Lords Sitting of 13 December 1995

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

Lord Mackay of Drumadoon
Donald Sage Mackay, Esquire, QC, having been created Baron Mackay of Drumadoon, of Blackwaterfoot in the District of Cunninghame, for life—Was, in his robes, introduced between the Lord Fraser of Carmyllie and the Lord Rodger of Earlsferry.

Mental Health Care: Support
2.48 p.m.
Lord Thurlow Lord Thurlow asked Her Majesty's Government:
Whether adequate mental health services will continue to be supplied in the next three years if the timetable of closure of remaining long-stay psychiatric hospitals is not reconsidered.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege): My Lords, people with mental illness are best cared for through locally-based health and social services rather than in large remote institutions. A wide range of hospital, residential and community services will be in place to enable people with mental illness to receive care and treatment to meet their individual needs.
Lord Thurlow: My Lords, I thank the Minister for that reply. Does she agree that much as we welcome the increase in facilities in the community, there will for the foreseeable future remain a need for complementary accommodation in hospitals for acute services? If the review, which I understand has taken place, with regional health authorities reveals a gap in the prospect of available services with skilled staff, will the Government be prepared to consider a review of the timetable? I understand that more than 50 old hospitals are due to be closed down in the next five years. That seems to imply a requirement for replacement facilities far in excess of what facilities in community care can provide
Baroness Cumberlege: My Lords, I agree with the noble Lord's first statement concerning acute facilities. With regard to his second point, we have given a firm undertaking that we will not approve the closure of any hospital unless we are satisfied that adequate alternative services are provided.
Baroness Faithfull: My Lords, do patients have a choice as to whether they can remain in hospital or are they discharged even against their will? If discharged, are there day centres that they can go to? I refer in
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particular to schizophrenics, who are extraordinarily difficult for social workers to deal with in the community without a base in the community and who tend to disrupt their families completely because the families are unable to cope.
Baroness Cumberlege: My Lords, we issued guidance in August of last year that patients should only be discharged when and if they are ready to leave hospital. Clearly, they have a choice in that matter, and their carers' views are also taken into consideration. Secondly, there should be no risk to the public or themselves, or if there is, it should be very minimal and effectively managed. Thirdly, when they are discharged, they should get the support and supervision which they need.
Baroness Masham of Ilton: My Lords, following the stabbing of a doctor in his surgery yesterday, can the Minister say how much of the violence now hitting general practitioners in their surgeries is due to those who have mental health problems? Is this being monitored and how much protection can doctors be given?
Baroness Cumberlege: My Lords, it would be impossible to say whether violence in the community is due to mental illness. Certainly, when we look at homicides, the figures are fairly consistent and have been for many years. With regard to the protection of GPs, it is a matter for them. However, if the noble Baroness has suggestions, we should like to take those on board.
Lord Marsh: My Lords, I follow and agree with the general thrust of the Minister's argument and the Government's policy on this subject; but does she accept that there are numerous people around on the streets who clearly are not capable of looking after themselves? Is it not possible that we have underestimated the number of people who require residential care?
Baroness Cumberlege: My Lords, we have carried out some studies of people who are homeless and on the streets of inner city areas. Although I am sure many of them are mentally ill, there is little evidence that any of them have been discharged from long-stay institutions. However, I take the point that many of them probably need help for acute mental illness.
Lord Strabolgi: My Lords, what is to happen to those people who are so mentally handicapped that they cannot cope at all; for instance, people who have a mental age of one or even six months and have not developed for the whole of their lives? Is accommodation to be provided for them or are they to be thrown onto their families?
Baroness Cumberlege: My Lords, as I said in the undertaking which I gave in my original Answer, we certainly would not wish to discharge anybody from a hospital without adequate provision in the community. For those people who are very severely disabled or handicapped, we believe that there are better ways of looking after them than in the long-stay Victorian institutions. Indeed, many good homes have been set up

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in the community. We give very clear guidance to the health service: we have care plans which it has to follow. They ensure that there is sufficient support for these people in the community not only during the day, but at weekends and in the evenings.
Lord Hayhoe: My Lords, will my noble friend the Minister confirm that the vast majority of patients discharged from long-term psychiatric hospitals—particularly those ghastly Victorian monstrosities that still exist in this country—in fact do well? Does she agree that it is out of balance to concentrate unduly on some of the exceptional cases which require exceptional treatment? Does she further agree that, by and large, it is a good policy which should continue to be pursued?
Baroness Cumberlege: My Lords, my noble friend is correct in what he says. I was responsible for five of the largest mental institutions that catered for the needs of London and when I first went around those huge Victorian institutions they were an eye-opener. Despite the efforts of the staff, I thought that the quality of care was very poor indeed. We were denying some people all the things that the rest of us take for granted, such as living in a normal house, in a normal street; going to the pub; going to the shops; and going to church. All the things that the rest of us take for granted were being denied these people.
Lord Rea: My Lords, I am pleased that the noble Baroness has once again reiterated that no psychiatric hospital should close until adequate community services are available. But does she fully understand that these services need time to develop as well as requiring adequate finances? Is she aware that at present they are simply not adequate in many areas, especially in inner cities? Can the Minister reassure us that there will be no further mental hospital closures until there is solid, detailed evidence that community services in the catchment areas of those hospitals are up and running?
Baroness Cumberlege: My Lords, there are a number of ways of providing care for mentally ill people. Only one of those is through residential or hospital care. The number of beds available has increased from 87,500 two years ago to 90,833 in this current year, so we are seeing an increase in the number of places as well as the provision of community mental health teams who work in different ways other than through hospital provision.
Lord Allen of Abbeydale: My Lords, can the Minister say what the position is regarding secure accommodation, which is a subject with a long history? Are there now enough secure units? Will these be kept and added to, if necessary, or may it still be necessary from time to time to have recourse to private psychiatric hospitals for this purpose?
Baroness Cumberlege: My Lords, there are different degrees of security. The special hospitals provide the maximum secure accommodation. They have been in existence for some time. In 1979 there was no medium secure provision in the country. Now we have approximately 1,200 medium secure places in 33 units.
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That is enormous progress since 1979. That was achieved through a special financial allocation. A further 300 will be provided through the normal NHS capital programme. So we have increased the number enormously.
Lord Monkswell: My Lords—
Noble Lords:Next Question!
The Lord Privy Seal (Viscount Cranborne): My Lords, I apologise to the noble Lord. I hope he will understand that this is only the first Question and we have already taken nine minutes. I wonder whether the noble Lord will be very graceful and perhaps allow us to get on to the next Question?

Slaughterhouses
2.58 p.m.
Lord Buxton of Alsa Lord Buxton of Alsa asked Her Majesty's Government:
Whether they accept the opinion of the Meat Hygiene Tribunal that the regulations concerning slaughterhouses are "extremely complex and their application is difficult"; and whether they will undertake a full review of the relevant legislation and in the interim consider the decisions on the commissioning of slaughterhouses.
Lord Lucas: My Lords, my noble friend has managed to ask three Questions in one and the Answers to them are yes, no and yes. Yes, the regulations concerning slaughterhouses are complex and difficult to apply, but no, it is not in our power unilaterally to review the EC directive on which our regulations are based. We must also bear in mind that we are coming to the end of a period of considerable change and the industry is likely to welcome a period of stability. However, we are looking at our implementation of the directive to ensure that no unnecessary burdens are imposed. Lastly, yes; my honourable friend the Parliamentary Secretary for Agriculture, Fisheries and Food is looking at each outstanding derogated slaughterhouse to ensure that we are being as helpful as possible within the constraints of the legislation.
Lord Buxton of Alsa: My Lords, I thank my noble friend very much for his largely satisfactory and admirable reply. In fact, it has almost restored my "feel-good factor". I am sure that your Lordships are anxious to get on to the next Question, but will my noble friend convey to the Minister, Angela Browning, very sincere appreciation and congratulations on what has happened? It is nearly a year since we started to be concerned about the case of Mr. Law and his family slaughterhouse business which has gone on for several generations. A very serious injustice has been averted through her intervention and through her taking full charge of these decisions. Therefore, we would like my noble friend to kindly pass that on.
May I ask a further question? If we are now to ensure that no further injustices occur, can the arrangement whereby the Minister takes full charge be built into

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future provisions so that when Angela Browning moves elsewhere and higher, as I am sure that she will, we need have no further worries?
Lord Lucas: My Lords, I shall draw my noble friend's very kind remarks to the attention of my honourable friend who is, indeed, a most effective Minister. She, I, and all the officials involved, share the delight at the resolution of Mr. Law's problems and I hope that we may be able to deal with the other outstanding derogations with similar good effect.
Lord Cledwyn of Penrhos: My Lords, can the noble Lord tell the House how many slaughterhouses in England, Scotland and Wales are regarded by the Ministry of Agriculture, Fisheries and Food as inefficient or unsatisfactory?
Lord Lucas: My Lords, I do not believe that we know of any such slaughterhouses. Some have not yet met the conditions, but on the other hand the time limit in which they have to do so has not yet expired.
Lord Peyton of Yeovil: My Lords, does my noble friend agree that complex legislation and regulations open the door to tiresome officials being able to bully people and deprive them of their livelihoods? I have no doubt that my noble friend will have read the admirable judgment of the sheriff concerning Mr. Errington, who was so gravely bullied by Clydesdale District Council.
Lord Lucas: My Lords, I have not yet had the opportunity to read the judgment but I am looking forward to doing so. Generally, I agree entirely with what my noble friend said and believe that if we were to rewrite the directives now both ourselves and the European Commission would proceed in a different spirit.
Lord Carter: My Lords, despite the rather complacent Answer from the Minister, does he agree that it is extraordinary that after all the confusion and the increased costs and pressure on abattoirs resulting from the regulations, the recent inspection of abattoirs by the State Veterinary Service found that nearly half of those inspected were in breach of the rules governing the removal of specified offals as a control against the possible spread of BSE? Does not that confirm the worst fears of those of us who felt that the new regulations would not produce the increase in food safety that we were promised?
Lord Lucas: My Lords, I take a rather different view. Yes, I share the noble Lord's disappointment at the performance of slaughterhouses as regards the removal of spinal cord. That is something that we are taking extremely seriously. However, our belief is that the introduction of the Meat Hygiene Service and the regulations has resulted in a great increase in quality and a great decrease in costs compared with previous inspection results. If we are seeing more difficulties in slaughterhouses, I believe that it is simply because we are seeing more rather than because more are occurring.
Baroness Nicol: My Lords, can the Minister say whether any progress has been made recently in the provision of mobile abattoirs? He will no doubt recall
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that we had some discussions on that about a year ago. Mobile abattoirs would ensure that animals could be slaughtered as near as possible to the places where they had been reared. Is that progressing?
Lord Lucas: My Lords, I am afraid that I know nothing about that, but I shall write to the noble Baroness when I have some information.
Lord Mackie of Benshie: My Lords, although I am delighted that the Minister has saved one family business, can he tell the House how many have been closed down in addition to the three that I can tell him about in my own area? Can he also say how much the health of the nation has improved because of his officials' actions?
Lord Lucas: My Lords, since 1975 about 1,000 slaughterhouses have closed. I cannot give the noble Lord any answer about how the health of the nation has improved, but it seems to be in good shape, which is what we are all aiming at.
Lord Carter: My Lords, is the Minister aware that the incidence of food poisoning has increased in the past two years?
Lord Lucas: My Lords, no, I was not aware of that, but I am sure that very little of it is attributable to problems in abattoirs.

Intensive Care: Services
3.4 p.m.
Lord Ashley of Stoke Lord Ashley of Stoke asked Her Majesty's Government:
Whether they are satisfied with the critical care facilities in British hospitals.
Baroness Cumberlege: My Lords, it is for health authorities and NHS trusts to determine the level of intensive and high dependency care according to the needs of their local populations.
Lord Ashley of Stoke: My Lords, I thank the Minister for that Answer, although it does not say very much. Does she agree that the recent report on post-operative deaths stated that surgery and anaesthetisation were both safe but that patients' lives were at risk because of the shortage of high dependency beds in hospitals throughout the country? Is the Minister aware that the report recommended that that shortage should be dealt with urgently? Are the Government dealing with it urgently? Indeed, why have they not dealt with it so far?
Baroness Cumberlege: My Lords, we welcomed the report of the national confidential inquiry into peri-operative deaths; but we did not entirely agree with its view on critical care because there is a lack of scientific evidence which could either support or refute the view that was expressed. That is why the

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Government commissioned a study into the provision of intensive care in England. That report was published in February of this year.
Lord Rea: My Lords, does the noble Baroness agree that the distribution of intensive care beds is uneven throughout the country, with under-provision in some areas and possible wasteful over-provision in others? Will the research that she mentioned lead to strategic planning of intensive care across health authority boundaries, involving trusts, and operating across purchasing authority boundaries? Will the noble Baroness answer my noble friend's question about high dependency beds, which are less costly than intensive care beds and can be used effectively in conjunction with them?
Baroness Cumberlege: My Lords, yes, the noble Lord is right in saying that provision is uneven across the country. Indeed, different admission criteria apply in different parts of the country. The study to which I referred was undertaken by Professor McPherson, and reported that one in six intensive care admissions was inappropriate. That meant that people with life-threatening emergencies were possibly denied treatment. The professions are producing guidelines on admission and discharge policies which we think will make a great difference. In April we set up an intensive care bed bureau in the south-east of England, since when there has been no occasion on which an intensive care bed was not found when needed. That practice has been adopted in other parts of the country.
Lord Hayhoe: My Lords, I pay tribute to the staff, to the nurses and others involved in intensive care, for their great dedication and high professional skills, but does my noble friend accept that there is sometimes a shortage of staff which leads to difficulties in finding intensive care beds for particular patients? Is my noble friend satisfied that proper arrangements are in hand to improve and extend the training of intensive care staff?
Baroness Cumberlege: My Lords, yes, my noble friend is correct about trying to staff intensive care units. In fact, more training places are now in the pipeline. Since 1990, 1,000 extra intensive care nurses have joined the service, so we are seeing an improvement on that front.
Baroness Robson of Kiddington: My Lords, is the Minister equally satisfied about the existence of proper rehabilitation services in most of our hospitals? After all, rehabilitation is tremendously important if one has been in a high dependency or intensive care unit. I fear that some of those services are no longer available.
Baroness Cumberlege: My Lords, I am not certain what the noble Baroness means by rehabilitation because it can be a long-term thing—two or three years. With regard to rehabilitation for those coming out of intensive care, what the noble Lord, Lord Rea, said about high dependency units can apply here also.
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People on general wards are conscious of the need to rehabilitate those coming from intensive care, and they do it well. It would be very hard for any Minister to give a guaranteed assurance that it is done perfectly.
Baroness Masham of Ilton: My Lords, is there not a problem with an increase in emergency admissions which sometimes take up the intensive care beds so that people waiting for serious operations have to have them cancelled at the last minute? Is she also aware that there is a shortage of intensive care cots for babies throughout the country?
Baroness Cumberlege: My Lords, the noble Baroness is right when she says that we have seen a rise in emergency admissions. We are not sure why that is. There is a study going on at the moment which is just about to report to the Government. We shall follow that up. With regard to neo-natal admissions, the problem in those units often is that there is no criteria for admission. I know that some trusts are addressing that issue.
Lord Ashley of Stoke: My Lords, will the Minister tell us how she reconciles her statement that there is a lack of scientific evidence about the situation, when this report was written by the best medical brains in Britain who were invited by the Government to do so? I refer to top class surgeons and anaesthetists. Secondly, will she kindly confirm that only one hospital in five in Britain has high dependency units?
Baroness Cumberlege: My Lords, when these committees do their work, they are often closely targeted on certain areas. In this case I believe that it went beyond the area one would normally consider. As I said, we welcome the report, but I have to say that there is no scientific evidence to support or refute its view.

Home Energy Efficiency Scheme
3.12 p.m.
Lord Ezra Lord Ezra asked Her Majesty's Government:
What are their plans for the home energy efficiency scheme in the light of the reduction in the funding of the scheme announced last week.
The Minister of State, Department of the Environment (Earl Ferrers): My Lords, by changing the scheme so that over 60s, who are not on benefit, will be eligible for a 25 per cent. grant instead of 100 per cent. grant, we expect that the numbers of the most vulnerable who will be helped by the home energy efficiency scheme will remain at about the same level.
Lord Ezra: My Lords, I wish to declare that I am patron of NEA which is the charitable organisation that operates the scheme. Is the Minister aware that in the last Budget the scheme's funding was increased by£35 million for three years; and that within one year that sum has been effectively removed? Is he

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aware that as a result the homes of some 200,000 elderly people on low incomes will not be insulated in the coming year? Did the Government have that in mind when they removed the additional funding that they had originally provided?
Earl Ferrers: My Lords, the noble Lord is correct: £30 million was put into the scheme last year. It was added to the base line, which means that it continues for the second and third year as a base line. Clearly all schemes have to be reviewed. When the home energy efficiency scheme consisted of some£105 million out of a budget for the whole of energy efficiency of£140 million, it is difficult to see how it could have escaped being affected.
Lord Gray of Contin: My Lords, I wish to declare that I am president of Energy Action Scotland, a charity which administers the home energy efficiency scheme in Scotland. Does my noble friend accept that the charities which administer the scheme are not unmindful of the considerable help which they received from the Government in the last Budget, but that they are deeply concerned that, having given a commitment for a three-year period at£100 million per year, the cut at the end of the first year should he quite so savage? Is he aware that the effect of that cut in Scotland will be that 20,000 homes which would have been insulated will not now be insulated this year? Most of those homes are occupied by a not particularly affluent section of society but by pensioners who are living close to the line.
Earl Ferrers: My Lords, the commitment for the three-year period was a commitment to the addition to the base line. No government give a commitment as to what they will then fund three years ahead. As I explained, all these matters have to be considered when there are substantial cuts in public expenditure. The fact that there are cuts in public expenditure is a good thing. I would dispute, if I may, what my noble friend said about 20,000 houses not now being insulated. I do not know from where he gets that figure. The point is that those who are on benefit will continue to receive the 100 per cent. grant. Indeed some of your Lordships might have applied for the grant. Anyone over 60 could have applied for that grant. What we have done is to say that 25 per cent. will be available to anyone, irrespective of their means. Those who are the worst off will receive 100 per cent.
Baroness Hilton of Eggardon: My Lords, does the Minister agree that there are consequences other than the possibility of hypothermia for old aged pensioners? I refer to the loss of approximately 1,000 jobs for those engaged in insulating old people's homes. Moreover, at a time when we should be concerned about global warming, this is surely the wrong time to reduce our efforts in that direction and to allow energy to escape into the upper atmosphere.
Earl Ferrers: My Lords, the effect on jobs, if I may say so, is not relevant to the principle of energy efficiency. We are trying to help people who are old or infirm or on benefit to insulate their houses. I find
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it hard that the noble Baroness should suggest that people who might have incomes substantially above the minimum should also receive the benefit. As it is, they receive 25 per cent. of the benefit, and that enables us to target those for whom the noble Baroness is concerned; that is, the oldest and the poorest.
Baroness Hilton of Eggardon: My Lords, the Minister did not reply to the second part of my question.
Earl Ferrers: My Lords, I noted down that the noble Baroness referred to old age pensioners and the loss of jobs. I did not note down the third point.
Baroness Hilton of Eggardon: My Lords, the effect on global warming from the loss of heat into the upper atmosphere, which should be concerning us all at this time.
Earl Ferrers: My Lords, I realise what global warming is. My noble friend the Chief Whip was trying to advise me. All kinds of conditions apply and help or destroy global warming. In all we do, it is important that we should be conscious about conserving energy, but that does not mean to say that the Government have to foot everyone's bill. What they are prepared to do is to say that those who are the least able to meet that bill will be helped, while those who are more able to meet it and those who are very able to meet it can still be helped.
Lord Haskel: My Lords, what is the value of the three-year commitment if it can be broken at the end of the first year?
Earl Ferrers: My Lords, the noble Lord, if I may say so, sometimes finds it a little difficult to accept the basic principle. The basic principle is that£30 million was going to be added to the base line. Last year that base line was£75 million, so it went up to£105 million. The base line for the second and the third years was also increased by£30 million. But, having said that, all factors in my department and throughout Whitehall have to be considered on their merits. We considered that giving public money to those who could afford it themselves was not the best way to spend public money. What we are trying to do is to give it to those who cannot afford it.

Business
3.19 p.m.
Lord Strathclyde: My Lords, after the debate on a review of the regulation and operation of the privatised utilities and before the debate on the Learmont Review of Prison Service Security in England and Wales, my noble friend Lady Blatch will, with the leave of the House, repeat a Statement that is to be made in another place on the future of HMSO.

Partial-birth Abortion (Prohibition) Bill [H.L.]
Lord Braine of Wheatley: My Lords, I beg to introduce a Bill to prohibit partial-birth abortions. I beg to move that the Bill be now read a first time.
Moved, That the Bill be now read a first time.—(Lord Braine of Wheatley.)
On Question, Bill read a first time, and to be printed.

Business of the House: Debates this Day
Viscount Cranborne: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the debates on the Motions in the names of the Lord Ezra and the Lord Rodgers of Quarry Bank set down for today shall each be limited to two-and-a-half hours.—(Viscount Cranborne.)
On Question, Motion agreed to.

Procedure of the House: Select Committee Report
3.22 p.m.
The Chairman of Committees (Lord Boston of Faversham): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the First Report from the Select Committee be agreed to (HL Paper 8).—(The Chairman of Committees.)
Following is the report referred to:
1.COMMITTEES ON LEGISLATION OFF THE FLOOR OF THE HOUSE
The committee has reviewed the three new procedures for Committees on legislation off the Floor of the House which were used last Session following the report of the Group on Sittings of the House (the Rippon Committee). The group recommended a number of ways of taking proceedings away from the Floor of the House.
The committee notes that in the course of 1995 the House of Commons has implemented a number of the recommendations of the Committee on Sittings of the House (the Jopling Committee) (HC 20 (1991–92)), including sittings on Wednesday mornings, less business after 10 p.m. and taking more business off the Floor of the House. As a result, last Session the House of Commons rose on Mondays to Thursdays on average some 50 minutes earlier than in the previous Session and that House no longer sits on some 10 Fridays a year. With the more limited programme of reform proposed by the Rippon Committee, the House of Lords in the same period rose on average some 25 minutes earlier each day.
The committee draws attention to these developments and hopes that further efforts will be made to sit for fewer hours and to rise earlier. We repeat the view we took a year ago that a significant improvement in the hours of sitting of the House can come only with general support throughout the House, and by agreement through the usual channels, and not by any decision of the committee (First Report, 1994–95).
The committee makes the following observations and recommendations on the new procedures for Committees off the Floor.
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1.The further experiments in Special Public Bill Committees ("the Jellicoe Procedure") were successful and we confirm the view which we took in 1994 after the first experiment that the procedures have proved a valuable addition to the scrutiny function of the House. We endorse our previous observation that the procedure should be used not only for Law Commission Bills but for other Bills.
2.The experiment in taking the Committee stage of the Children (Scotland) Bill in the Moses Room under the procedure whereby Lords are not selected and any Lord may attend, speak and move amendments as if the Committee stage were taking place in the Chamber as a Committee of the Whole House also proved successful. Under the procedure no Divisions at that stage may take place. The procedure should be retained and used for suitable Bills.
3.One or more further experiments should be held in the use of informal committees, on which the results of the experiment last Session were less clear. It will be for Ministers in charge of Bills to convene such committees on suitable Bills as and when the need arises.
4.Special Public Bill Committees should be named (on report from the Committee of Selection) before Second Reading to enable the Members to agree a request for evidence and consider a programme of work at the earliest opportunity contingent on the Bill being committed to a Special Public Bill Committee. After Second Reading, the Committee will be appointed in the normal way with the 28-day period running from that date.
5.Notice of those meetings of Special Public Bill Committees at which Bills are considered clause by clause should be given on the Order Paper.
2.DEBATE ON CONSOLIDATED FUND BILLS
The committee was invited to re-examine the current Companion guidance concerning proceedings on Consolidated Fund Bills:
"It does not offend the privileges of the Commons for the Lords to discuss or even to decide upon consolidated fund bills, but the House has habitually passed such bills without printing them and without discussion or dissent. It is now a convention that proceedings upon them are taken formally."(Companion, p124)
We considered this matter in January and March 1993 (Second and Third Reports, 1992–93). On both occasions we confirmed the current guidance and our recommendations were agreed to by the House.
After further consideration, the committee once again endorses the current guidance. We invite the House to agree to this conclusion and express the hope that a similar proposal will not be brought again before the committee.
Lord Boyd-Carpenter: My Lords, it is strange that the report which we have in front of us gives no reason why debate on Consolidated Fund Bills—the second item in the report—should be prohibited. Indeed, it goes out of its way to indicate that were your Lordships to debate the Consolidated Fund Bill it would involve no clash with the interests and views of the other place. Therefore, if a ban on debating Consolidated Fund Bills is to be continued I should have thought that we were entitled to be given some actual reasons why that should be so.
It is most curious not only that no such reason is given in the report but that it is proposed to continue the ban on debating one of the most important measures of the year. It is one to which this House, with its great resource of knowledge on finance and the public economy, is particularly well fitted to contribute. It is in curious contrast, too, with what is allowed in respect of the Finance Bill, which otherwise is a parallel measure.
Finally, I was intrigued to note that in the report it is suggested that the House should not again consider this ban. I wonder why not.
Lord Campbell of Alloway: My Lords, perhaps I may take a contrary view. Could the reason be that the

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majority of your Lordships happen to agree with the Procedure Committee? I do, and have said so on the Floor of the House on previous occasions. Surely we have spent enough time on this subject and surely the hope expressed under the second heading is welcome and is no cause for surprise.
Lord Simon of Glaisdale: My Lords, I support the intervention of the noble Lord, Lord Boyd-Carpenter. Your Lordships stand in the position of the Great Council of the Realm of the Middle Ages. Although, as the noble Lord said, the other place has the machinery and the privileges as to finance, your Lordships can show massive experience and knowledge. Our Members include five former Chancellors of the Exchequer, four former Chief Secretaries, three former Governors of the Bank of England and a chairman of one of the biggest joint stock banks. Your Lordships are in a position to make a contribution in debates on finance, economics and taxation that no other deliberative assembly in the world can match.
The Procedure Committee, as the noble Lord, Lord Boyd-Carpenter, pointed out, gives no sign of having addressed the problem that was presented to it. It was something new. It was suggested that, as there is no occasion to debate finance and so forth between the Finance Bill presented in the Spring and the Queen's Speech presented in the late Autumn, the July Consolidated Fund Bill gives an incomparable opportunity for your Lordships to do so.
Recently, the noble Lord, Lord Desai, introduced what seemed to me to be a valuable debate reviewing finance against the background of the Budget. Presumably the Opposition sacrificed one of its days for that. I see a nod from the Opposition Front Bench. That is quite wrong. Your Lordships are entitled to ask that the Procedure Committee should now consider the question of the summer Consolidated Fund Bill.
Your Lordships have control over our procedure. Although we welcome the advice and help that we receive from the Procedure Committee, in the end it is a matter for your Lordships. In my respectful submission, it is odd that your Lordships are denied the opportunity of marshalling your knowledge and experience, which is unmatched.
Lord Strabolgi: My Lords, I agree with the noble and learned Lord, Lord Simon of Glaisdale, that your Lordships' House has a great deal of expertise in finance. However, I submit that the Consolidated Fund Bill is not a suitable vehicle for debate in this way. Another good reason is the fact that another place does not debate it. I understand that under Standing Orders it is prohibited from debating the Bill, as the noble Lord, Lord Boyd-Carpenter, with his long experience of another place, and the noble and learned Lord will know. What the other place has, of course, is a debate on the Closure Motion with many short debates on constituency matters. However, it does not debate the Consolidated Fund Bill itself.
We would, therefore, have the rather Gilbertian situation in which another place, which has responsibility for finance, does not debate the Consolidated Fund Bill while your Lordships' House,
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which does not have responsibility for finance, would be debating it. However, I have some sympathy with the point made by the noble Lord, Lord Boyd-Carpenter, that the House should be given an opportunity to debate financial and economic matters. Therefore, I submit that it might be a matter for consideration by the usual channels that the Consolidated Fund Bill should be taken formally and accompanied by a suitable Motion which would give rise to a debate.
Until the mid-1970s this House did not debate the Finance Bill. It took the Finance Bill formally and at the same time there was a Motion, mostly put down by the Opposition, which was often worded in such a way as to lead to a Division. The Finance Bill was taken formally. During the 1970s one or two noble Lords objected to some of the provisions by the then Labour Government and insisted on a Second Reading debate. That became the custom ever since. Perhaps I am in a minority in wishing to see both the Finance Bill and the Consolidated Fund Bill taken formally for the reasons that I have attempted to give.
Lord Ampthill: My Lords, this is a chestnut of such antiquity that I wonder whether the noble Lord the Lord Chairman of Committees might consider, for the sake of saving the Procedure Committee going through this matter yet again, publishing the correspondence that took place between myself, when I occupied the position that he now has, and the noble Lord, Lord Boyd-Carpenter, and the noble and learned Lord, Lord Simon of Glaisdale—with their permission, of course. It might clarify in the minds of those two noble Lords, not to mention the whole House, the reasons why this course has been covered sufficiently.
Lord Bruce of Donington: My Lords, many of us quite understand the impatience in some quarters of this House caused by this matter being raised from time to time by the noble Lord, Lord Boyd-Carpenter, and, on occasion, by me.
Perhaps I may suggest that we do not take sufficient account of entirely new forms of expenditure which are being incurred year by year and, indeed, day by day and week by week. I refer specifically to the expenditure out of the Consolidated Fund on sums towards the European Economic Community, the obligations for which are not accepted at one time only—that is, at the time of the Budget—but are in fact accepted by this country every time a new proposal with financial implications is agreed at the Council of Ministers without any consultation whatever with either House on whether or not such matters should be agreed.
It may well be that a debate on the Consolidated Fund Bill may not be the correct occasion on which to take those matters into account. But I should warn your Lordships that the question of direct payments by this country to implement Community proposals and legislation is increasing rapidly to a point at which it is a matter of some financial significance which should be considered by someone. I believe that this House has a reputation for examining with considerable care all matters in connection with Community funding, fraud and so on.

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I put it to your Lordships and to the Chairman of Committees that sooner or later, if we disagree on whether or not it should be debated on the Consolidated Fund, machinery should be put in place to enable this House to debate items of expenditure which are not agreed specifically in the original Budget that goes through another place but which happen day by day, week by week and month by month without any check whatever being made by any part of Parliament.
Lord Harmar-Nicholls: My Lords, it is essential that the Consolidated Fund Bill should, as a separate Bill, be debated and examined by Parliament. If the other place does not debate it—and we have just been informed that it does not—it would seem appropriate that this House, which is part of Parliament, should undertake that task, particularly in view of the expertise which the noble and learned Lord, Lord Simon of Glaisdale, reminded us that we have. We can give it a proper, thorough, detailed and authoritative examination.
One does not wish to interfere with the work of the Procedure Committee. As the noble Lord, Lord Ampthill, said, it is not a new problem. I believe that this is the wrong time to exclude any part of Parliament from examining in July the contents and the results which will flow from the Consolidated Fund Bill. Even at this late hour, perhaps the Chairman of Committees will allow that sentence to be removed from the report so that we do not commit ourselves to it. That would be one way to extricate ourselves from the present dilemma.
Lord Brabazon of Tara: My Lords, as a member of the Procedure Committee, I support the Chairman of Committees. The impression may have been given that the Procedure Committee did not give full consideration to this matter. It certainly did. We heard my noble friend Lord Boyd-Carpenter give his reasons for wishing the Consolidated Fund Bill to be debated. I believe that I speak for all members of the committee when I say that we listened to those arguments with great care and we came to the conclusion which has been reached, as the noble Lord, Lord Ampthill, said, on many previous occasions. I agree that this matter should now be put to rest for some little while.
Lord Graham of Edmonton: My Lords, no one wishes to inhibit debate for debate's sake and no one denies that this may be a suitable peg on which to hang a debate. However, we must bear in mind the timetable for debates, when the House rises and the receipt in this House of the Consolidated Fund Bill. The timing of that makes it impossible to do justice to the good management and order of the business.
Noble Lords who raised this matter say that the House has ultimate sovereignty over the Procedure Committee and that the House may take a decision. The best way that that can be implemented is by noble Lords who feel strongly about these matters tabling a divisible Motion on which the House might then be invited to vote. I doubt that some noble Lords would accept even that democratic decision because they have the democratic right to return to this matter time and time again. We
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cannot stop them from doing that. They complain about the shortage of time to debate important matters but every time that this matter is raised, time is taken up on it. The time of the Procedure Committee is also taken in consideration of the issue.
I have been a member of the Procedure Committee for a number of years and the matter has been aired thoroughly. The merits of the case are fairly clear and I am sure that the Chairman of Committees will repeat them. In practical terms, I do not believe that there is a case. The noble and learned Lord, Lord Simon, said that we were wrong to give up a day of our time in order to have an economic debate. That was a genuine opportunity taken by Labour Peers to use the Budget as a peg on which to hang a debate. I did not notice among the speakers many of those who agitate for more debates on the economy.
I sense that we have a small number of noble Lords who I respect deeply but who are not prepared to accept the democratic will of this House as expressed through their delegated committee members on the Procedure Committee. Just as somebody yesterday invited somebody else to take him to court, I invite those noble Lords who wish to press the matter to table a Motion on which the House can vote. That will mean that we shall have on the record the number of noble Lords in favour of that Motion. However, that may not resolve the matter. I suspect that even when an overwhelming number of noble Lords vote against that Motion, the matter will continue to be raised.
Lord Monkswell: My Lords, one of the strengths of this House and the way that it does its business is that rules are not provided which determine what shall be discussed and who shall speak. We work on a basis of consensus across the House or around the House and on the basis that we all agree with its procedures.
I did not intend to speak in the debate because I felt that there were noble Lords who could argue the pros and cons of the proposals suggested by the Procedure Committee. But, unfortunately, I am driven to my feet by my noble friend the Opposition Chief Whip who suggested that a divisible Motion is the way forward. I hope that the procedures of this House will not be determined by a majority but will be determined by a consensus, otherwise, I suspect that we may be going down a slippery slope of contention about the way that we do our business rather than considering the particular merits of the case.
I am not sure how we can go forward. A number of suggestions have been made in the debate so far. I hope that the different ways of going forward that have been suggested will be considered by the Procedure Committee as a means of trying to find some consensus on all sides of the House.
Lord Annan: My Lords, can the noble Lord say how you find consensus on the matter without a vote?
Lord Brightman: My Lords, perhaps I may make a brief comment on a completely different aspect of the Select Committee's report which arises in paragraph 1 at the bottom of page 1. It reads that the Jellicoe procedure,

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"should be used not only for Law Commission bills but for other bills".
It is quite often said that the Jellicoe procedure is not suitable for Bills of a controversial nature. In my opinion, that is not correct. While the Jellicoe procedure is obviously inappropriate for a Bill which is party political, or one that would be subject to a party Whip, I believe that a Bill should not be disqualified merely because it is controversial.
The Jellicoe procedure provides an admirable forum for the proper resolution of some controversial problems for the simple reason that evidence is taken and, therefore, voting takes place in the light of that evidence. I do not know whether the noble Lord, the Chairman of Committees, would care to comment on that particular assessment of the value of the Jellicoe procedure.
The Chairman of Committees: My Lords, in view of the business that is to follow this afternoon, I had hoped not to take up too much of your Lordships' time. However, bearing in mind the debate that has taken place on the matter and which was raised initially by the noble Lord, Lord Boyd-Carpenter, I believe that I should spell out some of the considerations which have arisen.
First, perhaps I may deal with the point raised by the noble Lord, Lord Boyd-Carpenter, and the noble and learned Lord, Lord Simon of Glaisdale, about the Consolidated Fund. I can bring them some comfort in that the Procedure Committee did indeed, as the noble Lord, Lord Brabazon of Tara, said, consider in very great detail the arguments for and against debates on Consolidated Fund Bills.
The noble Lord, Lord Boyd-Carpenter, also asked why it was that no arguments were spelled out in the report of the Procedure Committee. I can help him in that respect in a moment, but, by way of preliminary, I should point out that it is not the custom for your Lordships' House to spell out in reports presented to it arguments in that kind of full way. However, as I have already indicated, they were very thoroughly considered.
Perhaps I may briefly take up one point before going through the other arguments that have been raised. It was raised by the noble Lord, Lord Graham of Edmonton. In view of the fact that quite a number of noble Lords have taken part in the debate, I hope that your Lordships will forgive me if I do not refer to each of them by name. The noble Lord made a perfectly valid point; namely, that if a matter has been raised within a committee of your Lordships' House, and within the House itself, quite a number of times, then, perhaps, the simplest way to resolve the matter would be for those who are concerned to press such a matter still further. They should, perhaps, press it to a Division in your Lordships' House. Without advocating it in one way or another, I can confirm that that is a procedure which is fully open to your Lordships to take. Moreover, as was indicated this afternoon in another context, it is always for your Lordships to decide what the House will do.
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As regards the point made by the noble Lord, Lord Boyd-Carpenter, on the final sub-paragraph of the report, I should just like to stress that it does not say that your Lordships' House should not consider the matter; it advises your Lordships' House that it would be better, for the reasons indicated, if the matter were not raised in the Procedure Committee again. As I have already said, it is a matter for your Lordships' House to decide how it should work.
As regards the other arguments raised, I recognise the strength of the feelings of the noble Lord, Lord Boyd-Carpenter, and of the noble and learned Lord, Lord Simon of Glaisdale. However, I believe that it would be neglectful of me not to convey to your Lordships the strength of feeling within the Procedure Committee on two previous occasions, not just a week or so ago.
I acknowledge, with support, the point made by my noble predecessor in this post, the noble Lord, Lord Ampthill. I shall certainly have a look at the suggestion that the noble Lord made as regards correspondence. The question of a possible Division also arises in the light of what the noble Lord had to say.
I turn now to the arguments which the Procedure Committee considered, having done so on three occasions recently. The first was the timetable for such Bills—a point that was touched upon by one of your Lordships this afternoon; I believe that it was the noble Lord, Lord Graham of Edmonton—which is both fast moving and very difficult to predict. Therefore, the view that the Procedure Committee had before it and accepted was that debates would arise with very little warning and very little opportunity for noble Lords to prepare for them.
As regards another place—another point that has been raised this afternoon —under Standing Order 54(1), which is the one that applies, the other place is now prohibited from debating Consolidated Fund Bills. Even when they were debated prior to recent changes in supply procedure, it was, as noble Lords here who have been in another place will confirm, minor constituency matters which were the main elements of those debates.
So far as concerns Consolidated Fund Bills and their content, there is some misapprehension among a very small minority of noble Lords. They merely sanction the issue of money from the Consolidated Fund. They have no direct relevance either to the health or otherwise of the economy. Again—and this is another matter which was considered by your Lordships' Committee and also mentioned this afternoon —while the Companion of this House indicates that privilege is not an issue, the principle of comity exists between the two Houses on certain matters. I appreciate that, from time to time, we acknowledge differences. Indeed, if I may say so, I am among the first to say to your Lordships' House that the way we go on is a matter for ourselves and not for another place. However, as I said, on certain matters in particular there is the principle of comity between the two Houses. I submit to your Lordships

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that that certainly suggests that this House should not decide to discuss Money Bills on which there is no debate in another place.
Then there is the question of when and how often the House should debate economic affairs. With respect, I submit that that is another matter. It is a matter for the business management of the House. The usual channels are always responsive to suggestions and always consider suggestions from your Lordships for debates on particular matters. It is a matter for business management and judgment as to how many and at what times of the year debates on general economic and financial affairs are required. If they are clearly required by a sizable number of your Lordships, and the usual channels are consulted and consider the matter, I have no doubt at all that, if a sufficient case were to be made out, there would be little difficulty in getting a debate on economic and financial affairs when your Lordships required it.
As regards the arguments which were before the Procedure Committee when it considered these matters, the House has followed the practice of not debating consolidated Bills for almost the whole of the present century. That has become a convention. Conventions are not unknown to your Lordships, nor indeed to our constitution. That is a firm convention. I am sorry to have taken up this amount of time in saying all this. I hope that what I have said indicates the strength of feeling within the Procedure Committee about these matters. The committee considered these matters thoroughly.
I acknowledge that the noble Lord, Lord Boyd-Carpenter, put his case fully and fairly in his genial way to the Procedure Committee. However, I am bound to say that his suggestion found no favour whatever with the Procedure Committee. The Procedure Committee was unanimous in its decision. As I have said, we have taken up your Lordships' time this afternoon in discussing this matter. The Procedure Committee felt it had to say that sufficient time had been spent thoroughly considering this matter.
As regards the point made by the noble and learned Lord, Lord Brightman, I would say by way of a preliminary remark that I am grateful to him for raising his interesting point in your Lordships' House. The House is also grateful to the noble and learned Lord for acting as chairman of three of your Lordships' committees. He has great experience of these matters.
The question of which specific Bills are suitable for the Jellicoe procedure —as the noble and learned Lord has described it, and as we have come to know it —is a matter for the usual channels and the House itself to consider rather than the Procedure Committee. However, I certainly appreciate the strength of the noble and learned Lord's observation on this matter, as I am sure do other noble Lords. Perhaps it is right to point out that it would possibly not be the best procedure for a wide-ranging Bill, bearing in mind the fact that there is limited time to take evidence. The noble and learned Lord raised the matter of controversial Bills with the Procedure Committee. I
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accept that the fact that a Bill is controversial in some way does not necessarily exclude it from consideration under these procedures. Indeed, the fact that there is a certain amount of controversy—I do not refer to party political controversy but controversy as regards the merits of the matters being proposed—gravitates a little towards this procedure as it may permit us to iron out difficulties and save your Lordships' time in your Lordships' House.
Your Lordships will recall that about a year ago on 5th December last year in the first report of that Session from the Procedure Committee it was recommended, among other things, that further opportunities should be found for the use of special Public Bill Committee procedure, in particular for Law Commission Bills but also for other Bills introduced into either House. That recommendation was made as early as that date. I fully agree with the noble and learned Lord, Lord Brightman, that that is a procedure which should be adopted not exclusively for Law Commission Bills but for other Bills too. I hope that that observation has been of some help to the noble and learned Lord, Lord Brightman.
On Question, Motion agreed to.

Privatised Utilities
3.54 p.m.
Lord Ezra Lord Ezra rose to call attention to the case for a review of the regulation and operation of the privatised utilities; and to move for Papers.
The noble Lord said: My Lords, in introducing this debate on the privatised utilities, I wish to declare that I am chairman of a group of energy companies which, among other activities, are involved in the distribution and usage of gas and electricity. I have other energy interests including membership of a number of voluntary bodies. I am also associated with a group which has interests in the water and cable sectors, although I am not involved in those operations. I may add that my activities and connections have given me the opportunity to study the subject under debate at close quarters.
Over three years ago, in July 1992, I introduced a similar Motion in your Lordships' House. I concluded that the subject of the privatised utilities merited "serious and continuing discussion". It has certainly received it since. Not only has there been substantial press coverage in recent months but there have also been numerous studies and conferences on the subject. Two major reviews have been started, one by the Hansard Society and another by the National Audit Office. Therefore, there can be no mistaking the lively and sustained interest in the matter. I consider that it is timely that we should be looking at the situation again in your Lordships' House.
It is now 11 years since telecommunications were privatised; gas followed in 1986, and water and electricity in 1989. The enterprises involved supply basic services and are substantial in size. They represent together about 10 per cent. of GDP, have a

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stock market valuation of some£70 billion and employ 400,000 people. They are all subject to regulatory control. In recent months there has been mounting public concern about how these industries are regulated and operated. There has been much criticism of the alleged inconsistencies and other shortcomings in the system of regulation. The operation of the enterprises is widely considered to favour shareholders at the expense of consumers. These are the essential issues with which I shall deal.
It is my opinion that many of the problems besetting the privatised utilities have arisen from the way in which they were privatised in the first place. Like other noble Lords who have an interest in the subject, I participated in the debates on the privatisation legislation. Although the Government stated that the objective was to subject the utilities to the competitive pressures of the private sector, little was contained within the privatisation legislation to bring this about. There were many proposals from the Floor of the House—and I moved some amendments myself—for the industries to be restructured before they were privatised. The Government rejected those proposals. British Gas and the water companies were privatised in their existing form. One competitor operating on a limited scale was allowed in the case of British Telecom. Although there was some restructuring of electricity, the regional distribution companies were privatised as they existed and the generation of electricity was left in a limited number of hands.
There were clearly two reasons why the Government acted as they did. One was to get the privatisation measures through with the minimum of delay; and the second was to achieve the maximum financial benefit. Major restructuring before legislation would have introduced delay and uncertainty and would undoubtedly have had an adverse impact on the financial markets. The restructuring came later and in a somewhat haphazard manner. This sequence of events is in my opinion the main reason why the privatised utility sector is under such controversy at the present time.
Because of the way in which the utilities were initially privatised with the minimum of restructuring, there had to be safeguards that there was not an abuse of monopoly or quasi-monopoly power. This was provided by a regulatory system. The intention was that the regulator in each case should be given broad duties and considerable discretion to carry them out. However, increasingly the system of regulation has come under criticism. For example, it is argued by some of the enterprises that political intervention, which was the bugbear of the nationalised industries which I well know from my own personal experience, is being replaced by ad hoc regulatory intervention. Other criticisms are made of a lack of accountability and transparency. It is also contended that the present system depends too much on the personal inclinations of the regulator. For example, in the case of gas, the previous regulator, Sir James McKinnon, and the present regulator, Ms. Clare Spottiswoode, have taken radically different views of the way in which they
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should exercise their duty to promote efficiency in the supply and use of gas under Section 4(2)(b)of the Gas Act 1986.
A number of proposals have been ventilated for changing the regulatory system in order to overcome those problems. One proposal is that there should be a regulatory board with non-executive directors. The regulator would act as a chief executive, having powers over day-to-day issues, but referring larger decisions to the board. That would have the advantage of de-personalising the regulatory relationship and limiting discretion.
Another suggestion is that there should be a small regulatory panel rather than a single regulator. There has also been the suggestion of a regulatory commission which would amalgamate the existing individual regulators and, as a variant of this, the merger of the regulation of the gas and electricity industries.
Those various suggestions have emerged because of concerns about the way in which the present regime works, leaving too much discretion in the hands of a single regulator. The disadvantage of the alternatives is that they could lead to delay and greater bureaucracy. It is my opinion that the two aspects of the problem need to be balanced to find a solution.
There is mounting pressure also for greater transparency and accountability for the regulatory system. The Gas Act 1995 moved in the direction of transparency, and that needs to be applied more generally. As to accountability, the favoured solution is to appoint a Select Committee on regulation through which the regulators would be accountable to Parliament as a whole.
The essence of the regulatory system in the UK is that the regulator sets the annual rate at which prices may rise by an amount linked to the retail prices index. That amount, expressed in the form "RPI-x" (x being the figure below the retail prices increase that would be allowed) is reviewed at fixed intervals, usually every five years. That system, as opposed to the American system of controlling the rate of return, is considered to provide a major incentive to increase efficiency. The fixed five-year term between reviews is intended to enable companies to plan their operations effectively.
While the system of price control has undoubtedly stimulated greater efficiency, the consumer has not necessarily been the main beneficiary. For example, during the recent spate of takeover bids certain regional electricity companies have been able to draw substantially from their resources to safeguard their position with shareholders. That caused the regulator to intervene unexpectedly to announce that he would re-examine a recent price review which in the normal course of events would not have been looked at again for another four years.
Those and other circumstances have led to the proposal for a windfall tax or for more equitable profit sharing as between shareholders and consumers. The concept of profit sharing depends upon the definition of what should be a normal level of profits above which

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customers would get an extra share. However, the concept underlines the point gaining widespread acceptance that consumers are not getting a fair deal.
Mr. Ian Byatt, the regulator for the water industry, suggested in a speech last October, that the interests of consumers in receiving a wider share of the profits should be met by voluntary action on the part of companies. He instanced as an example that six water companies have committed themselves to additional cash payments amounting to £252 million. Others have undertaken to provide benefits in kind.
What that serves to demonstrate is that the RPI-x regime, with its fixed five-year period, does not sufficiently benefit the consumer, otherwise those massive reserves for further distribution would not be available. Therefore, whether by voluntary or other means, consumers seem entitled to a larger share of the profits of the privatised utilities than they are getting at the moment.
That leads to the wider question of the protection of consumers' interests. The legislation varies considerably in that regard. The Gas Consumers' Council is an independent body with considerable authority. There is no similar body in the case of the other industries. Furthermore, the Government have been reluctant to make safeguarding the interests of consumers a primary duty for the regulators. That came out clearly during the various stages leading to the passing of the Gas Act 1995, which the noble and learned Lord will recall. In spite of efforts by myself and others to introduce amendments to that effect, the Government resisted.
There is increasing concern that in the forthcoming opening up of the gas and electricity markets to domestic consumers special protection for the interests of consumers is required. That is a totally untried area and there could be serious problems, particularly in the early years. Examples of those problems are the major difficulties which could arise in changing the invoicing and metering systems on a substantial scale due to the entry into the market of a large number of new suppliers. There have already been such problems in the much lesser range of difficulties arising from the opening up of the industrial and commercial markets. Those problems will be much greater when the much larger domestic markets are opened up.
British Gas has been the subject of much criticism in recent times. However, it has suffered particularly from the policy of the Government to restructure the market after privatisation rather than before. At privatisation British Gas retained responsibility for supplying the whole of the gas market; and while the intervention of other suppliers was possible, the nature of the legislation made it unlikely. In order to meet the market requirements and discharge its responsibilities in addition to its existing commitments, British Gas entered into a number of long-term contracts with North Sea gas suppliers. Due to regulatory changes, British Gas has since lost a large part of its market share in the industrial and commercial sectors and by 1998 will be subject to full-scale competition in the domestic sector. In the meantime, gas prices have fallen. British Gas is therefore left with onerous contracts. The producers
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claim that the contracts were willingly entered into at the time. It is difficult to see how this problem, which results largely from changes in government policy, can be resolved without some form of government intervention. No doubt the noble and learned Lord will enlighten us on that when he speaks later.
In the light of the issues that I have indicated and of others which will no doubt be raised by noble Lords in the course of the debate, it seems clear that the time has come for a major government review of the way in which the privatised utilities are regulated and operated. Let us also be clear that there has been a noticeable increase in efficiency, and consumers have benefited to some degree as a result. Nevertheless, there is growing public disquiet and there are many matters of principle which need to be re-examined. I hope that we shall be assured at the end of the debate that the Government take these problems seriously and that they will urgently consider proposals for dealing with them. I beg to move for Papers.
4.8 p.m.
Lord Skelmersdale: My Lords, I should like to begin by congratulating the noble Lord, Lord Ezra, on achieving this debate. Having been a micro-wheel in the usual channels in the past, I know how difficult it is to get a subject that you know well debated in your Lordships' Chamber.
However, I note that the list of speakers in this debate is on the flimsy side. I wonder whether some noble Lords, like me, have had second or even third thoughts about speaking in it. I welcome the debate. As the noble Lord, Lord Ezra, said, it is over three years since we last discussed the matter in depth. I had no inhibitions then about referring to individual firms or their regulators. Today I have two problems: one about the debate itself; and one which I shall shortly explain.
First, my position has changed somewhat because of the standing order to which we recently agreed which states that it is forbidden to speak on a firm that you have declared in the mandatory section of the Register of Members' Interests. By virtue of my employment with British Gas, that bars me from referring to it. That is quite straightforward. Since it is currently the only large company regulated by Ofgas, and since this is a debate about regulators, it would seem by extension that the word or semi-acronym Ofgas should not pass my lips.
Baroness Seear: My Lords, surely we have not got into the foolish situation that because the noble Lord knows a great deal about the gas industry, having declared his interest, he is not allowed to talk about it. That would be nonsense writ large. He is surely allowed to talk about it having told us that he has this interest. Is that not the position?
Lord Skelmersdale: My Lords, I am afraid not. I consulted the Clerks on this matter. I begin my speech as a result of the advice that I received from them.
As I was saying, since British Gas is the only large company regulated by Ofgas, and since it is a debate about regulators, it would seem by extension that the

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word or semi-acronym Ofgas should not pass my lips. However, come April, Parliament has agreed to a major trial of competition in the supply of domestic gas and there are already advertisements on show in the West Country encouraging prospective customers to get in touch with soon to be licensed competitive firms. Licensed by guess whom, my Lords?—Ofgas, and operating under exactly the same licence, which incidentally still has not been agreed to, as British Gas will.
Having got that off my chest, I shall try to abide by the very strict rules—the noble Baroness is quite right; they are extremely strict—that we have saddled ourselves with because there are today general points which apply to all regulators. I am delighted that my noble friend Lady Platt, who has had recent experience of the gas industry, will speak later.
My second problem is with the Motion itself. It encourages us to think about reviewing the role of the regulator rather than reviewing the way that role is actually performed —which I believe is the problem that the noble Lord, Lord Ezra, was addressing.
Lord Ezra: My Lords, perhaps I may enlighten the noble Lord. The use of the word "regulation" was meant to cover both the regime and the way in which it was operated.
Lord Skelmersdale: My Lords, I am grateful to the noble Lord.
Were I to be a right reverend Prelate—chance would be a fine thing—I would take my text from the Book of Common Prayer. At one point in the marriage service it says,
"[Consider] the causes for which Matrimony was ordained".
Regulation of the soon to be privatised industries was sold to Parliament as a surrogate for competition. The regulator was to use the pricing formula to reduce prices except in the water industry where he was to limit the increases needed to pay for a century of under-capitalization. The regulators' role was quite clear. Section 3 of the Electricity Act 1989, provides that the regulator of that industry has,
"to secure that all reasonable demands for electricity are satisfied; to secure that licence holders are able to finance the carrying on of the activities…to promote competition in the generation and supply…to protect the interests of consumers of electricity",
and to check into,
"the prices charged and the other terms of supply; the continuity of supply, and the quality of the electricity supply services provided; to promote efficiency and economy on the part of persons authorised by licences…to promote research into, and the development and use of, new techniques…to protect the public from dangers arising from the generation, transmission or supply…to secure the establishment and maintenance of machinery for promoting the health and safety of persons employed in the generation, transmission or supply",
and at the same time to take account in particular of the protection of the interests of consumers of electricity in rural areas and the interests of those who are disabled or of pensionable age. At the end of the section, the director has slight relief. The Act states that any functions so assigned,
"do not include references to functions…relating to the determination of disputes".
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As we have seen, such determination is the province of the Office of Fair Trading and the Monopolies and Mergers Commission.
The key to this disparate collection of requirements is, as the noble Lord, Lord Ezra, said, the pricing formula which we know as the RPI plus or minus x formula. Of course, "x" is fundamental to its whole operation and to decide upon x the regulator has to be a pretty invasive fellow, which has a cost to the regulated industries. They have to install whole bureaucracies to answer questions from the regulators who have completely to understand what is going on in each industry and in the process become experts in their respective industries.
The companies naturally complained of the number and detail of the questions they were asked in the early days, and presumably will again with the advent of gas competition and the multiproduct energy firms, and the railways regulator. I believe that the Government were right to resist those complaints and recognise that it is unrealistic to expect the regulators to operate without that expertise.
Equally, it is unrealistic to expect the regulatees not to understand both where the regulator is coming from and where he or she expects the firms to get to. I agree with the noble Lord, Lord Ezra, on that point. Secrecy in regulation is of no advantage to anyone. It will annoy the industries and cause bad blood between them and the regulators. That has happened in the past, and I am told, in some areas it is still happening, but it must not be allowed to continue. At the same time, regulators should not become too personal in their relationships. Either there will be complaints of unreasonable behaviour, or, on the other hand, of favouritism. I believe that a clear framework of regulatory principles and objectives is overdue. I would expect it to lead to a greater consistency of decision making and avoid sudden changes of direction which I have heard described as the "whim of the regulator".
Capital investment only occurs when a firm can see where it is heading. If there is doubt as to the consistency of regulatory decisions, either new investment is not made, or, worse, it is, and is then under-utilised or aborted part-way through, with all the waste and therefore the cost to the consumer that that entails.
This debate would not be taking place, I believe, if the tales of woe to which I and other noble Lords will allude are not real. How are we to advise the Government to deal with them? One suggestion has been to amalgamate all the regulators into a single body. Given the need that I have described for them completely to understand their individual industries, I do not believe that that would be the right thing to do. Having studied the gas, electricity and water industries in some depth over the past 20 years, to say nothing of taking more than a passing interest in telecommunications and the rail industry, I do not see enough common factors to make that a going proposition. I accept that in the energy sector there are interests in common. There might therefore come a time when Offer and Ofgas can be amalgamated, but not in

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the next three years while competition is being introduced into both the electricity and gas industries. Nonetheless it would be a nonsense if the decisions of one regulator were to be completely at variance with those of another. Discussions between regulators will, and I am sure do, help to prevent that. However, that does not stop the regulatees from complaining.
Regulators remain very powerful executive bodies in their field—one might almost say autonomous. In the event of a major row such as we have seen in the gas and water industries, the only appeal is to the Monopolies and Mergers Commission. It is, as I understand it, only then that the Government get involved, with their ability to accept, reject or accept in part the reports of the MMC. Surely that is really what is wrong with the regulatory framework as we have it at the moment. It is conducted by experts with no involvement from the man in the street. There is no political direction other than that in the various privatisation Acts. There is no one to suggest, however humbly, that if you want to achieve A, why not do it by method F, or even G; method E is bound to annoy the consumer, small shareholders or whoever; or even, why are we seeking to do A at all if B has worked perfectly well for the past three years?
That leads me to believe that small regulatory panels operating in single industries, as opposed to individual regulators, would obviate the need for expensive and time-wasting appeals to the MMC in most cases, and would have the advantage of depersonalising the regulatory process and making sure that the discretion that regulators undoubtedly have is used with more forethought. It need not, as is often suggested, be bureaucratic, or slow the decision making process. I have not, for example, noticed any non-executive directors slowing down the plans of their companies. If they did, it would be for very good reasons, one may be sure, or they would not last very long. I would also second a senior employee of one regulator to the board of another regulator, and vice versa, for a year or 18 months—no longer, or the secondees would become embedded—to ensure a measure of consistency between decisions. That would deal with the most commonly voiced complaints about today's regulatory framework, and preserve the first reason for privatisation; namely, getting government off the backs of the utilities.
4.21 p.m.
Baroness Hamwee: My Lords, I, too, considered whether I had any interest to declare, in that perhaps the pension funds to which I contribute held shares in the utilities. I dare say that is likely, although like most pension fund contributors I do not know. I hold no shares in any of the utilities in my own name. I have to admit to being somewhat "unreconstructed" in that connection. I did not buy any shares because I had something of a distaste for seeing essential services pass into private hands. We all carry some sort of political baggage. I have to admit that that is mine. But I also admit that there is no turning back the clock, save
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perhaps for Railtrack and for possibly even not starting the clock in the case of HMSO. However, neither of those fall within today's debate.
I believe that the outcries against the levels of profits made in the utilities and the levels of executive salaries and remuneration packages are because the consumer resents funding both of those. The utilities were privatised at much the same time as so much of the private sector was being transferred to quangos. Although the regimes are of course not the same, it is no wonder the public feel that both are tarred with, if not the same then at any rate similar, brushes in their lack of democratic accountability and the difficulties of regulation. If we add to that the levels of profit, and in some cases the levels of pay—in referring to pay I think it is a little rough on those in middle management that they are regarded as being on the same gravy trains as some of the more senior management—it is not surprising that there is such a level of resentment at private profit from what is essentially still part of the nation's infrastructure; indeed, what are recognised in many cases as consisting of very precious commodities.
Because these services are essential, indeed fundamental, the public regard them as qualitatively different from other products. They look for protection from the state in areas of standards, availability and price, as well as the application of social obligations which a beneficent state must have at the heart of its policy. It is, I believe, the general view that the state has not done all it could to protect its citizens, and that it has failed to assist them to play their proper role as consumers.
At the time of the privatisations I do not believe we often heard comments such as, "I shall be buying shares so that I can go to annual general meetings and question the directors". The comment that I heard most was, "I shall be buying shares for myself and my family so that"—not necessarily expressed in these words—"I can make a turn". I wonder in fact how successful the privatisations were in turning us into a nation accustomed to owning shares, as I believe was one of the aims. It has not so far been so successful. More particularly, it has not been successful in boosting our powers as consumers.
The current situation is regarded as one of (as was put to me recently) embarrassingly soaring profits going hand in hand with poor services and unsatisfactory prices. If market forces cannot be brought to bear, then political pressure must.
I understand of course the need to retain profits for big schemes, investment in repairs and improvements, and so on. Long-term planning is essential. But the public, especially in Yorkshire, must have little confidence that that is the reason. The explanation that we have become accustomed to hearing—namely, that the problems are the results of the predecessor bodies—does not hold much water (and I hope noble Lords will forgive the pun) since by and large the same people are in post.
The profits should be shared with the customers or consumers. Profit is, after all, a means to an end. In the area of the utilities it should not be an end in itself.

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Indeed, if the water, gas and electricity consumers do not profit from improved performance, that end is not reached. Profits going solely or largely to shareholders is a short-term policy. Shareholders have individual short-term interests. I concede that those shareholders include institutions. I also concede that my pension in 15 years time may therefore be the bigger. I do not allege that Thames Water fails to provide it, but what I want is a clean, reliable water supply now. As stakeholders we all have mutual long-term interests. The development of a culture that places more emphasis on the stakeholder model would be very welcome.
The greatest benefits may be from competition, but there are some services where competition is not practicable. I support opening the networks to rival service operators in those areas in order to encourage such competition as there can be. But, in the telecommunications business, where there is the longest experience, I understand that BT still has some 90 per cent. of the market. The July issue of Consumer Policy Review contained a report commenting on the publication of an advert by Mercury which,
"claimed that it had been responsible for putting pressure on BT to cut prices over the previous ten years".
That led to a complaint from BT to the Independent Television Commission on the grounds that,
"the cuts were largely due to regulation not competition",
and that,
"it was misleading to claim that 'everyone' had benefited from price reductions since the most significant reductions principally affected business customers".
That is not necessarily the record that one wants to look back on.
A Consumers' Association survey quoted in the same article showed that there was a very large gap in the information that consumers have about the choices available to them. Half of those surveyed said that they did not have enough information about other suppliers. They did not have accurate, up-to-date information. They said that they,
"stay with BT because otherwise they would have to change their telephone equipment".
A large number said quite simply that it would be "too much hassle to change". That is still not the climate that was hoped for and aimed at.
If competition is to develop, consumers must have clear and accessible information in order to make real comparisons. They must also have the confidence that they will not be disadvantaged. I come from south-west London, which over the past two or three years has been very extensively cabled. Many telephone users have switched to cable services. But try to find their telephone numbers! I understand that Directory Inquiries is supposed to give out those numbers—I did not know that; again illustrating the lack of information—but it is hardly obvious, since apparently there is considerable reluctance to divulge the numbers.
The regulators should ensure the availability of information. For instance, they could ensure the development of performance indicators of standards; not just of price, but environmental standards. The effectiveness of supply in a relatively small country
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means that people can quite rightly expect consistency of supply—and not just consistency of service, but also consistency of the approach to regulation. The noble Lord talked of this at greater length and I found his comments interesting. There should be a consistency of approach through a regulatory body to oversee all the utilities, with the interests of the consumers at heart rather than those of the industry insiders.
Performance indicators measuring customer satisfaction across the utilities will tell us quite a lot. As the noble Lord, Lord Skelmersdale, said, they are very different industries but there are many areas in which they can be compared. That of itself would lead to pressures to improve. The regulators should also be required to publish more fully the reasons for their decisions.
I still remember vividly the comments about selling the family silver. It is sad that today that silver is somewhat tarnished; and it will not become brighter without an energetic application of consumer-friendly polish.
4.31 p.m.
Lord Harmar-Nicholls: My Lords, the debate introduced by the noble Lord, Lord Ezra, shows Parliament at its most responsible and its most effective. It is three years since we debated this matter seriously and in depth, and the noble Lord, Lord Ezra, raises it again. The reason it is responsible is that the three-year period has given everybody a chance to see how the new direction is working. I deplore many of the day-to-day inventions which come from the propaganda sheets and do the opposite of what the noble Lord is trying to achieve today. I therefore welcome Parliament looking at this issue, under the terms of the debate, seriously and responsibly.
I am a little puzzled when I compare my reaction to the new direction with that of the noble Lord, Lord Ezra. His speech, which was fair, detailed and informative, showed that by and large he felt that the three years had been something of a failure; that it was not the success that it should have been. As a small businessman and a consumer in my own right, I believe that the three years' experience we have all had showed it to be a great success at almost every level.
Lord Ezra: My Lords, I thank the noble Lord for his kind remarks. However, I should like to enlighten him on what I said in relation to the results of that period. I said that there had been increased efficiency but that I did not consider sufficient benefits of that efficiency had been passed on to consumers.
Lord Harmar-Nicholls: My Lords, half a loaf is better than no bread, so I am grateful for that explanation. However, by and large, the fact that the noble Lord initiated the debate and the tenure of his speech, which was good, indicated some dissatisfaction with the experience of the three years. That is completely opposite to the way I feel, using the same material upon which to form a judgment.
I claim—I do not need to produce evidence; everybody can use their own experience—that the evidence of our day-to-day experience shows that the

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utilities have been a great success. They are more efficient, as the noble Lord conceded, than they have ever been; he also conceded that prices are falling year by year. I do not want to appear to be on opposite sides to the noble Lord. In general, I am with him when it comes to wanting to examine what has happened and arrive at eventual perfection; I am one of his disciples, not one of his opponents.
In my experience and that of others, the standards of service are better and the companies are profitable. It looks therefore as though everybody is benefiting. The profitability means that the companies have funds to reinvest in the industry to make it even better; it means that they can give adequate dividends, which will encourage more people to invest in industry—that is what we should all want because that is what the nation needs. We can compare that with the position of 12 years ago, when prices were rising, services were poor, and the Exchequer was subsidising the utilities in order to keep prices even lower than they are today.
One of the main reasons for the success which I am proclaiming is that the Government, having set up the framework of the new direction, kept out of it. They had enough confidence in the people who have to produce the results to let them make decisions without governmental or electoral party policy interference. It is vital that that should continue.
We have to head in new directions; we are not the same nation as we were. When I first came into politics—a good many years ago—we were the head of a great empire; we were the financial and industrial leaders of the world; we had a Navy that the world wanted and needed, and because of our great power (which now seems to be vested in America) we were able to make little mistakes and interfere without it affecting our general power and influence to do good. That is not so today. We depend upon the day-to-day success of the way we do things, whether we are part of the Government, employers, workers or whatever part we play. Pragmatism is the order of the day. We have no fat—as we used to have—where mistakes can be submerged, overlooked or forgotten about. We need that, and this new direction seems to be producing it, as opposed to government intervention with the Government, through extra taxation, having to pay into it. We are therefore entitled to feel satisfaction as to how things have been going over the past three years.
Nobody likes to be regulated. But the regulators have done their job extremely well. Whatever decisions one makes as a referee or an umpire, somebody will be upset; any decision for one person will result in a decision against somebody else or some other group. That has been the regulators' job from the beginning of time. The regulators were appointed to do a specific job and have done it extremely well, with the minimum of disturbance and interference.
There have been mistakes, such as directors raising their own salaries stupidly and prematurely on occasions. There are all kinds of things as regards which I could criticise my noble friends who have responsibility in government. However, having said that,
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it would be remiss not to stand back and see whether, despite those pimples, there have not been results which justify some commendation. This debate in enabling us to do that today. Noble Lords may accept the case put forward by the noble Lord, Lord Ezra, although he conceded a good part of it when he intervened a few minutes ago, or they may accept mine as a consumer/small businessman. I have to sign the cheques. I know the difference when we have to pay the gas bill. One of my companies runs a small group of hotels. I have to sign the cheques for the electricity bill, the gas bill and the council tax. I have some pretty good idea what I am paying for the services I am likely to get.
I ask my noble friends who have responsibility in government to carry on with the policy of minimum interference from government. Those of us who have held ministerial office, however small, know of the interference and intercommittee problems that have to be overcome. Those involved are not doing wrong. Every group is fighting its own corner. It is difficult for a committee to run anything. Those of us who have sat on committees know jolly well that of a committee of seven or eight never more than two or three produce the ideas and initiatives and get the work done. Handing it back to the people who have to produce the results was a move in the right direction. The advice I give to my noble friends is to pay heed to the criticisms; and if it is possible to amend on the way without interfering with the general direction that has been set, yes do that. Digging up the plant two days after it has been planted to see whether or not the roots are moving in the right direction is the way to nowhere. That is what we must not do and that is what, under our present parliamentary system, we are much too apt to do.
I now wish to give a little advice to our fellow countrymen. One of the problems today when we are discussing any of these matters is that, instead of having a Lord Ezra debate where one can get at the subject, hear different opinions, weigh one advantage against another disadvantage in a proper way and come to an overall conclusion—nothing will be perfect but one can get it as near right as one is likely to do—everything seems to be done by sound bite. That is a new word which I honestly do not understand. I do not know what a sound bite is. But from the way it is being used by various people, I see it as a means by which to influence the crowd to put up their hands in your favour without having to think a lot about a subject. The sound bite takes an attractive word and tries to give it a vicious meaning. It tries to make it sound nasty and dirty.
The process started back in the 1930s when I was actively involved in politics as a very young Conservative. It was admitted on all sides that the country was almost bankrupt. In the end all the parties got together in a coalition in order to get out of the difficulty. They set up the May Committee with instructions to look at the whole picture and see what could be done. The May Committee made a very good report and spelt out in minute detail where savings had to be made if we were to remain solvent. Even in those days we were moving in an awful direction. However, the coalition did not carry out the recommendations of the May Committee. The "sound bite" got to work. As

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soon as the report was there with suggestions as to how we could remain solvent someone invented the phrase the "means test"—those who need it must get it but those who do not need it must stand further back in the queue. So whenever one wanted to move in the direction in which this impartial committee had suggested, having reported in great detail and with great thoroughness, we heard the phrase the "means test". That stopped us getting our house in anything like order.
What is the next sound bite that disturbs me? It is the "community charge". The community charge was one of the soundest, safest and fairest pieces of legislation that has ever been introduced. The idea was to see to it that those who benefited from government paid their proper and fair share. But, oh no, another phrase was used to give it a vicious twist—the poll tax. Whatever you did you only had to say "poll tax" and you would work up a frenzy with the crowd outside the factory or at your meetings. The sound bite replaced the Lord Ezra way of looking at an issue properly and examining all its aspects.
What is the latest word? What is the latest sound bite? The new sound bite is "privatisation". There is nothing wrong with the word but some people are trying to inject it with a viciousness and anger which can do so much damage. We should cut out the sound bite. It is up to the people of this country to recognise a sound bite as against sound argument such as we are trying to produce today.
I congratulate the noble Lord, Lord Ezra. He presented his doubts fairly and effectively as to whether we are going in the right direction. I believe that his overall pessimism was wrong. My practical day-to-day experience of privatisation is that it is a success. I hope that that message will go out from this short debate.
4.47 p.m.
Baroness Platt of Writtle: My Lords, I am grateful to the noble Lord, Lord Ezra, for initiating today's debate calling for a general review of the regulatory system of the privatised utilities. However, I shall not refer to the general problem in depth as I had thought we would be more severely time limited in our contributions. I shall speak only about the regulation of British Gas plc of which I was a non-executive director until this time last year. I now have no financial interest in the company except a small shareholding.
British Gas was among the first privatised utilities. There was a great deal of publicity to attract "Sid" and his friends to become shareholders, perhaps for the first time. I joined the throng of several millions who bought shares. I did not become a director until two years later. British Gas still has 1.8 million shareholders, many of them with small holdings. I suppose that I am referring to the success of privatisation, just as my noble friend Lord Harmar-Nicholls did so eloquently a few moments ago.
Since privatisation British Gas has reduced prices to domestic customers by 23 per cent. in real terms, excluding VAT. It has carried out a vigorous campaign of negotiating international business, including exploration and production, and of providing gas
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distribution and services worldwide, firmly based on its longstanding successful operation in this country. That has resulted in considerable earnings for this country, achieved by British Gas itself and by allied British suppliers selling abroad under its umbrella. As a successful company it also pays billions of pounds into the British Exchequer in taxes every year.
Over a long period of years British Gas has entered into North Sea gas supply contracts for the supply of gas to its customers. With the legislation passed since privatisation British Gas is no longer the monopoly supplier it was when it entered into those contracts. At that time it had the legitimate expectation of fulfilling its statutory duty of supplying gas to its customers whatever their needs. British Gas has accepted the transformation of that monopoly to a fully competitive gas market in the interests of benefits to its customers. I am greatly in favour of privatisation in that respect, too.
The change, however, presents a major new challenge to British Gas, entailing considerable initial costs and great uncertainty in the way it works. Already the price of gas has fallen substantially, as the noble Lord, Lord Ezra, pointed out. British Gas is, however, left with fixed price contracts under what are known as "take-or-pay" terms, so it has an obligation to pay for annual quantities of gas even if today and in the future it no longer requires them.
Already, under government regulation British Gas has lost over 60 per cent. of its industrial market. Over the next two years, as already referred to, pilot schemes will be put into action. A fully competitive market is planned to be introduced in the domestic field shortly afterwards. That is bound to mean an even greater fall in the need for gas by British Gas. The legislation was brought into action several years after privatisation.
It is imperative that the Government support British Gas in the renegotiation of contracts, as noble Lord, Lord Ezra, said. The imposition of the legislation has placed British Gas in an invidious position, potentially disastrous for a very successful company.
Way back in the late 1960s and early 1970s, British Gas took a courageous decision, against some contrary public opinion, and replaced an organisation consisting of individual small coal gas companies with a system of national transmission and distribution of natural gas which has proved so popular in so many ways; for example, in power generation, community heat and power, and the vast expansion of domestic central heating.
It has also meant much cleaner fuel environmentally. The transmission system, named TransCo, was recently separated within British Gas, again at government instigation, as part of a move to a fully competitive domestic market, allowing other suppliers to use it. It is a virtually leak-proof system, unlike the leaking water pipes the public are determined must be repaired or replaced. That is imperative as gas is a hazardous substance; nevertheless, it is a tribute to British Gas and its considerable innovative engineering developments that constant maintenance and updating of pipelines can be carried out efficiently and economically and with the

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least disturbance to traffic where pipes are laid under roads. That is in the interests of consumers and the public as a whole, and it is vital.
It is essential that safety and security should be maintained into the next century. That can only be done if the selling prices and regulations set by Ofgas for other suppliers provide adequate financial return to British Gas so that it can maintain the safety and security of pipelines, miles of which go below our countryside, operating at high pressure.
I speak of a company with a highly successful business record. Competition means that European suppliers are invited to compete without the possibility of British Gas competing in the European market. There is no level playing field. In those circumstances our Government need to ensure that conditions are set for the continued commercial success of British Gas here and worldwide in the future; otherwise this country stands to lose a natural resource of great value. That, I submit with respect, we cannot afford to allow to happen. We certainly do not want to return to the 1930s, as my noble friend Lord Harmar-Nicholls has just so vividly described.
4.55 p.m.
Baroness Seear: My Lords, in launching this debate about the private utilities, we on these Benches do not wish to give the impression—and it is certainly not the impression held here—that everything before privatisation was wonderful. Some of us remember the state of the sewers and the condition of the water supply. The condition of the water supply enabled those who took to bottling water to make the most ridiculous success out of the refusal of people to drink decent tap water. Personally, in a restaurant I greatly enjoy asking for water. When I am asked which kind of water I say, "Tap water" very firmly and now with considerable confidence. All was certainly not well before the privatisation programme.
There have been very real successes in privatisation. I have found that my gas bills have come down and the service I get from British Telecom is a great deal better than it used to be before privatisation. For one thing I now know how my money that goes to British Telecom is spent. In the past how the money was distributed or how I spent so much was always a dark secret. I am now told, but it is still quite a lot! At least I know what has happened to my money and that is some compensation.
This debate is not an attack on the privatised industries as such. What we are really saying is that privatisation was launched in an attempt, presumably, first and foremost, to improve the service to the country and to improve consumer satisfaction. Competition was a means to that end. Competition is never an end in itself, but a means to that end. We need to be satisfied that in fact that end is being achieved and that the consumer's position has improved as a result of privatisation. It is because we are not satisfied that that has developed entirely in the way in which one would wish, that we launch the debate today.
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Competition, to the extent that it is working, has had some very good results. We have to keep reminding people that the protection of and benefits to the consumer come not only from a quick reduction in price or an improvement in service, great or small as it may be, but also from the long-term and continuing provision of improved services. That means devoting the profits raised to investment as well as immediately benefiting the consumer through reductions in price.
Large amounts of money that are raised are being used for real investment. In particular that was long overdue and very necessary in the water industry; in the telecommunications field, and, I suspect also in the other privatised industries, although I know very little about them. To that extent, in order to raise the standard continuously and for services to be at the same level as those which are available to our competitors elsewhere, it probably means that a very large amount of the moneys taken need to be devoted to long-term investment, if we are not merely to satisfy the consumer today but also to continue to satisfy both the private and the business consumer.
After all, energy, water and telecommunications are very important components in any business expenses. We must get them right from the point of view of the business consumer in the long term, but most assuredly there are very great disadvantages to the ordinary consumer. All those matters are of the very greatest importance.
The privatisation of industries of such importance was new and an experiment. It would have been extremely surprising if the Government had got everything right straight away. However, it would be advantageous if they would now agree that, given an experiment as new and important as that, it is high time to review the way in which it is working—not in a spirit of carping criticism, but by saying that it is very unlikely that we cannot improve on what we have done.
The competition is by no means perfect competition. The Government should be willing—indeed, they should encourage—issues of competition to be referred to the Monopolies and Mergers Commission so that we can consider whether the competition is working as it should. A great many people at present believe that it is not working properly. There is a legitimate query in the minds of the public, among both industrial and private users. Surely the Government should be on the side of ensuring that the competition is as good as it can be made in the difficult circumstances of industries where natural competition does not exist. After all, the Government are the great supporters of competition. It is true that a degree of competition has been introduced, but it is not competition in the way in which it exists in industries which have always been in the market and which are not natural monopolies in the first place. It is now high time that the issue of competition was reconsidered so that we can ascertain whether we are really getting the benefits of the competition which the Government promised.
As other noble Lords have said, the role of the regulators needs to be considered. I remember saying repeatedly from these Benches at the time of the

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privatisations that although we do not like monopolies (whether public or private), if we are getting rid of a public monopoly, we have to be extremely careful that we are not creating a private monopoly. That was the burden of a good deal of the criticism that came from these Benches during the privatisation programmes. The Government's reply was to introduce a regulator in all the industries concerned. I do not know that at the time anybody had a better idea, but it is not surprising that people are not entirely satisfied with this first attempt at finding an alternative way of bringing to this market the benefits of real competition, given that we are talking about markets in which there is no competition through normal market forces.
As has been said, the regulators have acted in varied and different ways, and we do not know how they should be acting. Indeed, they cannot all be right because they operate so differently. It is not a question of the Government admitting that they have got it wrong—it does not involve any loss of face for them; but in our view it is time that the Government said, "We have now had experience of regulators for some years; let us establish an independent committee to take a real look at how regulation is working and at whether any improvements in the system of regulation could be made". What is an appropriate type of regulation for one privatised industry is not necessarily the right type of regulation for another privatised industry. It does not follow automatically that they should all be regulated in exactly the same way. The Government should say, "We have now had enough experience of this and we know that people are not exactly satisfied. It would be surprising if they were, but let us take a real look at how the regulation can best be carried out". Nobody has thought of a better way of simulating real market forces than having a regulator. It is not the idea of regulation that is wrong, but experience of it is raising many doubts.
Finally, and following the points raised by the noble Baroness, Lady Platt, we need to reconsider the whole question of the gas industry and its contracts. Gas is an enormously important industry in this country. It is important both to industry and to ordinary, individual consumers. If as a result of the contract arrangements that were entered into the industry really is faced with the kind of threats with which the regulator says it may be faced, surely there is no time to lose in taking a look at that and at what can be done about it. We cannot accept our privatised gas industry running into a serious financial position that is not of its own making, but which would have adverse effects on all types of consumer.
We are asking the Government to look at the best possible way of developing competition. There are doubts about whether that is what we have at the moment. There should be a real review of how regulation has been working, how it can be improved and of what other systems could be introduced. There is also the special question of the position of the gas industry and the contracts that it entered into some years ago.
5.5 p.m.
Lord Haskel: My Lords, I too wonder why so few noble Lords have put down their names to speak in this debate, which deals with a most important topic. Perhaps it is the proximity of Christmas; perhaps it is because of the flu or perhaps, as the noble Lord, Lord Skelmersdale, suggested, it is because of our various interests. At this point, I must declare an interest as a non-executive director of a cable company.
The question that we need to ask ourselves is: why do we need regulation of the utilities? It is because they are the monopoly suppliers of the essentials of life—heat, water and light. Every person and every business in the country needs them. They also form an important proportion of British industry, accounting for around 14 per cent. of our total market capitalisation and for about 10 per cent. of GDP. Therefore, I agree with many noble Lords that the objective of regulation must be to balance the different interests of all those involved: the consumers, the shareholders and the employees. There is also a national interest here, as the noble Baroness, Lady Hamwee, told us.
The Government's policy seems to be that all those interests can be balanced simply by introducing competition. The noble Lord, Lord Skelmersdale, spoke about that by referring to the marriage service—no less. I was not quite sure of the relevance of that. Competition is desirable, but it is not an end in itself, as the noble Baroness, Lady Seear, said, because there will always be an element of monopoly in the means of distribution.
It is all very well for the electricity regulator to declare that we will have full competition in electricity by 1998, but competition does not follow simply from declaring it in a press release. The fact is that domestic consumers will still receive electricity only through a single wire owned and operated by their local regional electricity company. There will also be only one water pipe, owned and operated by the local water company.
So it is necessary to strike a balance and not seek a simple absolute answer. Special care is needed in regulating an industry where there is a chance of genuine competition. Telecommunications is a good example of that. Here, there is a good prospect of real infrastructure competition between different kinds of cable and radio-based services. However, installing that new infrastructure is a very long-term endeavour. Investment in the telecommunications network is proceeding, but it is still at a sensitive stage because three-quarters of households still have no alternative to British Telecom, which still carries over 90 per cent. of all calls. Regulating telecommunications at this interim and complex phase is difficult. I think that the Minister will agree with me that it is much more difficult than regulating a monopolistic market or one where competition is firmly established.
The noble Lord, Lord Ezra, told us that the Government made a serious error in not reorganising the companies before privatisation. I think he is right. The signs of poor regulation are everywhere. I do not agree with the noble Lord, Lord Harmar-Nicholls, who seems to find everything satisfactory, and I too sign the

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cheques in a number of companies. We were told last week, for instance, that some regional electricity companies are paying industrial users to shut down their operations rather than supply electricity to them at pre-agreed prices.
The cancellation on Monday of the two new nuclear power stations means the cutting of safety measures still further in scheduling supply to meet demand. From that, we can only conclude that the short-term needs of privatisation take precedence over the long-term needs of British industry for continuous electricity supply. The noble Baroness, Lady Seear, told us about that and about the need for investment. Incidentally, does the regulator have to worry about our international carbon dioxide emission obligations?
There is another example. We heard recently Yorkshire Water asking customers dependent upon water supplies to move their production elsewhere. In the recent Budget, we saw the Government virtually doubling their cash demand from the Royal Mail, with all that implies for less investment and higher postal prices. Is that what Ministers mean when they speak of Britain becoming the enterprise centre of Europe? Those are the sort of things that go on in a Third World country.
Of course price is central to regulation. The noble Lords, Lord Ezra, and Lord Skelmersdale, told us about the RPI-x price capping formula which lies at the heart of the current system of regulation. I agree with them. I find that it has failed the people of this country as an adequate tool of regulation. That is because whatever efficiency gains have followed from privatisation for the most part have not been passed on to the consumer in lower prices.
Lord Harmar-Nicholls: My Lords, the noble Lord answered my point about signing cheques by saying that he too signs the cheques for these bills. Are the cheques he signs bigger or smaller than they were four years ago?
Lord Haskel: My Lords, I shall come to that point in a few minutes.
On any reasonable measure, the profits of the utilities have been very high. Over the period 1991-94, Oxford Economic Research Associates has calculated that the average total returns to shareholders of the regional electricity companies has been in excess of 38 per cent. Meanwhile, the average total returns calculated on the same basis for the Financial Times All Share Index over the same period are just under 16 per cent.
At the same time, because of a number of tax credits and allowances granted by the Government to many of the utilities, some of them have paid very low levels of tax. A recent analysis of company accounts of the water companies has revealed that, on mainstream profits of£7.8 billion, water companies have paid just under£07 million—a tax rate of just 1.36 per cent. So the taxpayer too has lost out.
Meanwhile, water rates are set to rise to the end of the century. Domestic electricity consumers pay an average of 9p per kw/hr, almost double the US average.
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Certainly electricity prices have fallen since privatisation, but only from the very high levels to which they were raised prior to privatisation.
It is quite clear to me that the level of profits provides the best guide for regulators. Like the noble Baroness, Lady Hamwee, I find the concept of profit sharing entirely reasonable. A "normal" level of profit would be agreed, an excess profit beyond that level would be shared between the utility and the customers in the form of rebates and lower prices. Because the utility would retain a share of the excess profits, there would still be an incentive towards increasing efficiency, and funds would be available for investment.
The calculation of a normal level of profit would not be a difficult burden for the regulator. Such a calculation is common to all forms of regulation, including the present RPI-x framework. Profit sharing has the advantage that the profit sharing rule would require the normal level of profit to be made public and not, as at present, hidden away in the regulator's assumptions. It would provide the greater transparency for which the noble Lord, Lord Skelmersdale, asked.
Meanwhile, business has to go on. Regulators have a lot to do. Companies have to motivate their staff and service their customers. Business managers know that demoralised staff rarely deliver good service.
There was a time when people joined the public utilities out of a sense of service, and there was something rather high-minded about that. That high-mindedness has been destroyed now that the overriding priority is cost cutting. Is it a sign of poor management that the sense of public service has gone out with the cost cutting, and the sense of high-mindedness which made the work worthwhile for many people has not been retained?
Now that the cushion of excess water and electricity supplies has been removed, thus making the chance of cuts more likely, the regulator's concern with service must extend to seeing that the people who work at the utilities have a feel-good factor too. We know that the directors have a feel-good factor£we have heard quite a lot about that recently.
The regulator will have to come to terms also with the take-overs and mergers among the utilities. It was only after strong pressure from Labour that the President of the Board of Trade recently referred the bids by PowerGen and National Power for Midlands Electricity and Southern Electricity to the MMC, but only after allowing a similar take-over of ManWeb by Scottish Power to go unchecked.
We are also seeing water companies taking over electricity companies. How are those going to be regulated? It is naive to think that the accounting can be kept separate. We need to be assured also that the regulator is properly screening companies which are taking over our utilities. There are some disturbing stories about the unethical behaviour of prospective and current owners, especially those coming from abroad, who may be attracted by the more lax regulatory regime we have here compared with the United States. That screening of their past behaviour has to be opened up to the public.

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Several noble Lords have discussed the qualities of the regulators themselves. Obviously regulators must be more than honest and incorruptible. They need to be sophisticated and aware. They must be paragons. They must insist that utilities carry out best practice, not just in management and technology but in corporate governance. Otherwise they will easily have the wool pulled over their eyes. I hope that the Government have a number of people in training. We need too a reply to the question: "Who regulates the regulators?".
The noble Lord, Lord Ezra, is right—it is time that this state of affairs was reviewed thoroughly by the Government. As the noble Baroness, Lady Seear, told us, it is a new experience, and because of that it needs a review. We are most grateful to the noble Lord, Lord Ezra, for introducing the debate and, it is hoped, starting the process of review. Perhaps the Minister will tell us whether that is happening.
Like any business, utilities need to change and evolve continuously. Regulation must allow for that, so there is no universal easy answer. Regulation must be light enough to allow for that continual change, but sufficiently severe and balanced to look after the interests of all. It is obvious that privatisation is the easy part. Regulation is the hard part.
5.20 p.m.
The Minister of State, Department of Trade and Industry (Lord Fraser of Carmyllie): My Lords, I welcome the opportunity provided by the noble Lord, Lord Ezra, to debate once again an important subject of wide public interest. A number of important points have been raised and I will attempt to answer them tonight.
The privatised utilities touch everyone in the country. All of us take a keen interest in their prices and quality of service. The Government are well aware of this. Indeed, as was said by the noble Baroness, Lady Seear, it was a desire to improve the performance and service of the utilities that led the Government to privatise them, to introduce competition where feasible, and to adopt a stable regulatory regime which would deliver increased efficiency, lower prices and better quality.
Perhaps I may say at the outset that no system of regulation is, or ever will be, perfect. We have learnt much from experience both here and overseas. We are still learning and considering possibilities for further improvements. I hope that that is sufficiently modest in setting out where we see the debate on regulation as lying.
As this debate has shown, there is no shortage of ideas for change. But I emphasise that we have built much scope for change into the existing regulatory system. Thus, regulators may and do make changes to licences including, if appropriate, changes to price caps.
There is also scope for changes to the structure of industries following, if necessary, references to the Monopolies and Mergers Commission under general competition law. This has already helped to transform British Gas, separating out its monopoly transmission business and allowing further competition in gas supply. My noble friend Lord Harmar-Nicholls was right in
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saying that it is this system of regulation operating at arm's length from Government, and so it should be, with competition introduced wherever possible, that has provided incentives for the companies to improve their performance dramatically. For example, National Power and PowerGen have doubled their labour productivity and British Telecom has more than doubled its productivity. This has in turn helped to bring down prices. BT's prices are down 35 per cent. since privatisation. Domestic gas prices are down 23 per cent. and domestic electricity prices are down 7 per cent., with further reductions to come. Telecoms, electricity and gas prices are now all among the lowest in Europe.
The quality of services is up. Over 95 per cent. of BT's phone boxes now work! In gas and electricity, the regulators have required demanding new guaranteed standards of service for customers, backed up by compensation. The number of disconnections for debt has gone down in gas by 70 per cent. since privatisation; in electricity by over 95 per cent.; and in water they have fallen rapidly since Ofwat guidelines were issued in 1992. For other interruptions, supply is now being restored within 24 hours in over 99 per cent. of cases in gas and electricity. The number of properties at risk of low water pressure has now fallen for the fourth successive year to 1 per cent. of connected properties.
Noble Lords spoke of the levels of investment that are required and the noble Baroness, Lady Hamwee, spoke of the water industry. Privatisation has enabled that industry to undertake a capital investment programme averaging approximately £3 billion per year. That is double the rate that was in place prior to privatisation. The benefit of this investment can be seen in significant improvement in river and coastal water quality and also in drinking water. Therefore, the noble Baroness has everyone's approval in deciding to drink tap water in such circumstances.
My noble friend Lord Skelmersdale indicated that he thought that regulation was a substitute— and a poor substitute at that—for competition. To that extent I agree with him—
Lord Skelmersdale: My Lords, perhaps I may interrupt my noble and learned friend. I made no allegation that it was a poor substitute. I said that it was sold as a substitute.
Lord Fraser of Carmyllie: My Lords, whether or not my noble friend believes that it was a substitute, it is the improvements in competition rather than regulation which we see as being a key to obtain further benefits. There is no doubt scope for more competition and more consumer choice.
Competition between suppliers is already a fact of life in telecoms; and for medium and large users of electricity and gas. We are determined to press ahead with further opening up of these markets. Next year we shall see the first phase of the introduction of competition to the domestic gas market. The gas and electricity markets will be fully open for competition in 1998.
None of this will be easy. The progressive opening of markets does bring with it problems, including those of adjustment for a dominant player. The noble Lord, Lord

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Ezra, the noble Baroness, Lady Seear, and my noble friend Lady Platt, raised the particular point of British Gas's long-term contracts for gas purchases. The Government are aware that British Gas is committed to taking gas at a price for which it does not have the customers. That is why the Government have been expressing the view for some time that some adjustment to contractual arrangements is no doubt inevitable and in the best interests of all concerned.
In spite of the invitation extended by the noble Lord, Lord Ezra, the Government do not seek to impose a solution. We believe strongly that commercial discussion between the parties concerned is the only sensible way forward. The department is monitoring the situation and will continue to encourage all parties to engage in sensible re-negotiations. Despite apparent difficulties, there is also scope for extending competition in the supply of water and waste water services, in the first instance, for large users. The Government are working on proposals with the Director General of Water Services and will publish a consultation paper early next year.
A number of noble Lords pointed to the criticism that executives are paying themselves too much at the expense of consumers. While I am aware of that criticism, perhaps I may say that this is primarily a matter for the shareholders not the regulators. The regulators should concentrate on controlling prices. It is prices which matter to consumers. It is the shareholders, led primarily by the institutional investors, who should press for a proper balance between profits and pay. As the Greenbury Report rightly stated, this is an issue which goes far beyond the issue of utility regulation. The utilities should be treated in exactly the same way as other companies.
The noble Lord, Lord Ezra, the noble Baroness, Lady Hamwee, and the noble Lord, Lord Haskel, also pointed to the criticism that shareholders are gaining at the expense of consumers. It is sometimes argued that the regulators have allowed the utilities to make too much profit. The initial price caps were set by government. With hindsight it is all too easy to say that some were too generous. At the time it was difficult to predict the extent and speed of the efficiency improvements which have since been achieved. The profits declared by these companies should be welcomed. Today's profits turn into tomorrow's price cuts for consumers; and profits finance investment in new infrastructure for the future, sometimes at substantial levels.
The utilities' success has enabled the regulators progressively to tighten the price caps, facilitating the large drops in prices to which I have already referred. Without the possibility of making profits, it is doubtful whether the companies would have had sufficient incentives to improve their efficiency.
The noble Lord, Lord Ezra, referred to the decision of the electricity regulator, earlier this year, to re-open a price review as a result of an REC takeover bid. The Government's view is that it was entirely appropriate for the electricity regulator to decide to re-open the electricity distribution price review in March, in the
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light of new information that had become available. With respect to the noble Lord, the customer is, I emphasise, benefiting. The electricity regulator's original proposals meant that from April this year an average annual domestic bill is £12.50 lower in real terms. His revised proposals, published in July, will reduce an average bill by a further £9 in real terms from April next year. We welcome that review, and the further benefits that it will bring for electricity customers.
The noble Lord, Lord Ezra, raised the issue of a windfall tax on excess profits. Apart from re-nationalisation, it is difficult to imagine what more could be done to destroy the incentives to improve efficiency, which provides the basis for further price reductions. A windfall tax also damages millions of small shareholders and—if the noble Baroness, Lady Hamwee, will allow herself to be included—pension fund beneficiaries who have invested for their future.
The noble Lord, Lord Ezra, the noble Baroness, Lady Hamwee, and the noble Lord, Lord Skelmersdale, also pointed to the apparently gentler reform of incorporating profit sharing into the present price caps so that customers would share profits above a specified level every six months or so. I understand the argument that profit sharing might appear more fair, acceptable and sustainable. It might also reduce the pressure on regulators to intervene between announced reviews of the price caps, so reducing uncertainty and the cost of capital. And, unlike the windfall tax, the beneficiaries would at least be the customers. But against that, there is a risk that profit sharing would also, like a windfall tax, reduce the incentives on the companies to cut costs and to be efficient. The present price controls already do share profits with customers in a way which preserves the companies' incentives to make them in the first place. Nevertheless, it is not for the Government to decide how the price caps should be reformed. We will not seek to impose solutions. It is for the regulators to initiate changes. Their final views are not yet clear.
Mr. Byatt, to whom the noble Lord, Lord Ezra, referred, has indicated that the regulatory system should evolve, but he has also warned on a number of occasions against radical change on the basis of short-term experience. Other regulators are consulting publicly about the desirability of change. I stress that this is an example of where there is scope for change within the existing legislative system. But gone are the days when Ministers intervene or change prices at a whim while bowing to the political pressures of the day. We have moved properly towards a more stable, independent and transparent system.
Concern was expressed that too much power has been given to the regulators; and the noble Lord, Lord Ezra, drew attention to the proposal that they should be made accountable to a new Select Committee. That is not a matter for government but is for Parliament to decide.
The noble Lord, Lord Ezra, referred back to the debates that we had on the Gas Bill and suggested that there may still be insufficient safeguards to protect consumers in a competitive gas market. I cannot agree with the noble Lord and I repeat my objections. There

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is a statutory duty on the regulator to protect consumer interests. The standard conditions of a gas supplier's licence contain an important protection for consumers. All suppliers are required to publish their prices and principal terms; to supply on those terms any customer in the licensed area who requests a supply; and to provide special services to more vulnerable customers, as British Gas does now.
The regulators also have a duty to facilitate or promote competition which should benefit both customers and competitors. It is interesting to note that the Director General of Telecommunications is seeking to use his greater powers to ban anti-competitive behaviour as a result of pressure from non-dominant competitors.
My noble friend Lord Skelmersdale and the noble Baroness, Lady Hamwee, argued that regulators' decisions should be more transparent. Over the years the regulators have put increasing emphasis both on consultation before taking decisions and on explaining their decisions in published reports.
I turn to an issue raised by both the noble Lord, Lord Ezra, and my noble friend Lord Skelmersdale; namely, the criticism that too much power lies in the hand of an individual and that individual regulators should be replaced by boards with non-executive directors, panels, or commissions. There is something to be said for these proposals, but I entirely agree that such devices are likely to slow the regulatory process, once again putting at risk the promotion of competition.
My noble friend Lord Skelmersdale suggested that there are too many regulators and, in particular, that there should be only a single energy regulator. There is, of course, an inter-relationship between the energy markets. The present regulators work closely together. I agree with my noble friend that the major changes in prospect in the gas and electricity markets require the undivided attention of specialist regulators to assist the transition to competitive markets in 1998. After 1998 there could be stronger logic in having one regulator covering the markets. Indeed, the Government welcome with open arms the prospects of fewer regulators and less regulation. There will, of course, always be the need to regulate the natural monopoly elements of the utilities; for example, the gas and electricity transmission systems. But elsewhere we look forward to increasing competition in telecommunications, gas, electricity, railway services and even water. That is where the Government's priorities lie. If further legislation is needed, it will be primarily directed towards the promotion of competition.
As has been indicated, the regulatory structures we introduced were innovative. Both the Government and the regulators recognise that the arrangements are not perfect, but I believe that the existing arrangements are highly flexible. The system is in an evolutionary phase. This process will no doubt continue, and rightly so. I am grateful to the noble Lord for introducing the debate. I hope that I have indicated sufficiently that we are in no sense complacent. We shall continue to keep the system under review to ensure that, as this House would wish, it develops in line with the needs of the market and consumers.
5.37 p.m.
Lord Ezra: My Lords, I thank all noble Lords who have taken part in the debate. In view of the importance of the subject, I had hoped that more noble Lords would participate but that has been more than compensated for by the contributions of those who have taken part.
We have had a wide-ranging review. I am most grateful to the noble Lord, Lord Harmar-Nicholls, for his kind remarks at the beginning of his speech when he said that this is just the sort of debate which one would expect in this House: that we take a subject and have a close look at it; we suggest various courses of action; we put suggestions to the Government; and we hope that the Government will take up some of them. We watch and see what happens thereafter.
Many suggestions were made today as to how the regulatory system, which the noble and learned Lord admitted is innovative, could be improved. For example, when I referred to the windfall tax, I said that that was a suggestion made with regard to what were deemed to be the excessive profits of the companies.
Many other suggestions were made about the system of regulation and about how consumers should have a larger share of the profits which are being made by the various companies. Because those criticisms and suggestions are being made, we suggest that there should be a review of how the system is working.
As I pointed out in my speech, there are to be two major reviews —one by the Hansard Society and the other by the National Audit Office. Once those reviews from such eminent bodies are completed, perhaps it would be a good idea if we had another look at the subject. We could then ask the Government, in the light of whatever conclusions they come to, what they propose to do about it. I conclude by saying that I consider we have had an extremely useful and timely debate. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

HMSO: Future
5.40 p.m.
The Minister of State, Home Office (Baroness Blatch): My Lords, I beg leave to repeat the Statement made by my right honourable friend the Chancellor of the Duchy of Lancaster in another place about the Government's plans for the future of Her Majesty's Stationery Office and how these might affect Parliament. The Statement is as follows:
"For most of the past 200 years, HMSO provided free supplies to departments and to Parliament, charging its costs to funds allocated in the Vote. In 1980 HMSO began recovering the costs. Within two years, departments were freed from their obligations to purchase from HMSO, which then had to compete with private sector suppliers. HMSO and its staff met the new challenge and the business became increasingly commercial, competitive and productive.

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In 1988 HMSO became an executive agency. I pay tribute to the management and staff of HMSO for their commercial success in recent years.
"But the public sector market in which HMSO competes is shrinking. Between 1990 and 1994 HMSO's turnover fell by more than 10 per cent. Job losses are likely unless HMSO is able to seek new sales opportunities.
"Against that background, the Government plan to privatise HMSO by means of a competitive tender offer. The business will benefit from access to wider markets. Staff will benefit from the increased security of a thriving business. Customers like Parliament will benefit from an accountable, commercially enforceable relationship with a supplier well positioned to reduce costs.
"We intend to retain in the public sector only a small residual body which will continue to bear the name HMSO. Its responsibilities will include Crown copyright. The residual body could also administer parliamentary copyright if Parliament so wished. Retaining responsibility for copyright in the public sector will allow us to sustain and improve the accessible and affordable publication of government information.
"The remainder of the business, which is the bulk, under the name of "The Stationery Office", will be offered for sale. We will seek a buyer who will maintain the independence and integrity of HMSO. Under no circumstances will we offer the printing and publishing businesses separately. I placed earlier today in the Library of the House the information pack which we are using to elicit market interest.
"Our objectives will be: to maximise value for money for the taxpayer; to ensure that staff are treated fairly and their rights respected; to ensure that the needs of Parliament and other customers such as government departments are satisfied; and to complete the privatisation as soon as practicable.
"The maintenance of a first-class service to Parliament is, of course, essential. The key point is that the buyer must be fully acceptable to Parliament. With that in mind, I intend to publish the short list of bidders in due course, and will involve parliamentary officials in the selection of the successful candidate.
"Parliament's requirements will be enshrined in a binding and enforceable contract, based on the new supply and service agreements between HMSO and Parliament, which takes effect from 1st January 1996. The contract could include the provision that any future changes in the structure or operation of the Stationery Office should take account of Parliament's requirements. And potential purchasers will have to honour recently negotiated improvements such as reductions in the price of publications and, I hope, negotiate further reductions.
"Parliament benefits from the dedication of trained and experienced staff in HMSO. The type of sale we envisage would mean the buyer taking on HMSO's staff with their existing terms and conditions.
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"The Government are sure that the interests of HMSO, its customers, its staff, the taxpayer and Parliament will best be served by privatisation along the lines that I have set out. But uncertainty, particularly for staff, necessarily accompanies a change of this sort. The Government will aim to complete the sale by summer next year, but subject always to meeting the requirements of Parliament as a pre-requisite".
My Lords, that concludes the Statement.
Having repeated the Statement, I should like to add that I have seen the report published today from the Offices Committee of your Lordships' House. In that report, the committee draws attention to a number of requirements which it would regard as essential if a privatised HMSO were to continue to meet the needs of the House for the printing and publishing of parliamentary papers. We shall, of course, consider those points with care. But I have no reason to think that they cannot be met.
My noble friend the Lord Privy Seal intends to seek an early opportunity for a debate on all those issues. The points raised on that occasion will give us a further opportunity to ensure that your Lordships' concerns can be taken fully into account. An official of the House is being involved as an observer at every stage in the preparation for privatisation to ensure that the needs of this House are fully understood.
In due course, the Offices Committee will be invited to consider the detailed arrangements for a contractual relationship between the House and a privatised Stationery Office. It will be for the committee and, ultimately, your Lordships, to judge whether those arrangements are satisfactory. I am convinced that a comprehensive contractual package can be assembled which will take full account of the needs of Parliament. Indeed, I hope that the advantages of privatisation will make it possible to secure further reductions in real terms in the price of parliamentary papers, an objective which I know is dear to the hearts of many of your Lordships.
5.46 p.m.
Lord Peston: My Lords, I should like to thank the Minister for repeating the Statement made by the Chancellor of the Duchy of Lancaster in another place. However, I must say at the outset that I am in some difficulty. I say that because normally when such a Statement is repeated I have a copy of it in front of me. I believe that I have a copy of the statement that was actually made in another place, but I do not have a full copy of the statement that the Minister just made; indeed, there are chunks of it towards the end that I have heard for the very first time. I should like to know whether that falls within the normal rules of your Lordships' House. If it does not, I must say that I am distinctly unhappy about the situation.
I should say immediately to the Minister that I can see the difficulty. On this particular occasion, a Statement which was suitable for the other place is not quite suitable for your Lordships' House. However, that does not mean that the principal Opposition spokesman

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should not have a full copy of such a Statement to enable him to have a look at it beforehand. I have to register the issue. It is not a personal matter between myself and the Minister; it is a matter of which I believe we ought to take note.
As I said, I believe that the Statement is directed in the first place towards the other place. However, I take it for granted that they can take care of themselves and, indeed, will no doubt do so when they debate the matter. Nevertheless, we have our own interests and I shall refer to them in due course, because they may not necessarily be identical to the interests of honourable and right honourable Members in another place.
I suppose the general question which we ought to start with, and which, in my judgment the Statement does not answer, is: what is the point of all this? Some general remarks are made in the Statement which the Minister repeated, but they hardly comprise a serious analysis of the whole issue. For example, the Statement says that,
"the business will benefit from access to wider markets".
Can I see the evidence which supports that proposition? I am not very clear as to exactly what is the Office of the Duchy of Lancaster, but has it undertaken studies of such matters and can it demonstrate that claim?
More puzzling is the sentence in the Statement which says:
"Customers like Parliament will benefit from an accountable, commercially enforceable relationship with a supplier well positioned to reduce costs".
Is that not what we have at present? Indeed, is it not precisely the position of HMSO? In other words, if we have to be more commercially minded, why can that not take place within the public sector?
In that connection, I must ask more specifically: just what is to be sold? What are the assets? We are discussing a multifarious business which is engaged in printing and publishing. Moreover, I have found out—as I have only recently discovered that I am the Opposition spokesman on Duchy of Lancaster matters—that the Stationery Office engages in activities like photocopying, which I gather is good business, and, indeed, in various other tasks of that nature.
Apart from some equipment and stock, surely HMSO's main asset is the actual contract that it has with Parliament, or more generally with the public sector. In what sense is that a saleable asset? In that connection, I ask the Minister whether it is possible to tell your Lordships in the broadest possible terms—I do not need a precise figure—how much money we are talking about here? Are we talking in terms of millions, tens of millions or hundreds of millions of pounds? I do not wish to prejudice the negotiations with a possible buyer but I would still like to know what I am talking about before proceeding any further. This is a field in which I am interested but I have no idea of the sum of money that is involved. If someone were to ask me how much I thought the Government were talking about I would have to say that I had not the faintest idea. It would help noble Lords if the Minister could at least give us some guidance on that matter.
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In that connection I note that an information pack will be placed in the Library. I have been assured that it is already in the Library of your Lordships' House but it is being indexed and therefore it is buried downstairs. I hope that by tomorrow plenty of copies of the information pack will be available to your Lordships, because if we are to proceed to examine this matter in any detail that is the least that we shall need.
The Statement refers to a shortlist of bidders that will be published. I hope I express the interest of all your Lordships when I ask again whether we shall have an opportunity to debate that shortlist and to express an opinion on the people in it. The Statement states that the buyer must be "fully acceptable to Parliament". I hope I am not mistaken, at least for the moment, in assuming that your Lordships' House is still part of Parliament and therefore that the buyer must be fully acceptable to your Lordships' House as well as to another place. I wish to emphasise—I hope the Minister agrees with this—that in my judgment this is a parliamentary matter and not a government matter. Will we be assured, therefore, that acceptability will be based on a free vote in which your Lordships will be free to express their opinions as they wish and believe in the interests of your Lordships' House, or will there be the usual process whereby the Government decide that they must place themselves on the line and there will be a heavy Whip and we shall see some of our noble friends whom we never see at any other time, trooping in in order to vote on the matter? I hope that will not be the case, because where the future of your Lordships' House is placed in debate—it is in a subject of public debate— a matter of this kind ought not to be dealt with on a three-line Government Whip.
I was puzzled as regards the reference made by the noble Baroness to the Offices Committee. Will the noble Baroness assure me that where she referred to the Offices Committee she meant the House of Lords Offices Committee on all occasions? I also note the reference to a debate, which we all welcome. Am I correct in assuming that this debate will take place at an early date before the ultimate buyer, or even the shortlist, is known because we need to debate the actual subject in the near future? I have been told that the other place will debate this subject next week. I believe there is little possibility that we could do that but I would certainly be unhappy if, with the other place having debated the matter, our debate took place at a much later date, as we have a contribution to make on our own behalf.
When we know the ultimate buyer, will we also then have a debate on whether we believe the safeguards have been met? I sit on the Offices Committee—that is why I check that that is the committee we have in mind—which agreed yesterday in its report that it should not be interpreted to mean that because the safeguards were met the committee then fully accepted that we should proceed with privatisation. In other words, we were at some pains to distinguish the question of privatisation from that of whether the safeguards are met. That is related to a matter which, again, I found surprising—your Lordships ought to allow me to emphasise this—and that is that the privatisation does

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not require legislation. When this matter first came up I was somewhat taken aback to discover that the Government can simply sell this business. Your Lordships ought to know that. There is the consideration that, no matter what we say, the Government can simply shrug and say, "We are selling it". I doubt whether they would do that if we had reservations, but I understand that the legal, statutory position is that they can do so.
I turn for a moment to the matter of copyright. It is not a matter I wish to dwell on today but it is a matter of some importance. It has been a concern not merely of mine but of many people interested in Crown and parliamentary copyright that Government and Parliament have been trying to earn too much from their ownership of copyright and therefore a great many public documents are priced so high that if an ordinary member of the public wished to obtain such documents he would find them extremely expensive to purchase. Taking a view of democracy, it seems to me an absurd state of affairs that the public at large should find it expensive to have access to documents on the laws of the land. Given our belief in open democratic government, I hope that copyright will be used from now on in a benign way in order that ordinary people will not find that the price of such documents is a deterrent to buying them. I am not suggesting that everyone wishes to buy Acts of Parliament. We shall return to that matter on another occasion, but I hope that in future copyright will be interpreted in an extremely generous way.
I return to the reason why this measure has been taken. Can I be told whether there has been any study of the performance of HMSO as regards your Lordships' House? Has there been any work done on that at all? Speaking for myself, my connection with HMSO is via the Printed Paper Office. Again speaking for myself, I have found the service absolutely first class. How many noble Lords have complained about HMSO? What sort of complaints have they made, or are most noble Lords, like me, quite bewildered by the whole of this business? There is an absolutely fascinating letter by Plantagenet Somerset Fry in today'sFinancial Times. He was HMSO first editor of books from 1975 to 1980. He reminds us that HMSO will be 210 years old next year; it is one of our oldest institutions. It was established to deal with certain problems in connection with corruption in the publishing of government documents and—if I may quote the precise words of the letter in the Financial Times—
"to secure economy in government expenditure on printing and stationery".
What I find most paradoxical of all is that the two great figures involved originally with the Stationery Office were Pitt the Younger and Edmund Burke. It is strange that I from these Benches should be calling up the shades of those two great men as opposed to the Conservative Party, which one might have thought would have taken some account of their sensitivities
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though they lie in their graves. My view is that this whole measure is nonsensical and I truly wish that Parliament's time was not being wasted with it.
Lord Harris of Greenwich: My Lords, at this time of seasonal good will to all men and women I am sure we all sympathise with the noble Baroness who has had the responsibility for bringing this dismal Statement to the House. We are talking about the privatisation of a good quality public service, intimately associated with Parliament, for entirely ideological reasons. On what conceivable grounds is HMSO to be privatised? What are the arguments? The points made by the Minister in another place were, to put it as politely as possible, extraordinarily unpersuasive.
I remind the noble Baroness, Lady Blatch, of what the all-party House of Commons Commission said on this matter when it expressed its concern,
"about the possible consequences both short and long-term of privatising a public sector organisation which has, in general, given good and reliable service to the House for most of this century".
I return to the question of safeguards to which we devoted a fair amount of time in the Offices Committee last evening. What happens if, following the negotiations, this House comes to the conclusion that the safeguards for which we are asking have not been met? The noble Baroness says that the aim must be to provide a solution which is fully acceptable to Parliament. What happens if it is not? What happens if the House decides as a result of the negotiations that the minimum safeguards laid down by the Offices Committee and contained in its report, which is available from the Printed Paper Office, have not been met? We deserve an answer to that question. Do this House and the other place have a right of veto in relation to their own interests, or will the Government simply ignore the views that are expressed?
In particular, what is the position concerning the price of many House publications, including Hansard? Many of us welcome the new supply and service agreement negotiated with the Stationery Office under which, as from 1st January next year, the price of Hansard and other publications will be reduced. What is the guarantee that a privatised organisation will accept that there shall be no increase in real terms in the charges paid by this House for those publications or that the House will be credited with a proportionate share of future savings arising from technological advances? Again, those points, made by the House of Commons Commission, are essential to this debate.
There is another question of some importance. Will the contract have to be submitted to competitive tendering under EU procurement rules? The Treasury apparently claims that it will not. What is the basis for that opinion? Has any lawyer with detailed knowledge of European law who comes from outside the public service confirmed that? If so, who was it? I am not asking for a reply today, but I shall be grateful if the noble Baroness will write telling us the answer to that question.
The noble Lord, Lord Peston, says that the other place will discuss this matter next week. It is a matter of considerable urgency, affecting, as it does, the

1321
arrangements with HMSO which are central to our day-to-day work. Why can we not also have a debate next week and put off one of the days on the Bill dealing with criminal procedure? For other reasons too, that might be a sensible idea.
At present, HMSO is accountable directly to Ministers. If there is a failure to provide us with parliamentary papers on time a Minister is directly accountable. Who will be accountable to this House in future if privatisation is pushed through and serious problems arise thereafter?
This is a sad and silly proposal. I hope that it will be dropped. If it is not, Parliament has a responsibility to protect its rights and the public interest.
A noble Lord: My Lords—
Baroness Blatch: My Lords, it is the convention of the House that I respond to points made by the Official Opposition and from the Liberal Democrat Front Bench.
First, perhaps I may explain that when I came to the end of the Statement I said that I had come to the end and added an addendum. I do not know whether that is in contravention of the rules of the House, but I used the words, "having repeated the Statement." I continued with remarks that I thought would be helpful, given that I have only today read the report of the Offices Committee. I knew that it was directly relevant. I also said, and it is worth repeating, that it will be for the committee, and ultimately your Lordships, to judge whether the arrangements are satisfactory.
I was asked a direct question about what is to be sold. The whole of HMSO will be sold, except for a very small residual body. The sale will include office supplies, copiers, business systems, furniture, print and publishing. Parliamentary contracts are worth less than 10 per cent. of turnover. Therefore, the value cannot be guessed at this stage. It will depend on the trading position at the time of sale, and in any case it would not be right for me to state publicly at the Dispatch Box information which could prejudice the tendering process.
The cost of the service was raised. The contract will specify the arrangements for determination of prices. The new supply and service agreement which, as the noble Lord, Lord Peston, said, was agreed yesterday, provides for an annual review of charges and prices which will set maximum prices to be charged to external customers. I expect future price movements to be downwards rather than upwards.
The short list will not be available until the spring. Bidders have to have time to decide whether to participate. Ultimately the House has to be content and ready to sign a contract for services which is separate from the contract of sale. That is an important point. The range and extent of those services can be determined by the House before the sale.
I am happy to respond to a point that was pressed by the noble Lord, Lord Peston. I am not aware of anything other than praise for the quality of HMSO. However, HMSO will find it increasingly difficult to maintain those services without increasing costs against a background of diminishing total sales. Privatisation is
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the remedy. The new owner will bring additional capital. That has to be good for the security of the people who work within HMSO.
I was asked whether the sale will require primary legislation. My understanding is that my right honourable friend has been advised that there is no need for primary legislation, but he is currently seeking advice about whether any secondary legislation may be needed.
Again, very rightly, the noble Lord, Lord Peston, made the point that we have concerns in this House which may be different from those in another place. That is why this House will be represented in, and will be party to, all negotiations that take place between now and the completion of any sale, and the Offices Committee will be kept informed. I am sorry if the information pack is not immediately available, but it will be.
I was asked how much money the sale will generate. It is too early to say. There is a need to analyse closely the trading position for the current year and the forecasts for future years. The price will be influenced by terms and conditions of contracts with customers and what proportion of HMSO's future work they cover. Figures so far bandied about in the press are likely to be way out. However, I am optimistic that value for money will be achieved. That is one of the aims of the exercise.
The noble Lord, Lord Peston, asked whether we can debate the short list. At this moment I am not certain what the mechanisms will be for Members of this House to approve the contract terms. I know that officials of this House will be fully involved in the process. The Offices Committee will be fully involved and will certainly be party to the process. I cannot say at this time what mechanism the committee and the usual channels will determine to reflect the views of the whole House, but no doubt that will be a point that will be pressed in the debate that will follow.
Copyright was mentioned. That is another important point. Parliament, not HMSO or myself, is ultimately responsible for its own copyright. That is very much a matter for Parliament. If Parliament did not wish to take on the responsibility directly, that could continue to be administered on behalf of Parliament by the residual HMSO, which would also be responsible for the administration of Crown copyright and certain statutory functions. Prior to the sale of HMSO, decisions will have to be reached on the terms of copyright licences required by the new business. Decisions on parliamentary copyright are, of course, a matter for the House, and in the case of Crown copyright the Government will consider the licensing terms in the light of the need not to restrict unduly access to government material.
As I said, these days HMSO is a commercial organisation facing increased competition and shrinking markets, and therefore uncertainty about jobs in the future. Therefore, freedom from Civil Service constraints will allow the business to grow and prosper, and to compete on equal terms and expand its markets. Parliamentary officials will be involved in the process of drawing up criteria for selecting a new owner and in

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the choice of the new owner. Officials responsible for arrangements in this House and in another place have been invited to join the steering group for privatisation. The supply and service level agreements, which were signed yesterday, will form the basis of the contract for services.
I cannot imagine that at this late stage it would be convenient to the House to alter the business for next week, which has been on the Order Paper for some time. However, I take the point that the noble Lord made that we want a debate in this House as soon as possible. I know that that point has been properly registered with the usual channels on these Benches.
The noble Lord, Lord Harris, asked who will be responsible. There will continue to be a Minister responsible for HMSO who would, if the House so desired, both administer parliamentary copyright and monitor the contract with private business.
On the point of European Union procurement, at present we expect to be able to offer a contract based on the existing arrangements. If that should change in any way, I shall, of course, write to noble Lords. I made the point in the main Statement that contracts will be enforceable in law, and that is more than is currently available to the House.
6.11 p.m.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that some of us find it rather disturbing that while another place will have the opportunity to debate this matter next week, this House, although equally affected, apparently has to wait for some indefinite date after Christmas. I wonder whether my noble friend will be prepared to reconsider the matter. It would be disappointing, of course, for those who are interested in next week's business if, on one of those days, business had to be postponed in order to make room for this matter. However, it is an issue which affects this House, as the noble Baroness admitted. Therefore, it does not seem right that while the Commons are to debate the matter at once and possibly have an impact on it, we have to wait some weeks. I ask my noble friend to reconsider the matter, either by shifting one of the items of business allocated for next week, or by sitting on Friday.
Baroness Blatch: My Lords, I can give my noble friend the assurance that his pressing request, and the rather persuasive way in which he put it, will be put to my noble friends the Chief Whip and the Leader of the House.
Lord Bruce of Donington: My Lords, perhaps I may ask the noble Baroness to explain the present status of HMSO. I gather that it is owned by the Government; otherwise they would have no power to dispose of it. Is it at present subject to the provisions of the Government Trading Act which, as noble Lords will recall, went through this House in all its stages in March and June 1990? At that time, and in aid of the provisions of the Government Trading Act, the Government Front Bench made great play of the fact that the provisions would
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apply to those agencies which were set out in the Government White Paper relating to the Next Steps agencies. So far as I know, HMSO was in the list of the Next Steps agencies included in the Government White Paper which formed the grounds of the Government Trading Act which passed through this House.
HMSO is either a Next Steps agency or it is not. If it is not, what is it? Is it subject to the Government Trading Act that was passed through Parliament? Subject to the answer that I receive from the noble Baroness regarding the precise status, I have to give her notice that if at this time it is a Next Steps agency referred to in the Government's own White Paper, I shall have to indict the Government. Its disposal or privatisation would be completely against the undertakings given by the Minister in this House concerning the future and its possible privatisation. My next action, or, I hope, those of my noble friends on the Front Bench, will depend precisely on that answer.
In the meantime, I have only two observations. One covers the other place, and the other relates to your Lordships' House. The price of Hansard overing the activities of another place in 1979 was 45p. That was also the price at that time of your Lordships'
Hansard. At present the price of the Official Report of another place is £7.50, a rise of about 1,500 per cent. since the Government took office. The price of the Official Report of this House is now£4.20, an increase of over 800 per cent.
Baroness Blatch: My Lords, perhaps I may take the final point first. As regards prices, the predictions are that if nothing changes the situation could become worse. One of the aims of the changes is that we should receive a more cost effective service. That cost effectiveness will be passed on to customers purchasing HMSO documents.
As regards status, as I understand it HMSO is a trading fund and a Next Steps agency. One of the problems is that the body is limited to publicly funded customers. The whole point of the new arrangements would be to free it up to be on equal footing with a private company and thereby to have access to greater markets.
Lord Harmar-Nicholls: My Lords, for a long period verbatim proceedings of this House were not printed. We depended upon the bound copies of The Times such as we have in the corridors of this House. When it was decided to print Hansard, was that decision made by the government of the day or by Parliament? The answer may assist the Government as a precedent for what they wish to do now.
Baroness Blatch: My Lords, I am not able to tell my noble friend whether that decision was made by Parliament or by an agency on behalf of Parliament. It will be for this House to take a view about the service level it requires. It will be for this House to assure itself that there is no compromising whatever over the

1325
services required by this House. Therefore, it would be this House and the other House safeguarding their own interests, as the noble Lord, Lord Peston, pointed out.
Lord Harris of Greenwich: My Lords, will the noble Baroness be kind enough to deal with two points which I put earlier. She did not cover them in her reply. I asked specifically what happens if this House were to come to the conclusion that the terms of the eventual settlement were unsatisfactory. Does it have the right simply to reject them and will the Government honour that decision?
Secondly, I asked whether she would write to me on the question of the EU procurement rules. I asked a far more detailed question than the one she answered. I should be grateful if she will reply to me in writing.
Baroness Blatch: My Lords, I said I would write to the noble Lord on EU procurement. As regards the other point, if we are not satisfied as a House, then we do not have to sign up to these arrangements. Therefore if the terms are unsatisfactory, and we cannot so safeguard, or the levels of service in this House are so compromised, then this House does not have to sign up.
It is also important to remember that this House on its own is not a very large customer. Therefore, if all the other areas of the Crown plus the other place decide to sign up, we may find ourselves having to consider having our needs satisfied by another customer. But we are not bound to sign up, and we are very definitely empowered to safeguard our own interests.
Lord Dubs: My Lords, I am not sure that I understood the last point. Perhaps I may seek clarification. The Minister stated that in order not to prejudice the bids coming in, she is not able to say how much the whole enterprise is worth. Given that we have had experience in the past of privatisations which have been too cheap—as evidenced by subsequent takeovers—is there a price below which the Government will not sell HMSO?
Baroness Blatch: My Lords, it is inappropriate to be discussing this kind of detail across the Dispatch Box at this stage in the process. What is absolutely certain and very important is that officials representing the interests of this House are fully involved in the process and that the House Committee is fully informed at all stages, and that they are involved in the shortlisting process and are ultimately party to the decision as to whether to enter into a contract. The terms of the contract would include the price the Government will receive and the levels of service that will be satisfied by the contracts that will be determined by the House. All those separate interests are safeguarded. To be talking now about the value of the company, to be pre-empting at this stage trading conditions and future prospects, is very premature. As I understand it, that will all be part of an information memorandum which will become public much nearer the time.
Lord Hayhoe: My Lords, is my noble friend aware that there will be a widespread welcome for the emphasis that she laid today upon the meeting of parliamentary requirements? As I understood the
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Statement, that matter will be paramount in the consideration of carrying forward this policy of privatisation, which seems to be a quite separate issue. Can my noble friend give an indication as to whether any time limit will apply to the binding contract ensuring that the parliamentary interests of this House and indeed the other place are paramount in the arrangements made? What sanctions will be available if the new body concerned with the printing and publication of our proceedings and papers fails to meet those requirements?
I say this with some concern since, when I was responsible for HMSO a long while ago, it dealt with, of all things, the printing of telephone directories. When that function was put out to private suppliers, one of those interested was a Mr. Maxwell. I am glad to say that he did not secure that particular arrangement; I had a hand in that at the time. Think of the difficulties that might arise if a future Mr. Maxwell were running the company responsible for printing all our parliamentary papers! Are we absolutely clear that proper safeguards will be in place?
Baroness Blatch: My Lords, again, my noble friend is absolutely right. I am happy to go on emphasising the importance of knowing what we want in terms of levels of service and making sure that they are properly specified. We have made a good start. Yesterday, service level agreements were signed both by this House and another place. I have made it clear that they will form the basis of a contract under the new arrangements. I am also happy to say that it will be for Parliament to determine the duration of the contracts, and they will be legally enforceable. That is what is important: knowing our own mind, safeguarding our own interests, and making sure that the contract is drawn up in a way that is legally enforceable.
Lord Haskel: My Lords, it seems to me that the purpose of this privatisation is to get costs down and find new markets. Why, then, can we not just follow the well-trodden path of getting in some new management to introduce new technology, bring the costs down and give the service that is required? Is the reason that that would merely add to government spending and therefore HMSO has to be privatised? Surely it would be better to reorganise the business under its present ownership and thereby retain all the security about which noble Lords are concerned.
Baroness Blatch: My Lords, I believe the noble Lord has completely missed the point I made. HMSO has made enormous strides under the new arrangements of being a trading fund and a Next Steps agency. It has effected a number of very important changes—
Lord Graham of Edmonton: In the public sector.
Baroness Blatch: within the public sector, which have produced increased cost-effectiveness. What it cannot do anything about is the shrinking market and its inability to trade outside publicly funded organisations. The reasons for privatisation are to give security to the workforce, to allow HMSO to grow and prosper and to allow it access to other markets. That is the purpose—

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to secure both the quality of our own service and at the same time allow this very good organisation the freedom to go out and secure more work for its staff and sell its talents on the open market. That is very important. Certainly many of the remarks made today about this privatisation have been made generally about almost all the privatisations. In the end, privatisation has worked in terms of value for money for the customer.
Lord Burnham: My Lords, I do not feel that it is frivolous to ask by what name this new privatised body is to be known. If it continues to be Her Majesty's Stationery Office, it will enjoy the privileges and conditions relating to the printing of parliamentary documents that it enjoys today. However, if, as I suspect, it is to be thrown into the commercial maw and jungle of the printing industry, life will be very different. It will find it extremely difficult, on commercial, price and other grounds, to continue to give the service that we receive from the Stationery Office today. Can my noble friend give any assurance that, even if it is in the commercial printing world, standards will remain the same as they are today?
Baroness Blatch: My Lords, first, I cannot see any difference in principle. I do not see at all why the private sector cannot provide a quality service. Certainly, if we have the safeguards of having a well drawn up specification, legally enforceable, we can demand the quality of service that we specify. Also, it is worth knowing that HMSO at this moment contracts out to the private sector. Quite a portion of its work is contracted out to commercial companies and is done to the specification of HMSO on behalf of the Government. The title HMSO will remain in the public sector because the residual body will continue to use it. But I cannot say, and it is very unlikely, that the title HMSO will continue beyond that point. The Government's contract, whether Crown or Parliament, is very prestigious. That will mean a great deal to any company outside Whitehall.
Lord Richard: My Lords, perhaps I may ask one very simple question. If the object of the exercise is, as the noble Baroness just told us, that the new Stationery Office can go out and seek new markets, why not give the existing Stationery Office precisely that power now?
Baroness Blatch: My Lords, there is something improper in the taxpayer supporting a commercial company. It would be very unfair. There would not be a level playing field with the rest of the private sector if the taxpayer underpinned the interest of a commercial company.
Lord Graham of Edmonton: That is what it is all about.
Baroness Blatch: There is no reason whatever why this very efficient service cannot stand on its own two feet in the private sector and seek the custom of the Government in all its forms, whether through the Crown or through Parliament. The principle (perhaps the noble
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Lord supports it) of the taxpayer taking on the business of supporting and underpinning all the rest of a private company is improper.

Prison Service Security
6.28 p.m.
Lord Rodgers of Quarry Bank Lord Rodgers of Quarry Bank rose to call attention to the Learmont Review of Prison Service Security in England and Wales (Cm. 3020), and to the case for a clear statement of government policy on the administration of Her Majesty's Prison Service; and to move for Papers.
The noble Lord said: My Lords, I am sorry that we cannot give the Minister a little peace after the rough ride that she has just had on the future of HMSO, but at the end of the debate on prison escapes and related matters in this House on 25th January last, initiated from these Benches, I said that we should return at a future date to the matters that we then discussed. Today, we are keeping that promise. This debate will also give the Minister, if she chooses, an opportunity to report to the House before Christmas on three linked matters: first, the Learmont Report, which is plainly referred to in our Motion; secondly, the organisation and reorganisation of the Prison Service, discussed briefly last January, and again briefly following the dismissal of Mr. Derek Lewis; thirdly, and more generally, the prisons policy of Her Majesty's Government into which Learmont and the Prison Service clearly fit. I gave the Minister notice of some of the points that I want to raise.
I take as my text the words of the noble and learned Lord, Lord Woolf, to whose 1991 report Members on all sides of the House paid appropriate tribute in our January debate. The noble and learned Lord said that the escapes from Whitemoor and Parkhurst should not have occurred, but that events should be kept in proportion. He advised what he called,
"a measured response to rectify any lack of balance which has occurred between the requirements of security, care and justice"—[Official Report, 25/1/95; col. 1071.]
He said that reports restricted to prison security alone could upset that balance.
Over a number of years one of the means of maintaining that balance has been the activities and reports of Her Majesty's Chief Inspector of Prisons, Judge Stephen Tumim. All credit to the then Home Secretary, Douglas Hurd, who appointed him and regret that the present Home Secretary, Michael Howard, saw fit not to persuade him to continue. I am sure that the Minister will wish to join noble Lords in all parts of the House in paying tribute to all that Judge Tumim did during his years in office. Our Prison Service is more efficient and more humane as a result of his efforts; he deserves to be remembered and recognised for all that he did.
A new inspector has now been appointed. He has apparently been asked to widen his brief to include security, though I am not aware that any new terms of reference have been published. If that is the case, and the new inspector is to be required to give much fuller

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attention to security than hitherto, he should do so only by downgrading his relative concern for what the noble and learned Lord, Lord Woolf, called "care and justice". There is also the danger that some officers within the Prison Service may feel absolved, at least in part, from their proper responsibility for security. I hope that the Minister will tell the House about the terms of reference of the new inspector and where, under his instructions from the Home Secretary, the balance of his responsibilities now lies.
Will the Minister also clarify a point that is puzzling me, though the fault may be mine. The Corporate Plan for the Prison Service 1995–98, published in May, says that the Home Secretary asked Sir John Learmont to report to him by this month on progress in implementing the Woodcock Report on Whitemoor. Is that a separate report that we are still awaiting?
As for the existing Learmont Report, I mainly want to ask the Minister questions that arise directly from the Home Secretary's Statement in another place on 16th October, which the Minister kindly repeated here. First, the Home Secretary said that he would come back to Parliament in due course with what he called "a full response" to Learmont. When is that to be and what form will it take? For example, are we to expect a White Paper?
On the question of dispersal and the alternative of one maximum security prison—"supermax"—the Home Secretary said that he would welcome comments. Has any formal procedure been set up for consultation? I ask that because the Home Secretary said that he expected the results of a feasibility study by the spring, when a decision will be taken.
In relation to the organisation of the Prison Service, Sir John Learmont, in his covering letter to the Home Secretary dated 27th September printed with his report, drew attention to his recommendation that a further study be carried out,
"to improve the liaison between the Prison Service and the Home Office".
But in paragraph 3.87 of his report he gave a different emphasis—it is more than a gloss—to this important matter by recommending an in-depth study of the "relationship" (his word) between the Home Office and the Prison Service,
"with a view to giving the Prison Service the greater operational independence that Agency status was meant to confer".
That is a positive view and a lot more than just improving liaison.
I therefore ask the Minister precisely what is her understanding of the purpose of the in-depth study. Is it, as Sir John recommended, to give the Prison Service "greater operational independence"? Or has that part of Sir John's recommendation been dropped? As she will appreciate, if the Home Secretary has adopted the recommendation as a whole, the Government have already committed themselves to the outcome they seek. On the other hand, if the abbreviated form of the recommendation used by the Home Secretary on 16th October is an amendment to Sir John's recommendation, the Home Secretary should have told Parliament and, in turn, with respect to the Minister, she would have done
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so also on 16th October. As that did not occur, I hope that the Minister will tell us today what are the precise terms of reference of the in-depth study and whether they reflect either what Sir John said in his recommendations or the amended version of the Home Secretary?
In the debate on the humble Address, I expressed my concern about the in-depth study being conducted by Miss Kate Jenkins, the chief author of the report which led to the creation of the agency concept in 1987. I said in the debate that it seemed odd that the person who devised the system in the first place was being asked to consider whether her original advice was correct. I did not doubt her talent and integrity. But that did not seem to be the best way to obtain the right answers and a system that would last.
The Minister's reply was to say that Miss Jenkins' knowledge and experience were to be welcomed rather than criticised. I do welcome them, but that does not affect the issue as to whether she should be asked to sit in judgment on a system she helped to create.
Be that as it may, I have two questions for the Minister. Are her terms of reference precisely those recommended by Sir John Learmont, or the abbreviated form used by the Home Secretary—I am returning to what I asked a moment ago—or, for that matter, the Minister herself on 20th November? Secondly—this is a further point—will Miss Jenkins' report be published? I assume that it will because the organisation of government is of proper concern to us all; it is not the property of the Government of any one time. When it is published, we shall be able to debate more thoroughly than we can today how these difficult matters—I readily concede that they are difficult—of accountability can best be handled. I hope that we will obtain advice from Members on all Benches, including those who are wise in the ways of Whitehall and to whom we all listen with great respect.
A case probably remains for a separate prisons agency and what the noble and learned Lord, Lord Woolf, called, in our debate on 25th January
"a structured stand-off between Ministers and the Prison Service",—(col. 1068.)
I do not like what I understand to be the jargon in the Home Office, that the Prison Service is a "business unit". I hope it is seen to be something more than that.
The idea of "a structured stand-off' will only work if there is a clear line of demarcation between the responsibilities of the Home Secretary and his advisers and the Director General of the Prison Service. The Home Secretary is bound to be concerned in large issues that affect Parliament and the public. But it is intolerable if the Home Secretary regards the Director General as a kind of superior office boy, to be summoned into his master's presence on almost every day of the week to take instructions and to be leaned upon.
Paragraph 3.83 of the Learmont Report is an important one. It says that the Director General needs minimum spending involvement—by which Sir John means interference—in the day-to-day operation of the Prison Service. It describes how Sir John Learmont and his colleagues asked the Prison Service to produce

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copies of correspondence with Ministers covering a period of four months or 83 working days. They discovered that just over 1,000 documents had been submitted by the Prison Service. Sir John's report continues,
"This was … an exceptional period, given the number of escapes, riots and other incidents. Nevertheless, it is at just such times that top management attention needs to be firmly fixed on solving the problem, not merely explaining it. Such a level of upwards-focused activity needs to be carefully managed if it is not to interfere with the Headquarter's proper downwards supervision and control of the organisation".
If we want to discover the origin of the events that led to Mr. Derek Lewis's dismissal and the failure so far to find a permanent replacement for him we need only to reflect on that paragraph. It is a powerful condemnation of how the Home Secretary and his immediate officials strangled the prisons agency with paper.
In his Statement in another place on 19th December 1994 about Sir John Woodcock's Whitemoor report the Home Secretary announced the setting up of a new unit,
"outside the Prison Service"—
i.e. in his department—
"to strengthen Ministers' ability to supervise the performance of the Prison Service".—[Official Report, Commons, 19/12/94; col. 1400.]
On the face of it, that is just what we do not want. It is a formula for more paperwork, more demands on the Prison Service and more interference. Perhaps the Minister can tell us today whether this unit still exists and, if it does, how many officials and of what seniority now staff it and to whom they report. Where do they fit into the current organisation of the Home Office, as shown in Annex D to Part I of the department's senior management review published in May. I hope she will say categorically that they are not there to counter-brief the Home Secretary in competition with the advice of the director general.
In my January speech I referred critically to four "rather glossy documents" which were intended to set the direction for the Prison Service. I said:
"There is a framework document, a corporate plan, a business plan and a citizen's charter. That is quite a lot of paper. The first three documents contain a statement on purpose, vision, goals and values. Those are supplemented by further statements on integrity, commitment, care, equality of opportunity, innovation and improvement".—[Official Report, 25/1/95; col. 1066.]
The Minister did not like that because she thought that I was ridiculing the system and casting doubt on its effectiveness. But I ask her to listen to Sir John Learmont in paragraph 6.6 of his report:
"Any organisation which boasts one Statement of Purpose, one Vision, five Values, six Goals, seven Strategic Priorities, and eight KPIs, without any clear correlation between them, is producing a recipe for total confusion".
So Sir John Learmont says, in his report to the Home Secretary, precisely what we said in January to the Minister's disapproval. As the Home Secretary clearly takes more notice of what is said by Sir John than views expressed in your Lordships' House, I assume that, almost a year later, we shall have no more doublespeak of this kind and, I hope, fewer glossy documents.
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There are two of Sir John Learmont's recommendations that the Home Secretary did not accept, two issues on which he said he disagreed with Sir John. They were concerned with in-cell television and home leave. Sir John said that television in cells,
"could provide a calming influence and a powerful incentive to good conduct".
His recommendation, in keeping with the report as a whole, was about security. On home leave, he said that it was a privilege that could be,
"a positive inducement to good behaviour".
Again, his recommendation was concerned, like his report as a whole, with security. Why did the Home Secretary reject those recommendations—simply because they ran counter to his own declared political agenda. I regret to say that when it suits the Home Secretary he is much less concerned with evidence, ideas and practical solutions to problems than with public perceptions. In this case he prefers the good opinion of the Sun and the Daily Mail to the advice of Sir John Learmont.
There are many questions to do with the growth of the prison population which must concern this House. The figures published by the Home Office and by the Prison Service indicate a much faster growth in the prison population than is provided for, according to published documents, in the building programme. The Home Office has rightly said that there have been some considerable improvements in targets and results. Those are impressive as far as they go. But is the House being asked to believe that, given the growth of the prison population and the fact that overall the Home Office budget will fall by£300 million at 1994–95 prices between this year and 1998–99, this trend of improvement will continue?
I return to what I said about balancing security, care and justice. We all recognise that the maintenance of law and order means that some men and fewer women will go to prison. We all believe that prisons must be made secure. But in a civilised society we must treat those in prison humanely or we will be corrupted by our own inhumanity. As much to the point, those who go to prison as criminals will come out as criminals. Far from prison working, the public will have been cheated into believing that the world is becoming safer.
Many prisoners are young, have no proper family and are illiterate. Prison must offer them education, experience of work, some sense of belonging and hope. Contained within the Prison Service must be the idea of redemption and of preventing the first-time prisoner becoming hardened into an on-and-off inmate for the rest of his life. The Home Secretary may have been right to endorse the Learmont Report as far as it goes, but that does not absolve him from responsibility for ensuring that care and justice have their place in the prison system too.
6.46 p.m.
Lord Campbell of Alloway: My Lords, the noble Lord, Lord Rodgers of Quarry Bank, in introducing in the wake of the Learmont Report this debate on the security aspect of the Prison Service administration, to

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which I shall confine my attentions, affords a most welcome opportunity for constructive discussion. The Motion by its terms seeks a clear statement of government policy in place both before and at the time of the report, policy for which my right honourable friend the Home Secretary is responsible. And, assuredly, the answers of my noble friend the Minister to the series of questions put by the noble Lord, Lord Rodgers, are not to be pre-empted by me.
The ambit of the noble Lord's Motion extends beyond the past and the present to include future policy. As to the polices in place, there was no criticism in the Learmont Report; there was no suggestion that such policies warranted clarification. My right honourable friend the Home Secretary is in no way to be condemned, as was suggested by the noble Lord. Criticisms in the report stopped dead short at prison board level. The report condemned the Prison Service for muddle, inaction and lax security constituting a recipe for inevitable disaster. It is not understood why in this regard any statement by way of clarification of my right honourable friend's past policies is requisite.
As regards security, no statement of policy of general application to all prisoners could ever afford any viable resolution. In every prison there is, and has to be, an indigenous community ethos, a subculture, which reflects the type of prisoner, the type of prison officer, the type of regime and the character of the governor.
As regards future policy, there are two suggestions which I wish respectfully to make. A maximum security prison should be set up for the most dangerous prisoners, as proposed by the Mountbatten Inquiry some 30 years ago and approved by the then Home Secretary, the noble Lord, Lord Jenkins of Hillhead. Special prisons with a lower level of security should be set up drawing on the experience of Grendon Underwood and akin to the borstal system, to contain this rampant new age menace of teenage gang barbarism, whose members terrorise, murder, rob and rape at knifepoint, defy the police, ram police cars and indulge in inter-tribal mayhem, drug dealing, street robberies and extortion. A modernised secure regime should be instituted in which they may be punished and disciplined, and, in the interests of rehabilitation, educated, trained for a trade and taught some respect for human dignity and some sense of responsibility towards society.
A maximum security prison for the most dangerous prisoners or those dedicated to escape—a very small minority of the prison population—would operate and would have to operate, under a regime which would be wholly inappropriate for the vast majority of prisoners, for whom every attempt must be made to retain the correct balance between punishment and rehabilitation, with only a relatively low level of security.
The effect of such a regime is all too well understood by those of us who served five years of an indeterminate life sentence in a maximum security prison during the war, the only hope of release being by armed intervention. The frustrations of long-term prisoners and those who guard them, and the resort to subcultures to bend and break security by exploiting lax and regular routine as an aid to escape were part and parcel of our
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existence. However, in my opinion, a maximum security prison and all that that entails, is absolutely requisite. It would serve to protect the public; it would reduce disorder in the other prisons; it would avoid the expense of maintaining a higher level of security than is requisite in all the other prisons in which the most dangerous prisoners are now strewn around. Reducing the level of security in such other prisons would serve the interests of rehabilitation for the rest—the majority—of prisoners.
As regards the lapses in security at Whitemoor and Parkhurst, it is the Prison Service under the leadership of Mr. Derek Lewis, appointed Director-General in 1993, which has to bear the full responsibility. The division of responsibility as between my right honourable friend for his policy and the Prison Service as to implementation, would not appear to have been understood by those who maintained that my right honourable friend is "answerable to Parliament" for all matters concerning the Prison Service and for whom the concept of divided authority has no meaning.
The plain fact of the matter is that matters of implementation of policy cannot and do not lie within the province of the Home Office to administer on any day-to-day basis. Mr. Derek Lewis, who acknowledges that he removed Mr. Marriott, the governor of Parkhurst, was offered the opportunity to make representations on the criticism of his conduct in the report. He made such representations, they were considered by my right honourable friend the Home Secretary and he concluded that the position of Mr. Lewis was untenable and decided that the service required a change of leadership.
That was a lawful administrative decision taken in the due exercise of his ministerial duties and in the due discharge of his discretion. As such it is not open to challenge, but it was also a reasonable decision fairly taken with total propriety. It was not a policy decision, but a decision taken on the facts of a matter concerning the Prison Service for which my right honourable friend is accountable to Parliament. He has already accounted in another place.
In conclusion, perhaps it may be mentioned that, according to the report on a totally free remit, the lapses of security were in no way attributable to private sector prisons as compared with public sector prisons. I do not regard this as a party matter. I certainly have no interest to declare save the common interest of all your Lordships and the interests of our own society.
6.57 p.m.
The Earl of Longford: My Lords, I am happy to take part in any debate initiated by the noble Lord, Lord Rodgers, and wound up by my noble friend Lady Mallalieu who has had varied experience for someone who, I may say, is quite young. She has had very varied and worthwhile experience and has become highly esteemed here.
I shall reply briefly to the noble Lord, Lord Campbell of Alloway. This is a free country. He justifies Mr. Howard's decision to remove Mr. Lewis. I regard that as a contemptible decision. He was made a scapegoat. I highly respect the noble Lord, Lord

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Campbell of Alloway. If he comes with me around the prisons I do not believe that he will find anyone who agrees with him. He will not find any governor who does not regard it as a contemptible decision.
What is the present position? We have read in the papers that a successor to Mr. Lewis cannot be found. A Home Office source was quoted in the newspapers yesterday as saying that no one would touch the job with a barge pole because they know what they might be in for. I tried to obtain confirmation of that from the Home Office but it was unable to help me. Perhaps the noble Baroness will tell the House whether a successor has been found to Mr. Lewis and, if not, is that not very strange?
The noble Lord, Lord Campbell of Alloway, must have been abroad, or doing something else, when the governors came out against the Home Secretary. The whole Prison Service is against him—does not the noble Lord realise that? I go to a prison each week and in the holidays sometimes to more than one. The noble Lord will find it difficult to get one prison officer to say a good word for Mr. Howard. That is the situation and one important aspect of the matter.
We are talking about security. In the end that depends on the intelligent, devoted activity of the prison staff. What is the present attitude of the prison staff to what they are compelled to do? Not so long ago I was in a prison and a senior prison officer said to me, "We are all aware that Mr. Howard would be unhappy if he saw a smile on a prisoner's face. It sounds all right at the Home Office, but think of the people who have to administer the regime? We have had to withdraw privileges from prisoners, and some of them are quite dangerous and violent men serving long sentences. We have to explain to them that 40 per cent. of home leave is to be cut". What effect will that have on their relationship with the prisoners? But we expect them to maintain security.
I congratulate the noble Lord, Lord Rodgers of Quarry Bank, particularly on the ideal that he expressed at the end of his speech. However, if I may say so, he was a bit too kind to the Learmont Report. I do not think that that report will stand up well in the light of history. If anyone wonders what right I have to say that, although I have been visiting prisons for half a century, I direct them to the comments of Judge Tumim. Has any noble Lord read what Judge Tumim said about the Learmont Report? He regarded it as disastrous. The noble Lord, Lord Donaldson, will deal with all of these matters extremely well because no one in this House, and few outside it, have done as much for penal reform as the noble Lord. Anybody who has considered these matters at all carefully knows that the Learmont Report is regarded as disastrous. Judge Tumim said that in a broadcast as well as in an article in The Times. He said that it is wrong to make security an absolute priority. Those were Judge Tumim's words—I hesitate because I was not sure whether the noble Lord was going to attack me. No, he is not moving this way, but I look to my noble friend Lord Graham to provide total security on these Benches. The noble Lord has put me off my stroke, but not for long.
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The simple fact is that Judge Tumim said that the Learmont Report, with its emphasis on security at all costs, will undo much of the good work which has been done in prisons in recent years. Frankly, therefore, I do not attach all that much importance to its findings. Of course, Learmont was a great soldier. He had a quick look around the prisons and one must note his contribution, among others.
Let us look at the whole thing more widely. We know by now about Howardism—the idea that prison works. We know that, in the code of Howardism, life is to be made as unpleasant for prisoners as possible. I have visited Whitemoor several times this year. In order to buy a cup of tea for a prisoner you now have to go to a building away from the prison to get a ticket. Leaving all your money behind, you re-enter and are then searched four times, the last search being assisted by a sniffer dog. That is what happens before you can enter the prison. I said to a prison officer, "This is making things a bit difficult for prison visitors", and he replied, "But nothing like as difficult as it is making life for us". That is the relationship that is being established in our prisons now by Howardism.
Let us make no mistake about it. Such attitudes will make good security very difficult to achieve. By and large, I think that prison staff are devoted, but one is asking for heroism beyond the call of duty if one calls on them to carry out a regime which they detest and which they find difficult to recommend to the prisoners.
I need not go on because I have said all this before and I will say it again. Let us make no mistake about it. We will not get security in prisons unless we attract the fullest loyalty and devotion from the staff. At the present time, the Home Secretary is going in the opposite direction.
7.3 p.m.
The Lord Bishop of Lincoln: My Lords, I speak as Bishop to Prisons, whose sentence has just been extended for a further five years. I want to draw your Lordships' attention to some important points in the Learmont Report. The right reverend Prelate the Bishop of Birmingham will speak on the balance between security and other considerations and our concern as Christian ministers.
I visited one of the prisons in my own diocese only last week. The deputy governor told me that, in his judgment, good progress had been made by the prison service since 1987. He felt that the introduction of mandatory drug testing and the incentive scheme for prisoners were the most important changes on the ground since the Fresh Start initiative some seven years ago. However, he pleaded for a period of stability in the service and for an opportunity to consolidate so that those improvements, as he saw them, in the management of prisoners could work their way through the system. Richard Tilt, the acting director general of the Prison Service, comments in the latest Prison Service News:
"For the coming months our priorities remain the same: security, and the continued implementation of the policies in relation to drug testing, home leave and incentives. But we must do that in a mood of optimism, stability and continuity".

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Constant reorganisation is death to that.
My second point is to remind your Lordships that I am constantly struck when visiting prisons by the idealism and commitment of prison staff. The noble Earl, Lord Longford, referred to the importance of that. My concern is that that staff morale should be sustained at the very highest level and that Learmont's comments should be heeded in that regard. It is important that senior appointments within the service are filled by professionals with long experience in that service.
Perhaps I may remind your Lordships that people are always an expensive resource, but, if the prison service is to move to being a people-oriented organisation rather than a paper-oriented organisation, as Learmont recommends, the money has to be found to sustain present staffing levels and even to improve them, rather than being diverted into other projects. Good security, as the noble Earl reminded us, and as Learmont echoes, depends as much on routine tasks being performed well as on sophisticated equipment—not to mention sniffer dogs. A very large part of the day-to-day work of establishments is carried out by non-officer grades such as education staff, workshop supervisors, administrative staff, psychologists and chaplains. Those people are in regular contact with prisoners. Their expertise is critical to successfully managing and running those establishments. I want to make a plea that those significant groups are remembered as important contributors to the Prison Service. If that service is to be a people-oriented organisation, their role deserves to be taken very seriously. I hope that the Minister will be able to reassure the House on that point.
7.7 p.m.
Lord Donaldson of Kingsbridge: My Lords, I am particularly interested to follow the right reverend Prelate because the main thrust of his speech dealt with prison service staff. If I have time, that is what I hope to cover also.
I have been complaining about the state of our prisons for some 35 years now. Some things have improved; others have got worse. The leader in The Times of five years ago, in 1990, opened with the statement:
"There is no bigger disgrace in Britain than its prisons".
One cannot say that today because we have so many other disgraces, but there is still a certain weight in what was said then.
I should like to draw your Lordships' attention to paragraphs 541 to 552 of the Learmont Report which deal with a single prison for uncontrollable prisoners. Everybody has referred to it, but detail is given in those paragraphs. That is something that could be taken up and done in its entirety without another two years' discussion of it. I hope that the Government will think about that.
The root cause of the trouble was, is, and probably always will he, overcrowding. There was 5 per cent. overcrowding in the prisons 35 years ago, and there still is today. That average figure of 5 per cent. for all prisons conceals the fact that there are always more prisoners in local prisons. At the moment eight or 10 local prisons
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are overcrowded by 50 per cent. which means that the position in those prisons is almost hopeless. Things do not happen as they should and the people who should be classified and looked after are in a mess. It is the most serious problem in the whole prison system. It always has been. No one ever does anything about it without causing a problem elsewhere.
Each time an effort is made to increase staff numbers, prison numbers are allowed to go up and so more staff are needed. The whole thing has been badly managed by everyone for years.
I wish to change the subject a little to try to throw another light on the matter: 21 years ago I was sent by the British Council to Thailand in response to a request it had received for some advice on the aftercare of prisoners. I was chairman of NACRO at the time, and I selfishly appointed myself to go. I returned a real lover of those delightful people. I am pleased to say that I have a granddaughter who this very day is staying with an old friend of mine in Bangkok.
I went for a happy month. I was shown all Thailand's prisons and talked to many of the prisoners through an interpreter. Their hospitality is generous. They are determined to treat everything as a party. One had to be careful not to be carried away and respond too easily.
The second in command of the prison service met me. He told me that they found it difficult to obtain any money from the government to ease conditions on release. "What our people want", he said, "is to catch the criminals and never hear of them again". It might have been our Home Secretary speaking.
Prisons in Thailand are seriously overcrowded. It is partly for that reason that the Department for Correction gave my visit such a warm welcome. It wanted change, but public opinion is apathetic. The public do not want to hear about the problems. We have heard a good deal about them today so if they read what has been said they will know a bit more about what is happening in this country. There were over 15,000 prisoners serving sentences of 10 years or more in a country with a considerably smaller population than ours. At that time we had 1,200 prisoners serving similar sentences. The Home Secretary might say that we want longer sentences. They had them, or at least they did 20 years ago.
There was no probation service in Thailand—again something that the Home Secretary would like—although something was done for juveniles. Prison conditions were harsh, but not dreadful. There was no corporal punishment. There was capital punishment by shooting, with the firer hidden by a sheet. However, the elegant death dance has been dropped for some time. It was a serious and awful occasion. There were 20 to 30 executions a year. I do not know how that has changed, if at all, in the past 20 years.
I saw a score of condemned men, all fettered, and without occupation of any kind. The conditions were accepted apparently with placidity. All the prisoners are kept working. They are not fed until they have done the work, which means that very little supervision is necessary. They are allowed to keep one third of the sale price of the goods they make. There were always a

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few prisoners in leg irons. The punishment cells were small. They had wooden doors with four half-inch eye holes in them. They were completely empty. I said, "I should not like to spend a day or two in one of those". The governor replied, "The maximum time is three months". So much for Thailand.
The Earl of Longford: My Lords, is the noble Lord recommending the introduction here of Thailand's methods?
Lord Donaldson of Kingsbridge: My Lords, no, but I shall come to something along those lines in a moment. I should like to follow what the noble Lord, Lord Campbell of Alloway, said about Grendon, and the hopeful things in the Prison Service. Grendon is one; Blantyre and Latchmere are others. There may be others, but those three establishments are, in their own ways, very good and they are going very well. I was the first chairman of Grendon about 20 years ago. I served for eight years with Dr. Gray, who was the brilliant doctor who ran it. He took no notice of anyone, including the Home Office. He did exactly what he liked, but he would never accept more prisoners than he thought his staff could cope with properly.
Overcrowding is the primary problem in the Prison Service today. No one attempts to tackle it. Until they do, it will not get any better. Whatever changes had been made under the present regime, as a result of the Home Secretary's change of attitude the prison population has been allowed to rise by 12,000. That requires extra expenditure of something over £200 million. The Prison Service cannot do anything, and it will never be able to do so as long as that sort of thing happens.
We cannot go forward. It is easy to talk. I believe that I have said enough. It is hopeless not to have enough staff to maintain a happy relationship with the difficult men with whom they have to deal. That cannot be done if the prison is overcrowded. If that one message can go from here tonight things might one day be different.
7.17 p.m.
Lord Stewartby: My Lords, I hesitate to enter the debate when most of the other speakers know so much more about prisons than I do. It is a matter that I have been interested in since I had some responsibilities for prisons in Northern Ireland. Perhaps I may apologise to your Lordships, but when I put my name down to speak in the debate I did not realise that there would be a Statement which would change the timing, and so I may not be able to stay until the end.
When I listened to the noble Earl, Lord Longford, I had to pinch myself to remind myself that the fundamental purposes of imprisonment are inevitably rather harsh. They are punishment, deterrence and the protection of the public. When one listens to debates on subjects such as this, especially in your Lordships' House, there sometimes seems to be a tendency to consider the humanitarian and rehabilitation aspects of imprisonment rather than its fundamental purpose. If we lose sight of its fundamental purpose, we shall not have the right sort of Prison Service, and it will not deliver what the public expects of it.
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It is in that context that we should welcome the Learmont Report. It is comprehensive, and it makes a large number of practical proposals. In recent years the third of the fundamental purposes that I mentioned—that is, the protection of the public—has been of growing urgency. After all, the Learmont Report was conceived largely in the context of and as a result of the Whitemoor and Parkhurst escapes. They are at the most serious end of the spectrum of security risk.
However, security goes much wider than the physical retention of Category A prisoners. In Judge Stephen Tumim's report on Parkhurst, he noted that the availability of drugs had become something of an inbuilt sub-culture. I believe that that is most worrying because it is most unlikely that it would happen suddenly. These things do not tend to happen suddenly. If proper control and internal management systems had been applied over time, such a problem ought to have been identified, and when identified tackled, at an earlier stage. One cannot run a prison without at least a minimum degree of security and discipline.
The availability of drugs on a scale anything like that suggests not only an occasional breach of security but that it is widespread and has become endemic. That raises broad questions about the lines of accountability and the systems of management within prisons. It also raises doubts about forms of external contact that are available to prisoners. One must assume the golden rule that where there is doubt in matters of security the benefit of that doubt should always be given to protecting the interests of law abiding citizens rather than being in favour of the convenience or comfort of the criminal. I do not wish to sound too harsh in saying that, but any prison system must strike the right balance. I am not suggesting that we should import certain Asian practices, and the noble Lord, Lord Donaldson, referred to some of those. However, I believe that if we have a prison regime which errs too much on the side of being soft a large part of the purpose of imprisonment is damaged. It provides less deterrence, it is less of a punishment and, critically in terms of tonight's debate, it provides a greater possibility for the development of indiscipline and a lack of security which can arise as a result.
When the Home Secretary placed restrictions on home leave and temporary release he was entitled to address that issue in the context of the serious number of temporary release failures which had taken place. In October, when my noble friend the Minister made the Statement in your Lordships' House about the Learmont Report, she gave some figures. Perhaps tonight she will be able to update them because I believe that there has been a significant reduction in the number of temporary release failures at the cost of some tightening of prison discipline, but one cannot have it both ways at the same time. If we need a disciplined prison system—and we clearly do—we must accept that there may be some uncomfortable consequences as a result.
The fact is that against a considerable increase in serious and violent crime during recent years one must seriously question whether our legal processes and our penal system have been robust enough to take the strain and to deliver what is necessary. It is a common public

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perception, and it is likely to be correct, that not only do too many criminals escape prosecution but that of those who come to court too many, for one reason or another, go unconvicted or are sentenced inadequately.
It is very dangerous if such a public perception leads to the feeling that severe or sudden measures need to be taken to correct it because severe and sudden measures are not always the best way of tackling such a problem. I do not believe that it is fair to criticise my right honourable friend the Home Secretary, who has been trying to tackle the issues. I thought that the comments of the noble Earl, Lord Longford, were something of a caricature. To tighten prison procedures and to toughen sentencing is a necessary part of ensuring that the present system operates in a sufficiently disciplined fashion to deliver what the public expect of it. I do not believe that any Home Secretary ought to have to apologise for that.
Perhaps I may conclude by commenting on accountability and morale in the Prison Service, to which the right reverend Prelate and a number of noble Lords referred. Of course it is important that the Prison Service, which has a difficult task, should have a higher morale than is now sometimes found in it. But that can he done only on the basis of clear lines of accountability and responsibility. One of the alarming aspects of the Learmont Report was that in some high profile cases there appeared to have been a failure in that area.
In any other form of human activity lines of accountability and responsibility are absolutely essential for efficiency and the delivery of the objective. In that sense, I do not believe that prisons are any different from any other kind of organisation. Clearly, one of the main issues which will need to be addressed in the aftermath of Learmont and the departure of Mr. Lewis will be the kind of relationship that is necessary between the board and the director general and those who are responsible in the system and within the prisons. Failures of communication, of accountability and of clear lines of responsibility are in most branches of human affairs a recipe for at the best disorganisation and at the worst serious failure. I am afraid that there have been such failures. The fact that we are now able to debate such issues more dispassionately and on the basis of well informed investigation gives us some hope that we can put things right. In that light, we ought to welcome the Learmont Report and express our thanks to the noble Lord, Lord Rodgers of Quarry Bank, for having given us the opportunity of debating it tonight.
7.27 p.m.
Baroness Young: My Lords, I look on this as an important debate and I wish to start by thanking the noble Lord, Lord Rodgers of Quarry Bank, for introducing it. I speak tonight not only as a Member of your Lordships' House but as a member of the public. I am conscious that in taking part in the debate I am speaking to people who are much more expert about the prison system than I am.
Like many members of the public, I am concerned about the Prison Service. I am concerned about the regimes which have been revealed in the report, in
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particular the escapes of last year. I am concerned, too, about the steps that have been taken and are to he taken to prevent such occurrences happening again.
It is very important to recognise that today there is a great fear, in particular among older women, of being attacked and mugged. I believe that the statistics do not substantiate those fears but, nevertheless, they persist and are very real. They are not helped at all when dangerous, convicted criminals escape from prison; or when prisoners are let out on parole and commit further offences; or when it is widely reported in the media that a convicted person goes into a prison whose regime appears to be as lax as has been reported.
One of the many changes that has taken place in the course of my lifetime is that when I was young as an undergraduate I would ride my bicycle back to where I lived during the blackout. Neither the college authorities nor my parents were in the least bit afraid of my being mugged, raped or attacked in any way, and nor was I. We cannot say the same today; we are living in a very different world.
I am, of course, well aware that the causes of crime are many and complex and I do not intend to go into that tonight. But what happens when those convicted go to prison must be a part of this important issue. The way in which prisons are run must have some effect on the rates of re-offending and how those currently committing crimes see prisons. For instance, does the prospect of prison act as a deterrent? I agree strongly with the remarks made by my noble friends Lord Stewartby and Lord Campbell of Alloway on that matter.
I was very surprised by the remarks made by the noble Lord, Lord Donaldson of Kingsbridge. I really cannot believe that he is trying to draw a parallel between what goes on in prisons in Thailand and what goes on in prisons in Britain. That is the kind of comparison that is not at all helpful under the present circumstances.
Lord Donaldson of Kingsbridge: My Lords, it was meant to be something of a joke and I am afraid that I failed to make it laughable.
Baroness Young: My Lords, if I have misinterpreted the noble Lord's remarks, of course I apologise. But this a very serious matter about which a great many people are extremely concerned.
I do not believe that anyone can read the report of Sir John Learmont without being very impressed by its thoroughness. Again, I was extremely surprised by the view expressed about it by the noble Earl, Lord Longford. Of course, I greatly respect his long service and knowledge of prisons. But the report struck me as being extremely impressive as regards the amount of detail into which it goes. But that detail in no way swamps many of the new and important recommendations and proposals that are made.
Like many who read it for the first time, I was astonished by some of its revelations. However, I was interested and pleased to see praise for the private sector prisons. I have read much criticism of them but the decision to establish those prisons has been

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completely vindicated by the report. I have no doubt that many lessons can and will be learnt from the experience of the private sector. I believe that it is true that escapes from contracted-out court escort services have fallen by 40 per cent. and that there have been considerable savings. That too seems to me to be a lesson which needs to be learnt.
The report makes 127 detailed and wide-ranging recommendations. I understand that about half endorse actions which have already been completed or are under way or are planned by my right honourable friend the Home Secretary. Of the remainder, I can see that a number of proposals raise great issues of principle; for example, that with regard to the "supermax" prison. I believe that there is to be a report on that after consultation with the Prison Service. Perhaps the Minister will comment on that. I believe also that there is to be a White Paper in the New Year setting out proposals on a number of other major issues raised by the report. All that is to be greatly welcomed.
My right honourable friend the Home Secretary has attracted much criticism in relation to some of his proposals and much criticism in our debate today. But I think that he is responding to public demands for greater security and he deserves our support. It is no use people spending all their time worrying about prisoners when it is victims who feel that they are without support. We need to keep a definite balance between the two in what we are trying to do.
Of course, there are two quite different philosophies in regard to prisons. I can see that there are some who believe that prison is a punishment while others see prison as a means of rehabilitation. Reading the Learmont Report, I regret to say that it appears to me at times that we have managed to achieve the worst of both worlds.
There are one or two points that I should wish to underline. We cannot have arrived at the position which the Learmont Report describes without all these things going on for some considerable time. I ask myself what the prison inspectors have been doing. I read very carefully paragraphs 5.98 and 5.99, which make recommendations about inspections that apparently now include proposals that the inspections should include inspections of security. If that was not the case before, I am astonished. I hope very much that that will be implemented.
The system of inspections in the education sphere, with which I am much more familiar, has benefited enormously from the establishment of Ofsted and the changeover from HMI. If there is one factor which is levering up standards, it is Ofsted's inspections. That whole area seems to me to be a matter of enormous importance.
The report's major proposals as to what the prison service must fulfil were well summarised at paragraph 6.15. The primary purpose of prison is to keep in custody those who have been committed to its care and who have committed crimes. That seems to me to be absolutely essential. The public have a right to be sure that dangerous, convicted prisoners will not escape.
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We must get the basics right. My noble friend Lord Stewartby made an extremely important point about management. It seems to me from reading the report that management is unclear. That is of no help or value to anybody in the prison service. It is very important to get that right. Organisations which work well and which produce effective service do so because they are well managed. Judging from the report, I do not believe that that can be said of the Prison Service.
The third point which is made in paragraph 6.15 is that the rules governing what prisoners have to do are in place but they should be adhered to. That seems to me to be of enormous importance. I am sure that I am not alone in thinking that it is quite extraordinary that prisoners are allowed to take drugs which, after all, is a criminal offence, when they are in a prison. I am simply astonished.
Much comes from this report. What we should like to know from the Minister when she replies is how these matters are to be taken forward; how we can see the very constructive suggestions carried through; and how we can be sure that a new inspection service will maintain the kind of proposals which have been made so that we do not slide back into the situation in which we currently find ourselves.
I end by saying something about staff. I am quite sure that it must be a very difficult and quite often unpleasant task to be a prison officer. The morale of and support for prison officers are important. But I do not believe that where people are working in a system, either is ever improved if bad and sloppy habits are allowed to persist. Whatever may be the causes of that, the fact is that very dangerous criminals have managed to escape. I have read how they managed to do that and the fact is that the security arrangements were very lax indeed. That undermines morale and does not help the service at all. It certainly does not help the hundreds of prison officers who I am sure do not allow lax situations to persist.
I should not like it to be thought that, in any of the remarks I am making, I am in any way denigrating people in the service: we must support them. The lines of management must be clear and we must have a recognition of what is being done. In this regard, it is at all times just as important to remember the victims of crime and how they perceive all of this as it is to consider convicted prisoners who have committed a crime.
7.38 p.m.
Lord Vivian: My Lords, I am most grateful for this opportunity to speak briefly in this debate about prison security. I thank the noble Lord, Lord Rodgers of Quarry Bank, for bringing the debate to the House this evening.
I should like to focus on the criticisms, responsibilities and recommendations brought out in the Learmont Report. Before I do so, perhaps I may welcome General Sir David Ramsbotham to his new appointment as inspector of Her Majesty's Prisons.
As a result of the two escapes from Whitemoor and Parkhurst prisons and the very worrying subsequent

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reports by Sir John Woodcock and Mr. Tilt, my right honourable friend the Home Secretary asked General Sir John Learmont to conduct a full independent and authoritative review of security throughout the Prison Service. The report of Sir John Woodcock into the escapes from Whitemoor revealed a dreadful state of affairs. It highlighted a catalogue of errors and significant management failures. It also identified a number of occasions when Prison Service headquarters had failed to provide governors with the clarity and strength of support that they had the right to expect.
Sir John Woodcock made 64 recommendations. They covered improved surveillance and observation; the control of prisoners' property and searching of their cells; security procedures for visits and searching of staff; a need to review inmates' privileges; the improvement of staff selection and training; and the effectiveness of management and supervision.
I should now like to turn to the Learmont Report. In a covering letter which is enclosed with the report, it is made perfectly clear that the responsibility for the problems of the Prison Service ultimately reaches the level of the Prison's Board and that the reports criticisms stop there, as was mentioned by my noble friend Lord Campbell of Alloway. The report does not conclude that any ministerial policy decisions contributed to either the escapes from Parkhurst or the way in which the Prison Service is being run. However, it severely criticises the board of the Prison Service.
Some of those recorded criticisms include, of course, the escape from Parkhurst which was based on the ability of prisoners to follow a well-trodden path through loose and ineffective security. The inquiry found a great deal that needs to be put right within the Prison Service, spanning leadership, structure, management and the ethos of the service. The inquiry discovered a fundamental mismatch between the perception of the board and what was happening on the ground. It is surprising that neither the Director General nor the board members recognised the signs and symptoms of failure and inefficiency that were so obvious and so dramatically illustrated by the Whitemoor and Parkhurst escapes.
The Director General and board members claimed that problems were not drawn to their attention. However, the report emphasises that the value of visits is lessened if inherent problems remain undiscovered. During the inquiry's visits to prisons, the team identified problems simply by talking to governors, staff and prisoners and by observing failure in basic security procedures. A change of ethos at board level is essential. A series of audits has confirmed that Whitemoor and Parkhurst were not aberrations of the norm, but symptomatic of the practices in place in similar establishments throughout the country.
I should now like to touch briefly on the report's recommendations. As has already been said tonight, there are 127 of them and time does not allow me to comment on many. However, it is worthwhile to note that, of the 127 recommendations, only 21 have cost implications, with some of the cost of these offset by other recommendations. As has also been mentioned
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tonight, it is important to note that around half of the recommendations endorse actions that have already been completed, are under way or are already planned.
I should like to bring some of the recommendations to your Lordships' attention. The first is for a single maximum security prison to house the most dangerous prisoners in the system. That recommendation was made some years ago, was accepted, but subsequently rejected. Since then, the policy has been to disperse the most dangerous prisoners among a small number of high security prisons. The report recommends that a single control prison be established to hold the most unruly and disruptive prisoners. It recommends that there should be a fundamental review of the system under which prisoners are allocated to different security categories according to the threat that they represent to the public and their likelihood of escape. The inquiry also recommended that there should be closed visits for all exceptional risk Category A prisoners, save in exceptional circumstances. Such a policy was introduced this year.
The report explains how physical security is enhanced by activities and incentives. Last year my right honourable friend the Home Secretary announced that the Prison Service would introduce a national framework of privilege and incentives. The report also recommends that early release from prison should be earned and not granted automatically as at present. Some of those proposals were announced at Blackpool last October and have been recorded elsewhere.
If we are to have an efficient, effective, responsible, well-led and properly trained Prison Service which will meet its obligations to society, we need to address the criticisms and recommendations contained in the Learmont Report as a matter of urgency. My right honourable friend the Home Secretary has also been personally responsible for a number of initiatives—to cut home leave, to introduce mandatory drug testing in prisons and to establish a system of incentives and sanctions for prisoners.
I strongly support the recommendations within the report on which I have focused and brought to your Lordships' attention this evening. Further, I welcome the recent and new initiatives. I also welcome the Government's intention fully to consult on the proposals and to publish a White Paper early next year. In that context, I wonder whether my noble friend the Minister can confirm in her reply to the debate that that is still the case.
In conclusion, I do not feel that I can do better than to quote the last paragraph of the report's concluding remarks:
"It must be appreciated that, unless security measures are in place which can be managed with confidence, then any hope of progress towards humanitarian objectives is pious. The Prison Service must fulfil its primary function of keeping in custody those committed to its care by the Courts. The escapes from Parkhurst and Whitemoor have revealed considerable lapses in security which violate the excellent set of rules provided in the Manual on Security. The Service must now get the basics right, including staff training, for it can ill afford another episode which erodes the very foundation of a long established and respected Service. The rules are in place. What is now needed is the resolve to abide by them. There is an abundance of excellent people within the Prison Service whose most

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fervent wish is to do a good and worthwhile job. They are yearning to be led to better things. Although much has been done to improve the corporate planning within the Service, this Inquiry has starkly illustrated the need to address urgently shortcomings in leadership, operations and security".
7.47 p.m.
Baroness Seccombe: My Lords, I should like to express my thanks to the noble Lord, Lord Rodgers of Quarry Bank, for giving us the opportunity to debate this issue. The report of Sir John Learmont is both wide ranging and detailed and, as we have heard, contains 127 recommendations most of which are being considered by my right honourable friend the Home Secretary. I shall refer to two of them, but I wish first to make one or two general points.
There is often criticism of the phrase "prison works"; indeed, we have heard it repeated today. There are noble Lords on other Benches who scoff at such statements, but I believe that it is important to listen to what senior practitioners, and not only theorists, have to say. The Chief Constable of Gwent, Tony Burden, in a letter to Mr. David Maclean, dated 14th September 1995, said:
"Local inspectors continually cite examples of how the imprisonment of particular criminals or groups of criminals has led to a dramatic reduction in crime levels in local areas".
I believe we can all accept that when hardened and persistent criminals are sentenced to imprisonment and are in prison they are not causing mayhem or terrifying innocent people by committing further offences during that time. In my experience as a magistrate, whether an offence is so serious or whether no other form of sentencing would be appropriate has to be considered. Magistrates approach that responsibility most seriously. I know the heartache that people experience before a sentence depriving someone of his or her liberty is imposed. The role of government is different. Ministers have to take into account strong feelings as regards the welfare of victims and the demands of the public for a safer society. My right honourable friend the Home Secretary is to be congratulated on the actions he has taken to help bring that about.
We should remember that the report of Sir John Learmont was initiated by the Government after a prison outbreak. The report—an important document—stated that the failure was not one of policy but of operation. The inquiry found my right honourable friend without fault but was seriously critical of the operation of prison management which in this case was the responsibility of the Director General of the Prison Service, Mr. Lewis.
I come now to the two recommendations with which I have difficulty. There is a feeling abroad that in prison everyone has an easy time in comparatively luxurious surroundings. Visits to any penal institution can allay such thoughts although I must admit that things have changed dramatically since 1968 when I first visited a prison. Needless to say I am delighted that the Government have built eight new prisons and refurbished others leading to the phasing out of the awful process of slopping out. New prisons were desperately needed. Not enough had been built during the liberal period of trendy thinking. However, I cannot
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agree that there should be television in each cell. They are prisons, not hotels. Prisons should be decent and dignified but certainly not five-star accommodation. Television may have been suggested to keep prisoners occupied. But what a message to send out! One can already see the tabloid headlines.
My other concern is home leave. On one occasion recently in the retiring room I questioned the clerk as to whether a defendant's previous convictions were in error. He had been sentenced to 18 months' imprisonment and yet three months later had been convicted of another offence. I believed that this could not happen but the clerk informed me that the offender was probably on home leave for the weekend and that this often happened throughout a sentence. I was astounded. I had always thought that home leave was granted either for compassionate reasons or towards the very end of a sentence. I therefore endorse most warmly my right honourable friend's view that home leave should be earned. I believe that the public should know this and that they should know of the criteria used to grant such leave.
I was interested to read of the suggestion that a maximum security prison should be built to house all Category A prisoners. I look forward to hearing the outcome of the research into that issue. However, it seems to me that my right honourable friend the Home Secretary is responding to the concerns of the public who want strong action to be taken. Naturally he leaves an independent judiciary to impose sentences but I believe that his policies are right. It is his duty to—and indeed he does—speak up for the welfare of the victims, and, above all, the protection of the public.
7.53 p.m.
The Lord Bishop of Birmingham: My Lords, I, too, am grateful to the noble Lord, Lord Rodgers of Quarry Bank, for initiating this debate, particularly because of my position as a member of the council of NACRO. I believe that what strikes even the most cursory reader of the Learmont Report is its concentration on the issue of security. In one sense there can be no complaint about that because, after all, that is what Sir John Learmont was asked to inquire into; namely, the issue of security in the Prison Service.
However, there is a question—to be directed not so much to Sir John as to the rest of us—as to whether this concentration on security might lead towards a distorted perspective on the tasks of the Prison Service taken as a whole. There is nothing new about this. Ever since the spectacular escapes which led to the Mountbatten Report of 1966, there has been more and more public and political anxiety about security. I certainly noticed the effects of this in the difficulties which chaplains had in getting inmates to chapel services in the aftermath of Strangeways.
It is true that Learmont talks about the need for a proper balance between Custody, Care and Control, with three capital C's. The question—some of your Lordships have already raised it—is, could there be such an anxiety about custody as to lead to an inadvertent depreciation of care? After all, there is more political

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embarrassment in breaches of security than in difficulties of access to religious or educational facilities. The paradox, of course, is that in the end the devaluation of care leads inevitably to greater problems of control. Learmont has that trinity of principles: custody, care and control. Woolf, if I remember rightly, had a similar set but it was not quite the same; namely, security, control and justice. That triad is not quite so snappy as a slogan but I think it goes deeper because surely justice is a more fundamental principle than care. We have a duty of care towards prisoners because of the deeper principle of justice and not the other way around.
There is, of course, a prudential point. People with long experience of running prisons say that control is much easier if the regime is acknowledged by staff and inmates alike as fair, just, firm and consistent. However, I am making a point not so much of prudence as of principle. We have a duty of justice to offenders, not so much because they have a right to it as because we owe a duty of justice to all our fellow human beings. Let me put it another way. A system of criminal justice must include justice for criminals; otherwise it will be undermined by self-contradiction. What does this mean in practice? Among other things it means never forgetting that, when a man or a woman is sentenced to imprisonment, the punishment properly consists in custody itself, in loss of liberty and nothing else.
People who are subject to imprisonment have a right to freedom from violence or intimidation. They have a right to due process if charged with further offences. They have a right to clean clothes and decent living conditions. They have a right to practise their religion and to receive appropriate education and training. They have a right to maintain contact with their families. They have a right to be treated with fairness and dignity. They have those rights. However, their rights are grounded in our duty; that is, our duty to accord justice to all who share our flesh and blood. That is the fundamental issue; the recognition of a common humanity. For a Christian this has a particular resonance—I know from observation and experience that this is recognised by many offenders—because Jesus Christ finished his life and won our salvation not as a guard, or a magistrate, or a judge, or a priest, or a member of a government, but as a prisoner convicted and condemned.
I recognise that to talk in this way about the recognition of common humanity and about our obligation of justice towards those who have offended against justice, sometimes in quite appalling ways, runs contrary to much of popular public opinion. Popular opinion on the whole likes to distance itself from offenders as if they are aliens, or somehow "other". They are often described as animals or as somehow otherwise subhuman. Attitudes like these, which are inside all of us somewhere, serve to justify our reluctance to accept the implications of our common humanity.
This leads me to reflect on a disturbing feature of the times in which we live. Politicians and others are far too ready, it seems to me, to appeal uncritically to what passes for public opinion as an arbiter of public policy, as if "what the public will stand for", devoid of any consideration of who the public are and how their minds
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have been formed can be an adequate standard for judgments which are moral as well as political. I make two observations. First, to appeal to public opinion in this way is an act of total surrender to moral relativism. It is the final corruption of the culture of choice—a surrender to the assumption that objective standards of right and wrong have been finally replaced by the consumerism which says, "I will choose my own values".
Secondly, when political leaders make that kind of appeal to public opinion they are abdicating their own responsibility for helping to shape and educate public opinion. Of course public opinion has to be taken into account, but those of us who exercise influence in society—politicians, journalists, educators, Church leaders and so on—do not stand in a merely passive relationship to public opinion, we help to form it. We are not honest if we pretend otherwise.
So, to state a moral principle which must inform the administration of the Prison Service, a just society has a duty of justice and fairness even to those who themselves have violated justice. Security is important; control is important; but without justice humanity itself is at risk, not only the humanity and dignity of those who are sentenced to imprisonment but the humanity and dignity of us all. I have talked at length about justice as a fundamental human value, but we must never forget that the works of a merely human justice can only ever be provisional.
Perhaps I may end with a story. A few years ago I found myself presiding at a Christmas carol service in the chapel of an over-full local prison. I found myself standing in front of the altar facing the congregation. As I stood facing them I could see that they were divided into two halves with the aisle between them. On the left were the inmates, on the right were the governor, the governor's wife, members of the board of visitors and their spouses, the chief constable, the High Sheriff and their ladies and all the other dignitaries. It was a disturbing enactment of the parable of the last judgment—goats on the left, sheep on the right. But who on earth really knows who belongs on the left and who on the right? That is a judgment which belongs to God alone, whose justice and mercy are inseparable.
Lord Campbell of Alloway: My Lords, before the right reverend Prelate sits down—and I apologise for not having heard his opening remarks—perhaps I may ask him if he is aware that the basis of this Motion is security in the prison service administration and what practical proposals of a constructive nature he has to improve it.
The Lord Bishop of Birmingham: My Lords, I am well aware that the primary focus of this debate is security, but I am also aware that Sir John Learmont himself mentioned other factors, including the care and control which are necessary in the satisfactory administration of the Prison Service. I was concerned to point out that I think that justice is an even more fundamental category of control and that justice in the running of prisons is essential if control is to be effected.
8.2 p.m.
Lord Harris of Greenwich: My Lords, I very much welcome the fact that the right reverend Prelates the Bishops of Lincoln and Birmingham have spoken in the debate. Both have a great deal of direct knowledge of the subject we are discussing, and it is therefore all the more appropriate that they should have spoken.
Today's debate enables us to return to the serious issues which were raised in the Learmont Report and some wider issues involving the general administration of the Prison Service.
As we all know, the debate is taking place at a time when prison numbers are continuing to escalate, with the warm encouragement of the Home Secretary and his junior Ministers. It is instructive to note that at a time when the service's corporate plan for 1995 to 1998, as amended by the Budget Statement, envisages unit costs being driven down by between 4 per cent. and 5 per cent. on the grounds that it is necessary to cut public expenditure, that precise moment is chosen to announce the appointment of yet another junior Minister to the Home Office team, with all the resource implications that are involved in the appointment of additional Ministers. There are now five junior Ministers in the Home Office. Mr. Attlee required precisely one. On value-for-money grounds I wonder whether we are doing very well. One has only to compare the reputation of the Home Office under Mr. Chuter Ede and under Mr. Howard to draw a rather adverse conclusion. The Prime Minister has declared his enthusiasm for "down-sizing" and "de-layering" in the public service, but he shows surprisingly little enthusiasm for cutting the number of his political colleagues who secure employment by those means.
The noble Baroness must accept that the Prison Service draws the most obvious conclusion when it sees that rise in ministerial appointments at a time when it is facing a real cut in the resources available to it; and at a time when it is also experiencing a rapid rise in inmate numbers, more violence on the wings, a dangerous epidemic of drug abuse—to which the noble Baroness, Lady Young, referred—and an indignant and often resentful staff.
I recognise that the noble Baroness, Lady Blatch, has no direct responsibility for the Prison Service. I also have no doubt that she will persuade herself, as she did on the last occasion when we discussed these matters, that criticisms from these and other Benches are entirely unjustified. I wonder whether she recalls the observation made by a governor—which was widely reported at the time in the press—at a crisis meeting of prison governors called immediately after the dismissal of Mr. Derek Lewis as director general. He asked the noble Baroness's colleague Miss Widdecombe, as Minister of State who attended that meeting, whether she was aware of the low esteem in which she and the Home Secretary were held by the Prison Service. That was an extraordinary statement by a prison governor who was a member of a class of public servants who are the most loyal and
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dedicated servants of the state. Can one imagine a statement on those lines being made when the noble Viscount, Lord Whitelaw, or Mr. Douglas Hurd was Home Secretary? It is inconceivable.
Ministers should ask themselves how they have got themselves into their present mess. Perhaps I may set out the reasons for the present groundswell of bitterness and anger in the Prison Service, for the House must recognise that that is exactly what we are currently experiencing.
Take the example of Mr. Lewis, the sacked director general. I should make it absolutely clear that I thought that his appointment was a lamentable mistake. The decision was taken, of course, not by Mr. Howard but by Mr. Kenneth Clarke. As we all know, he ignored the views and recommendations of the appointments board which interviewed the candidates. Mr. Clarke chose the candidate the board rated as number three out of three on the final short list. An experienced and able candidate from the public service was rejected by Mr. Clarke on ideological grounds. So a television executive from the private sector got the job.
I hardly know Mr. Lewis, and I am sure that he did his best to make a success of his job. However, the post of Director General of the Prison Service is one of the most demanding in the public service. He began, as he confessed, with no direct knowledge of the Prison Service, having only had the opportunity of watching one or two episodes of "Porridge". He was then permitted to retain a non-executive directorship, which limited the amount of time he had available for carrying out his job as director general. It was also made clear to him that one of his central responsibilities was to privatise as much as possible of the prison estate, thus inevitably worsening his relations with the staff associations. Loyal members of the Prison Service—and they are the vast majority of people working in the Prison Service—cannot be expected to look with a great deal of enthusiasm at a man who has been given the task of driving many of them out of their jobs. So Mr. Lewis experienced a host of entirely foreseeable difficulties. Then, when the going got rough after the publication of the Learmont Report, Mr. Howard sacked him. Mr. Lewis is now apparently pursuing a civil claim against Mr. Howard in the courts; and we all look forward with interest to finding out what will happen.
I fear that the trouble about the present Home Secretary, and the reason that there is so much discontent in the service, is that when faced with any sort of political difficulty, his immediate response is to identify a scapegoat and then to throw him to the wolves of the tabloid press. He did precisely the same with the former governor of Parkhurst, Mr. Marriott. I remember watching the BBC television "Nine O'Clock News" filming the car carrying Mr. Marriott away from Parkhurst Prison after his removal. There was no question of due process, or anything of that sort. He was just removed with a snap of the fingers. It was a humiliating episode. If Ministers want to

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understand why they are distrusted by so many members of the Prison Service, they have only to examine the record of that specific incident.
Following the Learmont Report, Parkhurst is to be downgraded from being a dispersal prison to one holding at most Category B prisoners. Some other establishment, possibly Belmarsh, may become a dispersal prison. Perhaps the noble Baroness will be in a position to tell us later whether that has been decided. After the treatment accorded to Mr. Marriott, I would find it a little surprising if there were a desperate struggle among governors for the honour of succeeding Parkhurst as a dispersal prison.
I turn to another reason for low morale in the service. I refer to the extraordinary proposition that we have debated before: that it is possible to separate what are described as policy issues from operational issues. Neither Sir. John Woodcock, the author of the penultimate report on the service, nor Sir. John Learmont were able to make any sense out of it. Nor, of course, can anyone else. It seems merely to be a device for attempting to shield Ministers from criticism when things go wrong. Even that no longer works. Indeed, it simply causes derisive laughter.
Quite apart from that, what does the noble Baroness, Lady Blatch, have to say about the recent revelations in the Observer that the current acting head of the Prison Service, Mr. Tilt, was instructed by Miss Widdecombe, the Prisons Minister, to alter a parliamentary Written Answer in order to avoid giving details of expenditure cuts which could have been a significant factor in permitting the escape of the three high security prisoners from Parkhurst? The alteration to the Written Answer also avoided disclosing that the dismissed governor of Parkhurst, Mr. Marriott, had—and I quote from Mr. Tilt's original draft—
"made a number of requests for security measures to be installed. These were made in writing, in telephone calls, at meetings and in Public Expenditure Survey bids".
This is the man they sacked for what was described as negligence. Because of Miss Widdecombe's intervention, those sentences were censored out of the Written Answer given in the name of a Home Office official. A number of us have always had doubts about the practice of chief officials of executive agencies replying in their own names to Questions for Written Answer. Indeed we discussed it in the Procedure Committee, but we were led to believe that they were at least their own answers. Now we have learnt that they are being edited by Ministers, in this case with the clear objective of preventing Parliament from being told the full truth. I think that this is quite deplorable. It once again throws an ugly light on the lengths to which Ministers will go in order to protect themselves from public criticism.
An immense number of public servants of high quality work in the Prison Service. They do a fine job on behalf of us all, sometimes working in fairly dreadful conditions, often having to put themselves at some personal risk—risk on some occasions of physical attack, and risk on others of being used as scapegoats by fearful Ministers. I have worked in the Home Office at times of high crisis following the
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escape of notorious prisoners and I can well understand the pressure on Ministers. But these crisis situations provide a stern test of character. I find it disappointing that in recent months that test has been failed so signally.
8.15 p.m.
Baroness Mallalieu: My Lords, the noble Lord, Lord Rodgers of Quarry Bank, has introduced a debate tonight on a subject which has repercussions for virtually every one of us. I congratulate and thank him for doing so.
Our penal system is in a state of acute crisis. I cannot remember a time when morale within the Prison Service, and public confidence in it, has been so low. In essence, we ask for two things from our penal system: first, that those who have forfeited the right to remain in the community should be kept secure for the length of their term of imprisonment; and, just as important, that when they are released those who have been to prison will be less likely to reoffend, not more likely. Only if those two requirements are met can any Home Secretary properly say that prison works; and the public perception at the present time is that they are not being met.
I sometimes wonder how the Home Secretary manages now to see across his desk. Report after report has landed on it. Some of them are still there gathering dust, like that of the noble and learned Lord, Lord Justice Woolf, and His Honour Judge Stephen Tumim. Perhaps I may associate those of us on these Benches with the tributes paid by the noble Lord, Lord Rodgers. Other reports are rather more recent: that of Sir John Woodcock in particular and the Learmont report which we debate tonight. Does the Home Secretary do anything about those reports? I found the answer in General Sir John Learmont's work. Indeed, reference has already been made to it by the noble Lord, Lord Rodgers. In a period of just 83 working days up to January of this year, over a thousand documents were sent by the Home Office to the prison headquarters, including 137 full submissions containing substantive advice about policy or operational matters. Much of that seems to have passed on in what the report describes as unworkable initiatives issued without consultation to a hard pressed work force. Noble Lords will remember that after the dismissal of the Director General of the Prison Service in October, the Home Secretary told us that he was responsible only for his policy towards prisons and not for operational matters.
A little earlier this evening, in dealing with an earlier Statement in relation to Her Majesty's Stationery Office, my noble friend Lord Peston complained about the cost of matters produced by it. I see that the Learmont report cost£24.50. During the course of the debate, I wondered whether the noble Lords, Lord Campbell of Alloway, and Lord Vivian, had obtained a shorter, cheaper, expurgated version which excluded criticism of the Home Secretary. I am bound to say from what both of them said that it appeared to me that we had not been reading the same document. I am quite sure that the

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passage read by the noble Lord, Lord Rodgers, at paragraph 3.83 must have been omitted from their copies.
It is abundantly clear from what is set out there that the view of those who prepared that report was that proper supervision and control of the Prison Service has been hampered by an avalanche of material coming from the Home Office which the headquarters has been required to deal with. Time which should have been spent on solving problems which the service undoubtedly face was instead spent trying to explain matters to the Home Office.
When the noble Baroness replies I very much hope that she will feel able to tell us what Her Majesty's Government propose to do about Recommendation 71 of the Learmont inquiry. The recommendation states:
"The Home Office should undertake an in-depth study of the relationship between itself and the Prison Service".
What has been going on simply cannot continue. No director general could operate effectively and efficiently in these circumstances.
The noble Lord, Lord Rodgers, made mention of a variety of different initiatives, all of them triggered no doubt by material from the Home Office and then passed down to the workforce to try to implement. The noble Lord set out the catalogue, and I am afraid I am tempted to repeat it: one statement of purpose; one vision; five values; six goals; seven strategic priorities; and eight key performance indicators. Only the partridge and the pear tree seem to be missing.
No business could operate as the Home Office has tried to make the Prison Service operate in recent years. If all that intervention had eased the crisis, then it could perhaps be justified. But I come to the point made by the noble Lord, Lord Donaldson of Kingsbridge, that the prison population has hit a record level of 52,731. The last figures I have available show that, at the end of September, 13 prisons were overcrowded by more than 30 per cent., and one of them, Exeter, by 61 per cent. Prison suicides are at a disturbing level. I add that because of a close experience of a suicide in Exeter within the past four weeks—not, I think, coincidentally with the 61 per cent. figure. Eight-and-a-half thousand prisoners are still two to a cell designed for one. That is the legacy of a period when the penal system has found itself caught up in a series of about-turns, when each new embarrassment in the Government's prison policy has been met with a new and more extreme change of direction.
From the White Paper, which effectively accepted the Woolf Inquiry recommendations only a relatively short time ago, prison governors are now expected to produce a wholly different and unquestionably more austere regime. They are expected to do that with less and less money. Together with the overcrowding, prisons are finding it increasingly difficult to develop or even sustain existing constructive regimes, which provide the only effective hope of preventing further criminality. That is our second requirement as members of the public.
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We have reached a stage when meddling and tinkering with the problems of our penal system will no longer be adequate. The problems are in many ways too many and too fundamental. What is desperately needed is some leadership with real vision and a long-term, as opposed to short-term, strategy. I hope—and I suspect it is more a matter of hope than expectation—that the noble Baroness will be able to give us some encouragement.
As a first step, it is clearly necessary to look at and clearly define the separate roles of the Home Office and the Prison Service. After that it is necessary to examine some very fundamental areas, most of which were touched on in one way or another by this report and its immediate predecessors.
First, who are we actually sending to prison? Among those 52,731 are too many people who should not be there in the first place. I give just two examples: mentally disordered prisoners, of which there are a significant number according to the Prison Governors' Association, and those who have failed to pay fines. A less cost-effective and more socially destructive punishment would be hard to devise for them. Radical steps are needed to ensure that only those who should be in prison actually go there.
In relation to security, the picture that emerges from Learmont is, frankly, a scandal. Like the noble Baroness, Lady Young, I was astonished by some of the revelations. For all the Home Secretary's posturing at successive party conferences, we have reached a stage where prisoners in some prisons are apparently able to dictate to prison staff that security cameras should not be used. They are able to make telephone calls, apparently virtually unlimited and unmonitored, some even to victims. The real problem is surely that there is no considered strategy for how the system shall deal with long-term prisoners, the sort of strategy that the noble Lord, Lord Campbell of Alloway, requires. Are they just to be put all together; are they to be dispersed? How are their sentences to be managed? This surely is an area of the Home Secretary's responsibility. I hope the noble Baroness will be able to tell the House what has he actually done about it, as opposed to said about it?
Learmont recommends a major overhaul of the Prison Service. Within the service, as I know personally and others paid tribute to, there are dedicated men and women who, despite the events of the past few years, are managing to make major improvements. They have done a great deal so far in regard to restricting the number of those escaping. I believe I am right in saying that there has been a reduction of 49 per cent. since 1992. I pay tribute to that. But Learmont suggests major radical changes in structure and management. I entirely agree with the report's proposal, as I agree with the noble Lord, Lord Stewartby, that what is needed is a disciplined Prison Service.
Perhaps I, too, may turn for a moment to an Asian example, as did the noble Lord, Lord Donaldson. Three years ago in Hong Kong I visited most of the major prisons. Every officer of whatever rank wore uniform. The prisons were clean, free of peeling paint and

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graffiti. Officers were disciplined and so were the prisoners. Privileges were earned. All prisoners had proper jobs and there was an impressive educational facility. Those prisons showed that it is possible to have real pride in a prison and to take real pride in the job of being a prison officer. That can be found here; but sadly, it is not universal. When morale is low and public criticism is rife it is difficult to be proud of the job you do. Every prison officer needs to know what is expected of him. He must know the clear objectives of his service, and he must have a clear line of command and responsibility, as the noble Lord, Lord Stewartby, said. There can be few more worthwhile or necessary jobs if the staff are allowed to do them properly.
I hope the noble Baroness will outline the Government's strategy to restore those parts of the Prison Service to a standard of which all of us can be proud. What are the Government proposing to do in the long term, not just today or in the next 18 months until the next general election, to seek to provide proper work in every prison for every prisoner and proper long-term plans for educational facilities? Without such a clear policy, we simply return offenders to the community with no work skills or prospects, often with severed family and community ties and an increased likelihood of further criminal offending.
Unless those matters are tackled, unless we stop treating the prison system and those who work in it like corks floating on the tide and at the mercy of political expediency, we do no justice, not merely to those within the system, as the right reverend Prelate the Bishop of Birmingham said, but to victims and potential victims of crime. I ask the noble Baroness, and indeed if I may term them in this way, the hard-liners who have spoken—the noble Baronesses, Lady Young and Lady Seccombe—to consider long and hard whether concern for victims does not also involve being concerned for prisoners and their future after release.
Lord Campbell of Alloway: My Lords, before the noble Baroness sits down, as she was good enough to mention my name in the context of paragraph 3.83 and was also good enough not to stigmatise me as a hard-liner (whatever that may be) I ask her this in total amity. If she looks at the report again, surely she realises that there is no criticism of government policy in the documents referred to. I can see none, and I am sure my noble friend Lord Vivian sees none. I just thought that we ought to try to defend ourselves publicly against the charge of not having read the report.
Baroness Mallalieu: My Lords, I would certainly not stigmatise the noble Lord as a hard-liner. His line is always an unpredictable one, as I think those on his side of the House would be the first to agree. The noble Lord clearly refers to some parts of the same volume as I have seen. However, if having heard the noble Lord, Lord Rodgers, read that passage to the House, he takes the view that it involves no implicit criticism of the Home Office or the Home Secretary, I can only say that criticism is in the eye of the beholder and the House itself must judge. I read that passage as a damning criticism of the Home Office for, in effect, showering
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the Prison Service with material at a time when it was trying to deal practically with the problems, and hampering it rather than assisting in those difficulties.
Baroness Young: My Lords, as the noble Baroness, Lady Mallalieu, referred to me, perhaps she will forgive me for intervening. I have a great regard for her ability to debate and am surprised that she should sink to name-calling, which I take that description of me to be. I take this as a serious subject but am immensely consoled to think that it will not be long before the Labour Party shares all the views I expressed; after all, it has picked up all the other Conservative ideas!
8.30 p.m.
Baroness Blatch: My Lords, we have had what has turned out to be an interesting and thought-provoking debate about what is, without question, an extremely important and wide-ranging report with significant implications for the administration of Her Majesty's Prison Service.
Noble Lords will need no reminding that my right honourable friend the Home Secretary commissioned this report from General Sir John Learmont after two of the most serious operational failures in the history of the Prison Service. The report was devastating in its criticism of the service and identified grave weaknesses which required attention.
Having received Sir John's report, the Home Secretary wasted no time in making a start to put matters right. He announced, with some sadness, the termination of the then director general's contract so that public confidence in the security of our prisons could be increased. He announced that Parkhurst would be removed from the dispersal system. And he announced that he had accepted the broad thrust of Sir John's analysis of what needed to be put right in the Prison Service.
The Home Secretary is determined to address all the issues raised by the report, ranging from the structure of the service, its management and security matters, to prisoners' cash and the use of phonecards. Perhaps I may say in passing to the noble Baroness, Lady Mallalieu, that the use and abuse of phonecards in prisons is a matter for the prison officers and the regime within the prison, not my right honourable friend the Home Secretary. He too was shocked and concerned by that laxity in the prison. This debate is about my right honourable friend doing what he can to see that those abuses are curtailed. He will report the results of his deliberations to Parliament during the course of next year.
Included in those deliberations will be the review of the relationship between the Prison Service and the Home Office—a matter which has exercised a number of noble Lords today. Work on that is under way. Assistance was provided during the initial stage, which is now complete, by Miss Kate Jenkins, who, as I have previously explained to the House, was one of the three authors of the report to the then Prime Minister which led to the establishment of executive agencies. She is now an independent consultant and has been able to

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contribute objectively, independently and constructively to the initial work. The precise methodology for the main stage of the work has yet to be determined; but I can assure noble Lords that it will be taken forward in close consultation with the Prison Service. The Home Secretary will report to the House when that work is complete.
One of the matters which is central to concerns is the question of the Home Secretary's accountability for the Prison Service, and several noble Lords have expressed their doubts about the ability of my right honourable friend clearly to distinguish between policy matters and operations. I should like to respond to that matter in some detail.
The distinction between policy and operations is nothing new. The Home Secretary has made his responsibilities in this area, and those of his predecessors, perfectly clear. As I explained during the debate about the Prison Service on 25th January this year, the Home Secretary is personally accountable to Parliament for all matters concerning the Prison Service. He is accountable and responsible for all policy decisions relating to the service.
The distinction between operations and policy is reflected in the framework document which established the Prison Service as an executive agency. It makes clear that the director general is responsible for the day-to-day management of the service. He is accountable to the Home Secretary for performance and operations, and he is the Home Secretary's principal policy adviser.
Although the Home Secretary does not normally become involved in day-to-day management matters, he does expect to be consulted on the handling of operational matters which could give rise to grave public or parliamentary concern. Furthermore, the Home Secretary expects to receive reports from the director general on any incident or matter which is likely to arouse concern. That must surely be right because, in order to be properly accountable, the Home Secretary must be properly informed.
As for the question of who should resign when things go wrong, it is long accepted that Ministers cannot be held personally responsible for all the actions and decisions taken in their departments. There is a relevant precedent to illustrate this. Noble Lords may recall the escape of terrorist prisoners from the Maze prison in 1983. My noble friend Lord Prior, who was then Secretary of State for Northern Ireland, said that he would have resigned had the inquiry into the escapes shown that they had resulted from an act of policy which was his responsibility, or from a failure on his part to implement something which he should have done. There were no calls for the noble Lord's resignation then. When the Home Secretary received the Learmont report, he examined it very carefully. As he made clear, had the criticisms in the report been made of him, he would have resigned. They were not.
Reference was made to the new Chief Inspector of Prisons. General Sir David Ramsbotham, who succeeded Judge Tumim on 1st December, was selected
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following open competition. He was judged to be the best man for the job from a very strong field of candidates and I am sure that this House will join with me in wishing him well.
The duties of Her Majesty's Chief Inspector of Prisons are set out in Section 57 of the Criminal Justice Act 1982 and, in general terms, they are to inspect and report to the Secretary of State on prison service establishments in England and Wales and, in particular, on the treatment of prisoners, conditions in prisons and such other matters as the Secretary of State may direct.
Sir John Learmont's recommendation that the Chief Inspector should take on security issues will be considered and the Home Secretary will report the results to Parliament in due course.
The Earl of Longford: My Lords, is the noble Baroness able to tell us whether they have been able to secure a new director general for the Prison Service?
Baroness Blatch: My Lords, there is no lack of interest in the post. The appointment has not yet been made. I am absolutely confident that someone will be appointed, so there is no truth in the fact that an appointment cannot be made.
Reference was made to Kate Jenkins' involvement in the work in the Home Office. No decision has been made on whether the report on the review of the relationship between the Prison Service and the Home Office is to be published, because the work in which she was involved has been part of the whole study. The whole study will be reported to Parliament. Kate Jenkins was involved in the initial phases of that and her piece of work is complete. The performance indicators were also referred to and Sir John Learmont's recommendations on those issues will be reviewed.
Reference was also made to the "supermax" prison. As I told this House on 16th October, the Home Secretary has already asked the Prison Service to consider the feasibility, the costs and the benefits of building an establishment of the kind Sir John Learmont recommends. We expect to have that report next spring. The Home Secretary said that he would welcome comments on the proposals for one maximum security prison and a single control prison for the most unruly and disruptive prisoners. I am sure that my right honourable friend will be interested in your Lordships' views. As to consultation, the Prison Service is examining how this can best be undertaken. I welcome the comments made by my noble friends Lord Campbell of Alloway and Lord Vivian.
Ministerial demands on the director general's time were also referred to. Sir John Learmont says that there needs to be minimum political involvement in the day-to-day operation of the Prison Service. But he recognises too that the Prison Service is a politically sensitive area. Many day-to-day issues are serious enough to command the attention of Ministers, who are entitled to be fully briefed by the director general on matters thought likely to cause concern to the public and/or Parliament. As Sir John says, it is for the director general to find a way to balance the need to keep Ministers informed with the requirement to provide leadership and management.

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Sources of advice to Ministers were also referred to. The director general is the Home Secretary's principal adviser on matters relating to the Prison Service. The Permanent Under-Secretary of State for the Home Office is the principal adviser to the Home Secretary on matters affecting the Home Office as a whole. Advice is also provided by the Prison Service monitoring unit. That was established because my right honourable friend the Home Secretary was keen to develop the independent advice on the Prison Service available to him at the centre of the department.
The unit monitors the Prison Service and supports Ministers and the permanent secretary in carrying out their responsibilities in respect of the Prison Service under the framework document. The unit reports to the permanent secretary. I was asked who serves on it. At present the unit has four staff: one Grade 5 head, one Grade 7, one HEO and one personal secretary. The size of the unit could be expanded should that prove to be necessary.
A number of noble Lords, including the noble Lord, Lord Rodgers of Quarry Bank, mentioned home leave. The Home Secretary's new arrangements for release on temporary licence, implemented on 25th April, recognise the need to maintain public safety and public confidence in the administration of justice. The results have been very encouraging. The number of temporary release failures has fallen by 80 per cent. since April. My right honourable friend does not feel that the protection of the public would be well served by accepting Sir John Learmont's proposals for more widely available home leave and we have no plans whatever to relax the restrictions. I welcome the comments of my noble friend Lady Seccombe and I was equally shocked by her observation. I, too, was shocked when I first came across it. The Home Secretary and I believe that more widely available in-cell television would be inconsistent with our policy that conditions in our prisons should be decent but, as my noble friend Lady Seccombe said, austere.
The size of the prison population was a vexed issue during the debate. The Prison Service is working hard to prevent overcrowding. A great deal has been achieved. Its first priority is to ensure that existing accommodation is fully utilised. In addition, the Home Secretary has in hand a substantial programme of prison building. Two new prisons are to come into use by 1997–98, providing 1,400 new places. A further 1,600 places are due to be provided to the same timetable through building at existing prisons and the reopening of Lowdham Grange. The measures should keep prison places in step with population forecasts. In spite of recent increases in the population, conditions in our prisons have radically improved. No prisoners have been held three to a cell designed for one since March 1994 and none has been held in a police cell since June 1995. Ninety-six per cent. of prisoners now have access to sanitation and it will very soon be 100 per cent.
The noble Lord, Lord Rodgers of Quarry Bank, asked about the PES settlement and what that would mean for the Prison Service. The settlement allows the service to complete its present new house block programme and
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provide for four privately financed new prisons. In addition, it will provide for the Woodcock security improvement to the dispersal system and for continuation of the drugs strategy.
My noble friend Lord Campbell of Alloway referred to tougher regimes for young offenders. A tougher new regime is to be introduced next year for selected young offenders at Thorn Cross young offenders institute in Cheshire. Inmates will have a 16-hour day full of demanding activity and will be subject to strict discipline. They will be expected to conform to high standards of dress and behaviour at all times and will have to earn privileges. The effort demanded of them will include taking responsibility for their criminal actions and the effects these have had, especially on their victims. The regime will help them to learn the skills required for employment on release, including basic education where that is lacking. The regime at Thorn Cross will be based partly on what we have learnt from the American bootcamp experience and also on successful features of regimes here. It will not simply be a copy of one particular American bootcamp but will include features from several which impressed Prison Service officials who visited them.
My noble friend Lord Campbell of Alloway referred to other forms of improving "supermax" as well as to persistent young offenders. The secure training centres are also part of our planning. There are to be five of these centres covering England and Wales. Invitations to tender for the first two sites with planning consent were issued in March 1995.
The Criminal Justice and Public Order Act 1994 provides the secure training order for the hard core of 12 to 14-year old criminals who commit disproportionately numerous crimes which are not in themselves serious enough to attract the powers to detain which already exist for serious crimes such as murder or manslaughter. Courts will be empowered to impose a secure training order of up to two years when the offender has been convicted of three or more imprisonable offences, when the offender has previously proved unable or unwilling to comply with the requirements of supervision in the community, and when the nature or seriousness of the offending requires custody in line with the criteria contained in Section 1 of the Criminal Justice Act 1991. Offenders will be sent to new secure training centres which will provide positive regimes offering high standards of education and training. High standards of care and discipline in secure conditions will also be a feature of the regime.
The noble Earl, Lord Longford, referred to the post of director general. My right honourable friend will make an announcement on the substantive appointment of director general when he is ready to do so. I can assure the noble Earl that there is no truth in the suggestion floated in the press that the post of director general is to be abolished or that there is no interest in the post and that it cannot be filled.
The noble Lord, Lord Donaldson of Kingsbridge, devoted a large part of his speech to conditions in Thailand. To say that conditions in prisons in Thailand many years ago are in any way comparable to those

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pertaining in British prisons bears no resemblance to reality. I found the attempt to draw the parallel offensive. The noble Lord, Lord Donaldson, later said that it was a joke. If it was a joke, it was in extremely bad taste. I was therefore heartened by the words of my noble friend Lord Stewartby and welcomed his comments and those of my noble friends Lord Campbell of Alloway, Lady Young, Lady Seccombe and Lord Vivian, which introduced necessary balance into the debate and gave voice to the concerns of the victims of crime and the protection of the public. That balance has certainly been missing in those who have spoken on other Benches.
My noble friend Lord Stewartby referred to mandatory drug testing. The first phase of mandatory drug testing for prisoners was completed satisfactorily in eight prisons at the end of June 1995 with no significant problems being encountered. A training and implementation programme to introduce testing in all prison establishments is now well advanced. Some 80 establishments will have begun testing by the end of December 1995 and the programme is on schedule for implementation in all establishments by the end of March 1996. In addition, to answer a point made by my noble friend Lady Young, staff are alert to the need to ensure that visitors do not bring drugs into prison or pass them during visits. As resources allow, cameras are to be installed in the visiting areas of all closed prisons to assist with that.
My noble friend was concerned about inspections for security and made a very important point. In April 1994 the Prison Service announced the formation of a standards audit unit to conduct thorough and independent investigations of prisons' performance. It has so far audited 70 prisons, completed 77 full inspections and made recommendations to ensure that the highest security standards are met. Each of the dispersal prisons has been audited and all except Full Sutton more than once.
On sentencing proposals, there has been some confusion about White Papers. The particular White Paper that has been mentioned refers to a sentencing White Paper. Progress on all the work that is taking place on Learmont will be the subject of report to Parliament.
Sir John Learmont and Sir John Woodcock have completed their review of the implementation of the recommendations of Sir John Woodcock's report on the escape from Whitemoor Prison. They have submitted that report to the Home Secretary, who will publish it before this House adjourns for Christmas.
Rehabilitation within prisons was mentioned by the right reverend Prelate the Bishop of Birmingham. As the Home Secretary has consistently made clear, the top priority of the Prison Service must be to keep prisoners in secure custody. Within prisons, prisoners should be fairly treated. Conditions should be decent and should also be austere.
We also firmly believe—and this is enshrined in the Prison Service's current statement of purpose—in the importance of helping prisoners to lead law-abiding and
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useful lives in custody and after release. I welcome Sir John Learmont's support for the many excellent prisoner programmes which exist and which can play an important rehabilitative role.
As an aside, I have to say, as regards the point made by the right reverend Prelate about the Government listening and taking into account public opinion, and accusing them of being guilty of accepting public opinion as some sort of orthodoxy, and holding the Government guilty of moral relativism, if the Government and Parliament stood guilty on that particular count, we would have hanging today as a punishment, for it is a well known fact that all surveys tell us that public opinion is in favour of capital punishment. But it has been sensibly debated in Parliament and Parliament has taken that view into account but decided not to adopt it. As a Christian, I am disenchanted with the present state of my Church, the Church of England, which has adopted moral and spiritual relativism and turned it almost into an art form. It seems that first principles were abandoned a long time ago.
Moving to a very different point raised by the noble Lord, Lord Harris of Greenwich, no decision has yet been made about the replacement of Parkhurst as a dispersal prison. I shall keep him informed on that matter. I was asked what steps the Prison Service is taking to extend the range and quality of the work available. The range of work being undertaken is expanding all the time. New projects at over 60 establishments range from desk-top publishing to mushroom growing and recycling. A number of these projects involve the private sector. Over 30 workshops are accredited to British Standards 5750, 150 and 9002, being the international standards for quality assurance. I can say to the noble Baroness, Lady Mallalieu, that I have personally witnessed some of those programmes and they are very impressive.
Seeking for a better balance between concern for the victim, protection of the public, punishment with rehabilitation programmes for the prisoner, if that is being hardline, then I, along with my noble friends Lady Young and Lady Seccombe and those others who were mentioned by the noble Baroness, stand guilty. I stand guilty along with them because that is the balance we are seeking.
I welcome the debate because it has provided an opportunity to focus on some of the difficult problems being experienced by the Prison Service and on Sir John Learmont's prescription for putting these matters right. As I have reminded the House, the Government have accepted the broad thrust of Sir John's recommendations, and the task of implementing them is now well under way.
In the spring the Home Secretary will be tabling a report detailing actions which have been taken, or which are planned, to implement most of the recommendations. Later in the year he will announce his decisions on those major recommendations which require detailed study and consultation; for example, the high security and control prisons. The Government are determined to see that this country has a prison service which is properly and effectively run. We shall ensure that those who are deprived of their liberty by the courts

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are held in decent but austere conditions, with the appropriate level of security to safeguard public safety. Sir John Learmont's recommendations will help us to ensure that those objectives are met.
Lord Harris of Greenwich: My Lords, before the noble Baroness sits down, will she be good enough to explain the circumstances in which Miss Widdecombe changed a Written Answer given in the name of a Home Office official to the House of Commons?
Baroness Blatch: My Lords, what I do know is that all replies come to Ministers within the Home Office and they will come to the lead Minister who has responsibility for such matters. Where an answer has been answered from the Prison Service-only point of view, and not necessarily taking into account other information, there is discussion between the Prison Service and the lead Minister. That is the proper way to conduct and interact between the responsibilities of the Home Office and those of the Prison Service. In fact, the final answer that was given in the letter accompanying the reply of my honourable friend Ann Widdecombe referred back to the relevant appendix of the Learmont Report that listed in detail all the requests made in relation to security at Parkhurst. It was felt that that was a full and proper account of that particular advice and information.
8.53 p.m.
Lord Rodgers of Quarry Bank: My Lords, I am very grateful to the Minister for her remarks this evening in attempting to conclude our debate. I know that, following her usual practice, she will write to all noble Lords if there are any points that she failed to deal with in her remarks. I thank all noble Lords for participating in the debate and also the right reverend Prelates the Bishop of Lincoln and the Bishop of Birmingham.
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For me it was a unique experience because I was ticked off by the noble Earl, Lord Longford, in this case for being too tolerant towards Learmont. I believe it was the right reverend Prelate the Bishop of Birmingham who came to my rescue, although he did not know it, by saying that Sir John Learmont's duty was to review physical security and security problems. That is what he was asked to do and whether we like his report or not, I believe that Sir John kept within his terms of reference.
What I hope that the Minister will take away from our discussions today is that, although we all wholly accept that our prisons must be secure, we also believe—even those noble Lords who spoke from behind the noble Baroness in support of her broad position—that they must be humane. I believe that the right reverend Prelate the Bishop of Birmingham said that the duty of justice requires us to make sure that humanity is also part of the policy of Her Majesty's Government and of the Prison Service. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Western European Time Bill [H.L.]
8.54 p.m.
Viscount Montgomery of Alamein: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Viscount Montgomery of Alamein.)
On Question, Motion agreed to.
House adjourned at five minutes before nine o'clock.