord Hailsham, said on more than one occasion— and I respectfully agree—that the prime function of the Lord Chancellor is to defend the independence of the judiciary. I, and we on this side of the House, have serious concerns about what is being proposed here. One cannot separate the judge sitting in court from those who serve his courts and our system. I take it that the noble Earl is confirming that it is the Government's view in putting forward these linked amendments that there is no prospect of privatising any aspect of industrial or similar tribunals such as social security or rent review tribunals. I should be grateful for his specific acknowledgement of that. I take it that that is what is meant by the exclusion of any body which may be,
"exercising the judicial power of the State"
which is not a phrase with which I am familiar.
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I know that time is pressing and there is much to be discussed. I hope that noble Lords will forgive my simply raising those questions, which, I repeat, are of deep concern, in relation to the way in which we conduct judicial business in this country. That way of conducting judicial business is fundamental to the benefits that we have as a society living in this country.
Lord Ackner: My Lords, I ventured to speak in favour of an amendment made in July to Clause 58, which is now Clause 62. The amendment, proposed by the noble Lord, Lord Williams of Elvel, focused attention upon the fact that the exclusion of functions in order that the judicial function should be protected was inadequate. In the debate that followed, the noble Lord, Lord Strathclyde, conceded that there was room for anxiety. There were important points about judicial function, such as magistrates, tribunals and others, which needed to be attended to. I am delighted, and I in no way look upon it as a coincidence, that the noble Earl arriving on the scene has produced a formula which deals with that particular concern—and deals with it quite adequately. The phrase,
"tribunal or body exercising the judicial power of the State",
is lifted straight out of Section 19 of the Contempt of Court Act 1981; it is the definition of a court. It seems to me—and I discussed the matter with my noble and learned friend the Lord Chief Justice—to be an adequate way of protecting judicial functions. We had, both of us, one concern; namely, to what extent it was clear that implied in the judicial function, as we both thought was the case, would be the question of what is now referred to, as a term of art, "case flow management"; that is, management by the judiciary, by the judges and by intervention in the administration of cases to ensure that they come on quickly and with the minimum of expense. It is an activity that is very developed in America, Canada and Australia. We wanted an assurance that that would be looked upon as being an inherent part of the judicial function. My noble and learned friend the Lord Chief Justice wrote to the Lord Chancellor expressing that concern. I am happy to say that the reply which came today—the Lord Chief Justice has provided me with a copy—gives the assurance:
"Judges in giving directions and otherwise in 'managing cases' are exercising the jurisdiction of the court, indeed that is what gives such acts their authority in law. Nothing which is being considered for the future and which may enhance or change the judges' case management functions will, I believe, change that situation and hence those functions will not become susceptible to contracting out".
So that particular anxiety has been removed.
With regard to the amendment just referred to, I believe that there are, on the face of it, adequate safeguards. There is to be inserted in the proposed new Section 27,
"No order under subsection (3) above shall authorise the contracting out of any functions the discharge of which would constitute—

(a) making judicial decisions or advising persons making such decisions;

(b) exercising any judicial discretion or advising persons exercising any such discretion; or

(c) exercising any power of arrest".

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Subsection (6) provides that,
"Before making an order under subsection (3) above, the Lord Chancellor shall consult with the senior judges as to what effect (if any) the order might have on the proper and efficient administration of justice".
Speaking for myself, and with the concurrence of my noble and learned friend the Lord Chief Justice, I thank the noble Earl for paying such careful regard to the anxieties that we expressed, which appear now to be adequately catered for.
3.45 p.m.
Baroness Hamwee: My Lords, I rise to speak to an amendment that stands in my name within this group, Amendment No. 81HB. It deals with what is perhaps an associated matter though one that is not entirely on the same ground as the amendment to which the noble and learned Lord, Lord Ackner, spoke. It aims to exclude from the scope of contracting out the quasi-judicial functions currently exercised by local authorities.
I raised this matter at the last stage on a day when the attention of several noble Lords—I include myself in their number—was a little distracted by the game of musical chairs being played on the Government Front Bench. Perhaps our attention was not fully on the point. Certainly I felt that a little further explanation on the Government's thinking might have been given that day or on the following day of the Committee stage. I have therefore tabled an amendment on this matter again the better to understand the Government's thinking.
Currently, local authorities exercise a number of what I have described as quasi-judicial functions—in particular, development control in the field of town and country planning, and also licensing, which can cover a very broad area ranging from matters such as acupuncture and ear-piercing, through the licensing of premises providing food, music, dancing, entertainment and so on. The list that I gave last time concluded with wild animals in zoos. Development control, of course, covers the granting or refusal of planning permission. I believe that those functions need to be exercised with a sensitivity and understanding that local councillors mostly have, and certainly should have, and in a democratic and accountable context.
With regard to development control, the local authority draws up its own local development plan. Decisions have to be made in that context. Last night I sat on a planning committee in my own authority considering, for about an hour, whether or not to depart from the policy in our own previously agreed plan. At the end of that hour I felt that the applicant for planning permission and those who were objecting had had a very full and sensitive discussion of the problems that they had raised in a way that would simply not be possible if contractors carried out that function. Not only did we understand the issues very fully and were prepared to debate them in public, but we did so in a way which meant that, even if those who are concerned may not feel comfortable or satisfied with the results, at least they understand the processes which led to them. But as members of local authorities, we are bound by codes of conduct and have to make declarations of interest and
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so on. I simply do not feel that contractors would be under the same sort of obligations or that the public would see them as carrying out the same kind of functions with that same responsibility.
At the previous stage, the Minister said, in connection with a different amendment referring to functions affecting the use or development of land—he had told me the previous day that such would be his answer on the point—that there would be no compulsion on local authorities to take action. The proposals in the Bill are simply to free individual local authorities to employ contractors where it seemed sensible and appropriate.
I fear that past behaviour is, as it were, the best predictor of future behaviour. Every example from the Government shows that, having first allowed contracting out, they then move from a permissive position to one that is mandatory. Rapidly, local authorities are required to contract out functions. I hope that the noble Earl will not feel that this is an attack on him personally; but I have to say that it is an attack on the Government in that I do not trust those weasel words.
The Minister also said that the broad approach taken in the Bill as it stands was the right one, as the Minister had to consider each case on its merits and would consult local authority associations in respect of local authority functions. He said that that would be the proper time to consider whether or not a function should proceed to contracting out. We have all experienced dissatisfaction in dealing with orders which do not lend themselves to the kind of scrutiny, revision or indeed overturning that one might wish to see.
For all those reasons, I tabled the amendments in my name in this group.
Earl Ferrers: My Lords, I am grateful to those noble Lords who have spoken about these amendments. I am particularly grateful to the noble and learned Lord, Lord Ackner. When I saw his name as a speaker, I was alarmed, for fear that he might think that the Government had not gone far enough in meeting his concerns. I am bound to say that I am indebted to his flattery in saying that he believed it was not without coincidence that my arrival at the Dispatch Box in this particular department coincided with these amendments. I am delighted that the noble and learned Lord should exercise his imagination on these matters, even if sometimes it strays into the realms of fantasy. I merely tell him that my noble friend Lord Strathclyde and indeed my present department considered carefully the suggestions and the worries that were expressed at Committee stage and acted upon them. The fact that that has met with the approval of the noble and learned Lord gives me great satisfaction.
I understand too the concerns felt by the noble Lord, Lord Williams of Mostyn, which he is right to raise because they are important. I hope that I shall be able to show him that they need not be so great as he feels them to be. He said that there was a very close relationship of trust between judges and court staff. He is entirely correct. There is a close relationship. The amendment excludes from contracting out those areas in which judges and staff work together most closely. In other areas each case will need to be carefully

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considered on its own merits so as to ensure that the arrangements are such that good working relationships with the judges will not be jeopardised.
There is no reason in principle why judges should not be able to work as effectively with contractor staff as with civil servants, provided that it is in appropriate cases. I do not believe that contracting out will undermine the proper working of the courts or the probity of the process. Together with the exclusions from contracting out in the amendment, the requirement to consult the senior judiciary and have parliamentary scrutiny will ensure that contracting out will not be used where it would undermine the probity or the proper working of the courts.
I am sure that the noble Lord realises that there are some 10,000 people working in the courts service. Many of the functions are routine. But it is impossible to say that none of those functions could appropriately be contracted out as a matter of principle.
The noble Lord was concerned too about the concurrence of the Treasury. Everyone is always worried about that kind of thing. I can only reassure him that subsections (1) and (2) of the new Section 27 replicate the terms of Section 27 as it currently stands. If the Treasury does not concur, the appointments may not be made. That is the present position.
The noble Lord quite rightly said that the lowliest clerk recognises his loyalty to the judicial process. The lowliest clerks will not be contracted out if they are involved with the judicial decision-making; of course, cleaning the courts and other such services could well be.
The noble Lord was also concerned about the fact that contracting out might make things more expensive. I do not believe that that will be so. In fact the contrary should be the case. It is the whole purpose of the contracting out process. The purpose of allowing competition is in order to seek out the benefits and to provide a better service and better value for money. If that was not found to be the case, contracting out would not follow. The noble Lord let his imagination run a little faster than it normally does by asking whether this was not in fact intended to be the privatisation of the courts. I can tell him that the Government have no intention of privatising the courts.
The noble Lord referred to industrial tribunals and social security appeal tribunals. The government amendments, including Amendment No. 81K, exclude functions, the exercise of which constitutes the exercise of jurisdiction of any court or tribunal exercising the judicial power of the state. Industrial tribunals and social security appeal tribunals do exercise the judicial powers of the state. So when those functions are exercises of their jurisdiction they are excluded. In any event, industrial tribunals and social security appeal tribunals are not office holders within the meaning of the Bill.
The noble Baroness, Lady Hamwee, was concerned that when she moved an amendment earlier everyone's attention was distracted by what she described as "musical chairs" on the Government Front Bench. I am glad that she pays such attention to what the Government do. However, I am sorry that it resulted in the rest of your Lordships apparently not paying so
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much attention to her amendment. I can understand her distress that that happened. Her amendments seek to exclude any quasi-judicial function of a local authority. The term "quasi-judicial" is a somewhat old-fashioned one which has lost specific meaning in administrative law. It is now generally taken loosely to refer to any decision-making function which is subject to judicial review under the principles of administrative law. I am bound to tell the noble Baroness that her amendments therefore go very wide and would preclude consideration of contracting out where in fact it would be entirely appropriate to do so. We believe that each case should be considered on its merits.
The noble Baroness was concerned about the local authority staff who are subject to codes of conduct whereas contractors are not. We intend to deal with the issues of probity and impartiality in later amendments. Perhaps I may deal with those points at that time. I can assure her that there are comprehensive safeguards in the Bill and the existing law which address her worries.
The noble Baroness was concerned as to whether or not local authorities would be forced to contract out. We have made quite clear that the provisions are only enabling provisions. It will be for a local authority to decide how far to use a contractor to carry out a specific function if a relevant order has been made.
I hope that, with those thoughts, I have been able to allay some of the anxieties, although I realise that they were not great, that were expressed. I remain grateful to the noble Lord, Lord Williams of Mostyn, for giving the welcome that he did, although it did not go quite as far as that of the noble and learned Lord, Lord Ackner. We cannot expect everything always and I am grateful for the welcome that he gave.
On Question, amendment agreed to.
4 p.m.
Baroness Hilton of Eggardon Baroness Hilton of Eggardon moved Amendment No. 81B:
Page 54, line 41, after ("(2)") insert or ("2A)").
The noble Baroness said: My Lords, in moving Amendment No. 81B I shall speak also to Amendment No. 81F. It is a pleasure on this occasion to be faced by a Minister who knows a great deal about the police service. The noble Earl, Lord Ferrers, spent many years dealing with police matters and will therefore understand the arguments that I put forward. That is in contrast to the Minister who was dealing with an almost identical amendment at Committee stage, which was tabled by the noble Lord, Lord Harris of Greenwich. The noble Lord, Lord Strathclyde, is not an expert on police matters but it is reasonable to assume that his replies expressed Government thinking on the police service. If so, his reply—to be found at Hansard, col. 266 on 20th July—reveals a disturbing lack of understanding and a narrow view of police work that in my view is potentially disastrous for our society.
The noble Lord listed what he described as the most important statutory functions of the police service. They were, firstly, stop and search; secondly, entry, search and seizure; and, thirdly, arrest and detention. Those he saw as the core functions of the police service—a

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woefully narrow view of police work. What about the preservation of the Queen's Speech (the Queen's peace, the Speech is obviously on all our minds). Authorities as diverse as the noble and learned Lord, Lord Scarman, and Robert Peel—a previous Home Secretary—felt that the preservation of public tranquillity was a prime duty of the police service. Also, the prevention of crime was seen as an essential duty —in fact, the primary duty— of an efficient police service. Those were the words used in 1829 when objectives were laid down for the Metropolitan Police; that an efficient police force would be best shown by the prevention of crime. The arrest and detention of offenders came some way down the list.
In my view, the present Government's attempts to slim down the police duty to some mythical central core of crime detection will be wholly counter-productive. Only 40 per cent. of police work is directly related to crime. Moreover, 82 per cent. of calls by the public to the police have nothing whatever to do with crime. It is extremely important that that context is understood. Police work in attempting to catch criminals or detect crime is wholly dependent upon being situated within a context where the public are dependent upon them for many other services.
The idea that police work is all about chasing criminals has more to do with American television series such as "Hill Street Blues", "Starsky and Hutch" and "Hawaii Five-O", than anything to do with the reality of policing in a complex, multi-ethnic, multi-class society. I do not suppose that any of your Lordships are fans of "Hill Street Blues", but there is a passing resemblance between the Home Secretary and the SWAT team lieutenant who wanted to take a tank into the ghettos of New York. The fact that one-in-six of New York schoolchildren are carrying weapons to school is indicative of to what that style of policing may lead.
The deputy commissioner of the metropolis, in an article in the Sunday Observer, reminded us again that the narrow view of police work as merely enforcement was what led to the 1981 Brixton riots and, more recently, to the riots and wholesale destruction of parts of Los Angeles. The police service in this country has absorbed the lessons of the 1981 riots which were spelt out in the report of the noble and learned Lord, Lord Scarman. Similar conclusions were drawn in America from the Watts riots in the 1960s and the other riots that occurred more than 30 years ago. Unfortunately, those lessons were forgotten by subsequent police chiefs and politicians in this country.
The Home Office in this country and its current Ministers do not appear to have remembered the lessons of 1981 and earlier riots. To some extent, because the police service absorbed those lessons, the current friction between many thinking police officers and the Home Office is apparent. To be effective police work must be embedded in the community; firstly, because most policing is done by the community itself. Ninety per cent. of all crime arrests result directly from action or information from the public and not clever police detective work. Secondly, unless police are known, trusted and respected, the public will not provide them with information. For example, the current successes of
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"Operation Bumblebee", which have been widely trumpeted, are because police are concentrating on known burglars—that is, information received about individuals —and not because they are finding new burglars.
Trust and respect in relation to the police are built up precisely through the wide range of ancillary jobs performed by police officers. Such things as looking after lost dogs, receiving property lost in the street, rescuing people from fires, dealing with attempted suicides, the homeless, the mentally ill and traffic are all essential parts of building up respect and trust in the community. If police work is fragmented by chopping off those various tasks they may, individually, be done more cheaply, but we shall be left with a police service that can no longer carry out its core functions because of the loss of public support.
The Minister described certain court tasks as routine functions. But he ignores the fact that those routine functions are carried out within a context of human relationships; he ignores totally human psychology and the fact that an organisation such as the court service, the police service and communities are dependent upon a subtle network of relationships. It is not simply a question of carrying out mechanistic, routine tasks.
As more Securicor or Group 4 type organisations are set up to carry out single functions inevitably there will be fewer police officers, and they will become more remote from the communities they serve. They will become increasingly confined to an enforcement role, obsessed with response times and statistics. Those, as we know, can have disastrous results on the complexities of policing. We will see a more alienated and more resentful community, especially in our deprived inner city areas. Ultimately, I believe, it will lead to American style, crime-ridden ghettos. There will be no reduction in crime levels and an increase in urban violence and decay.
Contracting out ancillary police services may enable the police to concentrate more on their alleged core role. It sounds like a simple course of action towards improved efficiency, but that is exactly what is wrong with that specific remedy. It is too simple; it is simple-minded and simplistic. The Government operate on a model of human behaviour which, in many ways, dates from a 17th century Newtonian model of mechanics dependent more upon nuts and bolts, levers and pulleys than on the much more subtle and sophisticated quantum mechanics of today. If one considered taking a simple model like that of human behaviour and takes what is really appropriate to human beings, to organisations and to society, which is an organic model, then a police service, society, things like the court service become more like a living organism than a simple machine. It has a supporting structural skeleton which operates with simple joints and levers; but to function that skeleton requires muscles and a complex chain of chemistry with interacting enzymes, hormones and tissues.
An effective police service depends entirely upon that complex of supportive relationships and networks within the community which operates in the same way as body chemistry. If Ministers proceed in stripping

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from this organic system not only the fat but also the flesh they will end up with a perfectly articulated and working skeleton, but one which is totally unable to function on its own account. I beg to move.
Lord Allen of Abbeydale: My Lords, I was glad to put down my name to this amendment and to Amendment No. 81F. As the noble Baroness has explained, a similar amendment was put down at the Committee stage—and it was in my name—but owing to a railway strike, unfortunately I was not here to move it. I read with great interest the exchanges which took place on that occasion. One result is that the present version differs from the previous version in that it makes no reference to the Security Service. I was glad to see firmly on the record that the functions of that service and the director fall outside the provisions of Clause 64, as it now is, and that any amendment relating to those functions would be, to use the word employed by the noble Lord, Lord Strathclyde, negatory. That is not a word which I had previously encountered but its meaning at any rate is clear.
The amendment is designed to probe the Government's intentions relating to the police. As the noble Baroness, Lady Hilton, has explained, the discussion at the earlier stage was not very successful in eliciting information and I support her in thinking that it is right to have another shot. It has been recalled that on the last occasion the noble Lord, Lord Harris of Greenwich, was especially anxious that the noble Earl, Lord Ferrers, should reply to what was essentially a police debate and we must be most grateful to the Prime Minister for so promptly making arrangements for that to be possible.
On the last occasion the noble Lord, Lord Williams of Elvel, asked the specific question (at col. 266 of the Official Report of 20 th July) whether the police national computer was to be privatised. The noble Lord, Lord Strathclyde, did not know but promised to write. As I suppose that I was as much involved as anyone in setting up the original police national computer, I was naturally interested. I am glad to say that today I have received a copy of the letter which in the end the noble Earl wrote to those who had taken part in the debate. The letter says in effect that the Government are indeed thinking of contracting out the computer but that, as it is not provided in pursuance of any specific statutory requirement, it falls outside the scope of the Bill. I find that reply just a little disquieting.
The Bill itself provides in Clause 66(1) (a) that a function is excluded from Section 64 if,
"its exercise, or a failure to exercise it, would necessarily interfere with or otherwise affect the liberty of any individual".
I understand that in that context "liberty" means physical liberty. But the way in which a computer can operate can quite clearly affect the liberty of the subject as so interpreted. If it mixes up names and produces a list of previous convictions or a record of criminal activity for the wrong person, it could well happen that that individual could be arrested or at any rate hauled off to the police station for questioning and his liberty would indeed be affected. It is really asking too much to believe that the material fed into the computer could
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never be wrong? I find it just a little unsatisfactory that the Government's acknowledged desire to go for contracting out in this context takes no account of the safeguards which would cover it were action being taken under Clause 64.
We know that the Home Office is now conducting an inquiry in private designed to identify functions which the police can shed to private security firms, local authorities or what-have-you and, on the other hand, those core functions which the police must retain as involving the exercise of police powers or the potential use of legitimate force which should be delivered only by police constables. The trouble is that police responsibilities, as we have always known them, go well beyond this rather narrow definition of core functions, as the noble Baroness has so clearly brought out. As she said, it is not the only job of the police to catch criminals. In fact only a small proportion of applications to the police are concerned with crime. The very widely held fear is that the whole character of policing in this country, the traditions of peacekeeping, of crime prevention and service to the community, which have given the police in this country such a high reputation throughout the world, may be at risk.
Over many years the community has come to depend on the police to carry out what could be described perhaps as essentially social service functions. If now, at the behest of the Treasury, in which I once had the honour to serve, we go too far in dropping those functions, the police could end up simply as a law enforcement agency, as indeed is the position in some other countries. I can well remember that once in Manhattan I asked a police officer for help in finding an address. The reply went well beyond my knowledge of some of the more basic words of the American language but the message, that it was not his function to act as a guide, was only too clear. I am not suggesting that an order is likely to be made under the Bill forbidding our police from helping members of the public or from talking to strangers; but in a modest way that incident serves to illustrate the different attitude that we have to the police in this country.
Accordingly, these amendments, the drafting of which may or may not be ideal, are designed to put a barrier in the way of the police being obliged to go too far in withdrawing from their vital social service role and the activities which help to build up public trust, or at the very least to elicit some assurances from the Government. Following all the time and money which were wasted on the Sheehy Report, the very considerable defects in the recent police legislation introduced into this House and the somewhat disquieting information about the police national computer, I should like to be sure—perhaps a little surer than I am at present—that the police service is safe in the Government's hands.
The Earl of Winchilsea and Nottingham: My Lords, we on these Benches support these amendments, strongly believing that the Home Office review of core ancillary tasks for the police represents a far more serious threat to our police service than the Police and

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Magistrates' Courts Bill ever did. It must merit primary rather than secondary legislation should the review ever reach that stage.
Lord Monson: My Lords, I have listened with interest to what has been said, but I am puzzled by the drafting of Amendment No. 81F. I can understand why some noble Lords may wish to exclude a function where contracting out would adversely affect the ability of the police to carry out their duties. However, as drafted, would not the amendment also exclude instances where contracting out beneficially affects the police in carrying out their duties? If so, is that desirable?
Lord Peyton of Yeovil: My Lords, I hope my noble friend will forgive me if I make a short intervention on the amendment. I did not take part in the debates in Committee on this point. I wish to express to my noble friend a measure of anxiety. I hope that he will consider it and do his best to allay it.
There are some unpleasant echoes in my mind of proposals originally put forward in the Police and Magistrates' Courts Bill of which I need not remind my noble friend because he played a very helpful role in the passage of that legislation. I have long believed that contacts between the police and the community should be broadly based. It would be most unfortunate if one of the principal consequences of this measure should be a diminution of the contacts between the police and the community and a narrowing of them to those more unpleasant and almost hostile duties of law enforcement.
I do not like the idea of an increasing partnership between central government and private security firms. That gives me all kinds of uneasy vibrations. I do not wish to detain your Lordships' House, but I wish particularly to echo some words used by the noble Lord, Lord Allen of Abbeydale. He referred to the tradition of peacekeeping and crime prevention in this country being police duties. I believe that any change in the police function and their situation, or an alteration in the pattern of reporting and responsibility which they owe, should be handled with great care. Therefore, I say to my noble friend, in no spirit of controversy or nagging, that I hope that he will look carefully at this point; I, for one, feel great anxiety about it.
Earl Attlee: My Lords, perhaps I may first declare an interest because I own a vehicle which carries abnormal loads. Under the clause will the Minister be able to make an order permitting the contracting out of escorting of abnormal loads by the police to other contractors? If so, what kind of parliamentary scrutiny is offered for such orders?
Earl Ferrers: My Lords, I know that when the debate took place in Committee a number of anxieties were expressed about the Home Office review of police core and ancillary tasks and how the review might relate to the contracting out provisions in Part II of the Bill. Indeed, the noble Lord, Lord Harris of Greenwich, as the noble Lord, Lord Allen of Abbeydale, reminded us, expressed disappointment that I was not present in the Chamber in my then capacity as Home Office Minister. I was deeply flattered that he should have noticed my
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absence and minded. However, in view of the fact that that anxiety was expressed, the noble Lord, Lord Allen of Abbeydale, very kindly expressed his gratitude to the Prime Minister in seeing that I am here today. I am sure that the noble Baroness, Lady Hilton of Eggardon, when she was discussing the Deregulation and Contracting Out Bill in Committee, never expected to find me sitting here. I find myself rather like a rotten penny which has turned up again on a different occasion.
Noble Lords: Never!
Earl Ferrers: My Lords, when one sees the names attached to various amendments, it is rather like the scenario for the criminal justice Bill and the police Bill being re-enacted. The noble Baroness said a very important thing; namely, that the police must be known, trusted and respected. I agree with that entirely. I hope that they will never give the kind of reply which the noble Lord, Lord Allen of Abbeydale, experienced in Manhattan, even if he did not quite understand the language used. I am sure that that disrupted his sensitive ear, but I understand that he gathered the message from the policeman fairly succinctly. I believe that that is something which would not happen in this country. I hope that it never will.
I may be able to give noble Lords some reassurance. When I was at the Home Office I was deeply appreciative of the fact that I had some involvement with the police for whom I have the greatest respect. I have always regarded it as a great privilege to be involved there. I noticed that the police were rightly concerned about the amount of work being put on them year after year. First, one Bill would be passed and then another. The police asked, "How much more work is going to be put on us?"
The purpose of the review of the core and ancillary tasks is to try to find out what it is really important for the police to do so that they can concentrate their efforts on those tasks and leave to others what can be more adequately done by them. The core tasks should be left wholly with the police. I agree entirely with my noble friend Lord Peyton of Yeovil when he says that contacts between the police and the public should be broad based. I know that he found it difficult to appreciate this at the time but I remind him that that was the philosophy behind the Police and Magistrates' Courts Bill; namely, to give to the people in the localities the responsibility for the policing of their areas, making sure that police authorities had the responsibilities they needed to ensure that that policing was efficient and local. That legislation was also designed to ensure involvement between the police and the public. However, I can understand my noble friend's anxiety that any change should be handled with care.
I would like to try to reassure noble Lords and the noble Baroness, Lady Hilton of Eggardon, who knows a very great deal about the police, considering her longstanding involvement with that service, about the Government's intentions. As was made clear in Committee, I would like to stress that functions which affect individual liberty or which involve the powers and

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rights of arrest, search or seizure of property are excluded from the order-making power by virtue of Clause 66.
The noble Earl, Lord Attlee, asked about the escorting of abnormal loads. Functions which are not statutory do not fall within the scope of the Bill. I am unsure whether that is a statutory function and whether it fulfils the other criteria within the scope of the order. I shall investigate the point and let him know.
The Government consider that exclusion will put beyond doubt the fact that the core function of the police falls outside the scope of the order-making power in Clause 64. Therefore, I hope that your Lordships will be reassured on that. That does not mean that the employment of contractors may never be considered for some activities. For example, under existing powers police forces throughout the country have employed contractors in such areas as catering and ground maintenance. It is very likely that that will extend to other support areas such as IT services, cleaning, vehicle maintenance and so forth. Those activities may, at present, be carried out under existing powers by contractors. Although I know that change can be uncomfortable, I think that it is right and proper to ensure that such support services can be exposed to competition so as to ensure that value for money is achieved. The Bill will not alter that position in any way.
The Home Office review of core and ancillary police functions will consider the most cost-effective way of providing core police services and it will explore how best to deliver what are called "ancillary services". The order-making powers in Part II are not concerned with transferring functions from the police to another agency. I would emphasise again that core functions are excluded by virtue of Clause 66, which places matters which affect individual liberty and entry, search or seizure of properly outside the scope of the order-making powers in the Bill.
The noble Lord, Lord Allen of Abbeydale, was concerned that the review of police functions was secret. It is not secret. In fact, it has been fully discussed by all police and local authority associations in a group which has been set up specifically for that purpose. An interim report will shortly be published which will summarise the review's progress to date. I hope that that will allay any misapprehensions which the noble Lord or others may have about that review, which is not intended to change the basic role of the police.
Most importantly, I can again assure your Lordships that the order-making power in Clause 64 will not be necessary in order to implement the outcome of the review. I can reassure the noble Baroness, Lady Hilton of Eggardon, that throughout the review the Government have made it quite clear that they have no intention of changing the current role of the police in our society. The police will continue to help and to reassure the public. The Government want a broad-based police service which polices by consent.
The noble Lord, Lord Harris of Greenwich, raised during Committee the question of whether some police activities such as crime prevention, school visits or the tracking of missing persons could be contracted out.
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Those activities are carried out in fulfilment of general common law duties of the police. Government policy, as was reaffirmed in the Police and Magistrates' Courts Act 1994, is to give greater responsibility to the chief constables for the efficient and effective running of their force, and for there to be less government interference in the day-to-day running of police forces. It is the chief constables, not the Government, who have the statutory duty to direct and control their forces. At present there is nothing to stop a chief constable, with the consent of his police authority, from making use of private contractors in connection with those activities. Again, the contracting out order-making power would not apply to those activities.
The noble Lord, Lord Allen of Abbeydale, was concerned about the position of the police national computer. I can advise him that the Government are looking actively at the possibilities of contracting out the operation and maintenance of the police national computer. We do not believe that there are any overriding objections of principle and the Home Office hopes to announce by the end of the year whether, and if so when, a market test might take place. However, I should point out that the decision here on whether or not to consider market testing or the use of private contractors is in no way dependent on the passage of the Bill. The contracting out order-making power in Clause 64 will not be required, as there are no statutory restrictions which would prevent such a test proceeding. Therefore, the matter does not arise under the Bill.
I know of the anxieties that have been expressed both today and at earlier stages as well as on the Police and Magistrates' Courts Bill about the police and their relationship with the public. They are very important concerns. It is essential that the police and the public should have a mutual respect one for the other and- each to the other. I hope that what I have said this afternoon in answer to the amendment tabled by the noble Baroness, Lady Hilton of Eggardon, has been able to reassure her that the Government wish to see that continue. I hope that some of the concerns which the noble Baroness understandably expressed will not materialise.
4.30 p.m.
Lord Tordoff: My Lords, before the Minister sits down, I wonder whether the House will give me leave to ask for clarification. The noble Earl has given us a broad raft of things which will not be affected by the Bill. I did not hear of one instance where this provision might be required to do anything which was virtuous. If that is the case, what possible objection can there be to the amendment?
Earl Ferrers: My Lords, the objection to the amendment is that it is not necessary. The functions which would come within the scope of the power in the clause are narrowly defined. They would only lie within its scope if they met all the conditions in Clause 64. They are, for example, that the function is conferred upon the office holder within the meaning of Clause 74(1); that the function is exercisable by virtue of any enactment or rule of law by a member of the officer holder's staff or by a civil servant assigned or appointed

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to assist in the exercise of those functions; and that the function is not excluded by Clause 66. That excludes from the scope of the power those functions the exercise of which would necessarily interfere with the liberty of the individual. Of course, there would be no need to use the order-making power if it was already possible to employ contractors to carry out those functions. Those are the hoops that would have to be gone through before any action could be taken.
Lord Peyton of Yeovil: My Lords, before my noble friend completes that complex operation of sitting down, perhaps I may ask him one question. In the light of the assurances that my noble friend has given, which I very much welcome, what does he find objectionable in the amendment?
Earl Ferrers: My Lords, fundamentally, the amendment is not necessary. There is no virtue in making an amendment to the Bill which will not add to the advantages of the Bill and which will not help the work of the police. It is not clear that any of the functions would fall within the framework or be appropriate for consideration for contracting out. That is why we would prefer not to accept the amendment.
Baroness Hilton of Eggardon: My Lords, I am confused by that response. If it makes no difference whether the amendment is in or out of the Bill, it seems to me that we might as well have it in and make it clear that police functions will not be contracted out. The only functions that were mentioned by the Minister which are currently contracted out are cleaning and catering for which there are existing powers. If the Minister cannot give any examples of other functions which might be contracted out which Clause 64 is intended to cover, I cannot see any objection to including the amendment within Clause 64.
I echo what the noble Lord, Lord Peyton, said about having a broad-based series of contacts with the public. The danger of contracting out is that one reduces or shrinks the size of the police service until eventually it becomes so small that it has no room to do crime prevention or community policing work or to carry out a broad range of functions such as accepting lost dogs. The latter is an example of something with which the police are required to deal by statute which Ministers might think of contracting out. It is an obvious example that is often talked about. The problem is that that would require an amendment to be made to the Dogs Act 1906. Presumably, under these provisions, Ministers could decide to contract out the reception of lost dogs. However, that is the sort of thing that the public welcome the police dealing with. If one finds a dog, it is often convenient to take it to the local police station. That is also a convenient place at which to report a lost dog.
It is important that the police service retains that range of public services so that the public continue to have contact with police officers. If the number of police officers is reduced, the opportunities for such contact diminish. The anxiety that we are pursuing in the amendment is that the whole nature and style of policing in this country might change. We could end up with a
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force that is expected merely to enforce unwelcome laws. The police would then lose public support and respect. That is a serious matter of principle. Therefore, it is a matter upon which I should like to test the opinion of the House.
4.40 p.m.
On Question, Whether the said amendment (No. 81B) shall be agreed to?
Their Lordships divided: Contents, 108; Not-Contents, 168.

Division No.1

CONTENTS

Addington, L

Lester of Herne Hill, L

Airedale, L

Lloyd-George of Dwyfor, E

Allen of Abbeydale, L.

Archer of Sandwell, L.

Lockwood, B

Ashley of Stoke, L.

Longford, E

Bancroft, L.

Mackie of Benshie, L.

Barnett, L

Mallalieu, B.

Beaumont of Whitley, L

Birk, B

Mason of Barnsley, L.

Boston of Faversham, L.

McCarthy, L

Bottomley, L.

McNair, L

Brooks of Tremorfa, L.

Merlyn-Rees, L.

Bruce of Donington, L.

Campbell of Eskan, L.

Meston, L.

Carmichael of Kelvingrove, L

Milner of Leeds, L

Carter, L.

Mishcon, L

Chapple, L

Molloy, L.

Cledwyn of Penrhos, L.

Clinton-Davis, L.

Monkswell, L

Cocks of Hartcliffe, L

Mulley, L.

David, B.

Nelson, E

Dean of Beswick, L.

Nicol, B.

Dean of Thornton-le-Fylde, B.

Desai, L.

Peston, L.

Donaldson of Kingsbridge, L.

Ponsonby of Shulbrede, L.

Donoughue, L.

Prys-Davies, L.

Dormand of Easington, L.

Redesdale, L

Eatwell, L.

Ennals, L.

Richard, L.

Erroll, E.

Rochester, L.

Ewing of Kirkford, L.

Sainsbury, L.

Ezra, L.

Falkland, V.

Seear, B

Fitt, L.

Serota, B.

Gallacher, L

Shannon, E

Geraint, L.

Shaughnessy, L.

Gould of Potternewton, B.

Graham of Edmonton, L.

Stedman, B.

Gregson, L.

Stoddart of Swindon, L.

Grey, E.

Strabolgi, L.

Halsbury, E.

Taylor of Blackburn, L.

Hamwee, B.

Haskel, L.

Taylor of Gryfe, L.

Healey, L.

Thomson of Monifieth, L.

Hilton of Eggardon, B.[Teller.]

Tonypandy, V.

Hollis of Heigham, B.

Holme of Cheltenham, L.

Tope, L.

Howie of Troon, L

Tordoff, L. [Teller]

Hughes, L.

Turner of Camden, B.

Hunt, L.

Varley, L

Hylton-Foster, B.

Irvine of Lairg, L.

Wallace of Coslany, L

Jacques, L.

Wedderburn of Charlton, L.

Jeger, B.

Whaddon, L.

Jenkins of Hillhead, L.

Wharton, B.

Judd, L.

Kilbracken, L.

Williams of Elvel, L.

Kinloss, Ly.

Williams of Mostyn, L.

Kirkhill, L.

Winchilsea and Nottingham, E.

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NOT-CONTENTS

Addison, V.

Harvington, L

Ailsa, M.

Hayhoe, L.

Aldington, L.

Henley, L.

Alexander of Tunis, E.

Hesketh, L.

Allenby of Megiddo, V.

Hives, L.

Archer of Weston-Super-Mare, L.

Holderness, L.

Ashbourne, L.

HolmPatrick, L.

Astor of Hever, L.

Hood, V.

Astor, V.

Howe, E.

Balfour, E.

Inchyra, L.

Birdwood, L

Inglewood, L.

Blatch, B.

Johnston of Rockport, L.

Blyth, L.

Killearn, L.

Boardman, L.

Kinnoull, E.

Borthwick, L.

Knollys, V.

Boyd-Carpenter, L.

Laing of Dunphail, L.

Brabazon of Tara, L.

Lauderdale, E.

Bridgeman, V.

Lindsay, E

Brookeborough, V.

Lindsey and Abingdon, E.

Brougham and Vaux, L.

Long, V. [Teller.]

Bruntisfield, L.

Lucas, L.

Burnham, L.

Lyell, L.

Butterworth, L.

Mackay of Ardbrecknish, L.

Cadman, L.

Mackay of Clashfern, L. [Lord

Campbell of Alloway, L.

Chancellor.]

Campbell of Croy, L.

Macleod of Borve, B.

Carnegy of Lour, B.

Mancroft, L.

Carr of Hadley, L.

McColl of Dulwich, L.

Chalker of Wallasey, B.

Merrivale, L.

Charteris of Amisfield, L.

Mersey, V.

Chelmsford, V.

Middleton, L.

Chesham, L.

Miller of Hendon, B

Clanwilliam, E.

Milverton, L.

Clark of Kempston, L.

Monk Bretton, L.

Coleraine, L.

Monson, L.

Coleridge, L.

Montagu of Beaulieu, L.

Comwallis, L.

Montgomery of Alamein, V.

Courtown, E

Mottistone, L.

Cox, B.

Mountevans, L.

Cranborne, V. [Lord Privy Seal.]

Mountgarret, V.

Crickhowell, L.

Mowbray and Stourton, L.

Cross, V.

Moyne, L.

Cumberlege, B.

Munster, E.

Davidson, V.

Nelson of Stafford, L.

De Freyne, L.

Newall, L.

Dean of Harptree, L.

Northesk, E

Denman, L.

O'Brien of Lothbury, L.

Derwent, L.

Onslow, E.

Dixon-Smith, L.

Oppenheim-Barnes, B.

Donegall, M.

Orkney, E

Downshire, M.

Orr-Ewing, L.

Eden of Winton, L.

Oxfuird, V.

Effingham, E.

Pearson of Rannoch, L

Ellenborough, L.

Pender, L.

Elles, B.

Platt of Writtle, B.

Elliott of Morpeth, L.

Rankeillour, L.

Elphinstone, L.

Rawlings, B.

Elton, L.

Reay, L.

Fanshawe of Richmond, L

Renfrew of Kaimsthorn, L.

Ferrers, E.

Renton, L.

Fisher, L.

Renwick, L.

Flather, B.

Rippon of Hexham, L.

Foley, L.

Rodger of Earlsferry, L.

Fraser of Carmyllie, L.

Rodney, L.

Fraser of Kilmorack, L.

Saltoun of Abernethy, Ly.

Gisborough, L.

Seccombe, B.

Goschen, V.

Sharpies, B.

Gray of Contin, L.

Shaw of Northstead, L.

Gray, L.

Skelmersdale, L.

Gridley, L.

St Davids, V.

Grimston of Westbury, L.

Stewartby, L.

Hailsham of Saint Marylebone, L.

Strange, B.

Harding of Petherton, L.

Strathclyde, L.

Hardinge of Penshurst, L.

Strathcona and Mount Royal, L.

Harlech, L.

Sudeley, L.

Harmsworth, L.

Suffolk and Berkshire, E.

146

Swansea, L.

Ullswater, V.

Swinfen, L

Vaux of Harrowden, L.

Teviot, L

Vivian, L.

Teynham, L.

Westbury, L.

Whitelaw, V.

Thomas of Gwydir, L.

Wigram, L.

Torrington, V.

Willoughby de Broke, L.

Trumpington, B. [Teller.]

Wolfson, L.

Tugendhat, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
4.50 p.m.
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, before I call Amendment No. 81C, I should say that if this amendment is agreed to, I cannot call Amendment No. 81D.
Earl Ferrers Earl Ferrers moved Amendment No. 81C:
Page 54, line 42, leave out from beginning to end of line 4 on page 55.
The noble Earl said: My Lords, this amendment was spoken to with Amendment No. 81A. I beg to move.
On Question, amendment agreed to.
[Amendment No. 81D not moved.]
[Amendment No. 81E had been withdrawn from the Marshalled List.]
[Amendment No. 81F not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 81G:
Page 55, line 8, at end insert (", provided that such persons render proper account to Parliament on the exercise of their functions.").
The noble Baroness said: My Lords, in moving this amendment, I shall speak also to Amendment No. 81HA. This is the first of a pair of anti-Sleaze amendments which apply to the contracting out of central government functions. A later pair of amendments deals with the contracting out of local authority functions.
The first of the amendments is new. It was not tabled in Committee and therefore I should like to spell out the argument. Basically, it is designed to tackle the issue of quangos.
As seen at Bournemouth, the Government were split, and honourably split, with regard to Maastricht and the European fault line. Much of the debate has been about the democratic deficit. And yet, those who have been so concerned about the loss of democratic sovereignty in Europe have not always been seen to be defending two institutions which are highly respected in Europe for their competence and probity; that is, the British Civil Service and British local government.
We are seeing the disappearance of the Civil Service and the destruction of local government because of the transfer of functions to quangos, which are increasingly accountable not to Parliament and not to local authorities but to the Minister who appointed them. Quangos and Next Steps agencies within the Civil Service this year will cover about two-thirds of all central government function and in local government, quangos are outspending all of local government put together. In the process, that new patronage state means

147
that we lose ministerial responsibility; we lose the unity of the Civil Service; we lose the consensus governing its objectivity, integrity and impartiality.
Why are quangos so objectionable and why, therefore, are we moving the amendments? There are three reasons. First, they make bad decisions. By definition, they are single-issue bodies with no responsibility for the wider consequences of their actions. They have an interest in exporting their costs to other bodies. By definition, they are single-issue, blinkered and without a wider view. One only has to look, for example, at the absurd lack of interface between the Benefits Agency and the Child Support Agency. Both are Next Steps agencies. They are not integrated; they are fragmented. Therefore, when a father's ability to pay maintenance falters, income support cannot easily and speedily pick up and support the income of the parent with care.
Similarly, in local government health authorities wish to export the convalescent elderly on to social services departments which are not resourced to cope. In other words, by definition, because quangos are single-issue bodies they fragment services which should be integrated. They undermine the broader concept of value for money and concern for the needs of the users. Therefore, our first objection to quangos is that they make bad decisions.
This amendment deals with our second objection, which is concerned with the problem of public probity. Local and central government are governed by codes of conduct but quangos are not. Their appointments are secret; their audit is secret; their meetings are secret; their budgets are secret; and their members' names and addresses are secret. And yet they are spending our money in our name without our knowledge and consent and without our approval. However good the quality of the service which some quangos may provide, they must provide it in the light. Otherwise there is inevitably suspicion, which is too often well founded, of "cronyism" and sleaze.
One has only to look at some of the stories regarding the Welsh Development Agency. One has only to read the report of the Public Accounts Committee which found 26 cases of public business being conducted improperly. That is a scathing indictment of the patronage state. Incidentally, if those activities occurred within local government, councillors would be sent to gaol.
Our first objection to quangos is that they make bad decisions and our second objection is that their public probity is questionable. The third is the problem with regard to the democratic deficit. Councillors and MPs are elected. Both can be ejected and rejected. Civil Service departments are open to direct scrutiny by Parliament. However, when the Child Support Agency moved from targeting fathers who refused to pay to targeting fathers who were already paying but from whom the Treasury hoped to squeeze a bit more, that involved making a policy move which was never intended by Parliament; but Parliament had no control to rectify that matter because those Next Steps agencies
148
were beyond the parliamentary reach. That could not have happened in a department for which a Minister was directly accountable.
When, at the end of the 19th century, Gladstone and Salisbury corralled quangos such as Poor Law boards, school boards, metropolitan boards and so on into the newly invented local government system of county councils and urban, rural and district councils, they did so precisely to overcome the problem of fragmentation; precisely to increase probity; and precisely to produce accountability. I suggest to your Lordships that we should today reaffirm those Victorian values.
These two amendments go some little way towards that. The first of the amendments provides that such bodies should report directly to Parliament so that Parliament may hold them to account. That is Amendment No. 81G. The second, Amendment No. 81HA, provides that former permanent secretaries and Ministers who in office have established quangos or agencies or who have privatised functions should then not, in the space of two years, be the direct beneficiary by holding directorships or chairmanships, whether it be of BT, Cable and Wireless, British Gas or even BUPA.
No one should be thought to be making private profit out of public office, public duty and public service. It brings us all into disrepute. How can we believe that Ministers and senior civil servants are making decisions in a properly disinterested way when they are so quickly rewarded for their so-called disinterested decisions? It is indecent. We all know it and we all feel uncomfortable about it. We should do something about it. The second amendment goes some little way towards achieving that.
Any MP or councillor who has been canvassing is told two things on the doorstep. First, they are told, "You are all alike". Secondly, they are told, "You are only in it for what you can get". We are creating a culture of cynicism which dishonours politics.
We are all delighted that recently the Prime Minister appeared to acknowledge that those 2,000 or so quangos need to be brought out into the light from the shadowland of "cronyism" by asking the relevant Minister, Mr. Hunt, to publish names, to appoint from a list and to require meetings in public. The noble Lord, Lord McIntosh, and I have moved similar amendments, during the passage of previous Bills, which noble Lords opposite rejected. I am delighted to see that the Prime Minister now appreciates that we were right at the time and that we won the argument if not the vote. Certainly, recent Gallup polls have shown how widespread is now the view of the public that all parties—and I have to say, especially the governing party —are now believed to be infected by sleaze and dishonour. We must clean those stables.
I accept fully that the amendments only tinker with the problem and that the departmental shadowing committees are not yet sufficiently competent. We need a much wider reform of all the processes and procedures within Parliament. But these two amendments would signal the need, first, to bring central government quangos into a "get-attable" framework by Parliament over and beyond the Public Accounts Committee. The

149
second amendment would return us to the culture of the Northcote/Trevelyan reforms which, in the 1850s, removed patronage from the Civil Service.
I ask the House to go along with the Prime Minister, to reaffirm those Victorian values, to start to clean up politics and to bring them back into a proper repute. I beg to move.
5 p.m.
Earl Ferrers: My Lords, I am bound to say that your Lordships have listened to a most astonishing speech from the noble Baroness, Lady Hollis of Heigham. Indeed, she used some very extravagant words. She said that the amendment was all about "sleaze", "dishonour" and clearing up politics; that it was about private profit being made out of public service; about being rewarded with quick appointments; and, finally, that the whole thing was "indecent". In my view, that has very little to do either with the amendment or with the Bill. As far as accountability is concerned, I entirely understand the concern that those who are responsible for statutory functions should be accountable to Parliament; of course they should. Moreover, functions which are contracted out should not disappear from public view just by virtue of their being contracted out. However, Amendment No. 81G is not necessary in order to achieve that aim.
Clause 67 provides that the Minister or office-holder on whom the function is conferred will remain responsible for anything which is done or which is omitted from being done by contractors who are employed by him to carry out a function. The clause safeguards all existing lines of accountability. That ensures that Ministers and office-holders will remain accountable to Parliament and will be legally liable in the same way as they are at present for their own acts and omissions and for those of their employees. Those authorising contractors will be responsible for ensuring that the function is carried out properly. It is right that they should be accountable for any decisions which may be taken on their behalf. Where requirements to report on activities to Parliament already exist, these will of course remain in place.
The noble Baroness was concerned about Next Steps agencies. The Next Steps project has increased accountability by making the workings of government far more visible and easily understood by the public. The publication of framework documents, key annual targets and annual reports has significantly increased the information which is available both to Parliament and the public. Moreover, it has been made clearer than ever before just who is responsible for what. It also allows for more thorough parliamentary scrutiny.
The noble Baroness then had a good go at quangos as if they were something wicked and awful. I do not believe that they are. Indeed, there is nothing in the contracting out part of the Bill which transfers the responsibility of any Minister, office-holder or local authority to any other body. The Bill would merely allow for the employment of private contractors to carry out functions which can be currently undertaken by public servants. It is misleading to suggest otherwise.
150
The noble Baroness also referred to the Public Accounts Committee. Its report does not say that propriety has been a victim of Civil Service reforms. In fact, it acknowledges that it is important that the drive to provide improved services at a reduced cost should be sustained. That is precisely what we are doing. The message of the report is that we must ward against any risk that propriety could be compromised as beneficial change is introduced. I, for one, could not agree more. The whole point of the reforms is to make public services more accountable to the public and less wasteful and so bring about better management of public money.
The noble Baroness used the unfortunate word "sleaze" which is heard so frequently these days. I must tell the noble Baroness that I believe her amendment goes far too far. There are many occasions when persons who have advised a Minister about contracting out a function should not then be involved in the exercise of that function. Of course I understand that. For example, it may be a condition of the award of any contract in connection with the work of the official receiver that no one may bid if he, any partner of his, or any associated firm has been involved in advising my right honourable friend the President of the Board of Trade about contracting out such work. That bar also extends to advising potential bidders.
As I said, the amendment goes too far. Ministers will wish to be able to receive advice from those people who have specialist knowledge about a particular function. It would be a nonsense if potential contractors could not respond in detail to a consultation exercise for fear of not being able to bid for a contract awarded within the following two years.
Further, a Minister may wish to commission market research about a function. For example, if a Minister does commission such research it is right to ask whether it is correct that such people should be prevented from bidding for any subsequent contract. In order to make decisions, Ministers need to receive advice from many quarters. To place a bar on any adviser bidding for a contract subsequently would be detrimental to that advice. Of course —and this is a point the noble Baroness completely failed to recognise—there is advantage in there being movement of people from the public sector into the private sector. There is guidance as to how people should conduct themselves. But to say that anyone who has given advice to a department should be debarred from participating in any contract within two years is, I believe, an absurdity which really does not need to be entertained. I understand a little of the concern of the noble Baroness. However, if I may say so—and to use a colloquial expression—I believe that she went over the top with her anxieties in a quite unnecessary way.
Baroness Hollis of Heigham: My Lords, needless to say, I do not believe that the noble Earl's honour is in any sense in doubt. All I can say is that I really do not believe that he is living in the real world of perceptions out there as regards what is happening to the Government—I do not say "our Government"—in terms of issues of sleaze. For example, why does the Minister think that the Prime Minister set up at the weekend a

151
Cabinet review on quangos under Mr. David Hunt in order to spearhead a Cabinet drive against the sleaze factor now afflicting the Tory party? Has the Minister not heard of it? Does he not share the Prime Minister's concerns? Does he believe that Mr. Hunt will be wasting his time? Further, does he think that Mr. Hunt does not have a problem to identify, redress or resolve? I must say that I was slightly puzzled by the Minister's complacency in believing that all was well in the best of all possible worlds at the very time his Prime Minister is flagging up a problem and asking one of the most senior members of the Government to address it.
As regards the defence of quangos, the Minister did not at any stage touch upon the real problems that I tried to suggest are inflicted upon us by quangos in terms of their blinkered decision-making, their lack of public transparency and the questions relating to the inadequacy of the probity of their methods. That is now a widespread concern which is shared by parliamentarians, pressure groups, civil servants and certainly by academics, the judiciary and the Public Accounts Committee. What a pity that the Minister has not seen fit to read some of that material and, perhaps, also share that concern. He could then have helped us overcome some of those problems.
Finally, the Minister said that he saw no disadvantage—and, indeed, much advantage—in people moving from the public to the private sector. We are certainly not opposed to movement between those sectors. However, what we object to is senior Ministers of the Crown who have been instrumental in devising policies in the name of public interest then appearing quite quickly, and in quite indecent haste, to benefit from them both financially and personally. I am astonished that the Minister does not perceive that as a rather ugly and unpleasant phenomenon. However, as we have other amendments to debate, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 81GA and 81H had been withdrawn from the Marshalled List.]
[Amendment No. 81HA not moved.]
Clause 65 [Functions of local authorities]:
[Amendments Nos. 81HB and 81HC not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 81HD:
Page 55, line 39, at end insert:
("(2A) Where a Minister by order provides in accordance with subsection (2) above that a function of a local authority may be exercised on its behalf by another person, the authority concerned may, notwithstanding any regulations defining conduct as anti-competitive made under the provisions specified in subsection (2B) below, make compliance with any matter which would otherwise be so defined an express provision of the contract made between the authority and the authorised person (and in particular provisions to ensure that persons resident in the area affected by the contract derive some benefit from it).
(2B) The provisions to which the power in subsection (2A) refers are—

(a) sections 7(1A) and 9(4) (aaaa) of the Local Government Planning and Land Act 1980;

(b) sections 4(5) and 7(7) of the Local Government Act 1988; and

(c) section 9 of the Local Government Act 1992.").

The noble Baroness said: My Lords, in moving the amendment I shall, with the leave of the House, speak also to Amendments Nos. 81JA, 82CA, 82CF and 82CJ. This set of amendments concerns value for money and contract compliance. Contract compliance seeks to ensure—this is what Amendment No. 81HD seeks to ensure—that if a local authority wishes to insert conditions in a contract with regard to the employment of the long-term unemployed, women and disabled people, then as long as that applies to all potential contractors, it should not be regarded as anti-competitive. Any potential contractor wants not only to win a contract but, having won it, to perform within it as cheaply as possible thus maximising his profit. Part of the process of performing as cheaply as possible consists of exporting one's costs onto others.
If we let them, waste disposal contractors would dump and pollute. However, we do not let them do that and contract compliance ensures that environmentally friendly policies are pursued. If we let them, building contractors would take little or no responsibility for health and safety at work, but we do not let them do that. We insist that they observe standards of social responsibility and that they do not export their costs onto others.
Indeed we often talk about planning gain attached, for example, to a shopping centre in that one obtains a park or a créche in consequence of that shopping centre. Certainly one of our complaints about quangos is that they comprise single service bodies, such as water authorities, precisely because it is in their interest to maximise their profits by exporting their costs to others. For example, water companies carried out 21,000 disconnections last year, and hepatitis and dysentery increased three-fold. Environmental health bodies must pick up the bill for that. Cheapness often results in greater costs to other people.
However, staff in local authorities and in government should be in a position to act more sensibly than that, and to seek proper value for money by ensuring that when a contract is placed it does not generate additional costs elsewhere. Indeed it may even add benefits to the local economy. That is why contracts that embody contract compliance, and are not merely the cheapest possible ones, ensure that contractors observe such conditions as loop back into the local economy, and not just the money savings to be gained from a cheap contract as we would expect them to do. They should consume their own smoke so to speak and should not undermine other policies that a local authority is anxious to promote. If that is not done, one saves £1 on a contract and spends £2 elsewhere on other local authority activities.
This amendment would allow local authorities to insert into contracts such conditions as would ensure that the contract offers the best value for money. The conditions would apply to all contractors. If a contractor

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did not like the conditions, he need not tender. The amendment empowers local authorities to act as guardians for their local interests.
In Committee we tabled an amendment on local labour which the Minister, at the time, argued was contrary to EC law. But a more general amendment would allow local authorities to reach some of those in the group referred to, who for the most part tend to be the long-term unemployed. I am now talking about the long-term unemployed because the Government have spent £4 billion in the past few years on inner city initiatives aimed at building employment in inner cities. However, all research has shown that where Government have funded such schemes—UDCs, action areas, housing trusts and the like—where they have created new jobs, for every three new jobs that have been created two have been stripped out from elsewhere in the local community. Some 80 per cent. of jobs in London's Docklands were taken by outsiders and little benefit spilled over into the local area.
We know that in the inner cities some half of those under 25 are unemployed. We know the situation is even worse for ethnic minorities and the disabled. We know that those unemployed quickly—unfortunately, this is often permanent —become the long-term unemployed. Therefore what is saved on contractors' bills by going for the cheapest contract has to be spent several times over by the local authority in making good vandalism, installing security television cameras, providing extra policing and dead-end training schemes which lead to no real local jobs. The Department of the Environment stated in its document entitled Assessing the Impact of Urban Policy which was published in June,
"Residents see little direct or indirect benefit coming from most of these schemes".
There is nothing new about requesting contract compliance which will ensure, for example, that a contractor is required to employ some element of the long-term unemployed. The Government, for example, have imposed similar conditions with respect to religious affiliation in Northern Ireland and they are to be commended for that. Similarly, we would like to argue the case of women workers, especially those who head single-parent families and who are often shunted or coralled into low-paid, part-time work. We believe we should be able to protect their interests through contract compliance.
A further group which finds it difficult to enter the labour market comprises disabled people. The Minister is expert in this field. We know that the disabled have two to three times the unemployment rate of able-bodied people. The jobs traditionally carried out by those either in the formal or the informal quota system are disappearing. We know that disabled people may have better attendance records than most non-disabled people and that the cost of adaptations in the workplace are modest. But we also know that disabled people are up against not only the handicap of personal disability but also the disability of employer prejudice. The Government accepted—when the noble Lord, Lord Ashley of Stoke, tabled his Question on this subject yesterday—that education and voluntary persuasion should be backed by statutory law. That is coming but
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in this amendment we are asking that local authorities should have the power to insert into their contracts those very same conditions as the Government, we understand, will shortly impose on private contractors and local authorities more generally on a compulsory basis.
When we argued this matter in Committee, the Minister insisted that to support such an amendment would be illegal under European law. I have taken quite a lot of advice on this matter and I must say that, as I understand it, member states have considerable flexibility in permitting such contracts. It appears from the Beentjes case that the scope of contract conditions should not be limited or discriminatory on grounds of nationality. In other areas contract compliance could be inserted that would not be contrary to the Treaty of Rome or to EC law where local authorities deemed it was in their best interests. I hope, with that argument, that we may be able to persuade the Minister to support these amendments. I beg to move.
Lord Henley: My Lords, Amendment No. 81HD, with which the others are grouped, attempts to propose that matters defined as anti-competitive in the legislation governing compulsory competitive tendering for local authorities should not be treated as anti-competitive when an order is made under subsection (2) of Clause 65.
I do have to say that I am at a loss to understand why. The order-making power in Clause 65 is an enabling power and will not force local authorities to contract out work. They will be able to choose whether or not so to do. In contrast, the provisions listed in Section 2B of the amendment apply only when local authorities wish to retain in-house work which is subject to the compulsory competitive tendering regime.
During Committee stage, as the noble Baroness well remembers, we discussed similar amendments at some length. We discussed, as I remember it, many other matters, some of which some Members of the Committee seemed to think were varying on irrelevance to the amendments with which we were concerned. But those amendments would have allowed local authorities—as the noble Baroness will remember—to apply conditions to contracts for such work in order to secure the employment of local labour, women and disabled people. This would mean treating work contracted out as a result of an order under this section differently from all other public purchasing. The Government do not believe that the case for doing so is so proven.
First, let me repeat what I said at Committee stage: local labour clauses are in breach of EC legislation and the Commission has already intervened in cases where they have been proposed. I appreciate that the noble Baroness has taken advice. So have we, and I am convinced that that is still the case. But obviously, as the noble Baroness makes that point, I am quite prepared to give a commitment to have another look at these particular amendments and, perhaps again by means of correspondence, write in greater detail to the noble Baroness assuring her that her amendment is in breach of EC legislation.
Baroness Hollis of Heigham: My Lords, I thank the Minister for giving way. I wish to emphasise that the amendment does not address the issue of local labour but the issue of the long-term unemployed. According to the advice that I have been given although those groups may overlap, to target the long-term unemployed is not forbidden by EC law. Therefore, it is entirely possible, legally, for the amendment to be taken on board.
Lord Henley: My Lords, I take the point made by the noble Baroness. My advice is that her amendment is in breach of EC legislation. I do not think that we shall get far arguing the point at the Dispatch Box. As I said, I can give the noble Baroness an assurance that we shall have another look at the matter. Obviously, I should be the last to wish to do anything that might possibly be in breach of EC legislation. I do not understand the reaction of noble Lords opposite to that remark.
Other contract compliance clauses may also be regarded as discriminatory by the European Court. Again, I shall have a further look at the matter. They are also prohibited by Part II of the Local Government Act 1988. In addition, we should not forget that an underlying foundation of public procurement policy is that public purchasing decisions should be based on value for money. That is a matter that I shall come to later when I deal with Amendment No. 81JA, which seeks value for money savings. Decisions should be based on value for money, otherwise there can be additional costs for both local and national taxpayers.
It may help if I set out the legislative framework within which local authorities would have to operate following an order under Clause 65. These are the existing rules on public procurement.
First, the Treaty of Rome affects all public purchasing contracts and prohibits public purchasers, or those purchasing certain goods and services with public money, from taking any action which restricts the free movement of goods or the freedom to provide services, or which discriminates on grounds of nationality.
Secondly, the EC public purchasing directives, which apply to all local authorities, lay down criteria for the selection of contractors and award of contracts. The main aim of the EC procurement directives is to prevent discrimination against companies and workers of other member states. Authorities may exclude contractors from tendering only on prescribed grounds such as previous offences or grave professional misconduct; or if they fail to meet standards of economic or financial standing or technical capacity. All contractual matters must be made known in advance and must not offend against general principles of EC law which I have mentioned.
Thirdly, the terms of the UK legislation—Part II of the Local Government Act 1988—mean that local authorities may not refer to non-commercial matters at any stage during the process of letting or terminating a contract for the supply of works, goods or services. Matters such as the composition of a potential contractor's workforce are defined as non-commercial, so local authorities cannot use their procurement decisions to achieve social objectives.
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That is all in line with our policy. It is a general principle of government policy that social aims such as urban regeneration and equal opportunities should not be pursued through commercial contracts. As the noble Baroness well knows, we have a raft of other policies and provisions to support those social aims. I shall not now repeat the speech which I made at Committee stage in which I demonstrated to the noble Baroness that we have seen long-term unemployment fall, both among disabled people—although not as much as we would like—and among others; but obviously more can possibly be done.
We support the objectives of economic regeneration and ensuring that there is not unfair discrimination. However, contract compliance is not the way to achieve those ends.
Amendment No. 81JA seeks to ensure that orders under Part II specifying local authority functions cannot be made unless the Minister can show that substantial value for money savings will be achieved. There are a number of problems with the amendment.
First, because of the focus on savings alone, contracting out of functions could be prevented where that was done principally in order to secure improvements in quality. That might also include value for money, but not necessarily value for money savings. I am sure that the noble Baroness would not wish to rule out the capacity of the private sector to improve the standard of service at the same—or on occasions even greater—cost as incurred by public servants currently. Competing for quality is about improving quality and standards as well as reducing costs.
Secondly, the scheme of the Bill is to enable Ministers to lay orders under Clauses 64 and 65 which would specify functions which they consider may be appropriate for contracting out. As an order requires an affirmative resolution in each House, Parliament would then have the opportunity to debate whether the function so specified was indeed appropriate, taking into account the principles and safeguards laid out in the Bill.
Of course, the Minister would be able to say whether he thinks savings are likely. But at that stage no decision as to whether to contract out would necessarily have been taken; nor would it be possible for either the Minister, the office holder or any local authority to undertake the detailed evaluation necessary to satisfy the condition which the amendment seeks to impose. An order would typically be followed by a competitive tender to choose a provider based on the criterion of securing the best value for money, which I distinguish from value for money savings.
Thirdly, the Minister will not necessarily be well placed to assess the outcome of contracting out. The local authority itself will often be in the best position to evaluate the pros and cons of contracting out. As we have already sought to make clear, it is for the office holder or local authority to give the authorisation to employ contractors and not the Minister.
Having pointed out the problems, I believe that the noble Baroness can be assured that sufficient safeguards are in place to ensure that office holders and local authorities would satisfy themselves that contracting out would provide good value for money before authorising

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a contractor to carry out one of their functions. That is because Clause 67 makes sure that all the present accountability arrangements, including scrutiny of the decision to let a particular contract by the Public Accounts Committee or the district auditor, would remain in place.
I therefore hope that the noble Baroness will feel that on this occasion it is not necessary to pursue her amendments.
Baroness Hollis of Heigham: My Lords, I thank the Minister for that conciliatory reply. With the leave of the House, I should like to request the Minister to indicate whether, were he to find between now and Third Reading that the amendment is not contrary to EC law— as I believe to be the case, and as my professional advice indicates—he would come back at Third Reading with his own amendment embodying it.
Lord Henley: My Lords, to put it briefly: no. The fact that the amendment is contrary to EC law is merely one plank in my arguments. As I explained to the noble Baroness, the amendment is not considered desirable on other grounds. I can give no assurance that I would bring it back at Third Reading.
Baroness Hollis of Heigham: My Lords, I thank the Minister for his reply. It clarifies in my mind that the Government are saying that while they support the principles and policies of urban regeneration and equal opportunities, they would not seek to carry those through into commercial contracts. Why not? If commercial contracts do not carry urban regeneration and equal opportunity issues, then other bodies—the local authorities in particular—have to compensate for their failure so to do. Therefore, the savings to the commercial contractor are more than offset by the additional cost to the local authorities which have to make good that deficit in social responsibility.
If the Government will not support us in trying to privatise social responsibility—which is what the amendment seeks to do—and ensuring that nobody, and certainly not commercial contractors, is exempt from the social responsibility of caring for the longer term unemployed, women, ethnic minorities and the disabled, I should like to test the opinion of the House.
5.29 p.m.
On Question, Whether the said amendment (No. 81HD) shall be agreed to?
Their Lordships divided: Contents, 69; Not-Contents, 160.

Division No.2

CONTENTS

Archer of Sandwell, L.

Cocks of Hartcliffe, L.

Barnett, L.

David, B.

Birk, B.

Dean of Beswick, L.

Blackstone, B.

Desai, L.

Boston of Faversham, L.

Diamond, L.

Brooks of Tremorfa, L.

Donoughue, L.

Bruce of Donington, L.

Dormand of Easington, L.

Carmichael of Kelvingrove, L.

Eatwell, L.

Carter, L. [Teller.]

Ennals, L

Cledwyn of Penrhos, L.

Ewing of Kirkford, L.

Clinton-Davis, L.

Fitt, L.

158

Foot, L.

Mulley, L.

Gallacher, L.

Nicol, B.

Gould of Potternewton, B.

Peston, L.

Graham of Edmonton, L.

Ponsonby of Shulbrede, L.

Healey, L

Prys-Davies, L.

Hilton of Eggardon, B. [Teller.]

Richard, L.

Hollis of Heigham, B.

Ripon, Bp.

Hooson, L.

Seear, B.

Houghton of Sowerby, L.

Serota, B.

Hughes, L.

Shaughnessy, L.

Jeger B

Stedman, B.

Judd, L.

Stoddart of Swindon, L

Kilbracken, L.

Taylor of Blackburn, L.

Taylor of Gryfe, L

Kirkhill, L.

Thomson of Monifieth, L.

Lockwood, B.

Tonypandy, V.

Mallalieu, B.

Turner of Camden, B

Masham of Ilton, B.

Varley L

Mason of Bamsley, L.

Wallace of Coslany, L.

McIntosh of Haringey, L.

Westmorland, E

Milner of Leeds, L.

Whaddon, L.

Mishcon, L.

White, B.

Molloy, L.

Williams of Elvel, L

Monkswell, L.

Williams of Mostyn, L.

NOT-CONTENTS

Addison, V.

Eden of Winton, L.

Ailsa, M.

Effingham, E.

Aldington, L.

Ellenborough, L.

Alexander of Tunis, E

Elles, B.

Alexander of Weedon, L.

Elliott of Morpeth, L.

Allenby of Megiddo, V.

Elphinstone, L.

Annaly, L.

Elton, L.

Archer of Weston-Super-Mare, L.

Erroll, E.

Ashbourne, L.

Ferrers, E

Astor of Hever, L

Fisher, L.

Astor, V.

Fraser of Carmyllie, L.

Balfour, E.

Gisborough, L.

Beloff, L.

Goschen, V.

Blatch, B.

Gray of Contin, L.

Blyth, L.

Gridley, L.

Boardman, L.

Grimston of Westbury, L.

Borthwick, L.

Hailsham of Saint Marylebone, L.

Boyd-Carpenter, L.

Hardinge of Penshurst, L.

Brabazon of Tara, L.

Harlech, L.

Brookeborough, V.

Harmar-Nicholls, L.

Brougham and Vaux, L.

Harmsworth, L.

Burnham, L.

Harrowby, E

Butterworth, L.

Harvington, L.

Cadman, L.

Hayhoe, L.

Campbell of Alloway, L.

Henley, L.

Campbell of Cray, L.

Hives, L.

Carnegy of Lour, B.

Holderness, L.

Chalker of Wallasey, B.

HolmPatrick, L.

Charteris of Amisfield, L.

Howe, E

Chelmsford, V.

Inchyra, L.

Chesham, L.

Inglewood, L.

Clanwilliam, E

Jeffreys, L.

Clark of Kempston, L.

Johnston of Rockport, L.

Coleridge, L.

Kinnoull, E

Cornwallis, L.

Knollys, V.

Courtown, E

Laing of Dunphail, L

Cox, B.

Lauderdale, E

Cranborne, V. [Lord Privy Seal]

Leigh, L.

Cratborne, L.

Lindsay, E

Cross, V.

Lindsey and Abingdon. E

Cumberlege, B.

Long, V. [Teller.]

Davidson, V.

Lucas, L.

Dean of Harptree, L.

Lyell, L.

Denman, L.

Mackay of Ardbrecknish, L.

Derwent, L.

Mackay of Clashfern, L. [Lord

Digby, L.

Chancellor.]

Dilhorne, V.

Macleod of Borve, B.

Dixon-Smith, L.

Malmesbury, E

Donegall, M.

Marlesford, L.

Dormer, L.

McColl of Dulwich, L.

Downshire, M.

Merrivale, L.

159

Mersey, V.

Renwick, L.

Middleton, L.

Rippon of Hexham, L.

Miller of Hendon, B.

Rodger of Earlsferry, L.

Milverton, L.

Rodney, L.

Monk Bretton, L.

Saltoun of Abernethy, Ly.

Mottistone, L.

Seccombe, B.

Mountgarret, V.

Sharples, B.

Mowbray and Stourton, L.

Shaw of Northstead, L.

Moyne, L.

Simon of Glaisdale, L.

Munster, E.

Skelmersdale, L.

Napier and Ettrick, L.

St Davids, V.

Nelson, E.

Stewartby, L.

Newall, L.

Strange, B.

Northesk, E

Strathclyde, L.

Onslow, E.

Strathcona and Mount Royal, L.

Oppenheim-Barnes, B.

Sudeley, L.

Swifen, L.

Orkney, E.

Tebbit, L.

Orr-Ewing, L.

Teviot, L

Oxfuird, V.

Torrington, V.

Park of Monmouth, B.

Trumpington, B. [Teller.]

Pearson of Rannoch, L.

Tugendhat, L.

Pender, L

Ullswater, V.

Platt of Writtle, B.

Vaux of Harrowden, L

Rankeillour, L.

Vivian, L.

Rawlings, B.

Westbury, L.

Reay, L.

Wigram, L.

Renfrew of Kaimsthorn, L.

Willoughby de Broke, L.

Rennell, L.

Wise, L.

Renton, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
5.37 p.m.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 81J:
Page 55, line 41, at end insert (", and having regard to the views of,").
The noble Baroness said: My Lords, this is a simple and straightforward amendment. I shall be brief.
Clause 65(3) states:
"A Minister shall not make an order under this section in relation to a local authority without first consulting … representatives of local government… associations of local authorities".
Such consultation recognises that they have expertise that has been garnered over many years which a Minister who is only temporarily resident in a department may not have. It also recognises that local authorities and local authority associations are obviously stakeholders in the outcome. The amendment simply adds the phrase,
"and having regard to the views of.
The amendment does not provide that the Secretary of State should accept those views blindly but should have regard to them, giving appropriate weight, due consideration and reflection. In other words, the amendment ensures that the consultation process is not a mere formality, the outcome of which and the findings of which the Government could ignore with impunity. It provides for a proper consultation process.
We should like to think that the amendment makes explicit what the Government intended in which case the Government can have no objection to the amendment. But if it is not what the Government
160
intended and they expect to treat consultation as a casual matter, that makes the amendment all the more important. I beg to move.
Baroness Hamwee: My Lords, I support the amendment on a matter which we have discussed on many occasions. I have often felt that the term "consultation" is sadly merely cosmetic when inserted in legislation. It would become the Government Front Bench to accept that "consultation" really means to take full account of what they are told. In other words, perhaps it is a trite way of putting it but it means to listen and not merely to hear.
My one anxiety about the amendment is that if the words are added after the reference to "consultation" in this part of the Bill, what effect might it have on other references to "consultation"? I should not want to devalue the term where it appears, having so often heard Ministers give assurances that by "consultation" they really do mean "having regard to the views of.
Lord Henley: My Lords, I think that the noble Baroness, Lady Hamwee, has probably made my case for me as well as it could be made. I suggest that the amendment is unnecessary. As it stands, the clause is perfectly sufficient. Taking account of and balancing the views of those consulted is implicit in the word "consultation". A Minister cannot simply ignore all views put to him—to do so would amount to no more than "informing" those concerned of his intentions and would not fulfil the requirement to consult.
However, the outcome of any consultation exercise may well be that there are opposing views about the order which is proposed. It is the job of the Minister responsible for the function involved to weigh carefully those different views and to reach a decision based upon those considerations. It would be impossible to impose an artificial requirement that he should have regard to all views without reference to their legality or merit. "Consultation" does not mean that the Minister will necessarily accede to the views of those consulted, but he must consider those views carefully before deciding how to proceed.
The Government have consistently made it clear that they are committed to consultation with local government about the use of the proposed order-making power. I should like to repeat that assurance. I hope therefore that the noble Baroness, Lady Hollis, will accept—particularly following the weighty arguments of the noble Baroness, Lady Hamwee—that on this occasion her amendment is probably not necessary.
Baroness Hollis of Heigham: My Lords, I think it was deft of the noble Lord to pray in aid the noble Baroness, Lady Hamwee, when I thought that she was supposed to be supporting my amendment. However, I recognise and compliment the Minister on agility where one finds it. In the light of the Minister's comment and the fact that it is on the record, I ask leave of the House to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 81JA not moved.]
5.45 p.m.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 81JB:
After Clause 65, insert the following new clause:
("Probity and impartiality in carrying out of functions by contractors
. For the avoidance of doubt the following provisions shall apply to those to whom functions are delegated under section 65 above as if those, to whom the functions are delegated are local authorities—

(a) Part III of the Local Government Act 1974 (Commissions for Local Administration);

(b) Part III of the Local Government Finance Act 1982 (Accounts and Audit);

(c) section 31 of the Local Government and Housing Act 1989 (Code of Conduct).").

The noble Baroness said: My Lords, I wish to move Amendment No. 81JB standing in the names of myself and my noble friend Lord Williams of Elvel. Like the previous amendment, this is on the issue of probity.
By courtesy of my city council, I have a local authority diary. After listing the names of councillors and before listing the names of the committees on which they sit, the opening pages give the local authority code of conduct. For example, it states that if you have a private or personal interest in a question which councillors have to decide:
"you should never take any part in the decision",
neither speaking nor voting. That is unlike your Lordships' House where a more relaxed view is taken of such matters. It also gives guidance on other matters of probity, fiduciary duty, impartiality in the exercise of discretion. I suspect that on this occasion the noble Baroness, Lady Hamwee, may also confirm that her local authority diary carries such a code of conduct, whereas the Minister's may not.
The amendment seeks to ensure that no less standard of probity would apply where a function is delegated. It is an anti-sleaze amendment again, which, in today's climate, only the otherworldly would regard as unnecessary.
The new clause seeks to give substance to the Minister's assurance given at Committee that the powers of the Bill would not be used to undermine the impartiality and probity in the exercise of functions which affect the interests of the citizens. That was what the Minister told us at Committee stage. However, without such a clause, how can the Minister ensure what he said? How can his undertakings be fulfilled?
In local government, we not only have a code of conduct which I have mentioned, but we also have an ombudsman and an auditor who can disqualify and surcharge. As we know, the code of conduct has long been in force. When direct labour organisations were invented by the old LCC and the Webbs, they were invented precisely to break the cartels and improper practices of the private firms a century ago, tendering for public works. Clearly, certain professions are regulated by their peer groups—law, accountancy, architecture. But in some equally sensitive fields—for example, information technology where one is handling
162
confidential material or benefits work or areas of planning —there are no such regulations because professional groups are not widely supported. One has only to look at the failure of financial services to regulate themselves adequately to see that then: must be serious cause for concern.
Our first concern therefore is that private contractors are not regulated by the same code of conduct as currently applies to local government when the function is exported to them. We accept that on the second control over local government the ombudsman can investigate private as well as public contracts. But we are also worried about the role of the audit and the auditor. At Committee stage, the Minister, the noble Lord, Lord Strathclyde, seemed to us uncertain about the role and powers of the auditor. He suggested that the auditor would have access to documents and could demand an explanation. That is fine; but he did not seem clear whether the auditor could then have a clear right to take action and enforce action, such as a surcharge. Will the Minister please clarify what enforcing powers the auditor has to ensure that the same probity as we expect from local government will be embodied in commercial contracts?
The Minister said at Committee stage that it was hypothetical; it would depend on circumstances. Let me give the Minister a far from hypothetical example: what would happen if an authority contracted out its housing functions and the contractor then abused those functions by adopting housing policies so as to achieve a change in the social and political mix of the population by building stable communities in target wards? Would the auditor be powerless if Westminster's housing function had been contracted out, as opposed to his powers to investigate Westminster City Council, as he can at present?
In a report at the beginning of the year, Peat Marwick said:
"The contracting out of public services to private firms is likely to trigger an explosion in fraud and corruption".
That is not the Labour Party, it is Peat Marwick. They continue:
"Back-handers and slush money will flood public agencies as firms try to cut themselves into lucrative contracts".
It is quite wrong to legislate for contracting out, whether compulsory or voluntary, with all its invitation that Peat Marwick highlighted for us to be commercially exploitative, to cut corners and to engage in dubious practices without ensuring proper controls for probity.
This is an anti-sleaze amendment which I hope the Minister will accept. I beg to move.
Baroness Hamwee: My Lords, I too support this amendment for the reasons that were given by the noble Baroness, Lady Hollis of Heigham, and also because the amendment seeks to impose standards similar to those that apply to councillors, council officers and to council employees. The local authority associations and the Local Government Management Board have produced a code for local authority employees parallel to the one that has been adopted for councillors. Although it is not

163
statutory, it is nevertheless a very important document. I shall quote merely from one paragraph. It reminds local government employees that they are:
"expected to give the highest possible standard of service to the public … to provide appropriate advice … with impartiality",
and that,
"Employees will be expected, through agreed procedures and without fear of recrimination, to bring to the attention of the appropriate level of management any deficiency … [and] report… any impropriety or breach of procedure".
I am sure that we shall have assurances from the Minister that those to whom functions are delegated will be expected to meet the appropriate standards. But the experience must be that when functions are contracted out the distance that is inevitably and quite properly created—after all, that is the point of contracting out— somehow removes those who carry out the functions from the ethos, from the culture, that the contracting authority seeks to impose. In order to ensure that the standards apply—it seems to me that this must be an entirely uncontentious amendment—I hope that the Minister can indicate the Government's approval of the approach.
Lord Henley: My Lords, I had hoped for another speech similar to the previous one from the noble Baroness, Lady Hamwee. But I suppose once is probably enough—
Baroness Hamwee: My Lords, with the leave of the House, in order to protect my reputation, perhaps I may remind the House that on the last amendment I merely asked a question.
Lord Henley: My Lords, I note what the noble Baroness has to say. Questions can often be of considerable use in terms of putting one argument or another.
Perhaps I may express just the teeniest bit of surprise that the noble Baroness, Lady Hollis, came back with this amendment. As I believe she reminded the House, we discussed this matter at Committee stage. I believe that it was my noble friend Lord Strathclyde who responded. My understanding was that my noble friend had met most of her concerns. But obviously, if that is not the case, I will try to re-reassure the noble Baroness.
As we made clear in Committee, we do not want the role of the local government ombudsman to be in any way diminished. Nor do we want the provisions in this Bill to prevent a local authority auditor from carrying out his duty. And I am pleased to confirm again that these aspects of accountability would not be undermined by the provisions of the Bill as currently drafted. Local authority officers and members will remain responsible for ensuring that functions are properly carried out and that contractors' activities are monitored. These matters are already clear in law and in the Bill as drafted.
It is already the case that the auditor of a local authority's accounts has access to all of the documents he needs for the audit. This is so whether they are held by the authority, the contractor, or indeed anybody else. He is also entitled to demand explanations of any such documents from the person who is holding or
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accountable for them. The district auditor would be able to audit the contractual arrangements to perform the function as part of the local authority's accounts. The Audit Commission is satisfied that no further amendment is necessary to achieve this.
I can certainly assure both noble Baronesses that there is no cause for concern that there might be the potential for the avoidance of proper probity in financial affairs. As I have explained, responsibility for the function carried out by a contractor remains with the local authority, which must ensure that the terms of its contract provide for proper financial control.
Baroness Hollis of Heigham: My Lords, I thank the Minister for giving way. Can he then please clarify or enlarge on the point that we pressed with the noble Lord, Lord Strathclyde, in Committee and which I still do not believe the Minister has addressed (perhaps he will forgive me if he is going on to address it); namely, does the auditor have the power to surcharge?
Lord Henley: My Lords, the intervention of the noble Baroness was unnecessary. I shall come to the question of surcharge slightly later on. If the noble Baroness will bear with me, I shall make my arguments in my own way and in my own time.
Under Clause 67 the authority remains accountable and legally liable for the exercise of the function in question for all purposes. This means that the ombudsman's powers are not changed or diminished in any way.
Section 31 of the Local Government and Housing Act 1989 empowers the Secretary of State to issue a code of recommended practice regarding conduct of members of local authorities; it also provides for members' declarations of acceptance of office to include an undertaking to be guided by such a code. The code is concerned with standards of conduct in public life. It is therefore inappropriate to try to apply it to a person whom a local authority, following the making of an order made by a Minister, has authorised to exercise one of its functions. The essential lines of accountability remain with the local authority. This includes a duty to ensure, by whatever means are appropriate, that contractors act with propriety.
Obviously, care will be needed to ensure a professional approach to the task and ensure that any sources of potential conflict of interest can be limited. That might be by tender contract specification to minimise the element of discretion that is available to contractors; by excluding certain categories of bidder, by requiring separation of duties in organisational arrangements for carrying out the work, always with careful design of performance measures; or by instituting continuing procedures for declaration of directors' other interests. There may be cases where, having considered all relevant factors, market testing or contracting out would be considered inappropriate.
I now turn to the question of the potential surcharging of contractors. The auditor's powers are purely in relation to the local authority. He would be able to surcharge or disqualify local authority members only if they and not the contractor had been guilty of some illegality.

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As I made clear earlier, and as I repeated yet again, responsibility for the function carried out by a contractor remains with the local authority. By the means that I have just suggested it must ensure that the terms of its contract provide for proper financial control. In these circumstances it is right that the liability to surcharge remains with the officers and members of the local authority; and where unlawful expenditure exceeds £2,000 the liability to disqualification again remains with members of the local authorities. I hope therefore that the noble Baroness, who, I am sure, does not think that I am "other worldly", would accept that her amendment is unnecessary to secure the objectives of accountability, openness and probity which the noble Baroness is pursuing. I therefore invite the noble Baroness to withdraw her amendment.
Baroness Hollis of Heigham: My Lords, I thank the Minister for that reply. We accept his assurances about the ombudsman. I think we were clear about that before the debate. But I wish to come back to the question about audit. The Minister kept referring to the expectation that professional standards of behaviour would apply. I had expected him to say that and I hoped therefore that I had addressed that matter in my own remarks: I said that clearly it was straightforward where one is dealing with long-established professions such as law and accountancy; but to expect professional standards where there is no such notion as a "profession"—as with information technology or benefits administration—such references to an ethos which cannot exist is a very precarious basis on which to rest probity.
The Minister went on to say that the auditor, while he may investigate and demand information, could only surcharge or disqualify local authority members, and not the contractor himself, and that responsibility remains with the local authority. I understand that very well, and that is very clear where one is dealing with a particular aspect of the service. I do not think that we have any problem on the local authority side accepting that members take responsibility for a function where one part of that service —for example, cleaning or vehicle maintenance—has been contracted out. But what happens when an entire function—for example, the entire housing service (possibly in Westminster)—has been contracted out and therefore members cannot have the responsibility for the operation of that function? If they had a responsibility, the function itself would not have been transferred out, only merely a shopping-list of services. Would the Minister care to think again about the distinction between individual services, where, I accept, the procedure of surcharge may not be relevant, and the transference cut of a function, where the local authority itself has withdrawn from the exercise of a whole swathe of responsibility? If the Minister's words are correct, it means mat in so doing the public will not have the same safeguards coming from the auditor as they currently enjoy when the local authority performs this service. In other words, if a local authority contracts out a function as opposed to sub-sets of a function—its services—the public cannot have the assurance that full
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probity will be maintained because the auditors' writ does not run. That is the point and that is the issue as I understand it.
I believe that we may have to return to this matter at Third Reading. It is very clear that, in the context identified by Peat Marwick of increased risk of fraud and corruption, at the point at which a function is transferred out the public lose the protection that government have seen fit to give them within local government. Frankly, that is not good enough.
6 p.m.
Lord Henley: My Lords, very briefly, with the leave of the House, perhaps I may say that I am not sure that I can help the noble Baroness at all. I do not see her distinction between the function and the mere activity. It remains the case that members of the local authority will be responsible for specifying what the contractors are expected to do. In terms of ensuring probity, it is for them to ensure that a professional approach to the task will be undertaken. There are a number of different ways—by term contract, specification or whatever—in which they could do that.
I do not believe that I can take the noble Baroness any further. If she wishes to come back to this point at Third Reading, it is a matter for her to decide.
Baroness Hollis of Heigham: My Lords, before withdrawing the amendment, with the leave of the House, perhaps I may seek a final response from the Minister. Do the implications of his remarks mean that councillors or officers will be surcharged by the auditor for the contractor's action because they retain responsibility for it?
Lord Henley: My Lords, I answered that point earlier. They could be surcharged but only if they and not the contractor had been guilty of some illegality; not for an illegality on the part of the contractor.
Baroness Hollis of Heigham: My Lords, this is an extremely worrying area for local government. They will have contracted out their functions but retained responsibility and could possibly be surcharged for activities over which they can have no reasonable control. This is clearly a matter that we must explore further, perhaps at Third Reading. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 66 [Functions excluded from sections 64 and 65.):
Earl Ferrers Earl Ferrers moved Amendment No. 81K:
Page 56, line 17, at end insert:
("( ) its exercise would constitute the exercise of jurisdiction of any court or of any tribunal which exercises the judicial power of the State; or").
The noble Earl said: My Lords, this amendment was spoken to with Amendment No. 81 A. I beg to move.
On Question, amendment agreed to.
Lord Peston Lord Peston moved Amendment No. 81KA:
Page 56, line 22, at end insert:
("; or
(d) it is a power to decide whether or not to issue proceedings against an individual in any court.").
The noble Lord said: My Lords, I hope that I demonstrated during the course of our deliberations this afternoon just how keen I am on contracting out. It is a question of what one can contract out. But I felt that your Lordships would disapprove strongly were I to contract out the whole of today's proceedings. So I shall speak to this amendment standing in my name.
The purpose of the amendment is to exclude from contracting out any function which could involve a decision to take civil or criminal proceedings against a person. The Government have already said that they are considering contracting out the Crown Prosecution Service, the Serious Fraud Office and the functions of the Treasury Solicitor's Department, although that does not appear specifically in the Bill. There is an extremely worrying story on the back page of Part 1 of the Financial Times today which refers to the fact that the Inland Revenue is planning to allow private companies to compete with its own staff for work involving the collation of sensitive financial information on individuals and companies. That is data provided to enable tax returns information to be verified. To put the Government on notice, I can only say that were the Government to move in that direction, the row would be absolutely deafening. I add that.
More generally on the subject of fraud and matters relevant to this amendment, there is a very important article in the Financial Times on page 33 about the fact that the incidence of that kind of crime is increasing steadily. It is therefore not a matter to be trifled with but, if anything, has to be taken more seriously. In such a matter the Government ought not to be dabbling in ideological issues.
With regard to the detail of the amendment, the particular office mentioned in the Bill is that of the Official Receiver. The Official Receiver is often involved in decisions about taking civil or criminal proceedings against individuals. As I understand it, at the present time the Official Receiver advises the Secretary of State—in this case I feel that that must be defined as the President of the Board of Trade—whether proceedings should be issued under the Company Directors Disqualification Act 1986 to seek the disqualification of any individual who has shown himself or herself unfit to be allowed the protection of limited liability status in his or her future business dealings. In many cases proceedings are issued with the Official Receiver as the applicant.
As I understand the matter, the Official Receiver is also responsible for reporting to the prosecution section of the Department of Trade and Industry offences which are discovered during the course of an investigation into
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a company's affairs. To repeat, the Official Receiver is often involved in discussions about the decision whether or not to prosecute.
I am very much a layman in this matter, but it seems to me obviously inappropriate that functions of that sort should be conducted by the private sector. To me it is so obvious that I am totally amazed that the Official Receiver appears in the Bill at all. On a subsequent amendment my noble friend Lord Clinton-Davis will deal with another aspect of the matter.
Let me say more generally that the level of reporting of both offences and unfit conduct by insolvency practitioners in voluntary liquidations and receiverships has itself often been criticised. It has been criticised by the National Audit Office in relation to disqualification proceedings. Therefore one has to ask the question— which is the purpose of the amendment—whether there is any sense whatever in anything to do with a decision to prosecute lying in the hands of insolvency practitioners. Is there any reason to believe that matters would improve if that were to happen?
I do not wish to criticise insolvency practitioners as a group. I do not wish to criticise accountants as a group. However, noble Lords will be aware that in recent years at least some of them have been seen not to operate to the highest standards. The profession itself—again, this is a matter to which my noble friend may return in a few moments—is asking questions about appropriate safeguards. In those circumstances yet again it seems to me that we should not move in any way towards weakening the public service element or in any way take any functions away from the Official Receiver. In this case—the matter will arise again in a few minutes— there are serious questions of conflict of interest as well as about the privacy of data to be considered.
I look for some government response. In my judgment—I wish the Government would say that they simply agree—this function of the Official Receiver, the function to do with disqualification and the function to do with civil proceedings in particular, should not be put out to the private sector. In my view the private sector should never be involved.
That is the reason for tabling the amendment. I am aware that a great deal of what happens as a consequence of this part of the Bill will arise only if and when the Bill becomes an Act, in which case we go over the detail again via various orders. But it would be enormously helpful, particularly for people in the field, if there were to be some government Statement and reassurance at this time to do with probity and a desire vigorously to deal with fraud. I beg to move.
Earl Ferrers: My Lords, the noble Lord, Lord Peston, prided himself on contracting out his responsibilities this afternoon to others.
Lord Peston: My Lords, perhaps I may interrupt the noble Earl to say that I have not contracted out my responsibilities; I have simply contracted out of speaking.
Earl Ferrers: My Lords, the noble Lord is absolutely right to make the distinction. His responsibilities continue as they do with the Minister; it is merely the

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carrying out of those responsibilities that is passed on to others. All that does is deprive us of the pleasure of hearing the noble Lord but gives us the advantage of having the pleasure of hearing his colleagues. I am sure that that will prove to be, in Civil Service jargon, an efficient and effective use of the noble Lord's time as well as that of the others and adds colour to the proceedings.
In Clause 66 we have already excluded from the scope of the order-making power, functions which necessarily interfere with or affect the liberty of any individual, subject only to one specific exception, on the face of the Bill. In effect that will exclude from the scope of the order-making power the bringing of all those legal proceedings, which will be mainly criminal proceedings, in which the defendant has to attend court on pain of some sanction. That reflects the Government's view that such decisions should not be contracted out by means of secondary legislation. Criminal proceedings often require the defendant to attend, on pain of a sanction, and the decision to issue proceedings will therefore be excluded by Clause 66(1) (a).
The noble Lord, Lord Peston, said that in his view civil proceedings should never be contracted out. But in most civil proceedings a defendant who fails to attend is only at risk of letting the action go undefended. Civil proceedings are often initiated as the result of routine decisions for which it might be entirely appropriate to consider contracting out. If we were to accept Amendment No. 81KA, it would exclude, through Clause 66, powers to instigate any proceedings against an individual in any court whatever. So it would extend to civil proceedings, which is what the noble Lord, Lord Peston, wants and which I am bound to advise the House is undesirable.
Lord Clinton-Davis: My Lords, perhaps I may intervene to say that if, in certain insolvency proceedings which may not involve any criminal offence, a person who is required to attend fails so to do, then sanctions can be invoked which are tantamount to criminal penalties.
Earl Ferrers: My Lords, I shall absorb the point of the noble Lord, Lord Clinton-Davis. But we are of the view that the amendment proposed by the noble Lord, Lord Peston, would go too far. It would prohibit extending the benefits of competition to areas where value for money might well be achieved and where there is no fundamental reason not to consider the possible employment of private contractors. An example, where a power to instigate proceedings may quite appropriately be carried out by contractors and which may help to illustrate the point, involves the proposals of the Department of the Environment, which were recently the subject of a consultation exercise, to permit the employment of contractors by local authorities to take decisions on local revenue collection enforcement. If contractors were used, the collection of local taxation arrears would involve contractors deciding whether or not to apply to magistrates' courts for liability orders
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where rates, council tax or community charge payments were due but had not been paid, having checked that the final and reminder notices had been sent.
The significance of the liability order is that it enables the local authority to proceed with the next steps in enforcing payment, such as attachment of earnings, deductions from income support or levying of distress. The court will grant an order where it is satisfied that the individual in question owes the sum specified and when all the required procedures have been fulfilled. However, they are routine proceedings and such decisions are undertaken by junior members of the authority staff. Any decision to seek such a liability order would be carried out in accordance with the policies and guidance set by the authority. To retain the decision to apply for a liability order in-house would lead to duplication in work and a loss of efficiency in the process. It is right and proper that those routine functions be exposed to competition so as to ensure value for money in their delivery.
The noble Lord, Lord Peston, was concerned about the official receiver being involved in decisions whether or not to prosecute. He was of the view that they should not be contracted out. But the official receiver reports on the conduct of directors to the Secretary of State and the Secretary of State makes any decision to commence proceedings to disqualify directors.
Your Lordships will be aware that the Government asked the consultants, Stoy Hayward, to examine the extent to which the private sector could assist official receivers in the discharge of their functions. The work concentrated on their routine processing functions with a view to official receivers being able to concentrate on their investigative role. The whole object of exploring the possible involvement of the private sector is two-fold. First, there is the possibility of achieving greater gains in efficiency and effectiveness in the carrying out of their functions by employing private sector contractors. The second aspect relates to the investigative role of official receivers. The contracting out of routine processing tasks offers the possibility of releasing official receivers from the burden of those sorts of task and will enable them to concentrate on their prime work; that is, their investigative work. I would stress that no decision has yet been taken on which functions may be contracted out.
The noble Lord was worried about the Inland Revenue. The Board of the Inland Revenue, under existing powers, has the discretion to fulfil certain of its responsibilities by employing contractors. But tax inspectors cannot delegate their functions. They must exercise them personally. Therefore they do not fall within the scope of the order-making power of Clause 64.
I remain of the view that the Bill contains an exclusion for functions that affect the liberty of individuals and that that already excludes the ability to issue most criminal proceedings. As drafted, the Bill would enable the benefits of competition to be extended to areas where value for money could be increased. The nature of the order-making power means that both Houses of Parliament can debate the appropriateness of the contracting out of each specific function when an

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order is to be made under Clauses 64 or 65. That would be considered by both Houses. I suggest therefore that Amendment No. 81KA is not necessary and I hope that the noble Lord, Lord Peston, will feel that I was able to give the satisfaction for which he hoped.
6.15 p.m.
Lord Peston: My Lords, I thank the noble Earl for responding as fully as he did. If I may use a word he used in connection with my noble friend Lord Clinton-Davis, I shall need to look at and "absorb" some of his comments in order to understand them. Largely, I was not concerned with criminal matters.
It was explained to me earlier by one of the Minister's noble friends what the word "liberty" meant in this case. I am not now worried about that aspect of the matter. But even routine contracting out will involve the acquisition of information and therefore of influence, which could be dangerous. I must admit, however, that in looking at this matter the point made by the noble Earl about local authorities and contracting out is not one that I had examined and that is why I have to absorb what he had to say in order to know whether to proceed further. The matter will not go away because if the Government wish to move they have to place orders before your Lordships anyway and we shall be able to debate them in some detail. I was clearly probing to get the Government's views. Having said that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 81KB:
Before Clause 69, insert the following new clause:
("Discharge of functions by authorities
. —(1) Subject to the provisions of this section, a local authority (a "contracting authority") may agree with any other local authority (a "supplying authority") that the supplying authority shall carry out for the contracting authority any activity or service which the contracting authority is required to, or may legitimately, carry out.
(2) An agreement under this section—

(a) may provide for activities or services to be carried out by two or more authorities jointly; and

(b) may include such terms as to payment as the authorities concerned consider appropriate.

(3) Anything requiring to be done by a supplying authority under an agreement under this section shall be treated as one of their statutory functions.
(4) This section is without prejudice to any other power under or by virtue of which a local authority may arrange for the carrying out of any of their activities or services by another authority.").
The noble Baroness said: My Lords, this amendment is about cross-boundary tendering. The new clause would allow local authorities to tender across local authority boundaries. What is the situation at the moment? The Local Authorities (Goods and Services) Act 1970 and the Local Government Act 1972 between them allow local authorities to supply goods and services to other authorities—for example, in a purchasing consortium or in the use of professional staff such as specialised planning staff. The 1972 Act specifically allows that a local authority may arrange for the discharge of any of its functions by any other local
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authority. That seems clear enough. But since then guidance from the Audit Commission based on counsel's opinion and the CCT legislation of 1988 and 1992 have confused the issue for us.
May one DLO or DSO tender for a contract of another authority alongside private competitors and possibly even the authority's own in-house bid? We do not know. Given that the general framework of local government powers of ultra vires is drawn very tightly, it is essential that local authorities know the framework of the law within which they may operate. This clause would clarify it and so to that extent at the moment this is a probing amendment.
Why is such a power of a local authority to tender across boundaries so desirable? There are two arguments. First, it would produce better value for money for council tax payers. Secondly, it would facilitate local authority reorganisation. On the first argument—value for money for council tax payers— CCT was introduced to promote value for money. What the amendment would unambiguously permit—the situation at the moment is cloudy—is one local authority's DLO or DSO to tender alongside private contractors for another authority's work. Why not? Such a DSO or DLO would only win a contract if it indeed met the service specifications of the other authority as to the most cost-effective bid. If it did so it would offer savings to that authority.
There is sometimes a very under-developed private market for a service. One or two private firms might be running a hidden cartel. Where the purchasing authority might not have its own DSO to bid it could be very vulnerable to a rigged market. This amendment would offer value for money not only to the purchasing authority but to the providing authority. DLOs and DSOs are required to show a 5 per cent. rate of return and 85 per cent. of local authority organisations do precisely that. They are competitive. Others struggle. Extending the field in which they may tender and not confining them to one monopoly purchaser—their own local authority—would overcome the stop-go pattern of their work, would offer them economies of scale, would offer them more reliable training opportunities and would offer better and more effective use of expensive plant and vehicles. They would be more likely to be viable, they would be more likely to generate income for their own local authority and thus save their own local tax payers council tax.
The first argument is that a DSO or a DLO would win a contract of another authority only if it offered the best value for money. If it does, why should it not be in such a position to tender? Everyone then would benefit.
The second argument for supporting the amendment is that it would facilitate arrangements for local authority reform. The Government, rightly—they have had full support from this side of the Chamber though not always from their own Back-Benchers—prefer unitary authorities; authorities which are enabling and purchasing authorities as well as providing authorities. But it is clear that a few services may require a larger population base than the average sized unitary authority; for example, archive work, which was debated in your Lordships' House last summer. Such joint arrangements

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and such lead authority arrangements already exist between districts; for example, over specialised housing; or between districts and counties over the arts or economic development; or even between county and county, as when they are running an airport or a secure unit for children. As the Audit Commission said, if a local authority is purchasing a service there is no difference in principle between that local authority purchasing it from a private contractor and purchasing it from another local authority provided it meets service specifications. This amendment would clarify the situation and would put such joint arrangements and such lead authority arrangements on a clear footing.
If the Government believe in competition as the most effective way of ensuring value for money, surely they must support an amendment which would allow another effective competitor to bid for a contract—that is, another local authority's DSO. It will not win unless it is the best. If it does; win, it is surely entitled to have it. If the Government say no, what are they frightened of? Is it that the bidding local authority is not good enough; that it will not win (in which case they do not have to worry); or that it would win if it were allowed to contract, and it would only so win if it were offering the best value for money. If the Government forbid it, the Government are costing its council tax payers more. Why should the Government artificially shelter the private sector from a properly competitive climate? I await the Minister's reply. I beg to move.
Baroness Hamwee: My Lords, this is an important issue and one that your Lordships have debated before. I shall not repeat the arguments put forward by the noble Baroness; but I agree with the points that she has made. I would merely say that if the Government truly mean that in the world of local authorities there should be maximum flexibility and, as the noble Earl has just reminded us, maximum effectiveness and efficiency, allowing as many options as possible can only be to the good. I do not agree with the Government's approach to the enabling authority. But if that is their approach, I should like to see lie best service delivery and the greatest choice of service delivery. It seems to me that the Government cannot be afraid of this amendment.
Lord Henley: My Lords, I am certainly not afraid of the amendment. While saying that I am unable to accept it—and I hope that the noble Baroness will feel able to withdraw it—I am going to be, as always, as conciliatory as I am.
Baroness Hollis of Heigham: A new man!
Lord Henley: My Lords, whether or not I am a new man is another matter which we can address on other occasions.
We accept that it makes sense to ensure that local authorities can operate in the most effective way. That is one of the fundamental objectives of the power in Clause 65 which enables local authorities to make use of contractors in appropriate cases. In respect of powers to enable local authorities to undertake work for each other, we believe that the powers are already available in England—I accept that the noble Baroness argued
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that there is a degree of cloudiness—under the 1972 Act and the Local Authorities (Goods and Services) Act 1970 which offer a degree of flexibility.
The issue, though, has been raised as a consequence of the current exercise on local government reorganisation and the Government have expressed themselves as willing to look at suggestions which would achieve greater flexibility after reorganisation. In Scotland and Wales this has already begun. Clause 57 of the Local Government etc. (Scotland) Bill, which is currently before the House, and Section 25 of the Local Government (Wales) Act are designed to clarify the law to ensure that in appropriate circumstances and with the proper safeguards reorganised authorities can tender for work and supply services to one another.
The noble Baroness's amendment is not appropriate for reasons which I shall explain. Local authorities themselves are not trading organisations and for them to become so, without adequate safeguards, could put taxpayers money at risk and could create unfair competition for the private sector companies who do not have the ultimate security of a tax base to underwrite their risk. Moreover, some authorities could decide to establish large trading empires if their powers were unfettered. It could allow local authorities to provide services where there are private sector suppliers available. I do not believe that is what local authorities should be doing.
The amendment would give local authorities a much greater latitude to supply services than we believe is appropriate and provide none of the safeguards which we consider necessary. In view of that, and given the confirmation that I have offered that the Government will be looking at suggestions from local government on this issue post-reorganisation, I hope that, having been as conciliatory as that, the noble Baroness will feel that she can now withdraw her amendment.
6.30 p.m.
Baroness Hollis of Heigham: My Lords, I thank the Minister for his reply. It is the conciliatory nature of it which is baffling me. He seemed to be arguing two aspects which are completely incompatible. On the one hand he recognised that there is a real need for such an amendment, but that it would only apply after reorganisation had gone through. On the other hand, he said that it should not take place because local authorities are not trading organisations and that, if they were, adequate commercial safeguards were not in place. Which aspect is the Minister having? Is he saying that it is all right to introduce the measure but only after reorganisation or that it should not be introduced at all because local authorities are not trading organisations? The Minister was arguing two completely incompatible positions. I realise that time is pressing, but I urge him to clarify his position.
Lord Henley: My Lords, I do not believe that what I was arguing was in any way contradictory. I was obviously saying that there were not the necessary safeguards in the noble Baroness's amendment but that there was something which could be done. However, we obviously want to discuss it with local government. We

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shall certainly listen to its views—and I give that guarantee to the noble Baroness—and consider them and come forward with proposals. But it is as regards post-reorganisation that I am offering that.
Baroness Hamwee: My Lords, with the leave of the House, perhaps I may add this point. The Minister is touching on very important areas. Many of the authorities and potential authorities will be very much reassured if the Minister can tell the House now that consultation with the local authority associations will take place before the raft of orders which we expect fairly shortly. Can the Minister give an assurance that consultation will take place as part of the process rather than following on reorganisation?
Lord Henley: My Lords, the assurance I gave to the noble Baroness is that we shall look at the suggestions from local government and that we shall look at this issue post-reorganisation.
Baroness Hollis of Heigham: My Lords, I am grateful for the intervention of the noble Baroness, Lady Hamwee. She is absolutely right because the Minister is saying that the Government may bring to this House and the other place recommendations from the Local Government Commission which will only be effective were this proposal to be in place, but that we shall not know whether it is or what the small print says until after such proposals have been brought. To use a colloquialism, that is really cart before the horse stuff. We need to know the clear ground on which one local authority may provide services for another to be confident that the proposals being brought forward will work when we are dealing particularly with specialist services requiring very different population bases.
The Minister's reply is simply not good enough. The matter should have been thought out well in advance by government. To take us down the road of local government reorganisation without a clear legal framework within which services can be provided, one authority for another, whether they are joint arrangements or lead arrangements, is simply not good enough for the local authority organisations. To say that it will happen afterwards, and not before or not concurrently, is an abdication of central government responsibility.
Lord Henley: My Lords, I hope that I made it clear that we shall listen to the views of local government. We have already invited those views and they will come in. However, I cannot offer guarantees of decisions earlier than that.
Baroness Hollis of Heigham: My Lords, I thank the Minister for that reply. I realise that he is constrained by his brief. My criticism is directed to other places. This is an issue which should have been thought of well in advance. The legislative framework within which joint arrangements may be made to work should already be in place and not be merely tagged on as an afterthought in a debate on an amendment brought by us to a deregulation Bill. It is an absurd way of managing central government business. In the light of
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what the Minister said it is perhaps not helpful to press this matter any further. With the leave of the House I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 69 [Powers of certain office-holders]:
Lord Clinton-Davis Lord Clinton-Davis moved Amendment No. 81KC:
Page 57, line 45, leave out paragraph (b).
The noble Lord said: My Lords, I beg to move this amendment which stands in the name of my noble friend Lord Peston. I wish to make it very clear at the outset that we see this provision as a potentially major change in the role of the insolvency service and I want to issue this very strong advice: in the likely event of a Labour Government being returned, and of any action having been taken by this Government to contract out the role of the insolvency service, we reserve the right to reverse that action; subject, of course, to any contractual obligations which have been entered into and provided that those contractual obligations are not unreasonable vis-à-vis the public interest.
Having said that, we have a number of serious anxieties about the whole concept. The first relates to the issue of cost which is dealt with in the Stoy Hayward Report. The situation would appear to come to this: because the larger firms of insolvency practitioners—in other words, the big six—would have the ability to take on a large volume of work and achieve substantial economies of scale as against the smaller practitioners, then there is a real risk that the big six will undertake pretty well all the available work between them. Indeed, it is said in the Stoy Hayward Report in particular that two of the firms with whom discussions took place felt that they were able to undertake between 25 per cent. and 33 per cent. of the entire work. I believe that that would restrict impartiality and independence. Because the market would be carved up effectively between the large firms, or perhaps even between a couple of them, there could be long-term cost implications in that as well.
The report indicates that the fees which were quoted by the insolvency practitioners were quite close to the costs incurred by the official receiver. But the hope was expressed that under formal tendering conditions the fees might be driven down. What would prevent these fees from rising, especially if most of the work was undertaken by something approaching a cartel? What if there were to be loss-leader business followed by rises in fees after contracts had been awarded? These are real anxieties expressed by many practitioners.
I also believe that if there is a fixed rate price for fees then there would be ineluctably an increase in public expenditure, particularly during a recession when case numbers would rise, as has been the case over recent years. The trouble is that once a rise has taken place as regards fees, based on historic experience it is quite unlikely that the fees would remain at that level. Historically, the number of insolvencies has never fallen back to previous levels during non-recession times.
I turn to the question of efficiency. At present there is no requirement for insolvency practitioners to appoint suitably qualified and/or experienced staff for the initial case work or interviewing. If there is a question mark

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over the quality of cases which have to be referred back to the official receiver for investigation and also for monitoring, then one can have a situation where unsuitable, inexperienced staff would also not be efficient in terms of asset discovery and realisation. It is the creditors who would, in fact, pay the penalty for that.
I turn now to the third point, effectiveness. Contracting out would cause the official receiver problems in terms of accountability and responsibility. He remains responsible for each case, but in order to carry out those responsibilities he would depend on the insolvency practitioner's effective discharge of the delegated functions. There would be a major change in the role of the insolvency service. In particular, its professional staff would no longer inquire into the causes of failure but would simply investigate specific offences. Therefore, the Police and Criminal Evidence Act would be likely to be invoked. At present, those provisions would not apply to the OR when the OR investigates causes of failure and reports any offences that may come to light as a result of his inquiries.
The role of the official receiver in court would be impugned, in my view. Would the OR continue to be treated by the courts as impartial and independent? Is there to be a major change in his role as an officer of the court? If so, would primary legislation be needed for the enactment of that? I do not believe that any amendment of the court role of the OR could be simply defined by contract.
The National Audit Office's report on disqualification has highlighted a number of substantial failings by insolvency practitioners in preparing adequate reports for the disqualification of directors. That is some evidence that the necessary resources to identify cases and to provide sufficient information for further investigation—which is the role of the independent practitioners—might be under question. It is also a fact that at present the referral rate on possible offences that have been identified by insolvency practitioners is extremely low. Indeed, much work in that regard has been the result of the activities of the insolvency service. Therefore, we have serious doubts, based on experience, about the ability of insolvency practitioners to perform such work.
I turn now to the ethical considerations. The report has underlined serious conflicts of interest which could arise. However, having done that, the report does not identify any solutions; or remedies to the problem. The independence of the official receiver, which is based on long history, is dealt with on page 47 of the report. The report seeks to say that that is not a problem about which we need to worry unduly. I believe that that is not the case. I believe also that the accountancy profession—or many elements of it—has expressed great concern about that. I shall not weary the House with accounts of reports that have appeared in Accountancy Age, but they exist. I have them with me.
Creditors, bankrupts, directors and employees all look to the insolvency service as being a highly reputable, independent body, allowing for the orderly winding up of the affairs of insolvents. It is not simply a question of that service being involved in the detection of fraud or misconduct. After all, many quite innocent people
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have to have recourse to insolvency. Such cases form the majority of those dealt with. As I said, I believe that the role of the insolvency service will be substantially impaired and altered by these proposals.
One of the strengths of having a single organisation is the experience—both individual and collective—that it amasses over many years. The insolvency service is able to identify cases that are connected. By that empirical practice, it can deal with frauds which might remain undetected if the connected cases were dealt with by different bodies. Contracting out will result in the loss of that network system.
As a former Minister in charge of corporate affairs, I should like to pay tribute to the way in which the insolvency service has operated and to the way in which it has utilised the experience it has gained. Why should it be impaired by these crazy notions of the Government? If this practice were to be invoked, I believe that the service would become much more expensive. Furthermore, it would be less effective and less efficient. I believe that the public interest would be at risk and, after all, that is what should be, in our judgment at least, the overriding consideration. I beg to move.
6.45 p.m.
Earl Ferrers: My Lords, the noble Lord, Lord Clinton-Davis, has given us the benefit of his concern about this part of the Bill. He asked why we have to have "these crazy notions of the Government" being put into practice. He said that it would result in a less effective, less efficient service. That may be the noble Lord's view and he is entitled to it, but he will understand if I do not go along with him. I do not think that these are "crazy notions" and I do not think that they will have the effect about which the noble Lord is worried. After all, Clause 69 ensures that a number of office-holders, including official receivers, may delegate the exercise of their functions to their own staff where it is not already possible for them to do so. As the noble Lord knows, official receivers are currently assisted in the discharge of their functions by assistant official receivers, by examiners and by a whole range of support staff. An official receiver will usually be attached to at least three or four county courts which have jurisdiction over bankruptcy matters and which will be responsible for the administration and investigation of many hundreds of bankruptcies and compulsory liquidations in any one year. That is a disagreeable thought, but it is a fact.
Clearly, the capacity to delegate tasks to their staff enables official receivers to plan for this far more effective and efficient discharge of their functions than if they all had to be carried out by one individual. The inclusion of the official receiver in Clause 69 also ensures that such office-holders are brought within the scope of the order-making power in Clause 64.
The noble Lord, Lord Clinton-Davis, knows and referred to the fact that Ministers asked Stoy Hayward Consulting to examine the extent to which the private sector could assist official receivers in the discharge of their functions. Stoy Hayward's second report was placed in the Library on 10th October. The report

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identified that the option which would enable official receivers to concentrate more on their investigative role would be to contract out cases immediately upon the making of an insolvency order. I should emphasise that no decisions have been taken on the outcome of the review. Any decisions to contract out the work of the official receivers would of course be subject to the passage of this Bill and to the procedures set out in it, including consulting official receivers and obtaining an order which has to be approved by both Houses.
My right honourable friend the President of the Board of Trade has instructed his officials to undertake preparatory work which would enable the preferred option, which was identified by Stoy Hayward, to be pursued. Of course, the proper discharge of their functions would remain the responsibility of official receivers. By virtue of Clause 67, they would be accountable for the acts and the omissions of any contractors who might carry out their work. Using contractors to carry out some of the official receivers' work, particularly at times of large, short-term fluctuations in the number of insolvencies will considerably enhance the capability of the service to respond to changes in workload effectively and efficiently.
We have, therefore, had a report from Stoy Hayward. No decision has yet been taken about what to do and the noble Lord, Lord Clinton-Davis, has given us his warnings. He was anxious that the large firms would be undertaking all the official receivers' work but no decisions have yet been taken. Competitive bidding usually guarantees the best price, and competition aspects will need to be considered. The contractors are most likely to be firms of insolvency practitioners because they have the expertise and the experience that is relevant to the work under consideration. There is a range of size of such firms; they need not all be large firms.
The noble Lord was anxious that contracting out will lead to increased fees, eventually if not immediately. I do not believe that that should be so because competition would ensure that contractors offer realistic bids. Part of the evaluation of each bid, looking across all the bids received, will be to look at issues such as the credibility of those who bid and their financial viability. Fears of loss-leading bids were expressed in relation to local government tendering. Re-tender exercises have shown that those fears are unfounded.
The National Audit Office report on directors' disqualification was also a matter to which the noble Lord, Lord Clinton-Davis, referred. Allowing the official receivers to concentrate on investigation was the main reason for exploring contracting out. The National Audit Office report found that the recent recession had swamped official receivers with administrative work.
It is in order to enable the official receivers to do the job that they ought to do, and that for which they are set up to do, that we are trying to see whether there are ways of contracting out the more administrative work. No decision has been taken about that. If that were to be the case Parliament would be consulted.
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It would be wrong to exclude the official receivers from the ability to have some of their work contracted out, should that prove to be desirable, which is what the amendment would achieve. I hope that on consideration the noble Lord, Lord Clinton-Davis, will see that it would be best to leave that ability in the Bill.
Lord Clinton-Davis: My Lords, we dispute virtually everything that the Minister has said. We believe that it will have a major effect on the historic role of the official receiver. It is wrong to pray in aid examples about examiners, assistant official receivers and delegations to the county courts because there we are dealing with a public service. What the Minister has in mind is something quite different.
The firm of lawyers for which I am a consultant deals frequently with Stoy Hayward and it has a high regard for that firm. I hope that as a result of anything that I say about the report, the flow of work will not dry up. I must be accountable for that. However, I cannot pull my punches because I believe that the remit given to Stoy Hayward gave it no room for discretion. It could not say, "We believe that the whole system sought to be invoked by the Government is wrong". It was asked to assess the options for making use of the private sector for insolvency services. The firm was given a limited remit and therefore I do not blame it for reaching the conclusions that it has.
The Minister says that no decision has been made. However, Stoy Hayward was not able to pronounce on the principle. I do not agree with the Minister that competitive bidding normally ensures the best price. It might do in certain instances but it is a different animal from local authority compulsory competitive tendering. I believe that there is a real risk that we shall face a situation in which, merely because of the way in which large firms can go about their business and tender, they can exclude smaller firms from the market. In any event, I have doubts about smaller firms because I am not sure that they will be able to undertake such cases with the efficiency that is demanded of them and with the public duty involved.
If this had been another time I can assure the Minister that I should have sought to divide the House. Unfortunately, that is not seriously possible and in those circumstances I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Clinton-Davis Lord Clinton-Davis moved Amendment No. 82:
Page 58, line 2, leave out paragraph (e).
The noble Lord said: My Lords, I reserve the right of an incoming Labour Government to deal with this matter along lines similar to those that I previously indicated.
The clause enables office holders to authorise officers to exercise any of their functions. Subsection (4) (e) refers to:
"the traffic commissioner for any traffic area".
The amendment seeks to exclude the traffic commissioner from the operation of this provision.
When this matter came before another place the Minister said that the clause means that the functions of the named officeholders will come within the scope of

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the order-making powers in what is now Clause 64; that is, if an order is laid before Parliament, debated and approved, the functions can be contracted out or privatised. It is a list of proposed potential privatisations. Other parts of the list which the Government have put forward in the clause are objectionable but I shall not deal with that now. I wish to deal exclusively with the issue of the traffic commissioner.
Let us consider the role of the traffic commissioner. Under the Public Passenger Vehicles Act 1981 the traffic commissioner must consider applications for PSV operators' licences. He has the power to grant, to refuse or to qualify. Chapter IV of Part I of the Bill mentions the traffic commissioner on numerous occasions. It amends his extensive powers but it does not reduce them in any significant or material way.
If a public service vehicle operator's licence has been granted, who can revoke, suspend or vary it? It is the traffic commissioner. He is in a position to disqualify people from holding a PSV operator's licence. He is in a position to exercise his discretion, to hear objections to the grant of a licence outside the prescribed period. Can it seriously be justified that functions which relate crucially to road safety and the safety of passengers on public service vehicles should be put into the private sector?
Indeed, here we are dealing with functions which in many respects are quasi-judicial. The operator's livelihood can easily be affected by the decisions of the traffic commissioner. We say explicitly that such powers should be exercised only by public officers; that is, publicly accountable people. Does the Minister believe that it is right:, equitable, just and judicial that a private company should have such powers and obligations?
I believe that the issue is clear beyond peradventure. It is an exercise in ideology, in doctrinaire conservatism, upon which the Government have embarked. We believe that it is wrong and we reserve the right to repeal any actions that might be taken by the Government, subject to the caveats that I expressed previously. I beg to move.
7 p.m.
Lord Tordoff: My Lords, I support the amendment. I am astonished that traffic commissioners should be included in this blanket provision. I can well understand that the Government may say that there are certain functions of the traffic commissioners—for example, having their tea brewed and their floor swept—which it may be possible to put out to tender. But that is not what the Bill says. It gives this and future governments and future Secretaries of State the right to get rid of all those functions, if they so wish.
That seems to me to be absolutely crazy. As the noble Lord, Lord Clinton-Davis, rightly said, this touches upon matters of public safety and the livelihood of people. I do not understand why we should allow such a blanket provision to go through on the nod.
Earl Ferrers: My Lords, this is similar territory to that covered on the previous amendment except that on this occasion it is not the official receiver which the
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noble Lord, Lord Clinton-Davis, wishes to exclude from the possibility of having services contracted out. Here we are dealing with traffic commissioners.
Traffic commissioners undertake a variety of functions, principally the granting of goods vehicle and passenger service vehicle operator licences and the registration of local bus services. Clause 69(4) (e), which the noble Lord seeks to delete, is intended to enable the traffic commissioners to authorise their officers to perform their statutory functions where it is not already possible for them to do so.
The noble Lord, Lord Clinton-Davis, will remember that the Carltona doctrine recognises the realities of 20th century public administration and that the volume of work and the variety of functions which are conferred on a Minister mean that a Minister could not possibly exercise personally each function which is bestowed upon him every time. Clause 69 recognises a similar difficulty in respect of the office-holders who are listed. Subsection (4) (e) puts it beyond any doubt that the staff of traffic commissioners may exercise functions on their behalf.
In line with provision elsewhere in Part II of the Bill, the traffic commissioners would remain accountable and would remain legally liable for the acts and the omissions of their staff in carrying out the functions. Clause 69 permits traffic commissioners to delegate their functions to their staff. Once that has been done, the functions fall within the scope of Clause 64. The functions may then be specified in an order under Clause 64 and once that has been approved by affirmative resolution of both Houses, the traffic commissioners may authorise contractors to carry them out on their behalf.
The inclusion of the traffic commissioners in Clause 69 does not mean that any decisions have been taken to contract out any of their functions. It merely retains the ability to specify the functions in an order at some future stage should that be desirable.
The purpose of the provision in Clause 69(4) (e) is to keep open the options for contracting out the more routine functions of traffic commissioners where there is minimal judgment. Most of their functions concern the administration of a licensing system for goods and passenger vehicle operators which presumes that operators will be granted a licence or an amendment to their licence if they meet specific criteria.
Lord Clinton-Davis: My Lords, I should like the noble Earl to clarify the matter. As I understand him, and I apologise if I misunderstand the situation, he said that the provisions are limited to enabling the delegation of the responsibilities of the traffic commissioners to their staff. Where does that appear in the Bill?
Earl Ferrers: My Lords, the noble Lord will know the Carltona doctrine which says that although a duty may be laid upon a Minister, he can allow the civil servants to carry out the duties on his behalf. It is just the same in this case. The traffic commissioners may permit their duties to be carried out by their staff should that be thought desirable.

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In almost all cases, it is clear whether those criteria have been met and there is no obvious reason why those cases should not be dealt with by a contractor. Where there is doubt over whether the criteria have been met, the traffic commissioners can decide to hold a public inquiry about an application. In 1993–94, applications decided after a public inquiry formed only 3.5 per cent. of all applications granted. There is no intention of contracting out the commissioners' public inquiry function.
Lord Tordoff: My Lords, the noble Earl says that there is no intention. Is there any ability to do that in the future if there is such an intention? In other words, does the Bill prohibit somebody contracting out all the functions if he suddenly goes crazy and decides to do that?
Earl Ferrers: My Lords, the Bill provides the ability to contract out the administrative work and not the decision-making duties of the traffic commissioners. That is what is intended to be considered for contracting out. The ability should exist for an order to be made should it be thought desirable.
The noble Lord, Lord Clinton-Davis, asks which clause refers to the traffic commissioners being able to delegate to their staff. It is Clause 69(1) and Clause 69(4) (e).
Lord Clinton-Davis: My Lords, it is important to try to clarify the situation. Clause 69(1) would apply equally to the powers of the official receiver. The report prepared by Stoy Hayward recommends that the official receiver should be able to delegate his duties to the private sector if the Government decided to act in that way. Why would that not apply to the functions to which I have referred? It is important that the Minister should clarify that.
Earl Ferrers: My Lords, I am not absolutely certain that I correctly understand the noble Lord's anxiety. I am apprehensive in case we have a Committee stage discussion on this matter.
The affirmative resolution of both Houses is required before any of those functions may be contracted out. That will be required for all orders under Clause 69(4). Perhaps I may be allowed to consider what the noble Lord, Lord Clinton-Davis, said in the cool light of day to see whether or not I have resolved the difficulties that he has. I do not wish to give the noble Lord a misleading reply. I believe that what I propose would be the best course to follow. I shall consider also what the noble Lord, Lord Tordoff, said.
Lord Clinton-Davis: My Lords, perhaps I may make clear what it is that I seek because the noble Earl is not sure that he understands my anxieties. I am saying that just as the words "an officer of his" apply to the official receiver, so they would apply in this case. When one talks about the official receiver, one is talking about potential delegation to the private sector. On that basis I am asking whether or not the words "an officer of his" could apply equally in respect of the delegation of traffic commissioners' functions. That is the question I pose to
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the Minister who has been kind enough to indicate that he will write to me. We are extremely anxious about this issue. If my understanding is correct, the noble Earl has not really answered the point. It is a fundamental point.
We reserve the right to return to the issue at a later stage. It would be extremely helpful if, in the meantime, the Minister would write to my noble friend Lord Peston, who has overall charge of the Bill, and I. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 14 [Restrictions on Disclosure of Information]:
Lord Henley Lord Henley moved Amendment No. 82A:
Page 111, line 14, leave out ("Paragraph 6 below applies") and insert ("Paragraphs 6 to 8 below apply").
The noble Lord said: My Lords, this is a simple technical amendment to correct a drafting oversight. Without the amendment the safeguards provided for confidential information would not apply in all circumstances. The amendment ensures that all the provisions in the schedule are brought into play when they should be. I beg to move.
On Question, amendment agreed to.
Schedule 15 [Amendments etc. for Facilitating Contracting Out]:
[Amendment No.82B not moved.]
Lord Henley Lord Henley moved Amendment No. 82C:
Page 115, leave out lines 4 to 22 and insert:
("2. For section 27 of the Courts Act 1971 there shall be substituted the following section—
"Administrative and other court staff.
27.—(1) The Lord Chancellor may, with the concurrence of the Treasury as to numbers and salaries, appoint such officers and other staff for the Supreme Court and county courts as appear to him appropriate for the following purposes, namely—

(a) maintaining an administrative court service;

(b) discharging any functions in those courts conferred by or under this or any other Act on officers so appointed; and

(c) generally carrying out the administrative work of those courts.

(2) The principal civil service pension scheme within the meaning of section 2 of the Superannuation Act 1972 and for the time being in force shall, with the necessary adaptations, apply to officers and staff appointed under subsection (1) above as it applies to other persons employed in the civil service of the State.
(3) If and to the extent that an order made by the Lord Chancellor so provides, the Lord Chancellor may enter into contracts with other persons for the provision for the purposes mentioned in subsection (1) above, whether by those persons or by sub-contractors of theirs, of officers and staff for the Supreme Court and county courts.
(4) No order under subsection (3) above shall authorise the contracting out of any functions the discharge of which would constitute—

(a) making judicial decisions or advising persons making such decisions;

(b) exercising any judicial discretion or advising persons exercising any such discretion; or

(c) exercising any power of arrest.

(5) An order under subsection (3) above may authorise the contracting out of any functions—

(a) either wholly or to such extent as may be specified in the order;

(b) either generally or in such cases or areas as may be so specified; and

(c) either unconditionally or subject to the fulfilment of such conditions as may be so specified.

(6) Before making an order under subsection (3) above, the Lord Chancellor shall consult with the senior judges as to what effect (if any) the order might have on the proper and efficient administration of justice.
(7) An order under subsection (3) above shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
(8) References in this section to the contracting out of any functions are references to the Lord Chancellor entering into contracts for the provision of officers and staff for the purpose of discharging those functions.
(9) In this section—
"the senior judges" means the Lord Chief Justice, the Master of the Rolls, the Vice-Chancellor and the President of the Family Division;
"the Supreme Court" includes the district probate registries." ").
The noble Lord said: My Lords, my noble friend spoke to the above amendment when moving Amendment No. 81 A. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 82CA to 82CD not moved.]
Lord Clinton-Davis Lord Clinton-Davis moved Amendment No. 82CE:
Page 118, leave out lines 14 to 34.
The noble Lord said: My Lords, I move the above amendment on behalf of my noble friend Lord Peston, in whose name it has been tabled. I shall be relatively brief, though I am tempted not to be because we are now dealing with an issue about which I feel most strongly. I reiterate the advice that I gave to the House in relation to the earlier amendments that I moved.
The parts of the deregulation Bill that we are now considering propose minor changes to existing Acts which will have the effect of removing specific barriers for the privatisation of Companies House. No further legislation would be required. We take the view—and we believe that it is in the interests of the public—that such a service ought not to be contracted out by simply including it in a fairly minor clause; indeed, it is too important a service. We believe that it is quite wrong to resort to the Bill in the way that the Government have done in this respect.
Companies House is a very important place. It regulates business; it compiles and provides information on companies; and it is a great help to entrepreneurs and to people who are embarking upon litigation. It has very important staff responsibilities in that it employs over 1,200 staff, mostly at Cardiff, which is the headquarters, but also in London, Edinburgh, Glasgow, Manchester, Birmingham and Leeds. I believe that the overwhelming feeling of people who are concerned with the area is a deep anxiety about the removal of Companies House from the public sector. It is seen as an impartial, independent and successful service. It is impartial because it is staffed by civil servants who provide a similar service without prejudice or favour to everyone
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who requires it. Indeed, many functions performed by Companies House are quite beyond the minimum required by law and are undertaken without charge to the customer.
In terms of quality, any loss of staff and their skills through contracting out would have the effect of reducing the quality of the service, especially if new workers were required to learn and apply the complexities of company legislation, which are extremely extensive and difficult these days. It also provides value for money. The introduction of the profit motive would be reflected not only in a reduced quality of service but also in increased fees to customers or in general taxation.
As with the insolvency service, it was my privilege to work very closely with Companies House for over five years as the Minister in charge of those affairs. I believe that the work undertaken by Companies House has, historically, been of very great benefit to the public. I do not believe that what is proposed is right. Moreover, I do not believe that the Government have produced any compelling reasons for such a change. The burden of proof rests fairly and squarely on the shoulders of the Minister. I beg to move.
7.15 p.m.
Earl Ferrers: My Lords, having first been worried about the official receiver and the traffic commissioners, the noble Lord, Lord Clinton-Davis is now worried about the Registrar of Companies. He is perfectly correct to say that the standard of Companies House is very high and should remain so. However, the noble Lord must recognise the fact that the registrar receives nearly 4 million documents every year. A review of Companies House was announced in 1992 in order to examine the best means which would enable it to deliver its services as best it could. As part of that process, consultants were appointed to look at the options for the future of Companies House. Their report described a number of options for involving the private sector more closely in the activities of Companies House. The President of the Board of Trade announced on 19th July that he had asked the consultants further to consult the market on how best to contract out the services of Companies House in order to gain the commercial expertise, the investment and the technological skills of the private sector.
The consultants have been seeking the views of Companies House, those of its customers and users and also those with the best business information in the industry, on the approach to be taken. I should emphasise that no final decision has been taken on the use of contractors for the functions of Companies House. An important announcement will be made when the further work to which I referred has been completed. I see that the noble Lord wishes to intervene.
Lord Clinton-Davis: My Lords, I am much obliged. Were the consultants able to ask the users, and the others to whom the Minister referred, whether they approved of the contracting out which the Government

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now suggest? Were they given that option, or was it merely a case of saying, "Well, if we are going to contract out, what is the best way to do it?"
Earl Ferrers: My Lords, as far as I know, the consultants were asked to give their advice on contracting out If they did not think that that was a very suitable proposal I have no doubt that they would have said so. To the best of my knowledge, there was no inhibition on them in that regard. However, I shall look into the matter.
The whole purpose of the current review will be to secure continuing improvements in the services to customers as well as better value for money while at the same time ensuring that the present high standards which the noble Lord, Lord Clinton-Davis, is so keen to preserve are preserved. The powers of the Bill do not remove any function from the public sector. Responsibility for any functions of Companies House which were contracted out would remain with the registrar who would specify and look after any contract.
I can only remind the noble Lord that the registrar receives nearly 4 million documents a year. The Companies Act and other legislation require that such documents are delivered "to the Registrar". If a contractor were appointed under Part II of the Bill to process any of those documents—and it is the processing of the documents that we are concerned with—it would obviously be essential to ensure that the documents were delivered to the offices of the contractor and not to the registrar himself. The powers in Schedule 15 allow the registrar to direct that documents for filing should be addressed to a contractor where appropriate.
The amendment of the noble Lord, Lord Clinton-Davis, would remove the powers to which I referred. If that were to be so, it would effectively jeopardise the smooth running of the contracting out operation. It would obviously be very inefficient for the registrar to take delivery of 4 million documents a year and then have to forward them on to the contractor. That would adversely affect the speed with which the documents appeared on the register at Companies House and therefore would work to the detriment of those who were seeking information about companies.
Companies House is regarded widely by its customers as providing an efficient service. One of the objectives of the further work which the consultants have been asked to carry out is to test the reactions of its customers, and its users, and of the business information industry, to contracting out. Their responses will be taken into account in making a final decision. As regards asking the views of people, I think that that answers a point about which the noble Lord, Lord Clinton-Davis, was concerned: that if, having sought the views of those people, it was discovered that those people thought what was proposed would be bad, it would be for the consultants to take that into account and pass that information to my right honourable friend.
Lord Clinton-Davis: My Lords, I thank the noble Earl for his reply. He is right to say that I am worried about a whole series of issues here. The one we are
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dealing with now is one which affects Companies House. The Minister has said that the Government will ensure that the reactions of company users and others will be tested. That depends, however, on the question that is put to them. The question could be, "Would you rather that Companies House continues to operate more or less along the lines that it does at the present time"— of course there is always room for improvement— "basically within the public sector"? Or, it could be, "What is the best option for contracting out?" There is a world of difference between those two approaches. What I am asking the Government here—I would invite the Minister to intervene at this stage, with the leave of the House—is what question will be put to the users and the public. Will it be a broad, fundamental question as to whether Companies House should remain in the public sector, or will it be the other question that was dealt with by the consultants? I am perfectly prepared to give way to the Minister if he is inclined to answer that question here and now.
Earl Ferrers: My Lords, the noble Lord invites me to answer his question. He asks a specific question. What I have told him is that the objective of the work which the consultants have been asked to do is to test the reactions of customers and users, and of the business information industry, to contracting out. As I have said, the noble Lord asks a specific question. I shall find out the specific answer. I think it would be much better for me to do that rather than to give him an answer across the Dispatch Box. My understanding is that the consultants have been conducting a wide range of interviews and discussions to test the reactions of people. The noble Lord has asked me what specific question has been asked. I believe it would be better for me to write to him on that matter.
Lord Clinton-Davis: My Lords, I am grateful to the Minister because the answer that he was invited to give cast even more doubt on the whole issue and therefore I shall not embark further upon that course. I endorse what the Minister had to say about present high standards being preserved. If one were to contract out, and the undertaking to whom the service had been contracted out made an unholy mess of it, who would then deal with the position? Would it not be far more expensive, as regards public expenditure, to try to rectify that situation? What would happen if there were serious doubts about the propriety of the way in which information was not being given to the public when it was demanded? All these are important issues. Once one has contracted out a service, it is difficult to build back those present high standards which the Minister so eloquently commended. I should have said—I shall end on this note—that the best way to preserve those high standards is not to interfere with the service in the public sector at the present time. We reserve the right to come back to this issue, but meanwhile I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 82CF to 82CJ not moved.]
Clause 72 [Provisions with respect to orders]:
Lord Henley Lord Henley moved Amendment No. 82D:
Page 58, line 22,leave out ("subsection (3), or, as the case may be,").
The noble Lord said: My Lords, my noble friend spoke to this earlier. I beg to move.
On Question, amendment agreed to.
[Amendment No. 83 not moved.]
Clause 74 [Interpretation of Part II]:
[Amendment No. 83A not moved.]
Schedule 16 [Repeals]:
Lord Henley Lord Henley moved Amendments Nos. 84 to 90:
Page 123, line 7, column 3, leave out from beginning to end of line 34 and insert ("The whole Act.").
Page 124, line 25, column 3, leave out second ("in").
Page 124, line 26, column 3, leave out from ("51") to end of line 29.
Page 124, line 29, at end insert:
("1972 c. 70. The Local Government Act 1972. In Schedule 29, paragraph 43.").
Page 124, line 43, at end insert:
("1973 c. 65. The Local Government (Scotland) Act 1973. Section 157.").
Page 126, line 15, at end insert:
("1985 c. 13. The Cinemas Act 1985. In Schedule 2, paragraphs 4 and 5.").
Page 126, line 51, at end insert:
("1989 c. 38. The Employment Act 1989. In Schedule 6, paragraphs 3 to 5.").
The noble Lord said: My Lords, on behalf of my noble friend, I wish to move Amendments Nos. 84 to 90 en bloc. My noble friend spoke to these with Amendment No. 35. I beg to move.
On Question, amendments agreed to.
Lord Henley Lord Henley moved Amendment No. 90A:
Page 127, line 23, at end insert:
("1994 c. 20. The Sunday Trading Act 1994. Section 5.").
The noble Lord said: My Lords, this is a purely technical amendment to repeal Section 5 of the Sunday Trading Act. It is necessary to repeal Section 5 because Part I of the Shops Act 1950, to which it refers, is itself being repealed by Clause 20 of this Bill. I beg to move.
On Question, amendment agreed to.
Lord Henley Lord Henley moved Amendment No. 91:
Page 127, line 23, at end insert:
("1994 c. 20. The Sunday Trading Act 1994. In Schedule 4, paragraph 23.").
The noble Lord said: My Lords, my noble friend spoke to this with Amendment No. 35. I beg to move. On Question, amendment agreed to.
Clause 77 [Short title, commencement and extent]:
Lord Henley Lord Henley moved Amendment No. 91A:
Page 61, line 19, after ("15") insert (", 17, 18").
The noble Lord said: My Lords, if it is convenient to the House, in moving Amendment No. 91A I shall speak also to Amendment No. 91B. These are technical
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amendments to bring into effect automatically, two months after Royal Assent, the changes relating to Sunday betting, charges for admission to Sunday sport and the associated employment protection for betting workers on Sundays. These provisions will come into force two months after Royal Assent without the need for separate commencement orders. Accepting the amendment will mean that a definite date for the start of Sunday racing can be fixed, thereby assisting the horseracing and greyhound industries in planning fixtures. In our view the two-month period is sufficient to advise interested parties such as police, courts, industrial tribunals, local authorities and the racing and betting industries of the changes. I beg to move.
On Question, amendment agreed to.
Lord Henley Lord Henley moved Amendment No. 91B:
Page 61, line 20, at end insert:
("() Schedule 7,").
On Question, amendment agreed to.
Lord Henley Lord Henley moved Amendment No. 92:
Page 61, line 38, after ("12,") insert ("(Licensed premises at international ports: permitted hours),").
The noble Lord said: My Lords, my noble friend spoke to this earlier. I beg to move.
On Question, amendment agreed to.
Lord Simon of Glaisdale Lord Simon of Glaisdale moved Amendment No. 93:
Page 62, line 6, leave out ("day") and insert ("days").
The noble and learned Lord said: My Lords, this is an amendment that the noble Lord, Lord Peyton, and I put down at the Committee stage. We put it down in the same terms at this stage for two reasons. The first was that the noble Lord, Lord Strathclyde, who replied to the debate, read out the brief that was prepared for him, obviously with increasing dismay and incredulity. He promised to consider the arguments that had been put forward.
The second reason is that the noble Earl, having barely changed his hat, replied on the matter in his usual clarity, and indeed most helpfully, because he conceded part of our case. Perhaps I ought to say that in speaking to Amendment No. 93 I shall also be speaking to Amendment No. 94. I see that in the table of groupings Amendment No. 94A has been grouped with it, but I have been unable to find that in the Marshalled List.
Clause 77 deals with regulations. Subsection (4) is the subsection which invariably appears whenever the button on the computer for regulations is pressed. It states:
"The remaining provisions of this Act… shall come into force on such day as the Secretary of State may by order appoint".
7.30 p.m.
Lord Henley: My Lords, I thank the noble and learned Lord for giving way. The noble and learned Lord said that he could not find Amendment No. 94A in the name of my noble friend Lord Ferrers. I can assure the noble and learned Lord that Amendment No. 94A is included on the third Marshalled List of Amendments. I wonder whether perhaps the noble and

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learned Lord does not have the third Marshalled List and is working from the second Marshalled List or some other document. However, the amendment is included. I see the noble Lord, Lord Peston, nodding in agreement.
Lord Simon of Glaisdale: My Lords, perhaps I have a defective list. I am obviously in the hands of the House. I propose to speak to Amendments Nos. 93 and 94 and to leave Amendment No. 94A if that is convenient to the House.
Lord Henley: My Lords, since Amendment No. 94A is in effect the Government's response to Amendments Nos. 93 and 94 I shall certainly speak to Amendment No. 94A when I respond to the noble and learned Lord's amendments. I hope that he will find Amendment No. 94A in the name of my noble friend satisfactory to some extent in meeting the purpose of Amendments Nos. 93 and 94.
Lord Simon of Glaisdale: My Lords, I am very much obliged to the noble Lord. I believe that I now know what Amendment No. 94A must contain in which case I welcome it warmly so far as it goes. I have now been handed a copy of the amendment, and I see that my copy of the Marshalled List was defective.
I quoted subsection (4) as it stands. Amendment No. 93 changes "day" to "days". I imagine that that is acceptable to the Government.
The subsection continues:
"and different days may be so appointed for different provisions or for different purposes".
In our view that latter part is unnecessary. I gather that the Government amendment removes the words "for different provisions or".
The latter part of the subsection is unnecessary. It is intended to obviate an argument that only one regulation may be made and if that regulation appoints different days for different provisions, or different days for different purposes, then such regulation will be ultra vires. That argument is inconceivable of success in any rational court.
As I indicated, the noble Earl wrote to me saying that Clause 76 will almost certainly be needed to come into force on different days for the purpose of different repeals in order to coincide with the coming into force of the provisions to which the particular repeals relate. Clause 76 brings into effect Schedule 16, the repeals schedule. The argument is that different dates are required for different purposes. I say nothing as to the concession which is now apparently the subject matter of Amendment No. 94A except that I welcome it as valuable if the computer is re-programmed to omit that particular clause.
The argument in favour of the inclusion of reference to different purposes is, in my submission, misconceived because the clause does not state that the remaining sections and schedules of the Bill shall come into force but that the remaining provisions of the Bill shall come into force. Each of those repeals is a separate provision. Therefore, it is quite unnecessary to add the little phrase
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to the effect that different days may be provided for different provisions. That is already implicit in the word "provisions".
Therefore, I hope that the noble Lord in replying will accept the amendments if only on those grounds. There are two grounds. First, it is inconceivable that any such regulations would be held to be ultra vires if the whole of the final part of the subsection is omitted, and, secondly, the beginning of the subsection refers to different provisions, which include the individual provisions, for example, the individual repeal provisions. I beg to move.
Lord Henley: My Lords, as the noble and learned Lord reminded us at Committee stage my noble friend Lord Strathclyde undertook to take the matter away and consider it with the parliamentary draftsman. We considered the matter further. That is why we came forward with Amendment No. 94A, which I believed would satisfy the noble and learned Lord. Obviously it fails to do so.
I understand what the noble and learned Lord is getting at. Obviously, I hesitate to take issue with the noble and learned Lord. But I have to say that I am firmly advised that if we do not have the words,
"and different days may be so appointed for different purposes"
there would be real doubt as to whether we could commence a particular provision on different days for different purposes.
The noble and learned Lord said that if we did not have the words which he wishes to delete it was inconceivable that a court would interpret the matter other than as we wished it to be construed. It is always possible that the courts might construe Clause 77(4) just as we would wish without the words after the semicolon. The noble and learned Lord may be over-egging the situation when he uses the word "inconceivable". I do not believe that it is wise to run that risk.
Having said that, I have the greatest respect for the noble and learned Lord. Obviously I am prepared to have another look at the issue. However, I ask him to withdraw his amendment and allow us to move our Amendment No. 90A.
Noble Lords: My Lords, it is Amendment No. 94A.
Lord Henley: My Lords, I am grateful to noble Lords for correcting me. It is Amendment No. 94A. Between now and Third Reading perhaps I may further consider the matter and possibly take it up by means of correspondence with the noble and learned Lord.
Lord Simon of Glaisdale: My Lords, I am very much obliged to the noble Lord. Obviously, in view of that offer, I must beg leave to withdraw the amendment. If I can myself be of any help in discussion, I am, of course, at the noble Lord's disposal. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 94 not moved.]
Lord Henley Lord Henley moved Amendment No. 94A:
Page 62, line 8, leave out ("for different provisions or").
The noble Lord said: My Lords, in the light of the assurance that I have given to the noble and learned Lord, I beg to move Amendment No. 94A.
Lord Simon of Glaisdale: My Lords, it is,
"The daintiest last to make the end most sweet".
It remains only to say thank you.
On Question, amendment agreed to.

Summer Time Order 1994
7.42 p.m.
The Minister of State, Home Office (Baroness Blatch)The Minister of State, Home Office (Baroness Blatch) rose to move, That an humble Address be presented to Her Majesty praying that the Summer Time Order 1994 be made in the form of the draft laid before the House on 27th June [22nd Report from the Joint Committee].
The noble Baroness said: My Lords, the draft order before your Lordships this evening has been considered by the Joint Committee on Statutory Instruments and has been approved in another place.
The order is, in itself, uncontroversial in that it continues for a further three years, from 1995 to 1997 inclusive, the existing arrangements for the start and end dates of summer time. This will mean that next year— that is 1995—summer time will start at 1 a.m. Greenwich Mean Time on Sunday 26th March and will end at 1 a.m. GMT on Sunday 22nd October. Similarly, in 1996, summer time will run from 31st March to 27th October. In 1997 it will run from 30th March to 26th October.
The starting and ending dates and times conform with the 7th European Directive on summer time arrangements. The start date in March has always been common to all the countries concerned, but in the past, and indeed in the current year, 10 states have ended summer time in September, while the Republic of Ireland and the United Kingdom have had a derogation to end summer time in October.
I am sure that your Lordships will agree with and share the Government's pleasure that in this instance our continental European partners have seen the advantage of the British way of doing things, so that the 7th directive provides that, after a further year, all the members of the Union will end summer time in October—that is, as we and the Irish already do.
Thus, from 1996, while the United Kingdom's arrangements remain as they are, everyone will be able to take it that throughout the year the clocks here will be one hour different from those of most other countries in western Europe.
It is tempting to move on to the wider question of policy; that is, whether our arrangements for time as a whole, both in winter and in summer, should be the same us those widely employed elsewhere in western Europe, inside and outside the present European Union. However, I shall resist that temptation.
As your Lordships will be aware, the subject of this evening's debate is much narrower, and therefore seeks the agreement of the House to the continuation of the present arrangements for a further three years, as set out in this order. I beg to move.
Moved, That an Humble Address be presented to Her Majesty praying that the Summer Time Order 1994 be made in the form of the draft laid before the House on 27th June. [22nd Report from the Joint Committee]— (Baroness Blatch.)
7.46 p.m.
Lord Tanlaw: My Lords, on the face of it, this is a simple order. As the noble Baroness said, we should be grateful to our European partners for coming into line with Great Britain, and at our convenience. However, I believe that the order should be seen in the wider context of an issue which the noble Baroness said she was unwilling to pursue: the wider question of our time scale and that of Europe.
On Monday 18th July in the other place, in the first Standing Committee on Statutory Instruments, where this order was agreed and passed, the official Opposition asked whether there was to be a debate followed by a free vote on whether the United Kingdom should come into line with central European time. The right honourable Minister of State for the Home Office replied,
"There are no present plans".
Perhaps I may ask the same question of the noble Baroness. In answering, perhaps she will be more precise than she was in her introduction of the order. Will there be an opportunity to have a full debate on the consultative document Cmnd. 722 of June 1989? Perhaps I may repeat the year—1989. I very much hope that the noble Baroness will be able to give a clear and precise answer, unlike her counterpart in another place who indicated, regrettably, that Her Majesty's Government had apparently neither the time nor the inclination to debate this important subject.
At a time when senior ex-Cabinet Ministers advocate publicly that Britain would somehow be better off outside the European Union, could the noble Baroness reassure businessmen, at least, who have to deal with the daily realities of European trade, by indicating whether or not the question of single/double summer time is being given the priority by Her Majesty's Government that it deserves? Perhaps the noble Baroness will also state the reasoning underlying the delay in decision making; or is it just another form of what the media refer to as Euro-scepticism on behalf of the Government?
If that is the case, perhaps I should warn the noble Baroness and other noble Lords in the Government about the possible consequences to which that lack of decision making on matters regarding Europe can lead. In an article which appeared in the Daily Telegraph some years ago by (I think) a Professor Thompson—a professor of palaeontology—he suggested that dilatoriness regarding seasonal change may have contributed to the extinction of our human ancestors some 40,000 years ago. To précis the article, Professor

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Thompson said that it would appear that Neanderthal man was a Euro-sceptic and suffered the inevitable consequences by becoming extinct. On the other hand, homo sapiens were not Euro-sceptics and survive to the present day. It seems that homo sapiens took account of the seasonal changes and had no adverse feelings about moving south into Europe at the onset of the Ice Age.
Today British businessmen face major economic change rather than climatic change. In order to survive they must adapt to European trading conditions or they, too, will perish as surely as their Neanderthal cousins did 40,000 years ago.
Is the noble Baroness aware that many British businessmen now need to know as a matter of some urgency when the United Kingdom will come into line with Central European time? Is the noble Baroness also aware that London will be linked to the Continent of Europe by a regular high speed train service from next month? Does she realise that that will lead to many unnecessary inconveniences and missed business opportunities due to mistaken timings? For instance, it is publicised that the journey will take three hours. In reality it will take four hours. Those of us who have to make the journey frequently, whether by air or other means of transport, have great difficulty in getting to a meeting on the Continent before midday or lunch hour.
There are problems with portable computers. Their system utilities will have to be reset every time they are taken across the Channel and back again. I refer to two rather costly irritations, but other examples have been raised recently by correspondents in the Mail on Sunday and the Evening Standard of which I know the noble Baroness is aware.
I am not content to let this statute on harmonisation of winter and summer time settings, of which I thoroughly approve, pass through your Lordships' House on the nod without some kind of clarification, first, by Her Majesty's Government that this statutory instrument is part and parcel of a planned programme which will culminate in a debate to decide the adoption of single/double summer time in this country.
Alternatively, can this be a subject for inclusion in the Queen's Speech so that Her Majesty's Government can give a firm date for a debate which will, we hope, lead to a measure to be agreed by a free vote? Will the official Opposition support the bringing forward of such a debate as a matter of urgency? Will other noble Lords join me in expressing their discontent at the serious lack of progress in the matter? This statutory instrument should not, in my personal view, be passed through your Lordships' House on its own, unless it can be clearly shown that it is a necessary last step towards a debate followed by a Bill to integrate our timescale with the continent of Europe.
If your Lordships' House votes to delay the statutory instrument, no harm will be done because the order before us will not come into effect until next year anyway, as the noble Baroness said. An enforced delay by your Lordships' House will, on the other hand, have no other effect but to send a clear message to the European Parliament and the Council of the European Union that many people in this country are extremely
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unhappy with the slow progress of Her Majesty's Government's decision-making on this important subject.
Surely the noble Baroness who is to reply must recognise that to remain undecided on the implementation of single/double summer time benefits no one. From the evidence so far submitted by the Royal Society for the Prevention of Accidents, it will even endanger the lives of children and senior citizens unnecessarily during the forthcoming winter months.
Have we not reached a stage in European history when the leaders of our country should stop looking backwards in time and start looking forward to the future by recognising the need to harmonise the different timescales currently in operation between Britain and the continent of Europe?
7.51 p.m.
Viscount Mountgarret: My Lords, I ask the indulgence of your Lordships because I am afraid that I overlooked the fact that one is expected to put one's name down to speak on an order of this kind. After all the years I have been here, I find myself very remiss but I hope that I may make one or two observations.
I strongly support the order, and to satisfy the noble Lord, Lord Tanlaw, it might be observed that the Europeans wish to harmonise at a date which we already have for the changeover of our clocks. That must be a step in the right direction, otherwise we would lose the month of October before the clocks change. However, we are debating an order and this is not the moment to debate the quantum of the subject of what kind of time we adopt.
I wish to ask my noble friend a question, referring back to the 1989 consultative document. Three years ago, when the present summer time order was in force, I asked my noble friend Lord Astor a question and received the reply that a public hearing on the matter would be held after the summer break. So far as I am aware, that was not done and I should like to know why. I asked a similar question to the one raised by the noble Lord, specifically when the Government would make provision for a Bill in our House on the subject of the Green Paper because it is important for the matter to be cleared up and a decision reached. My noble friend Lord Astor also said that the Government would keep in close touch with developments and report back. That has not been done. Primary legislation would be required. I should therefore like to know why, after two years, no Bill has been introduced. I urge my noble friend to ask her colleagues whether or not we may make progress on the matter and have the subject definitively debated in the House.
7.54 p.m.
The Earl of Balfour: My Lords, I hope your Lordships will forgive me for asking one question. Article 1(2) of the order states:
"This Order shall have effect in Great Britain, Northern Ireland and the Bailiwick of Guernsey".

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I wondered why it did not include the Bailiwick of Jersey or, for that matter, the Isle of Man. Perhaps my noble friend Lady Blatch will be good enough to give me an answer when she winds up.
7.55 p.m.
Lord McIntosh of Haringey: My Lords, I am delighted to face the Minister at the Dispatch Box, I am glad that she follows me around, although she takes a long time to do it.
In itself, this is an entirely uncontroversial order, as she rightly says, and we shall not oppose it. I can confirm what she said about our position in another place, where we took the view—as we do here—that this is not a matter for Whipping and that there would be a free vote, if one were taken.
Therefore, I am free to say that my personal conviction is that although this is an improvement in the sense of the minor inconvenience of being in tune with the European Community in the month of October but not elsewhere, it does not go as far as it should. What we should do is not be an hour ahead of them all the time but be on the same time as they are. To that extent, I agree with the noble Lord, Lord Tanlaw.
I appreciate that that causes difficulty to some people, particularly those in the North of Scotland. They feel that the effect on them of being on European time would be that they would have darker mornings. However, the Royal Society for the Prevention of Accidents has shown conclusively over many years that to have darker mornings and lighter evenings is likely—I do not think that one could go further than that—to reduce accidents rather than to increase them.
Of course, the commercial advantage in terms of the coincidence of the working day and being on the same time as the rest of Europe would be great. I spend a good deal of my time in the United States where there are different time zones and I accept that with the extension of the European Union into eastern Europe in due course, there would be difficulties for those who are significantly further cast than we are. Indeed, Finland is likely to come in very quickly indeed; however, special provision could and should be made for those people. There would be enormous advantages for us in being on the same time as Europe, and I personally very much regret that the opportunity is not being taken to make that change. I appreciate that it is always a matter of great controversy and that people can honestly hold very different views on the matter. However, it is a pity that we are making only this minor improvement and not the major improvement which would be possible.
7.57 p.m.
Baroness Blatch: My Lords, I am grateful to those who made their points succinctly and clearly. First, perhaps I may respond to the brief question from my noble friend Lord Balfour. Both Jersey and the Isle of Man will be dealt with separately in separate legislation, so there is no question of them being left outside the arrangement.
My noble friend Lord Mountgarret reminded us that the matter had been discussed on a previous occasion with my noble friend Lord Astor. When he responded
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to the question put by my noble friend, the Minister was referring to the European Commission, which held a public hearing on future summer time arrangements in October 1992. At that time the debate was confined to the harmonisation of the start and end dates of summer time. Contrary to expectations, the public hearing did not raise any issues of particular concern to the United Kingdom.
The 7th European Community directive includes the welcome provision that in 1996–97 other member states will adopt the UK October end date for summer time. It is therefore the first development of any significance and I am pleased to note that that has been welcomed by all who spoke in the debate. As noble Lords know, the draft summer time order for which your Lordships' approval is sought today intended to give effect to that directive.
I have listened carefully to the debate and I have noted particularly the concerns of the noble Lord, Lord Tanlaw, and indeed the following supportive comments by the noble Lord, Lord McIntosh, about the wider policy choice between the status quo and moving to single double summer time. The one certain thing about this choice in policy is that it is not easily determined; nor is this a party political issue. The noble Lord, Lord McIntosh, made a very good point there.
Those who advocate the move to single double summer time refer to projected reductions in the incidence of road traffic casualties, and in the fear of crime; to increased opportunities for sport and other recreation in the longer summer evenings; to the potential boost for our tourism industries; and to benefits to business, travel and communications from working on a common basis with the great majority of our present European partners, and with the four states which we hope will join the European Community and Union next year.
On the other hand, those who see the advantage lying with the status quo foresee that single double summer time would inflict national inconvenience in darker winter mornings; worsen morning working for some groups in particular, including farmers, construction workers, postmen and milkmen; and have a disproportionate adverse impact in the North, particularly in Scotland.
The Government first initiated debate about the possible options for our arrangements as long ago as the 1989 Green Paper. We were forcefully reminded of that by the noble Lord, Lord Tanlaw. The responses to that consultation paper did not point to a clear way forward, and since then circumstances have altered, and the considerations have, if anything, become more complex. At that time our initial consultations did not, and could not, anticipate the adoption of a common October end date as part of the status quo. Some may see that as a further argument in favour of our present arrangements. Others may see it as evidence of the benefits of having common arrangements with Western Europe, the best of which would be to employ one time zone, as single double summer time would provide.

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A further consideration which carries substantial weight is that people throughout the United Kingdom are fully accustomed to the status quo. It can be argued therefore that advocates of single double summer time would need to show not only that its advantages would outweigh its disadvantages but that they would do so to such an extent that the change would indeed be worth making.
The present stage of the Government's policy is, therefore, to weigh carefully the pros and cons of the status quo and single double summer time respectively. I realise that that will be disappointing, particularly to the noble Lord, Lord Tanlaw, who asked me to be forthright, unequivocal and straightforward about this, and to other noble Lords
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who have spoken who had hoped that the green light might be given for early legislation for a move to single double summer time.
However, as my noble friend Lord Mountgarret said, tonight is not the night for this debate. This issue will be kept under review, but I must now bring noble Lords back to the subject on the Order Paper. I have noted what has been said in the course of the debate, and I welcome, of course, the move of our continental partners to an October date for the end of summer time. I ask the House to approve the Summer Time Order 1994.
On Question, Motion agreed to, and it was ordered that the Address be presented to Her Majesty by the Lords with White Staves.
House adjourned at three minutes past eight o'clock.