Lords Sitting of 23 January 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 Southwark.

Childline
Lord Ashley of Stokeasked Her Majesty's Government:
How much money they provide to assist Childline, and what proportion it is of Childline's budget.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege): My Lords, government sources provided £256,812 to Childline in 1993–94. This was over one-thirteenth of its total expenditure.
Lord Ashley of Stoke: My Lords, is the Minister aware that Childline has revealed enormous distress and suffering among children, many of whom suffer physical and sexual abuse and are desperate for help? Is she further aware that of no less than 10,000 children who telephone Childline every day, 3,000 get through and 7,000 merely get the engaged signal as there is no money to expand the service? I am disturbed and incredulous that thousands of children can telephone for help and be refused that help simply because the Government provide less than one-fourteenth of the £4 million that is required. Will the noble Baroness do what she can to help? Will she recognise that this social problem is far too serious to be left to voluntary funding and that the Government should help more?
Baroness Cumberlege: My Lords, we share the admiration of the noble Lord for this organisation. It does sterling work. That is why we have supported it since it first started in 1986. It is not possible to accede to every request from every organisation. Since Childline started, however, the Government have supported it to the tune of £750,000.
Baroness Dean of Thornton-le-Fylde: My Lords, is the Minister aware that last year just under 82,000 children were helped by Childline, and yet for every 10,000 children who ring in each day only 3,000 receive help? The nightmare of these young children is absolutely desperate if, when they call, they cannot get an answer. That can only be put right by extra funds. Will the Minister agree to review the funding that the Government provide for Childline to assist it to help these desperate children?
Baroness Cumberlege: My Lords, there are a number of children who write to Childlinė in addition to those who telephone in. Those letters are always answered. We know that the organisation has the most amazing ability to raise funds from other sources, and we congratulate it on that. Since last year it has managed to increase its income by 25 per cent. and has attracted
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donations of over £3 million. It is not possible for the Government to supply resources to every charity that launches an appeal.
Lord Bruce of Donington: My Lords, would it not be far better for the Government to lop off from the quite useless sums that are provided for the European Community—
Noble Lords: Oh!
Lord Bruce of Donington: It is quite clear to me that it would be better to devote at any rate some of the money to the purposes outlined by my noble friend. Surely, in a civilised country, they should have prior attention over subsidies to Spanish agriculture.
Baroness Cumberlege: My Lords, I am grateful to the noble Lord for his question. It has certainly started the week on a good note. I agree with the noble Lord that in this area we can lead the rest of Europe. Indeed, I am sure that other countries in Europe look to Childline to see what best practice to adopt.
Lord Cledwyn of Penrhos: My Lords, how can Britain lead the rest of Europe? Is it not the case that the figures given to the House today are a grim condemnation of a society in which such a large number of children are dealt with so cruelly? Should not the Government do rather more than simply provide a sum of money? Is it not time to institute a probing inquiry into the causes of cruelty to, and abuse of, children in Britain in 1995?
Baroness Cumberlege: My Lords, we give much more than the figures I mentioned to organisations and charities which support children. Indeed, only last Thursday we issued a practical guide to social workers on improving the services they give towards preventing abuse against children.
Baroness Jay of Paddington: My Lords, is the Minister aware that last year Childline set up a special service on school bullying, a specific area of child abuse which has been very topical in the past few months? That service answered 58,000 calls in the six months during which the line was open. Childline asked the Government for £20,000 in order to extend the service and that request was turned down.
Baroness Cumberlege: My Lords, we give to a whole range of organisations. The Pre-School Playgroups Association receives £500,000 a year; the National Children's Bureau, £443,000 a year. We give also to the National Council for Voluntary Child Care Organisations, Home Start, Kids Clubs Network, Kidscape, and all sorts of other organisations. It is not true that we do not support voluntary organisations in this area; we do. However, as noble Lords will know, the demand is insatiable. We have to set some priorities. We know that Childline has an amazing ability to raise funds from private sources—unlike perhaps the Alzheimer's Disease Society and others, which are less popular. We have to support them all in some way.
Lord Ashley of Stoke: My Lords, will the noble Baroness give an assurance that she will not be diverted

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by people riding hobby-horses about Europe? We are talking about rape, sodomy, bullying and vicious sexual assaults; we are talking about children in grave need, sadness and despair. They are children who need help. People who do not understand that should not come to this House and ride hobby-horses. They should listen. The Question is about those in very grave need. Will the Minister, who is always helpful, do something about it? Will she accept that the Government are not doing enough? There must be more government support. Does she agree that we cannot let these children be turned down, as they are at present?
Baroness Cumberlege: My Lords, I very much respect the noble Lord's sincerity. I share his view that child abuse in any form cannot be condoned. We have improved enormously our childcare services. It is interesting to see how many fewer children are now in care compared with 10 years ago. With regard to hobby-horses, I feel that if your Lordships were not allowed to ride them, this place would be the poorer.
Baroness Gardner of Parkes: My Lords, I am sure that we all appreciate the sincerity of the Question. But is not Childline a voluntary organisation? Do we know whether it has approached bodies such as British Telecom to ask for assistance with its telephone lines? Do we know whether it is using the number of volunteers it could use to man the telephone lines? Does the noble Baroness agree that it is not just a matter of having telephone lines; it is also necessary to man them?
Baroness Cumberlege: My Lords, yes, the organisation uses volunteers effectively. I understand that it has 500 people who help to man the lines. As my noble friend said, it has an amazing ability to raise funds. Last year it attracted income of well over £3 million from donations and covenants. It has just launched a new appeal. I can understand that it wishes to obtain support from the Houses of Parliament, both from your Lordships' Chamber and the other place. We have no reason to believe that it will not meet the targets that it has set itself.

Legal Aid
2.45 p.m.
Lord Boyd-Carpenterasked Her Majesty's Government:
What plans they have to limit the extent under the legal aid scheme by which, as reportedly stated by the Lord Chancellor in The Times of 4th January 1995, "the money goes rolling out to the lawyers involved in the case".
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, I am presently considering whether the present scheme should be replaced by one operated within a cash limit and based on a system of block contracts with a variety of different suppliers of legal services. I intend to develop this idea further in a Green Paper which I hope to publish in the spring.
Lord Boyd-Carpenter: My Lords, I thank my noble and learned friend for that encouraging Answer. Will he
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accept my assurance that his words, as quoted in the Starred Question, gave great encouragement to those of us who are very disturbed at the appalling outpouring of public money into legal aid?
The Lord Chancellor: My Lords, I am grateful to my noble friend. In seeking to develop the idea to which I referred, I shall be grateful for any help that any of your Lordships care to tender to me.
Lord Molloy: My Lords, we very much welcome the statement made earlier by the noble and learned Lord to his noble friend Lord Boyd-Carpenter. I congratulate him on what is being done. But is he aware that some people have grave concern that those who appear to be very well off can obtain more legal aid much more easily than those who richly deserve it?
The Lord Chancellor: My Lords, it is certainly a problem that those who appear—I emphasise "appear"—to be well off qualify under the rules for legal aid. I have sought to address that particular problem in a paper that I published earlier, taking up various suggestions for altering the rules, so that when they are applied to such people the result may differ from that under the present system. In addition to the propositions put to me, I have incorporated some other suggestions which have occurred to us in the paper. The consultation period is proceeding. Again, any proffered help will be very gratefully received.
Lord Irvine of Lairg: My Lords, does the noble and learned Lord agree that legal aid should be available to meet social need in meritorious cases? Does he further agree that, as a matter of principle, legal aid should not be subject to a blind financial cap regardless of merits?
The Lord Chancellor: My Lords, I consider that the legal aid scheme would be better if it were possible for it to respond more readily to priorities than does the present scheme. The quotation in the Starred Question was in reply to a question to me about the present scheme and my difficulty in assigning priorities once an entitlement had been established. In the proposals that I am considering, I have no intention of imposing a blind cap. The idea would be to allot a sum of money with priorities as to how that sum of money should be spent. I hope that it may be possible to include in the scheme a degree of local priority as well as national priority.
Lord Barnett: My Lords, as one who does not object in principle to cash limits—indeed, I was responsible for introducing them widely some time ago—can the noble and learned Lord explain how the system would work in the case of legal aid if, for example, earlier in the year the total amount of money allocated under cash limits was utilised? Would it mean that towards the end of the year many well-deserved cases would be refused the money?
The Lord Chancellor: My Lords, I feel sure that the noble Lord met this argument when, in his earlier days, he proposed an extension of the cash limited system to other areas that previously it did not cover. I have no doubt that he disposed of it very well by pointing out that, where somebody has a given sum of money to

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apply over a period such as a year, wise planning requires that it is not all spent at the beginning of the year but is spread in such a way that it will be used evenly. The success of the cash limited schemes introduced by the noble Lord show that his arguments in that connection were correct.
Lord Hailsham of Saint Marylebone: My Lords, when my noble and learned friend is considering priorities, will he confirm my belief that certain types of litigation—for example, defamation cases—are still excluded from legal aid? As a matter of national priorities, is it not possible to devise a system whereby certain types of litigation have a lower priority than others?
The Lord Chancellor: My Lords, that is a possibility under a scheme that I have in mind. It would be a welcome addition with a more flexible type of allocation of priority than exists at the moment. As my noble and learned friend says, defamation is and always has been excluded. It is a rigorous type of priority in relation to defamation, but it is more difficult under the present scheme to have any kind of gradation of priorities between not allowing a case at all and allowing it in fully. There is also scope for regional and local differentiation in priorities.
Lord Annan: My Lords, can the noble and learned Lord consider another matter? I refer not only to the question of who is entitled to legal aid, but also to the actual cost of justice. Will the noble and learned Lord consider whether refreshers are a natural and entirely admirable way of payment for the fees of barristers? If so, will he consider whether there might be refreshers for some of us who attend the House of Lords?
The Lord Chancellor: My Lords, I believe that your Lordships' arrangements depend, among other things, upon a subsistence rate which varies according to the time for which your Lordships are present. That is the underlying principle of the refresher. But the system of fees is also a matter that I want to consider in relation to this proposal. The Bar Council has proposed for some time—I am endeavouring to implement the principles of it—a graduated fee system which would make it easier to make arrangements along the lines that I am proposing if we go down this road.
Lord Wigoder: My Lords, just to put the record straight, is not the obsolete term "refresher" simply another way of talking about the daily rate?
The Lord Chancellor: My Lords, I thought that that was the substance of what I was trying to say. It is a matter of opinion what one calls it. In this House we call it a subsistence allowance on a daily basis. But the time a case takes is one factor that is relevant to the amount the person taking the case should be paid. Precisely how that is determined is a matter for judgment in relation to specific classes of case.

Housing Benefit
2.55 p.m.
Lord Milvertonasked Her Majesty's Government:
What estimate they have made of the cost implications for housing benefit following the deregulation of private rents under the Housing Act 1988.
The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, the deregulation of the private rented sector is only one of several factors which have a cost implication for housing benefit. It is not therefore possible to make a reliable estimate of the cost implications of deregulation alone. The amount of housing benefit rent allowance expenditure increased from £1.1 billion in 1988–89 to an estimated £3.8 billion in 1993–94.
Lord Milverton: My Lords, I thank the Minister for his reply. However, can he say whether, possibly through unforeseen consequences of the policy, the current bill has risen to a figure in excess of £9 billion? If so, has the House been informed of that?
Lord Mackay of Ardbrecknish: My Lords, the £9 billion to which my noble friend refers is the total cost of housing benefit. That is made up of three parts. The first is payments to local authorities via rent rebates; the second is payments to housing associations; and the third relates to payments to the private rented sector. My noble friend gives a figure of £9 billion (which is perhaps from the year before 1993–94) but that is for housing benefit across the whole field and not merely for the private rented sector.
Lord Stallard: My Lords, can the Minister tell us a little more about the relationship between housing benefit and average rents? For instance, in 1979 the average rent was £4.75, the equivalent of which today would be £13. In fact, average rents are way above the £100 limit in some cases. That is relevant when we talk of housing benefit. Can the Minister tell us something about the equation between housing benefit and average rents?
Lord Mackay of Ardbrecknish: My Lords, as I mentioned in my original Answer, a number of factors play a part in the increase from just over £1 billion to just over £4 billion. For example, part of that is accounted for by housing association tenants, in which there has been an increase; part of it is accounted for because of an increase in unemployment and people now needing to claim benefit who did not need to claim it before; part of it comes from inflation over the years; and part from an increase in market rents. However, part of the increase came from the introduction of deregulation, the object of which was to halt the decline in the private rented sector. That happened and we have both better accommodation on the market in the private rented sector and 200,000 more units available in the past four or five years.
Baroness Turner of Camden: My Lords, is the Minister aware that the National Federation of Housing Associations said, without equivocation, that the

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problem is the high rents since 1988? The federation is pressing for adequate subsidies in order to keep rents at an affordable level. What are the poor to do if rents rise and they are faced with the problem of a government who want to restrict benefits such as housing benefit? There must be a policy of ensuring that affordable rents are available for very poor people.
Lord Mackay of Ardbrecknish: My Lords, accommodation must be available for all people, including the very poor, and the housing benefit system is designed for just that. But in addition to being fair to the tenant, one must also be fair to the landlord to encourage him to bring his property to the market. As I explained, that has happened since 1988. One must also be fair to the taxpayer. That is why my right honourable friend the Secretary of State for Social Security announced that there will be a limit to the amount of money which will be paid in housing benefit on above average rents. Both the tenant and the landlord should be able to look at a market where neither thinks that the taxpayer is standing behind whatever rent they agree on.
Baroness Gardner of Parkes: My Lords, is it not a fact that the amount that can be paid in rent is totally unlimited at the moment? One London borough claims that the housing benefit total which it administers for the Government has increased since 1988 from £30 million to £100 million. I take the opposite side from the noble Baroness, Lady Turner, on this issue. I think that there should be a definite ceiling, as some people are getting housing benefit on properties costing £300 a week or more for one person in occupation. If there was a limit well below that level more money would be available to help those people who really need affordable accommodation.
Lord Mackay of Ardbrecknish: My Lords, my noble friend is right that the taxpayer cannot pay for a system in which someone would house himself at the taxpayers' expense in a property markedly more expensive than he would at his own expense. That is why we have taken steps to deal with extremely expensive property. It is also why my right honourable friend announced that housing benefit will be able to meet market rents up to the point of the average rent for that kind of property in that area. Above that average the housing benefit system will pay 50 per cent. of the difference between the average and the market rent. We believe that that will strike the right balance between the landlord, the tenant and the taxpayer.
Baroness Park of Monmouth: My Lords, does the Minister also agree that there is another group which gravely needs to see some limit set on rents? I refer to students, who are excluded from housing benefit.
Lord Mackay of Ardbrecknish: My Lords, as my noble friend rightly points out, the Government decided quite correctly that students are supported through the student grant system and through the student loans which are now available. Students ought not to be dependent on the benefits system which is designed for another and quite different group of people. We think
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that is the case and therefore the question of rents for students does not arise within the housing benefit system.

Youth Services
3.1 p.m.
Baroness Davidasked Her Majesty's Government:
Whether, in the light of recent proposals to reorganise the National Youth Agency and cut its budget for 1995–96, they remain committed to the youth service.
Lord Lucas: Yes, my Lords. The Department for Education's objectives include support for statutory and voluntary youth services. They also include the broader aim of furthering the personal, social and moral development of young people. The National Youth Agency is currently the subject of a periodic policy review. The review team's interim conclusions have now gone out to consultation. Ministers will not be formulating their views until the final report is submitted. I have placed a copy of the interim report and evidence in the Library.
Baroness David: My Lords, I thank the Minister for his reply. However, is he aware that there is still considerable doubt among all those involved in the youth service about the commitment of the Government because of what they have done? Is he further aware that the Youth Service Advisory Committee and the maintained youth service sector are very concerned at the department's recent proposal to dismember the National Youth Agency and restructure it without consultation with the voluntary sector and to cut the agency's budget by £200,000? Why is there a need for change, and why the haste? It is only four years since the National Youth Agency was set up. Can the Government never leave anything alone and give those who are clearly involved and have a great commitment a proper chance to get the thing going?
Lord Lucas: My Lords, every non-departmental public body is subject to review every five years and it is quite proper that that should be so. In the case of the National Youth Agency, as I said in my first reply, the interim report has been published. Ministers have yet to take a position on it. Indeed, they will not take a position until the final report has been published. Many organisations were consulted in the run-up to the interim report. That included a very large number of voluntary organisations. It is open to any organisation, voluntary or otherwise, which has opinions based on the interim report to submit them to the department and to Ministers. They will then be considered.
Baroness David: My Lords, is the Minister aware that the review was published only before Christmas and the responses have to be in by the middle of February? That is not much time.
Lord Lucas: My Lords, there are two elements to my answer to the noble Baroness. First, most organisations—indeed, so far as we know, all major organisations concerned with the youth service—have

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been involved in the consultation in the run-up to the interim report. Secondly, the department believes that there is enough time between now and the spring to produce the final report and to make the decisions thereon. If that turns out not to be the case, decisions will not be made in haste. They will be made in a proper time.
Baroness Lockwood: My Lords, were the local authority associations consulted about the increased responsibilities which it is suggested they should undertake in this reorganisation? If they were not consulted, and if they are not supportive, as I believe to be the case, do the Government have any fall-back proposals to take over part of the funding and the responsibilities which it was proposed the local authority associations should assume?
Lord Lucas: Yes, my Lords, the local authority associations were consulted. We are aware that they have concerns about the proposals in the interim report. They are due to see my honourable friend the Minister responsible for further and higher education shortly. As I have said, Ministers have yet to form a view on these proposals. This is the report of an interim working group and are not the Government's own proposals.
Lord Morris of Castle Morris: My Lords, is the Minister aware of the statement in The Times Educational Supplement of last week, where the leader says:
"the National Youth Agency is threatened with dismemberment by the Department for Education, apparently because it provided a very effective national voice for a youth service under threat, but proved less amenable to toeing the official line.
In particular the NYA, under its outspoken director, Janet Paraskeva, has fought hard to save youth service funding from the increasingly damaging effects of local spending cuts"?
Is there any truth in that, or is this usually very responsible newspaper indulging in baseless, groundless and senseless speculation?
Lord Lucas: My Lords, I would not dream of saying any such thing about The Times Educational Supplement. But on this occasion there is no truth in that thought. We do not envisage under any circumstances the dissolution of the National Youth Agency, which has done a great deal of good work. All that is taking place is an ordinary review of how best the National Youth Agency should be funded and how best it should achieve its objectives.

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

Agricultural Tenancies Bill [H.L.]
3.7 p.m.
Report received.
Clause 1 [Meaning of "farm business tenancy"]:
Lord Cartermoved Amendment No. 1:
Page 1, line 10, after ("conditions") insert ("or the agricultural condition").
The noble Lord said: My Lords, in moving Amendment No. 1 I shall speak also to Amendments Nos. 2 and 3. With this group of amendments we return to the interesting discussion we had in Committee on the definition and the nature of a farm business tenancy proposed under the Bill. In Committee we discovered the extraordinary irony that the Government have succeeded in producing an Agricultural Tenancies Bill in which the new agricultural tenancy does not have to meet the agriculture condition. With this group of amendments we hope to put that anomaly right to some extent and also to deal with the real concern expressed in Committee and outside the House about the need to put the essential terms of the farm business tenancy in writing.
I say immediately that it is clear from the amendments that we are not attempting to change the fact that there are three conditions in Clause 1 of the Bill; the business condition, the agriculture condition and the notice condition. We accept that, but we believe that the amendments and the argument I shall be developing turn round the Government's approach to one which we believe is more sensible.
We suggest that there should be an obligatory notice in writing—the notice conditions in the Bill are optional—which will also set out the terms of the tenancy. We propose no restriction on those terms. This is not a prescriptive amendment, to use the phrase which the Minister constantly deployed in Committee. We do not propose any restrictions beyond those already in the Bill.
Having established that the obligatory notice shall be in writing and set out the terms of the tenancy, then either the business or the agricultural conditions can be fulfilled. At this stage we accept reluctantly, although we may wish to come back to the issue at Third Reading, the extraordinary idea developed in Committee which the Government appeared to be entirely happy with; namely, once a farm business tenancy, always a farm business tenancy. I believe that we all agreed, including Members of the Committee on the other side of the Chamber, that it was odd that once a farm business tenancy had started then, no matter what happened afterwards, one remained in that circumstance. The example we had was the farm which became a golf course with a small field and four chickens in it, although it still remained a farm business tenancy.
The idea of the obligatory notice in writing is not new. Perhaps I may quote from the Housing Act 1988, Chapter II, Section 20(2), as regards an assured shorthold tenancy. It states:
"The notice referred to in subsection (1)(c) above is one which—

(a) is in such form as may be prescribed;

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(b) is served before the assured tenancy is entered into;

(c) is served by the person who is to be the landlord under the assured tenancy on the person who is to be the tenant under that tenancy; and

(d) states that the assured tenancy to which it relates is to be a shorthold tenancy".

There is not a great deal between that proposal and what is already in the Bill which I am not attempting to amend except in one important respect. We suggest that the notice should set out the principal terms of the tenancy.
Perhaps I may deal with the notice having to be in writing. At Committee stage we were all unclear about the oral agreement. For reasons which I understand, the Government believe that if they require all farm business tenancies to be in writing, people will make oral agreements in order to get round the Bill. The noble Earl kindly agreed in Committee to write to me to explain the situation and that he did.
Without in the least wishing to comment on the opacity of the noble Earl's letter, which I am sure he had some help in drafting, I believe, having read it four times, that I am now beginning to understand what it says. Perhaps we may make sure that we all understand it. There was a lack of clarity and understanding throughout the Committee.
In the letter the noble Earl says:
"As I said in the debate, section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 provides that a contract for the sale or other disposition of an interest in land"—
and obviously a tenancy is an "interest in land"—
"must be in writing. Short leases are excluded from this provision. A short lease is a lease for a term not exceeding three years at the best rent that can reasonably be obtained without taking a premium".
The noble Earl was careful in Committee to say that the Bill would not remove agricultural tenancies from the normal law of property. As I understand it, the only oral agreements then can be short leases, provided that that is a correct understanding of the letter. It will be extremely helpful to the House if it is made clear whether oral agreements apply only to leases of less than three years.
Amendment No. 3 states that the notice condition should set out,
"the terms of the proposed tenancy".
In Committee on 12th December, at col. 1133 of the Official Report, the Minister said,
"It is no part of a deliberately simply and streamlined Bill"—
and the Bill is certainly that—
"to write in provisions about deemed covenants for oral agreements. It is for the parties to decide what conditions and arrangements should apply in respect of their agreements, whether written or oral in nature. It is not for the Government to do so. The whole point of the Bill is to allow the parties to an agreement maximum freedom to decide on the terms which suit them best".
As always, having read that and having been persuaded by the eloquence and oratory of the noble Earl, we have accepted that point. We have allowed the two sides to state what the tenancy should be in the notice conditions. Having agreed what they are, they should at least be set out in the notice.
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Clause 13(2) deals with arbitration. We also return to the phrase, "the terms of the tenancy", where the arbitrator has to take into account all the relevant factors. There will certainly be discussion about that in later amendments. Those factors include in every case the terms of the tenancy. The phrase to which I have referred is already in the Bill. We have taken it from there and put it into the notice condition.
In the next group of amendments we shall be dealing with the need for guidance. Under the terms of the tenancy that could be part of the non-statutory guidance. I emphasise that we are proposing a very simple and not over-prescriptive approach. If the landlord and tenant wish to set up a farm business tenancy they exchange notices which are obviously in writing. They say that they intend to do this or that. The notice will include the main terms of the tenancy and, as I say, it is entirely up to the parties to decide what the terms are.
In Clause 1(4) (a) (i) the notice shall identify,
"the land to be comprised in the proposed tenancy".
So there is already one term of the tenancy in the Bill. That having been achieved, the tenancy agreement is signed. As long as it either fulfils the business or the agricultural condition, there is a farm business tenancy. If the oral agreement for a term in excess of three years has to be in writing under the Act which I have quoted, and if the agreement is for less than that period, it is highly unlikely that the landlord and tenant will exchange a written notice and then have an oral agreement. But if they do so—and we have not attempted to change it in the Bill —and if our amendments are accepted, provided the oral agreement fulfils either the business or agricultural conditions there will then be a farm business tenancy. If the oral tenancy is for over three years that will be left to the courts in any event, which is the case at the moment.
We have come a long way to meet the Government. We have accepted the three conditions; namely, the notice condition, the business condition and the agricultural condition. But we have altered their order of importance. We ask the Government to consider that the notice condition should be the obligatory one in writing with the terms of the tenancy as decided by the landlord and tenant. Then, as long as the tenancy in practice fulfils either the business or agricultural condition, there will be a farm business tenancy. I beg to move.
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe): My Lords, I am grateful to the noble Lord, Lord Carter, for explaining the reasoning behind the amendment so clearly. I am also grateful for the fact that he has accepted the broad structure of Clause 1 as drafted.
I have to say that I see two fundamental flaws with Amendments Nos. 1 and 2. First, as their name implies, farm business tenancies are business tenancies, yet Amendment No. 1 would make it unnecessary for them to comply with the business conditions. If the noble Lord had his way, land let solely for non-commercial hobby farming or for grazing a pet pony could be let under a farm business tenancy. This is not the purpose of the legislation.

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The second flaw is much more serious. The amendment would make the notice conditions mandatory. It is true that we expect—and indeed would wish—many parties to comply with the notice conditions, but we cannot force people to do so and the status of their tenancy should not depend on this. Some people, particularly those who need short agricultural tenancies so that they can, for example, grow specialist crops on clean land, may see the notice requirement as a bureaucratic waste of time, not relevant in their circumstances as they have no intention of diversifying out of agriculture. Others will forget to exchange notices or, if they do not take professional advice, will not realise that it is necessary. If this amendment was accepted, what would be the legal status of those tenancies?
If the lettings were for business purposes, in all probability they would be subject to the Landlord and Tenant Act 1954. We concluded some years ago that that legislation was inappropriate for agricultural tenancies. There might also be some which were not subject to the 1954 Act in which case they would most likely be subject only to common law rules. Those people, to their surprise no doubt, would find that they were not subject to the same rules that govern other agricultural lettings. This would give rise to considerable confusion. At the end of a tenancy tenants might find that they were not entitled to compensation for improvements even if these had been made with the landlord's consent. On the other hand, if the 1954 Act applied, landlords might find that the tenant had the right to a new tenancy. This would present a trap for the unwary not unlike that posed by Section 2 of the 1986 Act; and that is precisely the type of provision we are so anxious to avoid. Provisions of this nature undermine confidence and would discourage lettings.
The noble Lord asked about oral agreements and whether they apply to short leases only. The answer is yes, for terms of less than three years or for tenancies from year to year. Oral agreements which purport to be for longer terms than that are void in law.
Amendment No. 3 proposes that the terms of the tenancy should be set out in the notice. I am afraid that therein lies a further flaw. The proposed amendment would, in effect, make the notices which are exchanged before the tenancy is granted a rehearsal of the tenancy agreement itself.
Although I understand what the noble Lord seeks to achieve with this amendment, I fear that he runs the very substantial risk of negating the entire purpose of having the notice at all. It is essential that parties can exchange, where they choose to do so, a simple notice which states in the clearest possible terms that the tenancy on offer is to be a farm business tenancy. Clause 1(4) (a) sets out all that the notices need to say. All questions of terms and conditions ought to be dealt with in the tenancy agreement itself as a matter between parties. We want to avoid creating the position where a tenant was faced with a great list of terms which failed to highlight that a farm business tenancy was on offer.
Worst of all, what if the notice failed to incorporate all of the agreed terms? It is possible that parties might want to make last-minute minor changes after
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exchanging notices but before the tenancy is granted. If none of those affected the business or agriculture conditions, there ought not to be any difficulty over such late changes. However, if the terms set out in the notice condition did not correspond with the actual tenancy agreement, it would be possible for parties to challenge the validity of the notices which had been exchanged—and thus the true status of the tenancy itself. That would be an easy trap to fall into and a serious one. Not surprisingly, therefore, the industry does not favour this proposal.
I hope that with this further explanation the noble Lord will feel able to withdraw his amendment.
Lord Carter: My Lords, I get the impression from the Minister's reply that he is not very keen on this group of amendments. He seems to have made quite a meal of what was intended to be a helpful approach to a matter that we discussed at length in Committee. I certainly did not want to repeat all of that discussion about the nature or definition of a farm business tenancy. We think that this is the right approach to take. I agree that, if accepted, the notice conditions would be mandatory, as are the provisions which I read out in the Housing Act 1988 for assured shorthold tenancies. Is the Minister saying that the approach that was adopted in the Housing Act for assured shorthold tenancies should not apply to agricultural tenancies? If so, I find that extremely surprising.
The Minister referred to those who grow specialist crops. I am involved, for example, in the growing of carrots which over-year. The exchange of notices can be very simple. One already has to go through quite a performance as a result of Gladstone v. Bower. There will have to be something in writing for specialist crops. I am sure that a simple notice could be drawn up.
It is possible that the parties could forget to exchange notices. That is feasible, although one assumes that it will not happen once the provisions have been made clear. The next group of amendments will deal with the guidance which I think that the Government should give to those who are considering a farm business tenancy. As I remember it, in Committee we heard about the "impecunious landlord" and the "nervous landlord"; apparently we now have the forgetful landlord.
The Minister referred to the business conditions not being met in relation to hobby farming. However, Clause 1(2) states that the business conditions are,
"that all or part of the land comprised in the tenancy is farmed".
We debated whether it should be farmed or occupied and the Minister said that it was important that the word "farmed" should remain in the provisions because it related to an agricultural activity. Clause 1(2) continues:
"for the purposes of a trade or business, and
(b) that, since the beginning of the tenancy, all or part of the land so comprised has been so farmed".
The Minister referred to tenants having to operate under different sets of rules. That will be the case now in any event because all the tenancies that derive from the 1986 Act will be working after 1st September 1995 while all the tenancies that will be drawn up once this Bill becomes an Act of Parliament will work under this legislation. Although there is no way of proving it, I

867
suspect that initially a larger number of tenancies will operate under the 1986 Act than under this legislation. At the moment, out of the comparatively small proportion of land which is let at arm's length—the figure that we discussed both on Second Reading and in Committee varied between 25 and 35 per cent.—it is likely that the larger proportion operates under the 1986 Act. I suspect that that will continue to be the case. The effect of that Act will last for a long time yet because, as we have all agreed, we have only just reached the first generation of succession—and not even that in some cases.
I am extremely grateful to the Minister for his confirmation that oral agreements apply only to short leases of less than three years and that oral agreements relating to leases of longer than three years are void. If that is the case, I am not entirely clear why the Government are so concerned about sweeping in oral agreements and not requiring the tenancy agreement to be in writing. We discussed that previously. If the oral agreement stands up in law only for short leases of less than three years, I do not understand the Government's fear that, if they do not allow oral agreements to be included in the Bill, everybody will rush out to agree them.
It is entirely sensible that the main terms should be agreed. The contract between the landlord and tenant could easily allow for late changes up to the time that the tenancy agreement is drafted. There is no earthly reason why the contract should not state, "These are the main terms", and that a subsection cannot state, "The terms can be altered up to the moment that the tenancy agreement is signed". Once the agreement is signed, the terms are laid down.
For all those reasons, I do not think that the Minister's reply was satisfactory. I am disappointed because I had hoped that the noble Earl might be prepared either to accept our argument or to take it away for consideration. As he is not prepared to do so, I must ask the opinion of the House.
3.29 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
*Their Lordships divided: Contents, 71; Not-Contents, 127.

Division No. 1

CONTENTS

Acton, L.

Dormand of Easington, L.

Ashley of Stoke, L.

Ewing of Kirkford, L.

Barnett, L.

Ezra, L.

Blackstone, B.

Falkland, V.

Brooks of Tremorfa, L.

Farrington of Ribbleton, B.

Bruce of Donington, L.

Gallacher, L.

Carmichael of Kelvingrove, L.

Geraint, L.

Carter, L.

Gladwin of Clee, L.

Castle of Blackburn, B.

Gould of Potternewton, B.

Cledwyn of Penrhos, L.

Graham of Edmonton, L. [Teller.]s

Clinton-Davis, L.

Cocks of Hartcliffe, L.

Greene of Harrow Weald, L.

David, B.

Gregson, L.

Dean of Thornton-le-Fylde, B.

Grey, E.

Desai, L.

Harris of Greenwich, L.

Donaldson of Kingsbridge, L.

Haskel, L.

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Hilton of Eggardon, B.

Nicol, B.

Hollis of Heigham, B.

Ogmore, L.

Hutchinson of Lullington, L.

Plant of Highfield, L.

Irvine of Lairg, L.

Richard, L.

Jay of Paddington, B.

Rodgers of Quarry Bank, L.

Jenkins of Hillhead, L.

Russell, E.

Jenkins of Putney, L.

Sainsbury, L.

Kilbracken, L.

Seear, B.

Lockwood, B.

Sefton of Garston, L.

Lovell-Davis, L.

Stallard, L.

Mason of Barnsley, L.

Stoddart of Swindon, L.

Mayhew, L.

Strabolgi, L.

McCarthy, L.

Taylor of Blackburn, L.

McIntosh of Haringey, L.

Tordoff, L.

Merlyn-Rees, L.

Turner of Camden, B.

Milner of Leeds, L.

Wallace of Coslany, L.

Molloy, L.

Wedderburn of Charlton, L.

Monkswell, L.

White, B.

Morris of Castle Morris, L. [Teller.]

Wigoder, L.

Williams of Elvel, L.

Williams of Mostyn, L.

NOT-CONTENTS

Addison, V.

Harlech, L.

Ailsa, M.

Harvington, L.

Alexander of Tunis, E.

Hayhoe, L.

Allenby of Megiddo, V.

Hayter, L.

Astor of Hever, L.

Hooper, B.

Balfour of Inchrye, L.

Howe, E.

Balfour, E.

Hylton-Foster, B.

Barnard, L.

Inglewood, L. [Teller.]

Belhaven and Stenton, L.

Ironside, L.

Blaker, L.

Johnston of Rockport, L.

Blatch, B.

Knollys, V.

Bledisloe, V.

Lauderdale, E.

Brabazon of Tara, L.

Lindsay, E.

Braine of Wheatley, L.

Liverpool, E.

Brougham and Vaux, L.

Long, V.

Burnham, L.

Lucas, L.

Butterworth, L.

Lyell, L.

Cadman, L.

Mackay of Ardbrecknish, L.

Caithness, E.

Mackay of Clashfern, L. [Lord Chancellor.]

Campbell of Alloway, L.

Campbell of Croy, L.

Manchester, D.

Carnarvon, E.

Manton, L.

Carnegy of Lour, B.

Merrivale, L.

Carnock, L.

Mersey, V.

Chalker of Wallasey, B.

Miller of Hendon, B.

Charteris of Amisfield, L.

Milverton, L.

Chelmsford, V.

Monk Bretton, L.

Clanwilliam, E.

Morris, L.

Colnbrook, L.

Mowbray and Stourton, L.

Constantine of Stanmore, L.

Moyne, L.

Courtown, E.

Munster, E.

Cranborne, V. [Lord Privy Seal.]

Murton of Lindisfarne, L.

Cranworth, L.

Noel-Buxton, L.

Cumberlege, B.

Northesk, E.

Dacre of Glanton, L.

O'Brien of Lothbury, L.

Davidson, V.

Orkney, E.

De Freyne, L.

Oxfuird, V.

Dean of Harptree, L.

Palmer, L.

Ellenborough, L.

Park of Monmouth, B.

Elles, B.

Pender, L.

Elton, L.

Platt of Writtle, B.

Erroll of Hale, L.

Polwarth, L.

Faithfull, B.

Pym, L.

Finsberg, L.

Rankeillour, L.

Gainford, L.

Rawlings, B.

Gardner of Parkes, B.

Renwick, L.

Geddes, L.

Rodger of Earlsferry, L.

Gisborough, L.

Rodney, L.

Goschen, V.

Saltoun of Abernethy, Ly.

Gray of Contin, L.

Savile, L.

Gridley, L.

Seccombe, B.

Hailsham of Saint Marylebone, L.

Shannon, E.

Halsbury, E.

Simon, V.

Harding of Petherton, L.

Simon of Glaisdale, L.

869

Somerset, D.

Teviot, L.

Southwark, Bp.

Teynham, L.

St. Davids, V.

Trumpington, B.

St. John of Bletso, L.

Ullswater, V.

Stanley of Alderley, L.

Vivian, L.

Strange, B.

Wakeham, L.

Strathclyde, L. [Teller.]

Westbury, L.

Swansea, L.

Wharton, B.

Terrington, L.

Wise, L.

Wynford, L.

[*The Tellers for the Not-Contents reported 127 names. The Clerks recorded 126 names.]
Resolved in the negative, and amendment disagreed to accordingly.
[Amendments Nos. 2 and 3 not moved.]

Child Support
3.38 p.m.
Lord Mackay of Ardbrecknish: My Lords, with the leave of the House I should now like to repeat a Statement made earlier today in another place by my right honourable friend the Secretary of State for Social Security. The Statement is as follows:
"The 1991 Child Support Act established the principle that parents are responsible for their children—both parents —even if they live apart. Taxpayers should pay only to the extent that parents cannot afford to do so. The whole House endorsed that principle, when it passed the Act, without a single dissenting vote. I reaffirm it today.
"But the whole House has also had growing concerns about the practical application of that principle and the operations of the agency. I responded rapidly to early concerns by introducing reforms last February. I promised then to keep the system under review, and I committed the Government to respond positively to the Social Security Select Committee's second report. In the light of that report and the experience of the first year and a half I am persuaded that further significant change is required.
"The proposals in the White Paper incorporate the majority of the Select Committee's recommendations, and in some cases they go further. Altogether, I believe our proposals will enable the system to achieve its original purpose. They will make maintenance assessments fairer, improve thė service offered by the agency, and ensure that maintenance assessed becomes maintenance paid. I believe that that is what Parliament wants.
"The major focus of criticism of the Child Support Act relates to past settlements of property or capital. Some of those criticisms are based on misconceptions. However much property was transferred, there never could be a 'clean break' from your children. Parents or the state always could return to court to seek increased child maintenance. Also the current formula does indirectly reflect property transfers. Nonetheless, it is true that the formula does not explicitly reflect the value of property or capital transfers which were intended to contribute to child maintenance. To establish how much of any past
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property settlement was in lieu of child maintenance is often very difficult. It involves the exercise of judgment and discretion.
"To give the agency and appeal tribunals discretion to amend assessments to reflect past property settlements will require primary legislation. I therefore intend to bring in a Bill in the current Session. But primary legislation means the new arrangements cannot be up and running before 1996–97. And I want to give some recognition now. So I propose, from this April, to introduce into the formula a 'broad brush' allowance for past property transfers. It will assume half the equity belonged to each partner. Where the absent parent transferred more than £5,000 of his share of the equity there will be set allowances in the formula for amounts falling in three broad bands. A parent who finds that the 'broad brush' allowance does not sufficiently reflect his property settlement may seek a departure from the formula under the new discretionary powers.
"I also propose to allow strictly limited discretion to prevent hardship by taking account of some other expenses that are not in the formula. These will include high costs of visiting children, extra costs of supporting a disabled dependant, exceptional costs of caring for stepchildren and certain debts of the former relationship.
"Madam Speaker, I also intend to make a number of amendments to the maintenance formula. First, I want to encourage people to continue working even where they have to travel long distances. Calculating actual travel costs would be burdensome for everyone. So instead, for parents who live more than 15 miles from their place of employment, I will introduce a 'broad brush' allowance. An automatic calculation will avoid the need for detailed inquiries to be made about actual travel costs. If this works out much too high or too low either parent will in due course be able to apply for a discretionary adjustment.
"Secondly, I will let absent parents who have a new partner or stepchildren deduct all their reasonable housing costs.
"Thirdly, I shall put a ceiling on assessments of 30 per cent. of net income, (or the minimum payment of £2.30), so absent parents will be able to keep at least 70 per cent. of their net income after paying maintenance. And even those who are also paying off arrears will be allowed to keep at least two-thirds of normal net income. This reassurance goes beyond anything recommended by the Social Security Select Committee, and I am sure that it will be welcomed by the House.
"Fourthly, the maximum amount payable under the formula can be very high, especially where there are several children. I intend to halve the maximum additional amount payable above basic maintenance.
"In addition, to encourage absent parents to co-operate, where an absent parent provides basic information within four weeks I will defer the start of his maintenance liability for eight weeks.

871
"Madam Speaker, most of the measures that I have announced will make assessments fairer for absent parents. Indeed, no absent parent will now be able reasonably to refuse to pay their child maintenance. As a result, these measures will also help parents with care and their children by securing maintenance more speedily. Even where maintenance already being paid is reduced as a result of these changes, parents with care on income support will not lose money, since income support is adjusted immediately. However, awards of family credit and disability working allowance are set for six months. For those whose maintenance drops because of the changes, the Government will provide some compensation for the rest of the award period.
"Some commentators have argued for maintenance to be disregarded in calculating income support. But that would make it much more difficult for a parent with care to improve her family's standard of living by returning to work. Instead, I propose that parents with care who are on income support or jobseeker's allowance will be able to build up a new maintenance credit of up to £5 a week. This will be paid as a lump sum when they start work. It will give parents with care an increased interest in receiving maintenance and enhance their incentive to work.
"Madam Speaker, the Child Support Agency has performed less well than I would wish, in spite of hard work by its staff. But the agency has already taken steps to improve its performance. In December, the agency announced two measures to help it manage its outstanding cases. These involved deferring the take-on of parents with care on income support who have not asked or provided sufficient information for the agency to pursue maintenance. All parents with care who continue on benefit will, in due course, be taken on by the agency. And there is no question of deferring action against unco-operative absent parents.
"Nonetheless, the policy changes announced today will impose further work on the agency. I do not want the agency to add unnecessarily to its backlog, but to devote its resources to its current workload. Cases where there was a court order or maintenance agreement before April 1993 and the parent with care is not on benefit were due to have access to the agency at the initiative of either parent from 1996. I now propose to defer take-on of these cases. I will ensure they retain the right to use the courts. And I will also give them the right for a fee to use the agency's collection and enforcement service.
"Some absent parents have suffered through no fault of their own from delays in making assessments, resulting in huge bills for arrears. In these cases, we will not enforce more than six months' arrears, provided that the absent parent agrees to pay them and to pay his ongoing liability for maintenance. After a year, it will be clear whether the absent parent is meeting his obligation and, if so, we shall compensate the parent with care for any financial loss. I have decided to stop charging fees and interest
872
for two years from April 1995. After that, fees will be reintroduced and interest replaced by a late payment penalty.
"On Thursday I intend to lay a set of minor technical amendments to regulations, which will further help the administration of the scheme. Many of the changes that I am announcing today will take effect from this April. The formula will change, interest payments will be abolished and fees will be suspended. The agency will be writing to all its clients about these changes. There is no need for parents to contact the agency. Primary legislation is needed to introduce discretion into the maintenance formula and for other changes including deferring take on of non-benefit cases. Subject to the approval of Parliament, these changes will take effect during 1996–97. From April 1997 the new maintenance credit scheme and late payment penalties will start and fees will be re-introduced. None of these changes will apply retrospectively.
"Madam Speaker, legislation involving children, broken families and money will always arouse strong emotions. This is certainly the experience of Australia's Child Support Agency even after six years of operation. But I believe these changes will improve our child support scheme for both parents. They will take account of property or capital settlements, give flexibility to prevent hard cases, allow for high travel-to-work costs, help absent parents with step-families, reduce the maximum level of maintenance and ensure that absent parents normally keep more than 70 per cent. of their net income after paying maintenance. These changes should encourage and enable more absent parents to pay child maintenance regularly. As a result, they will give more parents with care and their children the chance of a better life. I commend them to the House".
My Lords, that concludes the Statement.
Baroness Hollis of Heigham: My Lords, we thank the Minister for repeating the Statement. I thank him personally for making available to me the White Paper and the Statement earlier than is often the case. That was extremely helpful.
Rather like the poll tax, and for many of the same reasons, the Child Support Agency was always going to be trouble because it brought 20 million people into the net of DSS to pay out very large sums of money, overriding court settlements and, in many cases, throwing family and financial lives into catastrophe.
As the Minster rightly said, no one doubts that parents may divorce each other, but not their children. It is right and proper that adequate contributions should be made to their children's maintenance. But, as this House has repeated on many occasions, those contributions from the absent parent have too often not been appropriate and have not taken account of the circumstances: second families, stepchildren, unexpected additional costs, property and clean-break settlements. Only belatedly following the orders of 12 months ago—last February—were the new arrangements phased in.

873
In addition, as the Minister has recognised, the agency's staff has had too vast a job and inadequate time in which to be thoroughly trained. The ombudsman's report of last week is a devastating catalogue of mistake after mistake: mistaken identity, inadequate procedures, failure to answer correspondence, incorrect advice, delay in assessment and delay in payments to parents with children.
Thirdly, not only was the formula unfair to the absent parent, not only has there been a catalogue of administrative mistakes but seldom, if ever, did the arrangements benefit the parent with care. Benefit was lost pound for pound and in the process, parents with care lost the certain income from the DSS. That was replaced by uncertain income coming from irregular maintenance payments. Very often lost with it were the associated passported benefits such as free school meals. Not only were most parents with care not better off; very many were worse off as a result of the Government's changes.
I repeat that Labour has always supported the belief that both parents should contribute to the maintenance of their children. We have called for a more flexible financial formula. Secondly, we have called for an appeals procedure. Thirdly, we have called for a disregard, even a modest sum, for those parents with care so that, at the very least, women should be no worse off than they were on income support. After all, women with care are often the poorest, taking half of the Social Fund loans. They are often in debt, with top-slicing for fuel and water bills. Their children risk being poorly fed, poorly clothed and falling behind at school.
Against that, how adequate is the Government's Statement today? How adequate are the proposals which we shall see reflected both in the amendments which will be before us shortly and in the promised primary legislation? First, many of the proposals, especially those which affect absent parents, are greatly to be welcomed and we do welcome them.
The Government are proposing discretionary appeal procedures where otherwise hardship would result for the absent parent. That is splendid. Back on 9th February 1994, when we pressed the Minister to provide such a procedure, he said that to introduce discretion "is not practical" and would not work. We are delighted that, if belatedly, the Government have come around to our point of view.
Secondly, the Minister referred to property and capital transfers. We are delighted about that. Again, that was rejected by the Minister on 9th February 1994 on the ground that the formula already took account of that. Today we are delighted to see that the Minister has qualified it and has said that all such settlements are not fully taken into account and that in future they will be. We welcome that.
Thirdly, the Minister proposes changes in the formula such as a statutory maximum of 30 per cent., which we welcome, along with costs of travel to work, which we welcome, and, above all, support for stepchildren where there is no other means of support, which we welcome. However, we shall wish to reflect on the point of maximum maintenance payments. We welcome those changes.
874
Fourthly, we believe that the Minister is wise to defer the addition of new cases but that is only if it is deferral and not abandonment. On this side of the House we do not wish to see a Child Support Agency for the poor and court settlements for the rich. Will the Minster give us an indication of the timescale in which he expects those additional cases to be brought back into a common procedure for all?
Therefore, this is a whole series of changes benefiting absent parents, which we are delighted to support. We only wish that the changes had come earlier, as so many of us from all sides of the House have consistently argued.
However, what about parents with care? The Minister was surprisingly silent in his Statement about the implications for parents with care. Obviously, we are especially pleased about the modest adjustments to family credit because many of us in this House have long lobbied for those. But at the heart of the Minister's response there was no mention or proposal for any modest disregard so that parents with care might keep even a modest sum—£8, £10 or £5—from the maintenance paid before there was a pound for pound deduction from benefit.
That really will not do. I recognise that the Social Security Committee did not vote for it. It was a divided committee in which the Conservative Members went one way—they held the majority—and the Labour Party Members went another. Therefore, the Chairman had to abstain. But that will not do. The Government have responded to the sharp-elbowed—the men—and they are right to do so; but they have ignored the plight of those who cannot walk away, who cannot go on strike and who cannot defy the law—that is, the parent, usually the mother, with care.
What sort of signal are we sending out from this House today? Is it that if you defy the law changes are made, but if you obey the law and care for your children you are ignored? Mothers with care are poor. They are often worse off under this system than they are on income support. They and their children need a modest disregard but because the mothers do not go on strike, the Government have ignored their plight.
Secondly, the Government are giving a roll-up credit of £5 per week for when lone mothers return to work. That is downright perverse. It is when mothers are not in work that they especially need the bonus, not when they have returned to work. The Government's line seems to be that when they are earning some money they will give them a little more, but when they are not earning even that, they are given nothing at all.
Thirdly, are we really saying that two very young children, perhaps under the age of five, who have already lost one parent—the father—should now lose the lone parent to work away from home in order to be eligible for the bonus? It may be that that is the mother's choice as she desperately trades time with her children against financial support for them. But again, what sort of signal is this House sending out about family values when we are so obsessed with the Treasury's well-being that we ignore that of the children?

875
Of course, we welcome the bonus but only in addition to a disregard for mothers with care and not in place of it.
Therefore, overall, the White Paper and the Statement mark a substantial retreat by the Government; and they are wise to do so. We are delighted that there is a proper recognition of the problems that the Child Support Agency and the Government's legislation have presented to absent fathers, although it is striking that the Minister did not mention the cost involved at any time in the Statement. But the problems of the parent with care have not been addressed. It is a one-sided response to those who have shouted loudest. We should have hoped for a more even-handed response than that from the Government.
Earl Russell: My Lords, on this subject, if it is not too Irish a statement, glasshouses are not confined to one side of the House. For that reason, I am not going to throw stones. But equally for that reason, I should like to pay tribute to those in this House and outside it who saw from the beginning what this Act would mean: first and foremost, the noble and learned Lord, Lord Simon of Glaisdale, whom I am delighted to see in his place, the noble Lords, Lord Houghton of Sowerby, Lord Mishcon and Lord Stoddart of Swindon, and on my Benches, my noble friends Lord Meston and Lord McGregor of Durris. I have learnt a lot from listening to them. I am glad to see that the Minister has also done so.
Last September, when we discussed this matter at the Liberal Democrat party conference, we set out a series of criteria to test amendments to the Act to see whether they were sufficient. The first concerned substantial changes in the formula. In that regard, we are given a great deal of what we asked for, even if not all, and for that I am very grateful. Secondly, we proposed real grounds of appeal—I shall probe that aspect later—and, thirdly, that the changes should benefit both sexes.
Lady Mary Wortley Montagu was once asked to comment on a certain Lord Harvey and replied that the human race was divided into men, women and Harveys. Nowadays, it is divided into men, women and the Treasury. The greatest of the three is the Treasury. One of the things I most deplore about the handling of the Act is the fact that it has been defended by continual attempts to set division between men and women. We already have enough of that; we do not need any more of it.
For that reason, like the noble Baroness, I deeply regret that there is so little in the legislation for the parents with care. Similarly, I welcome, as did the noble Baroness, the changes in the assessment of family credit. In fact, I am delighted by them. However, the big changes that were needed have not been proposed. There is nothing about a disregard. If the legislation is to have enough friends to survive—which, I believe, is still in doubt—it is essential that some people should be better off because of the Act. I say that because women who come on maintenance under the legislation will lose passported benefits. That is not regularly the case at present.
876
Where we are dealing with the support of children, free school meals are especially crucial. Therefore, that aspect must be given attention if the Act is to survive. Similarly, there has never been any case for the benefit penalty. If there were a disregard, we could then use a carrot instead of a stick. That is a much more effective way of securing compliance.
Much of the detail in the Statement is good and, in some places, extremely good. We owe our thanks to the department and in particular to Mr. Burt, who has been in charge, for proving, even if a little belatedly, that he can be a listening Minister, and, above all, for being a Minister to whom the Treasury has, in part, listened. There are not many of those.
It is a slightly overstated claim to say that property settlements are the major cause of complaint. However, they are certainly a big point. I am most interested in what has been done in that respect. I shall study the proposal with more care to see whether it is enough.
I have one technical question for the Minister about the broad-brush changes he proposes to introduce for this year. Are those changes to be brought in by primary legislation or by regulation? If they are to be brought in by regulation, what are the vires under which they will be introduced? Further, if the Minister intends to do that, will he study the remarks made by the noble and learned Lord, Lord Simon of Glaisdale, on 1st February last about the use of transitional powers? Those remarks needed attention. I hope that they have received it.
The general changes in the formula, are, on the whole, good ones. I am glad about access and about debts. I hope that attention will be paid to the debts of joint businesses that have been run by previous couples. I am also glad about travel costs, but I have one vital technical question on which paragraph 65 of the Select Committee's report put me into some doubt. It concerns the people who, regrettably, have no public transport available to them and cannot travel to work except by car.
A great deal of the correspondence I have received has come from people who could not travel to work except by car. Some were buying a car on an HP loan but could not keep up the payments if they paid what they were assessed to pay under the formula. Will the broad-brush approach take account of the capital costs of owning a car? Alternatively, will it, as the Select Committee suggested, ignore the overall costs of car ownership? If it does so, there will still be many people who cannot afford to work while paying what they were assessed to pay under the legislation and it will not be true to say that no absent parent has a reasonable complaint regarding what they are assessed to pay under the formula.
I am extremely glad to see the proposals as regards second families; for example, the recognition of all the housing costs of the second family. Had that been done a year ago, couples who are now divorced would still be living together. I am glad about the provision for the exceptional costs of stepchildren. However, I should like to probe what is meant by the word "exceptional". In particular, I want to know whether account has been

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taken of cases where the natural father of the stepchildren cannot support them because he is dead. That has caused much hardship in some cases.
I am pleased to see the cap on maintenance. Indeed, I doubly welcome it because I believe that I was the first person to propose it on 1st February last. What has been done has a considerable resemblance to what I proposed. Therefore, I am doubly grateful for it.
I am also grateful for the deferring of the start of maintenance assessment. I believe that that will help to avoid the enormous interim assessments which have arisen. I am glad about the concession on fees, but I wonder whether the Minister is perhaps slightly wriggling out of the situation when he puts the blame on the performance of the Child Support Agency. I am no fan of the agency, but I believe that account should be taken of the burden which was placed upon it. We should learn from the remarks made by the ombudsman. If such "misfortunes" are to be avoided, he said that,
"great care should be applied by public servants and those who instruct them whenever a policy decision is taken to devise a fresh administrative task which affects large numbers of the public".
The ombudsman also spoke about "maladministration",
"where quality of service is subordinated to sheer throughput".
I do not believe that the Government, even now, have any sense of the burden they have placed on the agency. When trying to deal with the agency, I hope they will take that factor into account.
Something must be done about appeals. I have proposed that appeals should be allowed in cases where either parent is left below benefit level; in cases where, under Section 2 of the Act, what is done is not in the best interests of the children; or in cases where the parent paying is unable to maintain the second family, including the stepchildren. Will the proposed changes bear any resemblance to my proposals?
The Government often say that no one is interested in constitutional reform. However, among the many hundreds of letters I have received regarding the Act, one constant theme is the fact that people cannot understand how Parliament allowed such legislation to come into existence. Only last week, I had to write to someone who complained that the Act was illegal. He said, "Although I understood what they were getting at, what they were saying could not literally be true". The feeling that the Executive is not being adequately scrutinised through the parliamentary process is painfully acute in such letters. They represent a large part of the public that is interested in constitutional reform.
If the department studies—as I am sure it has—the Hansard Society report drafted by the noble Lord, Lord Rippon of Hexham, on the drafting of legislation, that would be a start. However, it should be taken into account that the parliamentary sovereignty that is praised so much appears to many of the public to be simply, as the White Paper on the subject was nicknamed, a case of "Treasury comes first". It can, in fact, appear to be a form of arbitrary power. However,
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while we think about the changes in the Act, most of which I welcome, we should also consider the long-term constitutional implications.
Lord Mackay of Ardbrecknish: My Lords, I am grateful to both the noble Lord and the noble Baroness for welcoming the Statement. I suppose it would have been too much to expect them to resist the old adage about glasshouses and throwing stones, and they threw a few. I suppose I could almost excuse myself as regards being in the glasshouse in that I was not in your Lordships' House when this particular Act was passed. However, I will not take refuge in that safety valve.
My colleagues in the Department of Social Security have looked long and hard at the workings of this Act. I do not think either of the two speakers spoke in any way against the principles of the Act this afternoon in that we are still all agreed—as the noble Baroness, Lady Hollis, said —that it is right and proper that the parent in a particular case should make a contribution to his, or indeed her, children. However, it is more often a case of his children. That is something which does not divide us and we continue to want that. We want it done effectively. As I said, one of the problems with the working of the Act was that many absent parents were opposed to it and the money which ought to have flowed to the parent with care did not. I hope that what I have outlined today will mean that the money will begin to flow.
I am grateful for the welcome given by both the noble Baroness and the noble Earl for the changes to the formula and for the principle of having an appeals system which will allow departures from the formula. I am particularly grateful to the noble Earl, Lord Russell, for his kind words about my honourable friend Mr. Alistair Burt, who I know has spent many months deeply engrossed in this subject trying to see how we can improve the position.
I shall answer some of the particular points raised today. I was asked about the cases which will be deferred and about when they will be taken on. The proposal currently is that they should be deferred indefinitely in order to allow the new departure system to be introduced and to clear the agency's books. Quite frankly it would be pointless for me to commit myself to a date at some time in the future if the agency had not cleared its feet, so to speak, and was then overwhelmed by another bunch of cases coming in on top of the work it already had. I cannot remember who mentioned this point but I appreciate that that may not be the answer wished for and that that person would have preferred me to give a date. Dare I say that I think that is the sensible and pragmatic answer when dealing with that question?
The noble Baroness, Lady Hollis, asked me about maintenance disregard. I believe the noble Earl also raised that point. Disregard in income support would, of course, make it more difficult for the parent with care to be better off in work than out of work because clearly she would have to earn more to lift herself and her children out of the benefit in those cases. It would also be very costly. While I appreciate that some Members of your Lordships' House do not seem to mind that, I

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think there are others who know that that is a major determinant of all Government policy. Indeed, even Members of the Opposition in another place seem to think that making promises about spending more taxpayers' money is no longer in fashion. We hope that maintenance credit will provide a helpful sum of money when someone moves from being out of work to being in work. I thought one of the things we were agreed on was that there is a difficult bridge between being out of work and being in work. We hope that this particular maintenance credit will help a parent with care to cross that bridge.
On the same subject, the question then arises of parents with care being worse off when the maintenance floats them off benefit. In this regard maintenance is treated no differently to other forms of income which, of course, can also float the parent with care off benefit. But they can still qualify for help with such matters as National Health Service charges; for example, dental and prescription charges. Family credit rates, when they were originally set, included an amount to reflect the cost of school meals. Therefore, there is help in that regard.
The noble Earl, Lord Russell, asked how the formula changes were to be brought in. I said that they would be brought in this coming April; that is, April 1995. The measures will be introduced by regulations, using the power in Schedule 1 of the Child Support Act to make regulations relating to exempt income. I shall certainly—as I always do—study the remarks of the noble and learned Lord, Lord Simon of Glaisdale, on transitional powers, to which I was referred by the noble Earl, Lord Russell. However, I do not think there are any transitional powers involved in this regard.
The noble Earl asked an interesting question about the cost of going to and from work. This is a difficult matter. We are proposing a broad brush approach because it would be far too complicated to do otherwise. When the departures I have mentioned arise, some of the detail of this matter may then become an important point as regards the appeal for a departure. I cannot say whether that may or may not involve the cost of a motor car, but certainly I can envisage cases where that might be prayed in aid as a reason for the departure.
I hope I have answered most of the points raised. I have little doubt that when the legislation I have foreshadowed comes to your Lordships' House we will be able to look at it in greater detail. I am grateful for the welcome which both speakers gave to this Statement and I very much hope that we can proceed to make this agency run properly for the benefit of the absent parent, the parent with care, the children and the taxpayer.
4.16 p.m.
Baroness Faithfull: My Lords, I hope I may ask my noble friend the Minister two questions. The first concerns the staff. Will the staff in the Child Support Agency be trained, as I think they have a heavy load? I would suggest that there are not enough staff and that this Bill cannot be properly implemented without good and adequate staff. Secondly, as regards parents with care, are we basing much of our work on the Australian
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pattern or are we considering the European pattern? In France, for example, the parent with care is given the equivalent of a teacher's salary to stay at home and look after her very young children. Are we considering what is being done on the Continent—in as much as we are, so to speak, in Europe—or are we basing our work on the Australian pattern which I understand is not a great success?
Lord Mackay of Ardbrecknish: My Lords, I assure my noble friend that we are well aware of the importance of the staff of the agency. Indeed, additional staff were taken on to deal with the problems which were arising. We are equally aware of the need for the staff of the agency to be well trained in the procedures to make sure that some of the hiccups that have occurred do not occur again. I can give my noble friend the assurance that we will be considering the numbers of staff and the important matter of their training. In the months leading up to this Statement my honourable and right honourable friends and their advisers have considered many of the systems of support around the world, including the Australian one.
I listened to what my noble friend said about paying the parent with care to stay at home and look after the child. However, I must tell my noble friend that while I understand that argument, it goes a good deal wider than just the parent with care in a divorce case and would also encompass all mothers who would prefer to stay at home and look after their children. I think my noble friend is perhaps opening a much wider question than we are addressing in this Statement.
Lord Simon of Glaisdale: My Lords, when your Lordships were debating the Child Support Bill was it not clearly foreseen and prophesied that that piece of bureaucratic aggrandisement at the expense of the magistrature would cause exactly the sort of hardships, injustices and expenses which are now at last being recognised? In view of that, would it not be desirable to recognise that the previous system was superior; namely, trial by magistrates' courts close to the people concerned, using the judgment and discretion, which seem now to be claimed as a statutory innovation, in order to take account of all the multifariously different circumstances that arise in these cases?
Finally, I should like to ask the noble Lord about the expenses. When we discussed the Bill, large sums were paraded as being likely to inure to the Exchequer by way of savings. Will the noble Lord remind your Lordships' House what those were? How do they compare with any savings which are likely to inure under the system as modified, including the modifications by use of the transitory regulations?
Lord Mackay of Ardbrecknish: My Lords, with some reluctance I must disagree with the noble and learned Lord, Lord Simon of Glaisdale, about the previous system. It was not by any means a perfect system. The assessments were made very much at the discretion of a variety of courts. The result was uncertain and inconsistent and in many cases resulted in failure to deliver payments. Only one third of parents with care actually received maintenance regularly. The costs fell on the taxpayer. I explained a few moments

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ago that I was not a Member of this House when the Bill was debated. Therefore, I am afraid that I cannot remind the noble and learned Lord—although I suspect that he does not need to be reminded—how much it was claimed would be saved by the Child Support Agency.
Lord Simon of Glaisdale: My Lords, was it not set out in the Financial Memorandum to the Bill?
Lord Mackay of Ardbrecknish: My Lords, that is my point. I was not here at the time. Therefore, I shall have to refresh my memory when I leave the Dispatch Box. However, undoubtedly, considerable savings were prophesied for the taxpayer. I do not suppose that anyone complains about that saving. Everyone thinks that absent parents have a responsibility for their children and that they should not offload it on to the taxpayer.
Unfortunately, it is true that we have not made the savings that we would like to see. But we believe that as a result of the actions I have outlined today—which will cost us a little money—we shall make net savings. Most importantly, the parent with care will receive the maintenance from the absent parent which she deserves.
Lord Stoddart of Swindon: My Lords, the Minister said that the Act was passed without a dissenting voice. That may have been the case in the other place but, as the noble Earl, Lord Russell, pointed out, some of us—including my noble friend Lord Carter on the Front Bench—spent night after night, day after day, trying, into the early hours, to talk some sense into the Government. The noble Earl, Lord Russell, played his part very well during those long watches of the night.
At that time we warned that the Act would be an administrative and financial disaster comparable with the poll tax. No notice was taken of us at all. No amendments were accepted or agreed by the Government. We were told that we did not know what we were talking about and that the Government wished to save £400 million. In spite of our protests that that was an undemocratic way to proceed, the Bill was passed by this House and another place with 100 Henry VIII clauses which allowed the Government to do just what they wished. That is what has happened.
If there is any criticism to be levelled it should not be directed at the Child Support Agency, which had a difficult job thrust upon it. The criticism should be directed where it is deserved—at the Government, for bringing forward such a Bill and forcing it through Parliament without proper and reasonable consideration even of proposals by people like the noble and learned Lord, Lord Simon of Glaisdale, who is an expert on the law and who foresaw the difficulties which would occur in relation to the Act.
Having delivered myself of those remarks, I should like to ask one or two questions. First, can the Minister say whether those cases which are not related to income support will be brought into the net from 1996 as the Act states? My noble friend shakes her head. I did not understand whether that was the case. Perhaps the noble Lord would confirm that. I was also not clear as to
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whether the action to be taken in relation to clean-break settlements will be retrospective. Will the Minister clarify that point?
My final point relates to allowances for expenses incurred by non-custodial parents visiting their children. Will they be paid in full in respect of whichever means of transport is adopted? In answering that question I hope that the Minister will bear in mind that in France there is only a 16 per cent. loss of contact between children and non-custodial parents in divorce cases compared with a 50 per cent. loss of contact in the United Kingdom. Therefore, I hope that the noble Lord will be able to reassure me that the full costs of non-custodial parents visiting their children will be allowed.
Lord Mackay of Ardbrecknish: My Lords, I am glad that my Statement has allowed the noble Lord, Lord Stoddart, to get so much off his chest in one afternoon. That is probably a good thing for your Lordships' House in relation to other questions which may arise as the week progresses.
In relation to the noble Lord's question about non-benefit cases, as I made clear, we shall take powers in the legislation to defer the taking on of those non-benefit cases.
On the question of the departures—as these would be, since this is not a change in the formula—which would be allowed if the expenses incurred by parents visiting their children were excessive, that would be a matter for the appeals procedure to determine. I do not believe that all the expenses would be allowed, because at least some of the normal expenses would be part and parcel of the absent parent's use of his normal income, less any maintenance he has to pay.
The broad-brush provision for property and capital assessments will deal with property and capital transfers made before 1993.
Lord Dean of Harptree: My Lords, I also welcome the Statement. It appears to deal with most of the difficulties which have arisen in practice since the agency came into being. Can my noble friend give an assurance that the agency will not interfere with agreements which have been freely reached on divorce and are properly documented regarding property and the maintenance of children?
Can my noble friend also give an assurance that nothing in the Statement in any way undermines the fundamental principle that wherever possible parents should be responsible for their children and should not pass the buck to the taxpayer?
Lord Mackay of Ardbrecknish: My Lords, I am grateful to my noble friend for his support. To answer his question, as I mentioned, the take-up of those cases which were not on the benefit system before 1993 will be deferred in the legislation to come, although at some stage in the future, when the agency has caught up with the new departures and with its workload, it will consider taking them on board.
I have explained how the property settlements and capital settlements will be accounted for. In cases where the benefit system is involved—and I understand that

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the same applies under the court system—there is no such thing as a clean break between a parent and his child. There may have been a clean break between the spouses, but there cannot be a clean break between the parent who has left and the child. With regard to those cases which will be dealt with in the courts, there was no such thing, and there cannot be, in the Child Support Agency's work. As I believe my noble friend mentioned at the end of his question, it remains the major item of principle in the whole business, agreed by almost all noble Lords, that the absent parent has a financial responsibility to his children which he cannot and should not shrug off.
Lord Kilbracken: My Lords, as a so-called absent parent, I wonder whether I may make two observations. First, I wish to object most strongly and strenuously against the use of the offensive and misleading phrase "absent parent". I know that it is the phrase used throughout the Act, but I wonder whether the Minister could set a good example by using some other phrase such as, for instance, "a non-resident parent". My son spends about a hundred days a year with me. During those hundred days his mother is the absent parent and I am the parent with care. The phrase is much resented by fathers—and they almost always are fathers—all over the country.
Secondly, it is most unfair that boarding school fees paid by a father are not taken into account in calculating the sum payable to the mother. The father has to pay the same amount whether the son is at a fee paying boarding school—Eton, or wherever it may be—or is a day boy at a state school. I do not see how that can be justified. I wonder whether that point can also be considered.
Lord Mackay of Ardbrecknish: My Lords, of course I shall take away the last point and consider it. I understand the noble Lord's point about the names used. Many children will have two parents who consider themselves to be "with care". I accept that in the kind of case to which he refers, where one parent may look after the child for 100 days and another for 265 days, or 266 if it is a leap year, it is a little unfair to make the assumption, which is built into the phrase "parent with care", that the absent parent (if I may use that phrase) does not have care. Perhaps we may apologise to the noble Lord and say that it becomes complex to seek labels which will encompass every situation. I am afraid that we are stuck with the two that we have.
I shall certainly consider the question about school fees. I do not suppose that it affects very many people. However, I understand that those who are affected find it a serious point.
Lord Kilbracken: My Lords, can the noble Lord consider the phrase "resident" and "non-resident"?
Lord Mackay of Ardbrecknish: My Lords, of course. But, frankly, we are a little too far down the road to start changing some of the fundamental definitions in the Act.

Agricultural Tenancies Bill [H.L.]
4.33 p.m.
Consideration of amendments on Report resumed.
Lord Carter Lord Carter moved Amendment No. 4:
After Clause 1, insert the following new clause:
("Guidance to be issued by the Minister
The Minister shall, after consultation with the Royal Institution of Chartered Surveyors and such bodies as appear to him to represent the interests of landlords and tenants of farm business tenancies, issue guidance setting out the matters which in his view need to be considered by the parties to any farm business tenancy before entering into any such tenancy.").
The noble Lord said: My Lords, in moving Amendment No. 4 I shall speak also to Amendment No. 36, which is consequential.
When we debated the issue on guidance at Committee stage, my noble friend Lord Gallacher and I had put forward more prescriptive amendments than the present amendment. We suggested that the Government should be required to lay down regulations to deal with matters which should be covered in a tenancy agreement. As I said on the previous amendment, I am always ready to be persuaded by the Minister's eloquence. Therefore, we have now come back with what we believe is a more acceptable amendment. It is not so prescriptive, does not require the issue of regulations, but rests on the central point about which we feel strongly: that it is the Government's job to issue guidance and that that job should not be left to outside bodies, however worthy those bodies are.
I am sure that the Minister will quote the Tenancy Reform Industry Group (TRIG). But however much I admire the work of the group—I know its members well—I still believe that it is the job of Government to issue guidance as set out in the amendment. We know that the Royal Institution of Chartered Surveyors is working hard. It has kindly let me have a list of the headings that it is considering. It is a full list. That body has divided itself into working parties. Obviously they are doing a good job. They are drafting their own guidance notes. I understand that in the spring that body intends to go out to consultation more widely with other interested bodies in the industry. It is hoping that by the summer most of the work will have been done. There seems no reason why the Government should not allow that work to continue and, when completed, to consider the guidance notes and issue them with the Government's own gloss. They could have the imprimatur of being guidance notes issued by the Government and not by an outside body. The examples which the RICS gives cover all the areas that one would wish to see considered. It is a full list.
I emphasise that we do not suggest, as we suggested at Committee, that the Government should be required to lay down regulations. The guidance will not have the force of law. We have not even suggested that it should be a code of practice which would be stronger than guidance notes.
Perhaps I may paraphrase briefly what I stated in Committee. The Government's argument appears to be, "Just leave it to the landlord and tenant". If the matter is left to the landlord and tenant in this new,

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free-wheeling era which will surround the new system, we shall end up by not doing that but leaving it to the courts. It is worth repeating what I said at Committee: that a number of lawyers who specialise in this area of the law have said that they are licking their lips in anticipation of the kinds of cases that they expect to bring forward.
If the Act is successful in producing a large number of farm business tenancies, by the regularisation of the existing share farming, the contract or the Gladstone v. Bower arrangements, or it attracts new tenanted land which is now in the owner-occupied sector, then the Act will govern a large area of our rural land mass. I do not believe that the Government should be able to wash their hands of responsibility in that area. Therefore they should take on board the job of issuing guidance notes for those who will be drawing up the new tenancy agreements. They should at least take responsibility for providing suitable guidance; I do not refer to regulation. However, within that guidance there will still be the considerable freedom of manoeuvre for landlord and tenant which the Government wish to see. The guidance will not have the force of law. It will be there to help the prospective parties to the contracts.
It is obvious that the department, in particular MAFF, issues guide notes and codes of practice on many subjects. At Question Time we often hear guidance notes on sheep dipping cited. On reading the newsletter of the Dairy Industry Federation I learnt today that the Government are issuing guidance notes on foot and mouth disease. I believe that there is a code of practice on pollution. The Government are not averse to issuing guidance notes or a code of practice to deal with specific areas of agricultural policy.
I emphasise that we suggest guidance and not a code of practice. Such guidance does not have the force of law. We suggest the kind of guidance which the Government are prepared to issue on a range of subjects in the industry. The Government seem to have washed their hands entirely of providing guidance as to what should go into the new tenancy agreements.
The Minister is very fond of quoting (and I do not blame him) the industry group. Perhaps he can reflect on the remarks of the chairman of the TFA in January 1994 when, referring to the Bill that was likely to come forward, he said:
"I'm sure that in spite of all the safeguards we build in it Will still be possible for sharp agents, owners and even … tenants to write 'funnies' into the agreement which will do nothing but bring the system into disrepute and I do urge everyone to avoid that route".
The way to avoid that route is for the Government to issue some decent notes of guidance so that we all know what sort of things should be in the new agreements. To summarise the argument, we believe that it is the Government's responsibility; it should not be left to outside bodies. The Government should be prepared to take that responsibility. I beg to move.
Lord Stanley of Alderley: My Lords, I put my name to this amendment, and I have also tabled a milder amendment. With your Lordships' permission, I should like to address them both at the same time.
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The reason why I support this amendment and why I tabled Amendment No. 5 is this. Listening to the comments of noble Lords in Committee, reading the agricultural press and farming, as I do, in Wales and Oxford, I have been forced to the conclusion that, although the industry group and noble Lords may understand the radical nature of this Bill, it is blatantly obvious that the farmer on the ground just does not appreciate what a change in approach to the tenanting of agricultural land the Bill will cause.
As I have probably told the House I have farmed as a tenant for a little over 40 years. During that time I have enjoyed virtually total security. The tenant could—and I suppose on many occasions I did—tell his landlord to get lost with no fear of reprisal, except of course bad will. But that, for better or worse, will go with freedom of contract. Noble Lords should not for a moment forget that with such freedom comes responsibility. There is a great danger of it causing some very unpleasant situations, as the noble Lord, Lord Carter, also suggested. For instance, let us take as an example the tenant who could well have a wife and children and who might be 40 years old. He could well be evicted from his house—which, incidentally, would not be possible if he were an agricultural worker because he would be protected. This point was forcefully made in Committee by the noble Lord, Lord Northbourne.
The best way to avoid such problems is, as is suggested in the amendment by the noble Lord, Lord Carter, to make absolutely sure that prospective landlords and tenants understand the matters that should be discussed and decided before entering into a lease.
I would have liked to see a non-statutory model clause. However, when I mentioned that to the industry group it rebuked me in a manner that I can only describe as being like Sir Humphrey rebuking his Minister. Being, as always, fearful of annoying the agricultural lobby, I have managed to tone down my amendment, which only requires the Minister to keep a watching brief on future agreements and obliges him to make sure that both landlord and tenant are getting the best possible advice before entering into an agreement —or perhaps I should say "any old agreement", because that is what I fear could happen.
I realise that neither of these amendments is blessed by the industry group. I fear therefore that my noble friend Lord Howe will tell me that it is dangerous to interfere with such a delicate plant for its flower might wither away if upset in any way whatsoever. Like the noble Lord, Lord Carter, I think I know the members of the industry group well enough to know that they can—indeed they should—take a little criticism from time to time.
While I am about it, I might as well criticise my noble friend, too. If he replies by using the words "anodyne" or "otiose" in regard to my amendment—words that are much loved by civil servants—it will show that his department (not, of course, my noble friend) fails to appreciate the importance of good guidance to avoid future problems destroying the Bill. If my noble friend replies in such a vein, I really will have no alternative,

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much as I should regret it, but to take his advice and support the amendment of the noble Lord, Lord Carter, rather than move mine.
4.45 p.m.
Lord Geraint: My Lords, I support the Bill, which has been long awaited by the industry. But after saying that, I believe that there is a great deal of merit in the amendment that was so ably tabled by the noble Lord, Lord Carter, and supported by my friend from Anglesey, the noble Lord, Lord Stanley of Alderley.
As the years go by—and many of us have been involved in agriculture all our lives—I feel now that I need more guidance than ever before, and especially in regard to the new rules and regulations that come in from Europe. On balance, we need a great deal more guidance if the industry is to succeed in Europe. This is a glorious opportunity for the Government to help those farmers who will be involved in getting a new tenancy.
Looking at the Bill, I believe that the landlord would be far more likely to choose an established tenant with security behind him than prospective young farmers without milk or sheep quotas. I believe that that is what will happen. But I shall not speak against that. What is important is that those young farmers will have guidance and help without all the time having to go to their solicitors. Finally, of course, they will have to use a solicitor, but they need guidance in the few weeks before they do that.
I have just one final question. I asked the Minister this at Second Reading. I wonder what are his views and whether he has considered what was said then about county council smallholdings. I honestly believe that the young farmers of tomorrow will be very keen to have a county council smallholding if they are not successful under this Bill. Guidance could given on county council smallholdings by the Government. I know that they are provided by the local authority and perhaps people will say that we should not get involved in any way, but if the Government would give guidance to county councils to try to persuade them to buy more farms for the young farmers of this country, it would be a step in the right direction. I support the noble Lord, Lord Carter, and other noble Lords who have proposed this amendment. We need it badly. Let us hope that the Minister will accede to our request.
Earl Howe: My Lords, I am grateful to the noble Lord, Lord Carter, and indeed to my noble friend for explaining the purpose of their respective amendments. Flattered as I am by the implication that my department is the fount of all wisdom on tenancy matters, I have to say that I believe that others are better qualified to prepare guidance for people preparing a tenancy agreement. My officials, I am told, hardly ever even see a tenancy agreement in the course of their everyday duties.
The RICS has established a working party which has been working assiduously on drafting guidance notes. The members of that group are, I believe, well qualified for the task by virtue of their expertise and experience. I am glad that the noble Lord, Lord Carter, thinks that
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they are doing a good job. The RICS held a seminar last Thursday at which it explained in general terms what it was doing, and this was welcomed.
However, the important thing to realise—and I say this particularly to my noble friend—is that the RICS will not be taking all the responsibility upon itself. It has said that it hopes to have completed its first drafts on each of the various topics by the end of this month. It will then seek comments from the main industry bodies and, I trust, from MAFF as well. The next stage will be to prepare a fuller revised version with a target date of the end of March. That version will be the subject of wider consultation, in the light of which it will finalise the guidance. It should then be in a position to send the text for publication as soon as the Bill has completed its passage through Parliament and to issue it well in advance of 1st September, which is when we hope that the Bill will come into force.
I readily acknowledge that the guidance will be an important source of advice. It is important that it should be full, accurate and unbiased. My department is certainly prepared to contribute to that objective. However, it seems much better that industry experts should take the lead in designing a package with which they and their clients or members can work easily. I hope that my noble friend will agree that that approach, if it does not meet the letter of his amendment, certainly meets the spirit of it. I would not dream of criticising his amendment in the terms that he foresaw that I might do.
A further point that I should make is that this will not be —nor would we wish it to be—the only source of advice. Farm business tenancies will provide greater freedom and flexibility. Industry organisations may want to offer services to help their members draw up agreements for their own circumstances. Other people may rely on their regular land agent or solicitor. Others may turn to textbooks, which no doubt are being written as we speak.
With regard to the query of the noble Lord, Lord Geraint, about county council smallholdings, as I explained in Committee, essentially the decisions that are made by county councils are for them to make as to whether to buy more smallholdings. But the Bill will be helpful to the extent that providing more opportunities for tenants to move up the ladder will leave more openings for new entrants. At present the smallholdings tend to become blocked because the tenants do not move up the ladder.
This is not an area in which the Government should monopolise the field and prescribe the terms which are best for individuals in widely varying circumstances to include in what are essentially private contracts. We are prepared to play our full part in facilitating the production of guidance if the authors would like the benefit of our advice. However, I say to the noble Lord, Lord Carter, that we have no wish to take on a statutory responsibility for producing guidance ourselves.
I do not understand why the noble Lord believes that the absence of government guidance—rather than, as is now envisaged, guidance prepared by those best placed to produce it—will result in landlords and tenants engaging in an uncontrolled and ill advised free-for-all. I simply do not see that point.

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The noble Lord has that look about him which suggests that he is contemplating dividing the House. I hope that he does not divide it. I hope that he will accept that there is good work going on, led by professionals, in which my ministry will be pleased to take a role and which makes official government guidance unnecessary, even if he cannot agree with me that it is inherently undesirable in the context of this Bill.
Therefore, I hope very much that my noble friend and the noble Lord will not press their amendments but instead be content to let current events run their course and await publication of the draft RICS guidance at the end of this month.
Lord Carter: My Lords, I am not sure how one is supposed to look when thinking about dividing the House. I was struck by the modesty shown by the Minister about his department. He agreed that it was not the fount of all wisdom. We all agree with that. But he also said that his officials hardly ever see a tenancy agreement. They issued some guidance notes on sheep dipping, and how many times have they dipped sheep? They take advice from the veterinary service, do they not?
Earl Howe: My Lord, that concerns the Health and Safety Executive, which does know a thing or two about sheep dipping.
Lord Carter: My Lords, the same thing applies: as a department it takes advice. In this case obviously it would take both outside advice and advice from within the department from the land service. So that argument does not run. The noble Earl made an extraordinary statement. I had perhaps a naive view that the officials of government departments are or should be trained to consider matters objectively and advise industry. That is what we are asking the department to do. I feel that this is an abdication of responsibility.
The trouble is that the whole business was started by a former Minister—John Gummer, of blessed memory—who was in full-scale free market mode when this issue was introduced. It takes a long time for a Bill to be drafted and come forward. We are left with it now. We still have the hangover of the complete freedom of contract and an attitude of "leave it all to the market; leave it all to the landlord and tenant and they will sort it out". In fact we have already accepted that. We have not tried to break the fundamental principle of the Bill. We are trying to improve the Bill.
There have been some meetings around the country but it surprises me just how little is known about the Bill and its implications. I see that the noble Lord, Lord Stanley, nods his head. It is the job of the Government to make sure that the industry is aware of what it is taking on. We are going into a whole new scene. Perhaps the Minister will remember that at Second Reading he said that we were going back to the middle of the 19th century. If so, we need some guidance in what to do in that completely different situation.
He referred to the services that will be offered by various institutes and organisations. But those services will be offered anyway. We want a wide range of advice but set within a framework. Because of the importance
890
of the Bill, its effect on our countryside and all that will be happening there, and the fact that a farm is not just a means of earning a living but also a home—for all those reasons I believe that the Government should be prepared to take on board the responsibility. As I said, it will not have the force of law. We do not ask them to lay regulations or even issue a code of practice. We ask them to take all the advice that is available, put it together, put their own gloss on it and issue it as a guidance which everyone can then see is the essential advice that we all need.
I am afraid that the Minister was not correct. I had not thought of dividing the House until he answered the amendment. I believe that now I should ask the opinion of the House.
4.57 p.m.
On Question, Whether the said amendment (No.4) shall be agreed to?
Their Lordships divided: Contents, 92; Not-Contents, 129.

Division No. 2

CONTENTS

Acton, L.

Judd, L.

Addington, L.

Kennet, L.

Ailesbury, M.

Kilbracken, L.

Archer of Sandwell, L.

Kirkhill, L.

Ashley of Stoke, L.

Leigh, L.

Barnett, L.

Listowel, E.

Beaumont of Whitley, L.

Lockwood, B.

Bruce of Donington, L.

Longford, E.

Carmichael of Kelvingrove, L.

Lovell-Davis, L.

Carter, L.

Mallalieu, B.

Castle of Blackburn, B.

Mason of Barnsley, L.

Cledwyn of Penrhos, L.

Mayhew, L.

Clinton-Davis, L.

McIntosh of Haringey, L.

Cocks of Hartcliffe, L.

Merlyn-Rees, L.

Courtown, E.

Meston, L.

David, B.

Milner of Leeds, L.

Dean of Thornton-le-Fylde, B.

Molloy, L.

Desai, L.

Monkswell, L.

Donaldson of Kingsbridge, L.

Morris of Castle Morris, L.

Donoughue, L.

Murray of Epping Forest, L.

Dubs, L.

Nicol, B.

Ennals, L.

Ogmore, L.

Ewing of Kirkford, L.

Parry, L.

Ezra, L.

Peston, L.

Falkender, B.

Plant of Highfield, L.

Falkland, V.

Prys-Davies, L.

Farrington of Ribbleton, B.

Redesdale, L.

Gallacher, L.

Richard, L.

Geraint, L.

Rodgers of Quarry Bank, L.

Gladwin of Clee, L.

Russell, E.

Gould of Potternewton, B.

Seear, B.

Graham of Edmonton, L. [Teller.]

Sefton of Garston, L.

Stanley of Alderley, L.

Greene of Harrow Weald, L.

Stoddart of Swindon, L.

Gregson, L.

Strabolgi, L.

Grey, E.

Taylor of Blackburn, L.

Harris of Greenwich, L.

Thomas of Walliswood, B.

Haskel, L. [Teller.]

Thomson of Monifieth, L.

Hilton of Eggardon, B.

Tope, L.

Hollis of Heigham, B.

Tordoff, L.

Houghton of Sowerby, L.

Varley, L.

Howell, L.

Wallace of Coslany, L.

Hughes, L.

Wedderburn of Charlton, L.

Irvine of Lairg, L.

White, B.

Jeger, B.

Williams of Mostyn, L.

Jenkins of Hillhead, L.

Wise, L.

Jenkins of Putney, L.

891

NOT-CONTENTS

Aberdare, L.

Inglewood, L. [Teller.]

Addison, V.

Jellicoe, E.

Ailsa, M.

Johnston of Rockport, L.

Aldington, L.

Kinnoull, E.

Alexander of Tunis, E.

Knollys, V.

Arran, E.

Lane of Horsell, L.

Ashbourne, L.

Lauderdale, E.

Astor of Hever, L.

Layton, L.

Astor, V.

Lindsay, E.

Balfour, E.

Liverpool, E.

Blaker, L.

Long, V.

Blatch, B.

Lucas of Chilworth, L.

Bledisloe, V.

Lyell, L.

Boardman, L.

Mackay of Ardbrecknish, L.

Borthwick, L.

Mackay of Clashfern, L. [Lord Chancellor.]

Brabazon of Tara, L.

Braine of Wheatley, L.

Mancroft, L.

Brougham and Vaux, L.

Manton, L.

Burnham, L.

Marlesford, L.

Butterworth, L.

McColl of Dulwich, L.

Cadman, L.

Merrivale, L.

Caithness, E.

Mersey, V.

Campbell of Alloway, L.

Miller of Hendon, B.

Campbell of Croy, L.

Milverton, L.

Carnegy of Lour, B.

Mowbray and Stourton, L.

Carnock, L.

Moyne, L.

Cavendish of Furness, L.

Munster, E.

Chalker of Wallasey, B.

Murton of Lindisfarne, L.

Charteris of Amisfield, L.

Newall, L.

Clanwilliam, E.

Noel-Buxton, L.

Clark of Kempston, L.

Northesk, E.

Coleraine, L.

O'Cathain, B.

Colnbrook, L.

Orkney, E.

Colwyn, L.

Orr-Ewing, L.

Craigavon, V.

Oxfuird, V.

Cranborne, V. [Lord Privy Seal.]

Palmer, L.

Cranworth, L.

Park of Monmouth, B.

Cumberlege, B.

Pender, L.

Dacre of Glanton, L.

Platt of Writtle, B.

Davidson, V.

Pym, L.

Dean of Harptree, L.

Quinton, L.

Downshire, M.

Rankeillour, L.

Ellenborough, L.

Rawlings, B.

Elliott of Morpeth, L.

Renton, L.

Elton, L.

Renwick, L.

Faithfull, B.

Rodger of Earlsferry, L.

Fanshawe of Richmond, L.

Rodney, L.

Finsberg, L.

Saltoun of Abernethy, Ly.

Flather, B.

Savile, L.

Gardner of Parkes, B.

Seccombe, B.

Geddes, L.

Skelmersdale, L.

Gilmour of Craigmillar, L.

Slim, V.

Gisborough, L.

Somerset, D.

Goschen, V.

Strange, B.

Gray of Contin, L.

Strathcarron, L.

Hacking, L.

Strathclyde, L. [Teller.]

Halsbury, E.

Strathcona and Mount Royal, L.

Harlech, L.

Swansea, L.

Harmar-Nicholls, L.

Teviot, L.

Hayhoe, L.

Thomas of Gwydir, L.

Holderness, L.

Trumpington, B.

HolmPatrick, L.

Ullswater, V.

Hooper, B.

Vivian, L.

Howe, E.

Wakeham, L.

Hylton-Foster, B.

Wynford, L.

Resolved in the negative, and amendment disagreed to accordingly.
[Amendment No. 5 not moved.]
Clause 4 [Agricultural Holdings Act 1986 not to apply in relation to new tenancies except in special cases]:
5.5 p.m.
Lord Stanley of Alderleymoved Amendment No. 6:
Page 3, line 20, after ("granted") insert ("on an agreed succession").
The noble Lord said: My Lords, Amendment No. 6 is grouped with Amendment No. 9. I moved identical amendments in Committee, discussed at cols. 1146 to 1150. At that time we all agreed that succession rights should be protected under the 1986 Act rather than by a direction from the agricultural land tribunal. We also agreed that it was better to draw a line under the 1986 Act tenancies and that any new tenancies would be under the 1995 farm business tenancy. There was a difference of opinion as to whether the wording of the Bill achieved that aim and my noble friend Lord Howe said that he would look again at the matter. Having looked at it again I believe that my noble friend will agree that these amendments are necessary to achieve our common objective. I beg to move.
Lord Carter: My Lords, I am pleased to support the amendments because they deal with an important point. The intention of the legislation is that all new lettings after 1st September should be under the new legislation but that all existing tenancies and rights of succession should continue. I believe that that is the Government's intention. The present wording protects those successions approved by the agricultural land tribunal.
If we understand the Bill correctly, it allows new 1986 Act tenancies to be created, but only if they are fresh succession tenancies. The point is raised by practitioners —I mentioned it in Committee, and I do not believe it was properly answered—as to whether the intention is that no existing tenant with full security should inadvertently lose that security. It is also asked whether accumulated succession rights will be preserved.
The Bill does not achieve that end. It addresses only a situation where, inadvertently, by operation of law, an existing tenant surrenders his tenancy on a regrant. There are numerous examples where existing tenants, agreeing in co-operation with the landlord to a new tenancy on modern up-to-date terms, may inadvertently find themselves thereafter without security. It is a technical point on the drafting that was raised in Committee. We feel that there is not the security that there should be on succession. It would be helpful if the Minister could reassure us.
Earl Howe: My Lords, I agreed in Committee to give further thought to my noble friend's amendment. Although we do not think there is anything technically wrong with the clause as drafted, the fuller wording of the amendment would make clearer the circumstances in which succession tenancies can—and indeed cannot—be granted. I am sure therefore that my noble friend will be pleased to hear that since the amendment achieves the right result and is supported by the industry, I am happy to accept it.
Lord Stanley of Alderley: My Lords, I thank my noble friend for that answer.

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On Question, amendment agreed to.
Lord Cartermoved Amendment No. 7:
Page 3, line 22, at end insert:
("() is granted by a written contract of tenancy indicating (in whatever terms) that the 1986 Act is to apply in relation to the tenancy; or").
The noble Lord said: My Lords, Amendment No. 7 was discussed in Committee. The Government's argument is that if anyone wants the terms of the 1986 Act, they simply write them into the new farm business tenancy. However, we were advised—again I am talking of those involved with smallholdings—by the county land agent of the Norfolk County Council that,
"I should like the flexibility to be able to continue to relet statutory smallholdings [and] 'County Farms equipped holdings' under the 1986 Act and an amendment to this effect would be very helpful".—[Official Report, 12/12/94; col. 1151.]
The point, which I shall not repeat at length but which was made in Committee, is that if it is logical to allow tenants to contract into a new succession tenancy—it may be unlikely but it is possible—then they should be allowed to contract into a new life or retirement tenancy. We know that smallholdings were deliberately excluded from the 1986 Act. However, if there is a group of people who would like to opt into the 1986 Act we think it would be helpful if they could do that. They could save time because they would not have to go through all the paraphernalia of the farm business tenancy and having to write into the new tenancy all the clauses of the 1986 Act. The point would not affect an enormous number of people but we feel that there should be a means by which the parties could contract into a new life or retirement tenancy if they wished to do so. I beg to move.
Earl Howe: My Lords, I find it surprising that the noble Lord thinks that people will want to opt into the 1986 Act when there is at the moment such a marked reluctance to let land on lifetime tenancies. Nor do I see any reason to leave this option open. If a tenant wants a lifetime tenancy and the landlord is willing to grant him one there is nothing to prevent them from drafting an appropriate farm business tenancy to provide that security. That is what Norfolk County Council could do if it wished. In the same way the parties can agree, if they wish, to write into their farm business tenancies many of the provisions that are in the 1986 Act. One thing they will not be able to do is to agree to write down the compensation for tenants' improvements. The mandatory provisions in the Bill will apply.
I am somewhat puzzled as to why the noble Lord should advocate an amendment which could deprive a tenant of the very same compensation rights which, as I recall, he praised at Second Reading as being superior to those of the 1986 Act. The main industry organisations have agreed that once the new legislation is in force it should apply to all new lettings other than those arising under the statutory succession provisions. This amendment, which leaves the 1986 Act option open, would give rise to confusion and would not be in the interests of the industry as a whole. We believe that the new legislation will provide all the flexibility the
894
industry needs, including the option to agree lifetime tenancies. I hope that the noble Lord will feel able to withdraw the amendment.
Lord Carter: My Lords, I did say that I thought that this would be used only comparatively rarely and by a comparatively small group of landlords and tenants. We have been pressed by those in the smallholdings area who say that this would be useful to them. It seems that we cannot persuade the Government. I do not propose to come back to this matter again. We have tried twice and it seems that we cannot convince the Government. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Cartermoved Amendment No. 8:
Page 3, line 27, leave out from ("tenancy")") to end of line 31.
The noble Lord said: My Lords, this is an important point which was touched on earlier during the discussion of Amendments Nos. 6 and 9 in the name of the noble Lord, Lord Stanley. I am not quite sure whether the point will be picked up in the Government's acceptance of the noble Lord's amendments. It is a technical point. The preservation of security for an existing tenant on an expressed surrender and regrant is as important as where there is a surrender and regrant by the inadvertent operation of law. If the intention of the legislators is that all tenants with existing protected tenancies should not inadvertently lose that security after the passing of the 1995 Act, the wording which we propose is necessary.
I am advised by practitioners that there are instances of landlords and tenants agreeing to relocation within an estate. But because of the way the Bill is drafted, and the 1986 Act particularly, tenants would effectively be unable to move even though it is in the landlord's interests that they should because the tenant would not be able to get the same security as before. I am advised that the statement in Committee by the Minister about being able to achieve that by a long-term fixed term lease shows a fundamental misunderstanding of the doctrine of estates and the distinction between a protected annual tenancy and fixed term lease.
It is a technical point. It is one of those areas of the 1986 Act and the carryover into the 1995 legislation which needs to be looked at because what the Government intend will not be achieved. It will not give the flexibility that it should give in the operation of the Act. When we discussed the matter in Committee the Minister said that he would consider it and see whether there was anything in the technical point which had been raised. I have been advised by a leading practitioner in the field that that is the case. It would be helpful if the Government could say either that they take the point or that they are prepared to take the matter away and consider it. I beg to move.
5.15 p.m.
Earl Howe: My Lords, I have indeed considered this matter since we debated it at an earlier stage. However, I have come to the conclusion that the amendment would have a drastic effect which we do not believe would be acceptable. As drafted, the clause provides protection for people who have an existing tenancy under the Agricultural Holdings Act 1986 against losing

895
their rights under that Act—for example, their security of tenure—simply because a variation in their tenancy agreement has effect by operation of law as an implied surrender followed by the grant of a new tenancy. We accept that in those circumstances it would be inequitable for the new tenancy to be excluded from the scope of the 1986 Act when the parties had not intended that to happen.
However, the amendment would mean that the Agricultural Holdings Act 1986 would apply to any tenancy granted to a person who had previously held a tenancy under the 1986 Act on that land. That would be the case even if the parties had expressly signed a new tenancy agreement. Since that could hardly happen accidentally it seems quite unreasonable to provide for such new tenancies to be subject to the 1986 Act. In addition, the effect would be that where a short-term letting under a ministry licence or under a Gladstone v. Bower tenancy had come to an end and the parties wished to enter a farm business tenancy the amendment would mean that the 1986 Act would apply to the new tenancy. That, too, would be clearly unsatisfactory.
We are satisfied that the clause as drafted provides adequate protection for tenants against an unwitting loss of their rights under the 1986 Act. We would not wish to go any further than that. I am sorry to disappoint the noble Lord but, in the circumstances, I hope that he will feel able, albeit reluctantly, to withdraw the amendment.
Lord Carter: My Lords, I am extremely grateful to the Minister. I shall have to read what he said and consult others who will also read it with great care. The point was put to me quite strongly by a leading practitioner. It seems that there is a difference of opinion which I am sure the Government wish to see resolved. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Stanley of Alderleymoved Amendment No. 9:
Page 3, line 32, leave out subsection (2) and insert:
("(2) For the purposes of subsection (1) (c) above, a tenancy ("the current tenancy") is granted on an agreed succession if, and only if—

(a) the previous tenancy of the holding or a related holding was a tenancy in relation to which Part IV of the 1986 Act applied, and

(b) the current tenancy is granted otherwise than as mentioned in paragraph (a) or (b) of subsection (1) above but in such circumstances that if—

(i) Part IV of the 1986 Act applied in relation to the current tenancy, and

(ii) a sole (or sole surviving) tenant under the current tenancy were to die and be survived by a close relative of his,

the occasion on which the current tenancy is granted would for the purposes of subsection (1) of section 37 of the 1986 Act be taken to be an occasion falling within paragraph (a) or (b) of that subsection.
(3) In this section—
896

(a) "agricultural holding" and "contract of tenancy" have the same meaning as in the 1986 Act, and

(b) "close relative" and "related holding" have the meaning given by section 35(2) of that Act.").

On Question, amendment agreed to.
Clause 5 [Tenancies for more than two years to continue from year to year unless terminated by notice]:
Lord Stanley of Alderleymoved Amendment No. 10:
Page 4, line 1, at end insert ("except for the provisions contained in subsection (5) below.
(5) A tenant of a farm business tenancy for a term of two years or more may terminate the tenancy in any year before the due determination date by giving notice of not less than 12 months and not more than 24 months in the following circumstances only—

(a) where following the death of the named tenant the tenancy becomes vested in his personal representatives, or

(b) where the tenant has become permanently incapacitated by age or infirmity.").

The noble Lord said: My Lords, if my noble friend had accepted the amendment to Clause 1 of the noble Lord, Lord Carter, there would be no need for this amendment, which resolves the problem of what happens if the tenant becomes incapacitated and still has a number of years of his farm business tenancy to run. Under previous agricultural 'enancies the tenant could always give 12 months' notice to quit. That is not so with the farm business tenancy. I suspect that my noble friend will say that any reasonable landlord would allow the tenant to give notice. But there are unreasonable landlords, just as there are unreasonable tenants. The amendment would allow the tenant to give his landlord notice to quit if he became incapacitated. I beg to move.
Earl Howe: My Lords, once again my noble friend has demonstrated his comprehensive knowledge of agricultural holdings matters. I am most grateful to him for that explanation.
If parties wish to have access to break clauses in the unhappy circumstances dealt with by this amendment, they need to provide for such clauses in their own tenancy agreement. Of course I recognise that sometimes they might omit to do so. What then? I can see that if, for example, parties agreed a fixed term for three years and the tenant became very seriously ill six months after taking up the tenancy it would be a difficult situation. Rather than enabling notice to be given in the narrow circumstances dealt with by this amendment, the obvious alternative would be a negotiated surrender, which of course would have the added advantage of being achievable in a much shorter time than the minimum period of 12 months that would flow from giving notice under my noble friend's amendment. It will generally be obvious that it would do little good in such circumstances for the landlord to refuse the surrender and for the tenant to remain locked into the agreement.
I should, however, like to say in addition to my noble friend that I understand that this amendment is not supported by those in the industry group. Its view apparently is that the terms of the tenancy should apply,

897
together with whatever break clauses the parties have agreed. With that explanation I hope my noble friend will feel able to withdraw the amendment.
Lord Stanley of Alderley: My Lords, I do not believe that I have any alternative but to withdraw the amendment. I have been threatened with the industry group again, to which one is not allowed to say "Boo" or anything else otherwise they bully me outside and behave like Sir Humphrey. Obviously they behave in exactly the same way to my noble friend on the Front Bench.
I am not entirely happy because one may be unable to negotiate with a very difficult landlord. I know that this is an exceptional case. The matter would be dealt with if we had agreed to the amendment to Clause 1. This would have been one of the points to be considered very carefully. I fear that there will be occasions when this matter is not considered and there will be trouble. I shall have to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 6 [Length of notice to quit]:
Earl Howemoved Amendment No. 11:
Page 4, line 8, at end insert:
("() Where, by virtue of section 5(1) of this Act, a farm business tenancy for a term of more than two years is to continue (as from the term date) as a tenancy from year to year, a notice to quit which complies with subsection (1) above and which is to take effect on the first anniversary of the term date shall not be invalid merely because it is given before the term date; and in this subsection "the term date" has the meaning given by section 5(2) of this Act.").
The noble Earl said: My Lords, the need for this amendment arises because of a minor technical difficulty over the interrelationship between Clauses 5 and 6 of the Bill. The amendment enables either party to end a fixed term tenancy of more than two years' duration on the first anniversary after expiry of the agreed fixed term. Clause 5 of the Bill provides that, unless a minimum of 12 months' notice has been given that the tenancy is to end on the agreed term date, a farm business tenancy for a term of more than two years shall continue, as from that date, as a tenancy from year to year. Clause 6 provides that at least 12 months' notice must be given before the date on which a tenancy from year to year is to end.
I am advised that where a fixed term tenancy becomes a tenancy from year to year because no notice has been given in accordance with Clause 5(1), the tenancy remains the same throughout. However, Clause 6 as currently drafted could give rise to doubt as to whether a notice to quit could be served in the final year of the fixed term; that is before the fixed term tenancy has become a tenancy from year to year. The amendment makes it clear that a notice to quit may be given during the final year of the fixed term in order to end the tenancy on the first anniversary of the term date. The notice must, of course, comply with the other provisions of Clause 6.
Without this amendment parties who had a 10-year tenancy and who failed to serve notice in year nine would be locked in to their tenancy until the end of year 12: they would be unable to end it at the end of year 11. We need to regularise the position so that either party
898
can end the tenancy at the first anniversary of the term date, just as at any subsequent anniversary. I beg to move.
Lord Carter: My Lords, I am extremely grateful to the Minister for explaining this technical amendment. Can he confirm to the House that he had the permission of the industry group to table it?
Earl Howe: My Lords, I certainly have not heard any murmurs of discontent from the industry group, to whom we always defer for guidance. I hope that the noble Lord will feel it desirable to make this amendment to the Bill.
On Question, amendment agreed to.
Lord Gallacher Lord Gallacher moved Amendment No. 12:
After Clause 7, insert the following new clause:
Application of doctrine of privity of contract
(". The doctrine of privity of contract (whether enacted under statute or contained in the common law) shall not apply to any farm business tenancy.").
The noble Lord said: My Lords, at the Committee stage of the Bill we dealt in some detail with the doctrine of privity of contract. I return to it this evening, but I hasten to reassure the Minister that it is not my intention to give the exposition of what it means with which I bored the Committee to tears, I regret to say. Tonight, however, I wish to take advantage of the fact that circumstances have changed significantly since we discussed this matter in Committee. It is that change of circumstances which has occasioned the amendment which, I hope, will cause the noble Earl himself to look afresh at this question.
The change of circumstances comes about because it had been my understanding, which was not challenged in Committee, that while there was general agreement on the need for reform of the doctrine of privity of contract, there was not very much agreement between property owners, on the one hand, and people who were caught in privity of contract clauses, for example retailers, on the other.
As I understand it, the legal position was and is that the Government are in support of a Law Commission recommendation that the law be reformed in this regard. I believe that a Bill to do that was drafted by the Law Commission as part of its report on the subject. I now understand from the British Retail Consortium that it has reached agreement with the British Property Federation on the reform of privity of contract in commercial leases. The Parliamentary Secretary at the Lord Chancellor's Department, Mr. John Taylor, has invited the British Retail Consortium and British Property Federation representatives to meet with him. I believe that that meeting was scheduled to take place in December. As I say, the hope is that, arising from the meeting, a number of measures proposed by the British Retail Consortium to the noble and learned Lord the Lord Chancellor in 1992 will be agreed.
I shall not read in their entirety the submissions by the British Retail Consortium, but one of considerable importance is a modification of Section 19 of the Landlord and Tenant Act 1927:

899
"to enable parties to agree detailed terms when granting a lease concerning future assignments".
I believe that we have established that farm business contracts will be subject to the doctrine of privity of contract as the law now stands. If that is not so, I shall be relieved to hear that from the Minister. However, on the assumption that they are subject to the doctrine of privity of contract, the object of the amendment is to give exemption from the doctrine in respect of any farm business tenancy as worded in Amendment No. 12. I believe that that would be of only limited duration.
I have read enough to the House about the negotiations which are taking place between those affected by privity of contract and the Lord Chancellor's Department for your Lordships to be reasonably satisfied that there is now not merely the will but the expectation of a change of law in this regard. If the noble Earl is disposed to accept the amendment, I shall not expect the exemption which it seeks to run for long because it will be overtaken by legislation which will be enacted if not in this Session then in the next Session of Parliament.
As the provisions of the Bill do not take effect until 1st September, it will, as I say, be a fairly limited exemption. But it is desirable that those who may be contemplating farm business tenancies should be aware of the legal situation. Therefore, even if the Minister is unable to accept my amendment, I hope that he will, on the one hand, have encouraging things to say about the future and, on the other, warn those who may be disposed to enter into farm business tenancies that under the Act the privity of contract doctrine in the Bill we are now considering will apply to them. I beg to move.
5.30 p.m.
Earl Howe: My Lords, as I explained in Committee, the Government intend to introduce reforms in relation to privity of contract and estate, but we should like such reforms to cover all types of tenancies, not just agricultural tenancies. Therefore, although we are sympathetic towards the motives behind the amendment I still do not think that it is appropriate to try to tackle this very technical subject in this Bill which deals with only one type of tenancy. In addition, as I am sure the noble Lord realises, the solution will not, unfortunately, be anything like as simple as the amendment might suggest.
As noble Lords know, a Private Member's Bill was introduced in another place in the last Session but was blocked on Second Reading. However, there have been developments since then and I am grateful to the noble Lord for acquainting the House with the agreement which I understand has been reached between the British Retail Consortium and the British Property Federation on a package of proposals on privity of contract and related issues. That is very encouraging. However, their proposals represent a radical change of policy and the Government consider it right that the entire range of interests in the industry should be consulted before a decision is taken. Should a consensus emerge that would, of course, carry considerable weight.
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Turning to the noble Lord's amendment, I have to say that it would not be adequate as it stands: for example, privity of contract would have to be defined, which is not as easy as one might suppose. Furthermore, it does not reflect the policy proposed by the Law Commission and accepted by the Government; namely, that the parties to a lease should in general cease to have any rights or liabilities under the lease once they have parted with their respective interests, except where it is objectively reasonable for some degree of liability to continue. In particular, the Law Commission recommended that it should be possible for a condition of assignment to be that the tenant should guarantee performance of the covenants in the lease by his assignee. I understand that the BRC/BPF package does not materially alter this, but the amendment does not address that issue.
What I can say, therefore, is that the Government are keen to see a solution to this problem and that real progress is being made in that direction. What I cannot do, I am afraid, is to accept this amendment which, in any case, I am advised would not achieve the desired result and would in all probability result in landlords prohibiting assignment.
I hope that in the light of that explanation the noble Lord will agree to withdraw his amendment.
Lord Gallacher: My Lords, I am disappointed by that reply although it was not unexpected. I plead guilty to the simplicity of the drafting, which accords squarely with the character of the person responsible for the draft—myself. I am disappointed. Despite the complexity of the question, as outlined by the noble Earl, I think that the Bill as drafted will add to that complexity because farm business tenancies will presumably have to be considered in the light of the negotiations that are taking place between the Lord Chancellor's Department, property interests and user interests. I hope that the industry group, about which we have heard so much this afternoon in relation to other amendments, is conscious of the fact that it should be fully conversant with the dangers that might lie ahead and about which, even at this early stage, it should perhaps take some action to protect its members. We should certainly like them to be protected.
Having said that, as I said at the outset I am not in the least surprised, although I am disturbed, by the position that has arisen. However, given the Minister's unwillingness to give any assurances other than to say that the talks are moving forward, I can only beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 9 [Application of Part II]:
Lord Gallachermoved Amendment No. 13:
Page 5, line 24, after ("formula") insert ("which does not preclude a reduction and").
The noble Lord said: My Lords, Amendment No. 13, with which is grouped Amendment No. 14, relates to the formula for adjusting rent. I believe that the House has a choice as to which of the two amendments, which have the same objective, it wishes to support. Again, we

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raised this matter in Committee. I am advised that the Tenant Farmers' Association supports the amendment, as does the National Farmers Union.
The purpose of the amendment is to prevent the creation of a loophole allowing the introduction of a form of upward-only rent review. The rent review formula in Clause 13 enables an arbitrator to revise the rent according to the circumstances, which may mean an increase or a reduction. We do not want that to be circumvented by the use of the formula for adjusting rent. I am advised that agriculture has not been used to upward-only clauses, which are seen to have been damaging to businesses in the commercial property sector, as can be seen many times over on any walk down any high street these days.
Agriculture is a sector that is widely exposed to government decisions (whether on interest rates or the common agricultural policy) and it should therefore have freedom to adjust to circumstances. The industry organisations that have written to us on this matter believe that our amendment may be slightly better phrased, not involving a double negative, but I am not here to offer a lesson in English grammar to one as distinguished as the noble Earl. Nevertheless, he will no doubt tell me yet again in what respects my Amendment No. 13 is the poorer amendment. I move my amendment in anticipation of listening with rapt attention to what the noble Earl will say in favour of his amendment, Amendment No. 14. I beg to move.
Earl Howe: My Lords, this is an area in which, as I indicated in Committee, we are willing to give effect to the industry's wishes. The noble Lord will have seen my amendment to Clause 9, Amendment No. 14, Although the wording differs from Amendment No. 13, we accept that the effect is exactly the same. In view of that, the noble Lord may be pleasantly surprised to hear that I accept his comments on grammar and that we are prepared to accept his amendment and not to move Amendment No. 14.
Lord Gallacher: My Lords, I am grateful to the noble Earl. If I see him in an appropriate place after the conclusion of business, I shall express my thanks in more tangible form. I commend Amendment No. 13.
On Question, amendment agreed to.
[Amendment No. 14 not moved.]
Clause 11 [Review date where new tenancy of severed part of reversion]:
Earl Howemoved Amendment No. 15:
Page 6, line 20, leave out ("commences") and insert ("arises").
The noble Earl said: My Lords, this is a small clarifying amendment. Clause 11 deals with that complex subject, severance of the reversion. It refers to the situation where a new tenancy commences and then goes on to refer to people's interests under the original tenancy immediately before the date of the beginning of the new tenancy. The use of "commences" in this context is confusing because it suggests that it is intended to identify a particular moment in time. In fact, the clause is merely concerned with the situation where
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one tenancy is followed immediately by another. This amendment replaces the word "commences" with the more appropriate word "arises". I beg to move.
On Question, amendment agreed to.
Clause 13 [Amount of Rent]:
Lord Gallachermoved Amendment No. 16:
Page 7, line 13, at end insert ("and in particular any premium or equivalent").
The noble Lord said: My Lords, in moving Amendment No. 16, I shall speak also to Amendment No. 18 with which it is grouped. These amendments relate to the treatment of premiums and the equivalent tenants' improvements. We discussed this matter in Committee and I hope that this Report stage will give us the opportunity not merely to move the amendments in slightly different form, but to persuade the Minister that they have merit.
The industry working party supports the amendments and has pointed out that the agreement on which the Bill is founded includes a rent review formula that is based on the open market in which the arbitrator shall have regard to the payment of premiums or equivalent. The amendment seeks to give effect to the industry's intention.
Agriculture has only rarely seen the explicit payment of a premium for a tenancy, although it is acknowledged that that may become more common under the new legislation where it suits both parties. It is more common for tenants at the moment to be required to make certain improvements as a term of the tenancy. Those are no more than equivalent to premia. The law should treat such payments equitably so that the tenant does not pay rent where he has already paid capital.
The Bill preserves the wording from the present Act, requiring the arbitrator to disregard tenant's improvements unless they are made under an obligation of a tenancy agreement. When the Minister responded to a debate on that issue in Committee on 12th December, he expressed at col. 1190 the view that that meant that the arbitrator could take the premium nature of the obligation into account in reviewing the rent. We welcomed that statement.
However, the conventional understanding among professionals and arbitrators under the present legislation is that such improvements are treated at rent reviews as though they were the landlord's improvements. It may take a court case to establish that the Minister is right about the advice he gave in Committee. We believe that it is better to avoid the delay, the costs and the uncertainty which a court case would involve by addressing the problem explicitly in the Bill, which is what the amendment proposes. I beg to move.
Earl Howe: My Lords, as the noble Lord explained, the amendment is another attempt to address a concern which we discussed in Committee. Clause 13(2) requires the arbitrator in a rent review to have regard to all relevant factors, subject to certain exceptions. The amendment would then require him to have particular regard to any premium or equivalent. I do not think that

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that can be right. If he must take account of all factors, he should not then be prompted to have particular regard to specially identified particular factors.
If a premium has been paid, then an arbitrator is surely bound to have regard to that fact as a relevant factor. A tenant's improvement which the tenant is obliged to make is in some sense equivalent to a premium. If the tenant's improvement has to be completed at the beginning of the tenancy, it would be almost an exact equivalent to a premium and the arbitrator would certainly give full weight to it in his considerations. If the improvement is completed later on in the tenancy, its equivalence to a premium will be less and one would expect the arbitrator to give less weight to it accordingly. I appreciate that the intention of the amendment is mainly one of clarification, but the question of how much weight the arbitrator should give to a tenant's improvement which the tenant is obliged to make must be a matter of judgment having regard to the circumstances. To give the arbitrator a legislative shove in a particular direction would surely have the effect of promoting bias. In that sense the amendment goes far beyond its aim of clarification and is therefore undesirable.
I realise that this is a complicated and technical question, but I hope that the noble Lord will agree to withdraw his amendment, studying what I have said in Hansard, if necessary.
Lord Gallacher: My Lords, I thank the Minister for that reply which was not unexpected. I shall take his advice and study carefully what he said again on the subject. It is undoubtedly technical in character, although it has echoes of the problem I had as a bookkeeping student in the early days in distinguishing between revenue and capital expenditure. The Minister may be over-simplifying the question of how the arbitrator is being encouraged to review the matter in a distinctive fashion, and to make a distinction, as I have tried to do, between premia on the one hand and tenants' improvements on the other. It is a subject of considerable importance, but, as I say, I acknowledge that the Minister has examined the issue with a degree of thoroughness. All I can do at this stage is to beg leave to withdraw the amendment and consult those who advise me to see whether it is still desired to pursue the matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
5.45 p.m.
Lord Cartermoved Amendment No. 17:
Page 7, line 13, at end insert:
("() In arriving at the rent payable under subsection (2) above, the arbitrator shall also take into account the earning capacity of the holding to ensure that the rent payable is one which can be generated from the farming of the holding in question.").
The noble Lord said: My Lords, with the amendment we return—it is important that we do so—to the important question of the fixing of the rent, and the difference between the Government, who believe in the open market, and our suggestion that there should be some reference at least by the arbitrator to the earning
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capacity of the holding to ensure that the rent payable is one which can be generated from the farming of the holding in question.
That depends upon what one means by the open market, earning capacity, and so forth. There is an assumption as to the concept of the open market, and according to the economic textbooks—I must be careful, as I see that my noble friend Lord Eatwell has joined us—there should be equality of power and information between the buyer and seller to make an open market.
We know that that is not the case in agriculture. In fact, it is the case in very few markets. The land market is a difficult one. There are the wider environmental aspects, the concept of the stewardship of land, and what the economists call the externalities and access, together with a number of other things. The land market is not the normal market where there is equality between buyer and seller if, indeed, that can be found in any market.
I suspect that the Minister will give much the same reply as he did in Committee when he said that it was all right because all the arbitrator has to do is to take into account all the relevant factors. The Government studiously avoided any attempt to define what they meant by the relevant factors, but they say in Clause 13(2),
"all the relevant factors, including (in every case) the terms of the tenancy".
It is interesting to compare and contrast what they say about the arbitrator in Clause 13(2) with what is said in Clause 19(4) which relates to a reference to arbitration of a refusal or failure to give consent for a tenant's improvement. It states:
"The arbitrator shall consider whether, having regard to the terms of the tenancy and any other relevant circumstances"—
we change from "factors" to "circumstances"—
"(including the circumstances of the tenant and the landlord)".
Presumably we have to infer that in Clause 13(4), where the circumstances of the tenant and the landlord are specifically excluded, the Government intend that all the relevant factors that the arbitrator shall take into account shall exclude the circumstances of the tenant and the landlord, because had they wanted to include those matters presumably they would have put the words in as they have done in Clause 19(4). I expect that the Minister will tell me that the use of the words,
"the earning capacity of the holding"
raises the problem of removing the earnings out of the equation of the non-farming activities and diversification activities. Of course, that is covered because, if the farm meets the business condition in Clause 1(2), where the word "farmed" is used,
"all or part of the land comprised in the tenancy is farmed for the purposes of the trade or business".
The Government are happy that that phrase should include all the non-farming activities. So that point can be dealt with easily.
While we are on the subject of arbitration, it would be helpful if the Minister would clarify a misunderstanding which has arisen in discussions outside the House. We referred in Committee to "pendulum arbitration" which occurs in Clause 19(5)—in other words, the arbitrator can only unconditionally approve the provision of the

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proposed tenant's improvement or may withhold his approval. That unconditional approval or refusal (the pendulum arbitration, as it has been called) relates only to the provision or otherwise of the tenant's improvement before it is provided.
The idea has grown up that that applies also to arbitration on all the other matters. I hope that the Minister will confirm that it is intended that the normal arbitration procedure will apply to matters such as rent fixing, the value of tenants' improvements and so forth, and that the arbitrator's unconditional power—we shall be coming to that in a later amendment, but it is helpful to raise it now—applies only to that specific circumstance, and not to the general run of arbitration which, as I say, deals with rent, the value of tenants' improvements and other matters.
I return to the weaknesses, as I see them, of the open market. There is supposed to be an open market in the purchase, sale and leasing of milk quotas. Of course, that is an entirely artificial market and artificial situation that produces artificial prices. With the advent of the farm business tenancy, that is likely to happen in respect of the land market. Under the Bill, the same could happen to rents.
Acceptance of the amendment would help to overcome the problem that will undoubtedly arise for arbitrators. They will have to arbitrate on rents, effectively, under two Acts of Parliament—those tenancies which fall under the 1986 Act and those which fall under the new Act. The arbitrators must separate their thinking when considering such problems. I believe that however hard they try they will find that extremely difficult. Acceptance of my amendment will help to overcome the problem.
I hope that in the light of those comments the Government will reconsider the matter. I know that the wording of the amendment is not perfect but I hope that the Government will introduce an amendment indicating that not only the open market is involved. There should be some minimal direction to the arbitrator regarding the earning capacity of the holding. I beg to move.
Earl Howe: My Lords, the amendment tabled by the noble Lord is identical to Amendment No. 41, which we considered in Committee. As I explained at that time, the amendment has the effect of restricting the list of factors to be taken into account by an arbitrator at a rent review. Judging from the noble Lord's remarks, he has misunderstood the weight attached to the word "farming" in Clause 1. It would not embrace any non-agricultural enterprises. I shall deal with that matter in a moment.
The noble Lord elaborated further his fears about tender rents at open market levels. There is a natural tendency for people to bid high in order to secure a tenancy and, if the agreement permits a rent review at the customary three-year interval, they will not have long before what might be described as the. "true" rental level can be assessed by an arbitrator. There is no particular difficulty there.
If a holding is being used for non-agricultural enterprises within the terms of the tenancy agreement that must be a "relevant factor" for the arbitrator to take
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into account. I recollect that the examples I gave in Committee were caravan sites and pony trekking enterprises. I might add the example of a farm shop selling the produce of a horticultural holding. Many other examples spring readily to mind. Why should the rent for holdings used in that way be determined solely on the basis of actual farming activities carried out? The inevitable consequence will be that landlords let land only on condition that agriculture will be the sole user.
The noble Lord asked about pendulum arbitration and rent reviews. As he said, a later amendment more naturally embraces the subject. Arbitration under Clause 19 is a simple yes or no to consent for an improvement. But the arbitration in respect of a rent review requires the exercise of judgment as to the rent that is properly payable. I hope that that answers the noble Lord's question.
I do not believe that the noble Lord has made his case; indeed, I see some grave disadvantages in it. I hope that my explanation will enable him to consider withdrawing the amendment.
Lord Carter: My Lords, I do not believe that I shall convince the Minister. I would have been happy to take the amendment away and redraft it or allow the Government to redraft it. The principle was accepted and that could easily have been achieved, taking into account the point the Minister made, if I had referred to the "occupation" of the holding in question rather than to the "farming" of the holding in question. I would have been willing to consider that change in order to meet the Minister's point. It is only a matter of detail, although I appreciate that it is an important detail. It could have been corrected in the drafting.
It is clear that the Government are intent that the open market shall hold sway, even though no one in the industry believes that there is a true open market on the letting of land. It is important that the industry outside this House realises where, in this regard, the Government are coming from and where we are coming from. The easiest way to make that clear is to ask for the opinion of the House.
5.55 p.m.
On Question, Whether the said amendment (No. 17) shall be agreed to?
Their Lordships divided: Contents, 78; Not-Contents, 117.

Division No. 3

CONTENTS

Addington, L.

Donoughue, L.

Archer of Sandwell, L.

Dormand of Easington, L.

Ashley of Stoke, L.

Eatwell, L.

Barnett, L.

Ennals, L.

Beaumont of Whitley, L.

Ewing of Kirkford, L.

Callaghan of Cardiff, L.

Falkender, B.

Carmichael of Kelvingrove, L.

Falkland, V.

Carter, L.

Farrington of Ribbleton, B.

Castle of Blackburn, B.

Gallacher, L.

Cledwyn of Penrhos, L.

Geraint, L.

Clinton-Davis, L.

Gladwin of Clee, L.

David, B.

Gould of Potternewton, B.

Dean of Thornton-le-Fylde, B.

Graham of Edmonton, L. [Teller.]

Desai, L.

Donaldson of Kingsbridge, L.

Greene of Harrow Weald, L.

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Gregson, L.

Merlyn-Rees, L.

Harris of Greenwich, L.

Meston, L.

Haskel, L.

Milner of Leeds, L.

Hilton of Eggardon, B.

Monkswell, L.

Hollis of Heigham, B.

Morris of Castle Morris, L.

Howell, L. [Teller.]

Mulley, L.

Hughes, L.

Murray of Epping Forest, L.

Irvine of Lairg, L.

Nicol, B.

Jay of Paddington, B.

Ogmore, L.

Jeger, B.

Parry, L.

Jenkins of Hillhead, L.

Pyrs-Davies, L.

Jenkins of Putney, L.

Rea, L.

Judd, L.

Redesdale, L.

Kennet, L.

Richard, L.

Kilbracken, L.

Rodgers of Quarry Bank, L.

Kirkhill, L.

Seear, B.

Listowel, E.

Sefton of Garston, L.

Lockwood, B.

Stoddart of Swindon, L.

Longford, E.

Strabolgi, L.

Lovell-Davis, L.

Thomson of Monifieth, L.

Mallalieu, B.

Tordoff, L.

Mason of Barnsley, L.

Varley, L.

Mayhew, L.

Wedderburn of Charlton, L.

McIntosh of Haringey, L.

White, B.

Williams of Mostyn, L.

NOT-CONTENTS

Addison, V.

Hooper, B.

Ailsa, M.

Howe, E.

Aldington, L.

Hylton-Foster, B.

Allenby of Megiddo, V.

Inglewood, L. [Teller.]

Astor of Hever, L.

Jeffreys, L.

Astor, V.

Kimball, L.

Balfour, E.

Kingsland, L.

Beloff, L.

Kinnoull, E.

Blaker, L.

Lawrence, L.

Blatch, B.

Layton, L.

Bledisloe, V.

Leigh, L.

Boardman, L.

Lindsay, E.

Borthwick, L.

Liverpool, E.

Brabazon of Tara, L.

Long, V.

Braine of Wheatley, L.

Lucas of Chilworth, L.

Brookes, L.

Lucas, L.

Butterfield, L.

Lyell, L.

Butterworth, L.

Mackay of Ardbrecknish, L.

Cadman, L.

Mackay of Clashfern, L. [Lord Chancellor.]

Caithness, E.

Campbell of Alloway, L.

Mancroft, L.

Campbell of Croy, L.

Marlesford, L.

Carnegy of Lour, B.

McColl of Dulwich, L.

Chalker of Wallasey, B.

Mersey, V.

Clanwilliam, E.

Miller of Hendon, B.

Clark of Kempston, L.

Milverton, L.

Coleraine, L.

Monk Bretton, L.

Courtown, E.

Mottistone, L.

Craigavon, V.

Munster, E.

Cranborne, V. [Lord Privy Seal.]

Murton of Lindisfarne, L.

Crickhowell, L.

Napier and Ettrick, L.

Cumberlege, B.

Newall, L.

Dacre of Glanton, L.

Northesk, E.

Dean of Harptree, L.

Orkney, E.

Elton, L.

Orr-Ewing, L.

Faithfull, B.

Palmer, L.

Finsberg, L.

Park of Monmouth, B.

Flather, B.

Pender, L.

Gardner of Parkes, B.

Prior, L.

Gilmour of Craigmillar, L.

Quinton, L.

Goschen, V.

Rankeillour, L.

Halsbury, E.

Rawlings, B.

Hardinge, V.

Renton, L.

Harman-Nicholls, L.

Renwick, L.

Harmsworth, L.

Rodger of Earlsferry, L.

Hayhoe, L.

Rodney, L.

Henley, L.

Saltoun of Abernethy, Ly.

Hertford, M.

Savile, L.

Holderness, L.

Seccombe, B.

HolmPatrick, L.

Selborne, E.

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Skelmersdale, L.

Swinfen, L.

Slim, V.

Tebbit, L.

Somerset, D.

Thomas of Gwydir, L.

Stanley of Alderley, L.

Trumpington, B.

Stewartby, L.

Ullswater, V.

Strange, B.

Vivian, L.

Strathclyde, L. [Teller.]

Wade of Chorlton, L.

Strathcona and Mount Royal, L.

Wakeham, L.

Sudeley, L.

Wynford, L.

Resolved in the negative, and amendment disagreed to accordingly.
6.3 p.m.
[Amendment No. 18 not moved.]
Clause 16 [Tenant's right to compensation for tenant's improvement]:
Lord Cartermoved Amendment No. 19:
Page 8, line 20, at end insert ("save that where milk quota was registered in relation to land held under a tenancy to which the Agricultural Holdings Act 1986 applied and which was let immediately on the expiry of that tenancy as a farm business tenancy, and where no claim was made for compensation in respect of that quota under the Agriculture Act 1986, that Act shall still apply to that milk quota which shall not be the subject of any other claim for compensation").
The noble Lord said: My Lords, it may help the Minister if I say that I have that look about me which means that I am not going to divide the House on this amendment.
The amendment deals with a technical point, and I wish to raise also another point which I mentioned in Committee.
The first relates to the situation where a farmer moves from land held under a tenancy to which the Agricultural Holdings Act 1986 applied. The amendment seeks to ensure that if he does not take from that holding the compensation for milk quota under the 1986 Act and he moves to another holding belonging to the same landlord and so on, he will still be able to claim the compensation. In other words, he will be able to carry with him the compensation. The Minister may wish to reflect on that point, which is important. We have been asked to raise that matter so that it is clear that the compensation for the milk quota is "transportable" from one tenancy to the next.
As we are dealing with milk quotas, I should like to raise again a point that I raised in Committee. Although the Minister offered to discuss the matter with me, we did not have an opportunity to do so. He may like to reflect again on this matter.
Perhaps I may give an example of a tenant who has an existing holding under the 1986 Act with milk quota allocated from, for example, 1983 or 1984. He then takes on a tenancy under this Act and buys quota for the new holding. I am told that if he then gives up the two holdings, under the milk quota rules in Europe the landlord may be entitled to compensation for that second lot of quota which the tenant has purchased for his new farm, happily thinking that, as he had purchased it, all the value belonged to him. It is a fairly straightforward point. It would be helpful if the Minister were to reflect upon that. The point was made to me by a practitioner. I am sure that, under the milk quota rules from Brussels, that would be the case.

909
With regard to the amendment, it would be helpful to know whether the tenant is able to transport the value of the compensation of his quota; that it is possible to crystallise it at the end of one tenancy and then transfer it to the next tenancy without the involvement of any cash.
Secondly—and this is a separate but related matter—is it possible for a tenant who has bought some quota for a holding under this Act and has used all his money, with no involvement from the landlord, to then find that when he claims compensation the landlord may be entitled to some compensation for the second lot of quota? I beg to move.
Earl Howe: My Lords, I am grateful to the noble Lord, Lord Carter, for his explanation. Despite the fact that he is a professional in such matters, I am sure that he will be the first to admit that milk quota is a fearfully complicated and technical subject into which we venture at our peril. The amendment would allow the parties to use the Agriculture Act provisions where they took up a farm business tenancy immediately after a tenancy under the 1986 Act.
If that were allowed by the Bill, it would give rise to even more horrific complications than are already involved in dealing with milk quota. In effect, there would be two separate systems applying to a holding—one under the existing legislation and the other under the Bill.
Dealing with changes made to the registered quota after the new tenancy began would be a nightmare. If the tenant bought or sold quota—perhaps through part of his milk production business which was not subject to his tenancy—it would involve very complex calculations to determine exactly how the Agriculture Act compensation should be resolved. How would one know whether the tenant had sold his old quota or his new quota? The quota register records only the total amount of quota available to the producer at a point in time. If one supposes that the producer owns some land of his own besides the tenanted land, matters become even more confused.
I must confess that the legislation is difficult enough to follow as it stands, but at least under the Bill as drafted there is a clear cut-off point—the end of an agricultural tenancy under the Agricultural Holdings Act. Obviously there will be a number of issues which the parties must sort out between them in order to settle up at the end of the tenancy, and milk quota will simply be one of those matters.
I believe that by far the better legislative course is to give parties that clear legal cut-off. It does not prevent them reaching another arrangement if they find, for whatever reason, that they cannot settle up at the end of the 1986 Act tenancy. I am advised that the Tenancy Reform Industry Group does not support the amendment. Therefore, I hope that, on reflection, the noble Lord will withdraw it.
The noble Lord asked whether a landlord would have an interest where the tenant buys additional quota and it is added to another area of land. I am advised that the landlord would have such an interest. The European rules require all production units to be aggregated.
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However, parties may agree to apportion quota between parts of a Euro-holding. It is a complex area. I shall reflect on the noble Lord's remarks. If I can shed further light on the question, I shall of course write to him.
Lord Carter: My Lords, I am most grateful to the Minister. He is absolutely correct. As regards milk quota—I refer back to today's Question Time—it is true to say that professionals need almost continuous refreshers when dealing with such questions. I shall read Hansard and take advice on the matter. However, the problem is the total amount of quota that is held on the register and its disaggregation.
I was extremely interested to note that the noble Earl confirmed that the advice I received regarding the Euro-situation is correct. It is perhaps exactly a case where guidance notes from the Government would be most helpful. I hope that the RICS—and, indeed, all the industry groups—will take note of the point. It would be a comparatively rare case, but it could be extremely expensive to the tenant if it occurred. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 17 [Consent of landlord as condition of compensation for tenant's improvement]:
Lord Gallachermoved Amendment No. 20:
Page 8, line 28, at end insert ("relating to the tenant's improvement which is the subject of the consent").
The noble Lord said: My Lords, in moving the above amendment I shall speak also to Amendment No. 24 with which it is grouped. In doing so, I assume that the noble Earl will speak to Amendments Nos. 21 and 25 which are tabled in his name and which also form part of the group.
Our two amendments were first considered in Committee. They provide that the landlord may attach conditions to a consent to a proposed tenant's improvements only in so far as they relate to the improvement which is the subject of the consent. They thus prevent the landlord from using the opportunity of a request for consent to a proposed tenant's improvement to attach conditions which make alterations to a farm business tenancy which are not relevant to the improvement itself. They are a protection for the tenant who might otherwise be put off from seeking to make desirable improvements.
The Government have tabled amendments which appear to us at this point, subject to the noble Earl's confirmation, to have the same effect as ours. We believe that our amendments are clear and unambiguous, but if the Government could confirm that their amendments fulfil the same purpose we should prepared to look at them favourably. I beg to move.
Earl Howe: My Lords, with the leave of the House, I should like to address the two amendments tabled in my name which have been grouped with those to which the noble Lord spoke; namely, Amendments Nos. 21 and 25. The noble Lord will no doubt recall that he spoke to Amendments Nos. 57 and 64 in Committee—that is the Committee stage numbering—and sought clarification of the intention behind Clauses 17(3) and 18(2) in respect of variations in the terms of a tenancy

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as a condition of a landlord giving consent for an improvement. I explained then that I was not in the least opposed to a requirement that conditions must relate to the improvement proposed by the tenant. I undertook to look constructively at the wording of those clauses.
I believe that the amendments tabled in my name achieve the result intended by the noble Lord, Lord Gallacher. In the case of Clause 17, any variation in the tenancy agreement required by a landlord as a condition of giving consent must be related to the tenant's proposed improvement. In the case of Clause 18, which relates to compensation for planning permission, any variation in the tenancy agreement must be related specifically to the tenant's proposed physical improvement or proposed change of use for which planning permission is to be sought. Although the wording in my amendments differs from that contained in the noble Lord's amendments, I hope that he will allow my wording to prevail on this occasion and feel able to withdraw the amendment.
Lord Gallacher: My Lords, I am grateful to the noble Earl for his response and for the assurance that he has given me regarding the effect of the amendments tabled in his name. In view of that assurance, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Earl Howemoved Amendment No. 21:
Page 8, line 28, at end insert:
("() The variation referred to in subsection (3) above must be related to the tenant's improvement in question.").
On Question, amendment agreed to.
6.15 p.m.
Lord Gallachermoved Amendment No. 22:
Page 8, line 30, at end insert:
("(5) This section does not apply in any case where the tenant's improvement consists of one or more of the following—

(a) growing annual crops;

(b) pasturing;

(c) beneficial acts of husbandry;

(d) liming of land; or

(e) application to the land of purchased manure or fertiliser, unless there is provision to the contrary in an agreement in writing between the landlord and the tenant.").

The noble Lord said: My Lords, in moving the above amendment, I shall speak also to Amendment No. 29. Both amendments are concerned with tenant right. The Bill provides that for a tenant's improvement to be eligible for compensation it must have the landlord's written consent. In all cases bar planning permissions the question of consent can be referred to arbitration.
The proposed new subsection lists five items of tenant right as specific exceptions to that rule. If approved, no written consent would be needed for those essentially operational matters to be eligible for compensation. The parties' freedom is preserved by allowing them to contract otherwise in a written agreement.
As regards valuation, the general rule of the Bill is that a tenant's improvements should be valued for the value that they add to the holding. The amendment
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maintains the traditional approach to essentially operational improvements of their value to an incoming tenant, so that the tenant will farm as though he were the incoming tenant.
Under English common law, anything that is fixed to land becomes the property of the landowner. It is the peculiar position of the farm tenant that many of his day-to-day actions fix value to the landowner's land. Tenant right grew up to address that problem, creating a customary claim to compensation which the law steadily consolidated until the custom was finally abolished in 1947. The custom of tenant right reflected the fact that the agricultural year has no absolute end and beginning and the desirability of encouraging the tenant to farm as though he were the incoming tenant.
The Agricultural Tenancies Bill removes the legal basis for tenant right by insisting absolutely on the consent of either the landlord or the arbitrator. Nonetheless, it seems likely that over time the courts would intervene to recreate some customary claim to tenant right. Rather than face the cost and uncertainty of that process, and the denial of fair treatment to some outgoing tenants along the way, we feel it best to tackle the question as part of the Bill.
The approach taken in the first amendment to Clause 17 is to identify five specific exceptions to the general rule requiring consent for compensation. The list has been prepared after discussion with valuers and farmers from all parts of the country. The basic principles used in selecting the five items from among the many possible heads of claim are that they are operational rather than policy items. Policy items or capital expenditure should be addressed between the parties. The items listed are the running operational consequences of policy decisions.
Most written agreements could be expected to cover those items, but there will be some tenancies with only a sketchy written basis and others that are purely oral. In those cases the Bill's present form would require the tenant to seek the landlord's written consent—perhaps every year in a tenancy from year to year. That is likely to feel unnatural to both parties. The tenant may feel awkward about taking the matter to arbitration and sometimes may not even have the time: the requirement is for the arbitrator's prior consent. Most tenants will simply assume the matter is covered and be badly surprised should they find a landlord making it clear that he is not required to pay. Without some cover such as that proposed in the amendment, other tenants will clearly feel much more cautious about committing themselves to normal operations on the farm in the last years of the tenancy. That would not be in the interests of the incomer, the owner or the industry and would be bad for the reputation of the legislation.
The five heads of the claim are given in the amendment. Therefore, I shall not take up the time of noble Lords by reciting them. The amendment provides a general rule which would operate as a default but which would give the parties the opportunity to make other arrangements in a written agreement, so honouring the approach of the Bill. It will be for valuers to address the proper compensation in the circumstances. The amendment makes no reference to the detailed

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regulations under the 1986 Act, which in any event have not been revised for inflation. The measure of compensation should be that set out in the second amendment: the value to the incomer, reflecting the character of those items as running rather than capital expenditure. I beg to move.
Earl Howe: My Lords, I have listened with interest to all that the noble Lord has said on this complex and rather technical subject. I have to say that I have some sympathy with the intentions behind the amendment, but I do question whether this is the type of detailed provision which is appropriate in the Bill.
The improvements which the noble Lord has listed are all agricultural improvements for which agricultural tenants are entitled to compensation. But we are now dealing with farm business tenancies, and we must consider also whether there may not be some non-agricultural improvements which in years to come would equally merit inclusion in the list. If we adopt this approach, I can see us being pressed periodically to make additions to the list.
I have another concern. The amendment tabled by the noble Lord is relatively short, but it would be essential for some of the terms such as "beneficial acts of husbandry" to be defined more precisely. We would be incorporating a relatively long and detailed provision about a relatively minor matter into a Bill which is intended to provide a basic framework with key provisions. If the tenant is undertaking a long-term programme of, for example, fertilising, liming or other measures to improve soil fertility, it is really more appropriate for him to seek specific consent. And, if it is a matter of growing crops and things which are relevant only during the last year of the tenancy, then surely it is sensible for the tenant—who will have had 12 months' notice—to arrange to get all the necessary consents for the items on which he will be claiming compensation.
I have to say that I think that this is an issue which should be covered by the RICS guidelines, not the Bill. What one might envisage is a standard clause which could be used in most tenancy agreements, giving consent to the tenant undertaking certain activities and being entitled to compensation for them. There would be no problem about adding new items if the industry considered it necessary. Furthermore, landlords have an interest in seeing that an outgoing tenant maintains the holding properly.
Finally, there is the question of how the compensation should be calculated. It is generally acknowledged that we are dealing with relatively small .amounts of compensation and I would suggest that whichever method is used there is not going to be a great deal of difference in the amount of compensation which the tenant receives for the specific categories of tenant-right matters. I do advocate the simple approach adopted in
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the Bill, which I believe has the industry's support and I hope that the noble Lord will feel able to withdraw the amendment.
Lord Carter: My Lords, before the noble Earl sits down, did I hear him aright? Did he suggest that the landlord's consent should be asked if a farmer wishes to lime his ground?
Earl Howe: My Lords, I was suggesting that, because that is, or can be, in the nature of a long-term improvement on a holding. It is a programme that is sometimes undertaken not just one year in isolation but over a succession of years if the soil fertility is to be improved. I would suggest that it is a matter that is appropriately addressed, perhaps in the tenancy agreement in the form of a standard clause.
Lord Gallacher: My Lords, the Minister's response is not unexpected and I thank him for it because it contains sufficient detail to enable me to discuss again with our advisers whether or not it is desired to pursue this question further. I was particularly intrigued by the offer to consider the formula of a standard clause. We shall look at that in particular to avoid some of the disbenefits which the Minister explained in his response to my remarks. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 18 [Conditions in relation to compensation for planning permission]:
Lord Gallachermoved Amendment No. 23:
Page 9, line 1, at beginning insert ("Subject to subsection (3) below").
The noble Lord said: My Lords, in moving Amendment No. 23, I shall speak also to Amendment No. 26. Amendment No. 23 is in the nature of a paving amendment, so I turn at once to Amendment No. 26, which is the important part of this grouping. Amendment No. 26 seeks to make an important exception to the provision of Clause 18 regarding the rules about obtaining the prior consent of a landlord before applying for planning provision. Agricultural business tenancies in our view are likely to extend over a number of years. Indeed most of the received wisdom on the subject is that one of the benefits that may flow from this Bill will be the fact that tenancies will be for longer periods and this will allow both the landlord and the tenant to fully benefit from the fact that it is not a short tenancy of excessively short duration.
However, if the tenancy is for a number of years, say five, during this time planning law or regulations could change quite dramatically. We are very well aware at the present time of many well-meaning people who are strongly advocating much extended planning regulation in the countryside. I think it is appropriate to take notice of this in considering a Bill of this kind. In addition to the propaganda which—if that is not too harsh a word—is being put around in favour of planning extensions in the countryside, the planning authorities, it has to be said, are seeking to extend their powers in this particular area. It has also to be said, in fairness, that the seeking of that extension is in many cases quite legitimate.

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On the other hand we feel that the nature of farming changes are such that major changes in planning law during the currency of a farm business tenancy could seriously affect the operation of the farm. Indeed there is much in this Bill which allows for flexibility in this regard and we welcome it. While talking of change, one has only for example to contrast the original proposals by former Commissioner MacSharry for revising the CAP with what emerged at the end of the day largely due to some powerful argument well received by the United Kingdom which resulted in the removal of restraints which would have had a very adverse effect on the economy of many farmers in Britain.
As I have said, the Bill recognises the importance of flexibility. What we are seeking to do in this amendment is to ensure that that flexibility is not subject to a barrier because a change has taken place in planning law with the passage of time which would not have existed had the particular development been necessarily undertaken at an earlier stage in the tenancy. Amendment No. 26, as I say, now seeks to protect a farmer from such changes. I think it is an important issue and I hope that the Minister will be able to respond sympathetically to it. I beg to move.
Earl Howe: My Lords, I am grateful to the noble Lord, Lord Gallacher, for his explanation of this amendment. However, an important effect of the amendment would be that if the planning laws change after a farm business tenancy has been taken up and the tenant applies for such planning permission as is then needed for an improvement, obtains that permission and quits the holding before completing the improvement, he will subsequently be entitled to compensation for the planning permission without having had the landlord's consent. We have already debated this afternoon, in respect of Clause 17, the basic principle under the Bill that a tenant's entitlement to compensation rests upon securing the landlord's consent. I see no good reason to depart from that principle in the circumstances of changed requirements under the planning laws for physical improvements or changes of use.
If, at the start of the tenancy, there was no requirement for planning permission then, ipso facto, the tenant could not have claimed compensation for such permission. I come now to the key point. Refusal by the landlord to consent to the tenant applying for planning permission does not prevent the tenant from making the application. It simply means that, if he obtains planning permission and quits the holding before completing the relevant improvement, or effecting the relevant change of use, he will not be entitled to compensation from the landlord for the planning permission on its own.
There is a similar point with regard to liming which we have just discussed. The tenant does not need the landlord's consent to carry out liming. He only needs it if he wishes to claim compensation. The principle is exactly the same. If the building, or whatever the improvement is, has been completed with the landlord's consent, then the tenant is entitled to compensation, which may include an element for the value of the planning consent under Clause 20(4) of the Bill. In
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practice, of course, it is usually the proposed improvement or change of use itself which is more important than the planning permission. That is because, if a landlord refuses consent to what the tenant wants to do, the tenant will not receive compensation for it and the question of planning permission is unlikely to arise anyway unless an arbitrator overrules the landlord.
Almost every landlord will be aware that nowadays rural developments, whether or not of agricultural origin, are likely to require planning permission. If asked by a tenant for consent to make an improvement or change of use which benefits the holding, landlords will understand that planning permission is probably needed. The parties then decide who is best placed to apply to the local authority.
Changes in planning law are something of a red herring. If a new requirement for planning permission is imposed, that is no reason for the tenant to be entitled to compensation for obtaining such permission without consent. If the consent is refused, that does not prevent him from seeking the planning permission in any event.
I hope that, with that explanation, the noble Lord will be more than somewhat reassured and will feel able to withdraw his amendment.
6.30 p.m.
Lord Gallacher: My Lords, I found the noble Earl's response somewhat disappointing and, as someone who is not a practitioner in this field, a trifle removed from reality.
We are agreed that farming will change radically, even in the short term. Certainly in the longer term it would be a very bold man who attempted to forecast what a typical farm —whether a mixed farm or a specialised farm—will look like five years after a farm tenancy agreement has been entered into. It would be an even bolder man who would assume that local authorities will not seek to extend considerably their powers over planning law in the countryside.
The Minister sought to assure me that I see difficulties which either will not arise or, if they do arise, will be capable of resolution. I hope that he is right because, for my own money, I would be inclined to advise any person contemplating a farm business tenancy to take a long look at what he was putting his hand to and, in particular, to try to anticipate events. Those of us who have come up against the planning machine in urban areas know to our cost and sorrow that, even at the hands of our friends in government, some painful lessons have had to be learned. Equally, when decisions have been given in urban areas they are sometimes so ringed with planning conditions that, having obtained the consent one sought, one sometimes wonders whether it would have been better to have lost both the application and the appeal.
Nevertheless, I shall take on board what the noble Earl said and shall study it carefully. I do not wish to be a prophet of doom and gloom. Nevertheless, I feel that this is an aspect of the Bill which is not sufficiently clearly resolved. Although we may not return to the issue, it may be that those who look ahead in these matters should be aware that there are dangers on this score. I understand the motivation for seeking to

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regulate the question of planning consents within the Bill, but Amendment No. 26 seeks to introduce a measure of flexibility and tolerance to give the tenant farmer a greater measure of protection, not so much against his landlord as against the effect that changes in the law which will result from growing consciousness of the environment may have upon him as a farmer. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 24 not moved.]
Earl Howemoved Amendment No. 25:
Page 9, line 2, at end insert:
("() The variation referred to in subsection (2) above must be related to the physical improvement or change of use in question.").
The noble Earl said: My Lords, I have already spoken to the amendment. I beg to move.
On Question, amendment agreed to.
[Amendment No. 26 not moved.]
Clause 19 [Reference to arbitration of refusal or failure to give consent or of condition attached to consent]:
[Amendment No. 27 not moved.]
Lord Cartermoved Amendment No. 28:
Page 9, line 31, leave out from ("may") to the end of line 34 and insert ("withhold his approval for the proposed tenant's improvement or may approve it either unconditionally or subject to such conditions as he may think fit after considering the matters set out in subsection (4) above.").
The noble Lord said: My Lords, Amendment No. 28 deals with Clause 19(5). It was helpful in relation to a previous amendment to have the Minister's agreement regarding our understanding that pendulum arbitration—where the arbitrator can say either yes or no but cannot attach any conditions to his decision—applies only to the particular case where a tenant has been refused permission by the landlord for an improvement and has gone to arbitration and in that case the arbitrator can only unconditionally approve the provision or unconditionally withhold it.
We discussed the matter in Committee, but we consider it worthwhile to return to the point because we still feel that this provision is not quite in the real world. It removes a degree of flexibility from the arbitrator. We know as a result of our earlier discussion that this provision does not apply to arbitration in relation to rent or the valuation of tenancy improvements but only to this specific case. Although it is attractive in theory, in practice it could give rise to problems.
There has been a great deal of interest in the concept of pendulum arbitration in relation to industrial relations. It has been discussed by theoreticians, but I am not aware of any instances where it has been applied in practice. I wonder whether the Government, in their desire for simplification, are going too far down the road of lack of flexibility and whether they should not consider the amendment. The amendment would still allow the arbitrator to approve an improvement unconditionally if he wishes or, as often happens in arbitration,
"subject to such conditions as he may think fit after considering the matters set out in subsection (4)"
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of the clause, which are,
"the terms of the tenancy and any other relevant circumstances (including the circumstances of the tenant and the landlord)".
I believe that this is an area where it would be wise to give the arbitrator some flexibility.
I shall be interested to know why the Government have adopted this approach. Is it based on advice, or because they want to try the system and believe that it will work better? Are there cases in agriculture where that system of arbitration is applied? I am not aware of any cases, but I am prepared to be corrected. Perhaps the noble Earl can show whether there are examples of where this type of arbitration is already working. It is rather like a referendum in which one either says yes or no, and there is no "maybe" about it. It removes that degree of professional flexibility on the part of the arbitrator which we are used to him having. It is a surprising approach to this particular part of the Bill. I beg to move.
Earl Howe: My Lords, the noble Lord, Lord Carter, has set out his view —both now and in Committee—that Clause 19 of the Bill does not give arbitrators enough flexibility and prevents them from using their professional skills.
In this situation I see the lack of flexibility as a positive advantage. The noble Lord asked why we took that view. A landlord who was prepared to give consent to an improvement but wished to impose conditions would think very carefully whether the conditions he set were sensible. If they were not, in all probability an arbitrator would conclude that it was reasonable for the tenant to provide the improvement and give approval for the tenant to make the improvement and, being entitled to compensation, without any conditions being imposed. As a consequence, both landlord and tenant will be discouraged from adopting extreme positions in the expectation that the arbitrator would split the difference. Both parties would have a real incentive to adopt a constructive approach and make a positive effort to reach agreement without recourse to arbitration. That is to their mutual advantage, because an arbitration is bound to involve them in expense.
The main industry organisations, including the RICS, have considered this question carefully, and I understand that they support the approach adopted in the Bill. I genuinely believe that in this particular instance it is the right approach. I very much hope that the noble Lord will withdraw the amendment.
Lord Carter: My Lords, it is interesting that the Minister was not able to provide any practical examples of where pendulum arbitration is being practised. I do not know whether the Minister wishes to come back on that issue.
Earl Howe: My Lords, with the leave of the House, I should have said that the noble Lord was right in his assumption that pendulum arbitration is not currently practised in agriculture.
Lord Carter: My Lords, the Bill therefore breaks more new ground. I should be interested to know how an arbitrator can split the difference on a tenant's improvement. If the tenant asks to put up a barn and the

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landlord says, "No, I am not quite sure about that", I do not see how the arbitrator splits the difference. The provision is a hangover from the normal practice of arbitrators with regard to rents and valuation of tenants' improvements. As I said in Committee, the normal practice of the arbitrator is expensive and sophisticated; it is to divide by two. I believe that the Government are moving into a fairly risky area, even if they have the support of the RICS. I am not sure whether other members of the industry group agree.
We shall not press the point. However, we thought it helpful to put down a marker to warn the industry that that is what will happen. We shall have to sit back and wait to see what happens. I believe that the outcome will be a little more painful than the Government expect. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 29 not moved.]
6.45 p.m.
Lord Gallacher Lord Gallacher moved Amendment No. 30:
After Clause 30, insert the following new clause:
Section 22 of the Solicitors Act 1974 not to apply
(" . For the purpose of drawing or preparing any instrument under this Act, subsection (1) of section 22 of the Solicitors Act 1974 shall not apply to any Fellow or Associate Member of the Royal Institution of Chartered Surveyors.").
The noble Lord said: My Lords, we discussed a similar amendment in Committee. On bringing it back at Report, we have refined it somewhat in the hope that the refinements will commend themselves to the Government. In addition, rather than making it a debating point in reply, I should state at the outset to the noble Earl that his unstinted praise for the Royal Institution of Chartered Surveyors in response to my noble friend's Amendment No. 4 leads me to think that he will have difficulty in disagreeing with the very modest proposition I am about to put to him.
Most annual tenancy agreements are, and for many years have been, drawn by chartered surveyors. Those are currently turned into lifetime tenancies, including in many cases succession for two generations, by the effect of the Agricultural Holdings Act. Chartered surveyors therefore are experienced in drawing agreements which in practice run for many years.
We believe that Amendment No. 30 is justified on the ground of cost compliance. The amendment makes it easier and cheaper to put farm business tenancy agreements into writing because there will no longer be any need either for a solicitor or a barrister to approve the work carried out by a chartered surveyor. Under the Bill we are anxious to ensure that as much as can be put into writing is placed in writing, and we are equally anxious that there should be no deterrent in that regard as a result of legal costs incurred in so doing. We believe that it is in the interests of the industry as a whole that the tenancy agreements are made in writing in order to reduce not only the initial cost but also the potential for subsequent litigation if those agreements are not in writing.
The cheaper process, such as we believe is encompassed in the amendment, will encourage that development. In moving the amendment, I express the hope that the noble Earl will be able to give me a sympathetic reply. I beg to move.
Earl Howe: My Lords, in Committee I opposed a similar amendment to allow RICS members to draw up farm business tenancy agreements of more than three years' duration. However, I said that I would reflect on the debate. Having done so, I have to say that I found the arguments put forward convincing. We have considered the issue carefully and the Government are willing in principle to give RICS members the necessary power. We are currently preparing an amendment on which we need to have further consultation but which I hope will be ready to be tabled at Third Reading. I hope that in the light of that assurance the noble Lord will feel comfortable in withdrawing the amendment.
Lord Gallacher: My Lords, I thank the noble Earl for the constructive nature of his reply. In the light of it, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 34 [Service of notices]:
Lord Gallachermoved Amendment No. 31:
Page 15, line 24, leave out from ("by") to end of line 25 and insert ("prepaid post").
The noble Lord said: My Lords, we discussed in Committee how notices were to be served. Indeed, I recall that we drew upon the experience of the rules of the Supreme Court relating to the service of documents in force at the time of service. We have taken on board what the noble Earl said and have come up with what we hope is a simple and suitable alternative to the provisions in the Bill. Amendment No. 31 inserts the simple definition "prepaid post" in place of the words in the Bill. I beg to move.
Earl Howe: My Lords, I am grateful to the noble Lord, Lord Gallacher, for introducing this amendment. I would point out that under Section 7 of the Interpretation Act 1978 if service by ordinary pre-paid post was authorised by the Bill and a dispute arose on whether a notice had been served, the onus would be on the recipient to prove that he had not received it. Even supposing that he had not received it, it could be very difficult to convince the court that it had not arrived.
If the post is used to deliver a document the sender would be well advised to use the recorded delivery service and, in particular, to request delivery to him by the Post Office of a copy of the receipt obtained from the addressee. There is no need for the Bill to authorise or require this. The sender can do so of his own volition. I appreciate that Section 93 of the 1986 Act authorises service by recorded delivery post. I am advised that not only is the provision unnecessary but that its effect in practice is arguably to shift the burden of proof on to the addressee to prove that he did not receive the document when the ordinary post is used.
As your Lordships will remember, I said in Committee that the Government were giving further thought to the question of service of notices. We are

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preparing an amendment to Clause 34 to clarify the rules regarding the giving of notice by means of fax, for example. This is a complex area but we have done some preparation and we shall be consulting the industry very shortly. In the meantime, I hope that the noble Lord will feel content to withdraw his amendment.
Lord Gallacher: My Lords, again I thank the Minister for what he said. In the light of that assurance, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Carter Lord Carter moved Amendment No. 32:
After Clause 34, insert the following new clause:
Agricultural Holdings Act 1986: Rights to apply for new tenancy
(". Section 36(3) (a) of the Agricultural Holdings Act 1986 shall be amended to insert the words ", or any related ancillary," after the word "agricultural" where it first appears.").
The noble Lord said: My Lords, in moving Amendment No. 32 I shall speak also to Amendments Nos. 33 and 34. These are three suggested amendments to the Agricultural Holdings Act 1986. Perhaps I may make the general point that we made in Committee. I hope that the Government are not taking an intransigent stance on the issue. Political points put forward to change the 1986 Act can be debated with the Government. I accept that they would not always accept them. But if, as a matter of good law and practice, there is a chance—it is the only chance we shall have—to put right in this Bill obvious anomalies and weaknesses which those who have to operate the Act have found, I believe that the Government would be failing in their duty if they did not accept that chance.
I realise that in later amendments the Government have put down wording to alter the 1986 Act in the light of discussions in Committee. Amendment No. 32 inserts the words "or any related ancillary" after the word "agricultural" where it first appears in the appropriate section of the 1986 Act. That deals with this point. It is often difficult for successors to satisfy the source of livelihood test: that he or she must have earned their principal source of livelihood from agricultural work for five out of the past seven years.
Successors do not usually succeed to holdings until they are in their thirties and forties or are even older, by which time many of them will have families of their own and the agricultural work will not have been able to sustain the livelihoods of the two families on the farm, the parent and the successor. Thus the close relatives, usually sons, who would otherwise be fully eligible to succeed and who intend to farm have to supplement their incomes. We are all familiar with this in the industry. The work can take a variety of forms. It is usually agricultural or is related to agriculture—for example, contract farming (working as a contractor) or whatever. The amendment suggests that the 1986 Act should be amended to reflect the reality of the situation and to ensure that those who are suitable and have succession rights can realise them.
Amendment No. 33 is more technical. Its purpose would be to ensure that circumstances in which a reduction of rent is agreed, which cannot have been intended to result in the resetting of a three-year
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time-limit for reviews and which do not fall within the present exceptions—for example, where a landlord and tenant agree on the surrender of a cottage on the holding with a consequent reduction pro rata in rent, and vice versa, where a cottage is taken on—do not, as they presently would, reset the time limit. I had the chance to bring this point to the attention of the Minister when we met before Report stage. It is a technical point which has been put to me by a leading practitioner. I hope that the Minister will accept the point and either accept this wording or suggest that he will come back with his own wording.
Amendment No. 34 follows the lines of an amendment that we discussed in Committee. Paragraphs 9(2) and 10(1) (d) of Schedule 3 to the 1986 Act make provision for conservation covenants to protect tenants from the consequences of a breach of the rules of good husbandry as referred to above. However, the landlord must agree to the covenant either in the tenancy agreement or in a separate written agreement. We feel that tenants should not face such harsh consequences for inadvertent breaches of the rules of good husbandry simply because they have entered into set-aside, for example. The rules of good husbandry are outdated and inconsistent with modern farming methods, and in particular with environmental schemes. If we relate that point to Amendment No. 34, subsection (3), which deals with set-aside, tenants entering into set-aside, and indeed into environmentally sensitive area management agreements, could in certain circumstances, as I have just mentioned in the other respect, fall foul of the rules of good husbandry. No allowance is made in the rules for conservation management.
Subsections (1), (2) and (3) of Amendment No. 34 are not perfect. But in that amendment we are trying to grasp the point of how the good husbandry rules, with which we are all familiar, are not now related to modern agreements for conservation, for set-aside or for environmentally sensitive areas etc.
These three amendments are all related to improvements to the 1986 Act. They are not in any sense political. They deal with matters which have been drawn to our attention and which would improve the working of the 1986 Act. This is our chance to make those improvements. I hope that the Government will be able to accept them—or at least will be able to accept the principle behind them and offer to return with their own wording. I beg to move.
Earl Howe: My Lords, I have listened with interest to the noble Lord's reasons for wishing to make these amendments to the Agricultural Holdings Act 1986. However, much as this will disappoint him, I regret that I am no more persuaded than when he proposed the same amendments at Committee stage.
Throughout all the discussions leading up to the Bill, the Government have assured the industry that the new legislation would not be retrospective and that we would not amend the 1986 Act. The new clauses set out in Amendments Nos. 32 and 34 would breach that commitment. I recognise that the amendments are intended to facilitate diversification in the first case and conservation in the second case. But the fact remains

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that they would be substantial alterations to the parties' rights in relation to existing tenancies. The first new clause would have the effect of making it easier for a close relative to succeed to a succession tenancy. This would be a major change; and there would be those who would ask, including no doubt some of your Lordships, why in that case we could not impose various other conditions on succession tenancies, or indeed abolish succession rights altogether. If we have given a commitment not to interfere with existing tenancies, which the industry fully supports, we cannot simply say that this is an amendment which is meant to be helpful. To some it will be unhelpful.
For similar reasons, I am afraid I am not able to accept the other new clause set out in Amendment No. 34 which would alter the good husbandry responsibilities applying to all existing tenancies under the 1986 Act. Even with the best of intentions, we cannot pick and choose some areas to tinker with.
Turning to Amendment No. 33, the noble Lord explained very clearly some of the complexities of the rent provisions contained in the 1986 Act. Naturally, I consider that the approach to rent contained in the Bill is a very great improvement on Schedule 2 to that Act.
The real difficulty with the amendment tabled by the noble Lord is, of course, that it is not concerned with any provision within the Bill itself. Its effect would be to amend the statutory rent provisions applicable to a tenancy granted not under the Bill but under the 1986 Act. As I have just made clear, we do not wish to make retrospective changes, however meritorious a case could be made for those changes. The noble Lord's amendment is, I do not doubt, well-intentioned in that he seeks to correct what is seen as a technical deficiency in the present rent provisions. I make no comment today as to whether there is such a deficiency: however, if the agreement were to be made there would be an impact on existing tenancy agreements which might work to the disadvantage of one party or the other.
I suspect—indeed I know—that the noble Lord will not like these arguments. But the Government are committed to not interfering retrospectively with existing tenancies. We intend to honour that commitment. I hope that the noble Lord will understand when I invite him to withdraw the amendment.
Lord Carter: My Lords, I certainly understand the Minister, but I do not agree with him. I would be prepared to concede that Amendments Nos. 32 and 34 are at least debatable: they stretch the 1986 Act. I am advised that perhaps we should not have grouped Amendment No. 33 with the other two. It relates clearly to a highly technical point, where an apparent weakness has been discovered in the 1986 Act. The Government are taking a very intransigent view. Leading practitioners point out an obvious anomaly in the 1986 Act which they have the chance to put right, and they take up this very stubborn attitude that, even though it is bad law, they are not going to change it. I shall certainly want to take advice on Amendment No. 33 and return to it at Third Reading—or perhaps the Minister will have a chance to reflect on what he said and
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consider whether, on the technical point in this amendment—a point that I put to him before we entered the Report stage—it is worth considering. As I say, the point is highly technical, but I am told that it is very important. In the light of the Minister's reply I shall certainly withdraw this amendment, but we should look again at Amendment No. 33. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 33 and 34 not moved.]
Clause 35 [Crown land]:
Earl Howemoved Amendment No. 35:
Page 16, line 20, after ("land") insert ("or, if there is no such department, such person as Her Majesty may appoint in writing under the Royal Sign Manual").
The noble Earl said: My Lords, this is a technical amendment to the provisions relating to Crown land. I am advised that there may be some such land not forming part of the Crown estate where the management may rest with government departments as a matter of administrative practice rather than by virtue of statute. In such cases it is desirable to have a means of removing any doubt about who is to be regarded as the owner of the interest in that land for the purposes of this Bill. The amendment achieves that objective. I beg to move.
On Question, Amendment agreed to.
Clause 36 [Interpretation]:
[Amendment No. 36 not moved.]
Lord Gallachermoved Amendment No. 37:
Page 17, line 32, after second ("a") insert ("written").
The noble Lord said: This amendment is directed at Clause 36(3) in the Bill, which provides that,
"A tenancy granted pursuant to a contract shall be taken for the purposes of this Act to have been granted when the contract was entered into".
Therefore, we are advised that, if there is a contract before 1st September 1995 for a tenancy which is granted after that date, the tenancy will be governed by the Agricultural Holdings Act 1986 and will not be a farm business tenancy. Contracts for leases of three years or under do not have to be in writing as under Section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989. A landlord, or a tenant, might therefore find that he had entered into a contract without being aware that he had done so or of the consequences. If the contract was in writing, which is the purpose of the amendment, the parties would probably apply their minds to what they were doing and so the accident would not happen. If they did not, there would be clear evidence that there was a contract and so the Agricultural Holdings Act 1986 would apply.
I move the amendment in order to have the benefit of the noble Earl's view on the proposition which is contained in my reasoning in support of it. I beg to move.
Earl Howe: My Lords, I thank the noble Lord for explaining the problem so clearly. We certainly do not want to set any traps in the new legislation. We thought that Clause 1(4), read with Clause 36(3), was satisfactory. But in view of the unease which has been

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expressed by the noble Lord, I am prepared to have another look at the matter and, if necessary, return with a government amendment at a later stage. I hope that the noble Lord will feel able to withdraw the amendment.
Lord Gallacher: My Lords, I am grateful to the noble Earl for his assurance. In the light of that assurance, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule [Consequential amendments]:
Earl Howe Earl Howe moved Amendment No. 38:
Page 28, line 27, at end insert:
("The Agricultural Holdings Act 1986 (c. 5)
30A. In Schedule 6 to the Agricultural Holdings Act 1986 (eligibility to apply for a new tenancy under Part IV of that Act), in paragraph 6 (occupation to be disregarded for purposes of occupancy condition), in sub-paragraph (1) after paragraph (d) there shall be inserted—
"(dd) under a farm business tenancy, within the meaning of the Agricultural Tenancies Act 1995, for less than five years (including a farm business tenancy which is a periodic tenancy),".").
The noble Earl said: My Lords, this amendment is similar to one tabled by the noble Lord, Lord Carter, at Committee stage which I undertook to consider. It is grouped with the noble Lord's amendment, Amendment No. 39, which seeks to cover the same point.
The amendment in my name would safeguard the interests of an applicant who hoped to succeed to an agricultural holding under the succession provisions of the 1986 Act and who had to prove that he or she did not already occupy a commercial unit of agricultural land. Schedule 6 to the 1986 Act lists various types of short-term tenancy which should be disregarded for that purpose. This amendment would add to the list agricultural land occupied under farm business tenancies for a fixed term of less than five years, including periodic tenancies. As such, it is a genuine consequential amendment. Clearly such tenancies could not have been included in the 1986 Act because they will not exist until the Bill comes into force. I beg to move.
Lord Carter: My Lords, we have today dealt with three groups in which we and the Government have put down very similar amendments. I believe that so far the score is one to one: the Government have accepted one of our amendments and we have accepted one of theirs. I am prepared to let the Minister win two to one on this occasion. I do not propose to move my amendment.
On Question, amendment agreed to.
[Amendment No. 39 not moved.]

Cleveland (Structural Change) Order 1994
7.2 p.m.
The Minister of State, Department of the Environment (Viscount Ullswater)rose to move, That the draft order laid before the House on 8th December 1994 be approved [4th Report from the Joint Committee].
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The noble Viscount said: My Lords, I beg to move that the draft order be approved. This is the second structural change order to be put before your Lordships following a review by the Local Government Commission for England. This order was considered on 11 th January by the other place, where it was approved. On 18th January 1994, having considered the commission's report and the representations which were made to him on it, my right honourable friend the Secretary of State for the Environment announced his decision to accept the commission's proposals for Cleveland. It is the Government's belief that the establishment of four unitary authorities on the boundaries of the existing borough councils will best combine effective and convenient local government with a reflection of the interests and identities of local people.
The local government commission also recommended in its report that for ceremonial and related purposes the county area of Cleveland should be divided between County Durham and Yorkshire. While the Government have accepted that proposal in principle, we shall not be taking a final decision until we have reached conclusions on the future structure of local government in County Durham and North Yorkshire. The present order does not, therefore, address that issue, which will be dealt with in in a later statutory instrument.
It has been suggested that no orders should be made until the Government have made decisions on all the commission's representations. We do not agree with that argument. Such a delay would prolong uncertainty for all involved in local government in Cleveland, not least the staff, and delay the benefits of change in Cleveland and elsewhere.
The Government's original intention was to implement reorganisation on 1st April 1995. That timetable, however, had to be altered following Cleveland County Council's judicial review application, which was turned down by the High Court in June. To have proceeded on our original timetable would have put at risk both a smooth transition and proper provision of essential services.
There are no substantive proceedings currently before the courts. However, as some of your Lordships are aware, the county council has applied for leave to appeal by means of an oral hearing before the Court of Appeal and a date for that hearing has not yet been set. Before the order was laid before your Lordships, the Government gave very careful consideration to the question of whether that outstanding application should prevent laying and debating the order, but we concluded that it should not. If your Lordships approve the draft order, we shall of course take stock of the position on legal proceedings before the order is made.
The draft order which is now before your Lordships proposes change to the structure of local government in Cleveland. It provides for Cleveland County Council to be wound up on 1st April 1996 and its functions and powers to be transferred to the four borough councils of Middlesbrough, Hartlepool, Stockton-on-Tees and Langbaurgh-on-Tees (the last-named to be renamed "Redcar and Cleveland").

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Having considered local views, the Government have decided that all four borough councils should hold elections for the whole council in May 1995. The councillors elected then will have a fresh mandate from the people of Cleveland to plan for the change and then to take over responsibility for running all local authority services from the following April. Because three of the councils were due to hold all-out elections in that year anyway, special provision is required only in the case of Hartlepool, which normally elects one-third of its members annually.
To ensure a smooth transition and safeguard essential services, the Cleveland authorities will be given extra duties and powers to prepare for reorganisation. The draft order distinguishes between what the authorities can do before and after the May 1995 elections. Preparatory work needs to begin from the time the order is made. However, the Government's firm view is that the decisions which will determine the outlook and culture of the successor authorities, together with appointments of chief officers, should be taken by the councillors who are elected in May with responsibility for managing the authorities' new range of functions.
There will be a duty on all five existing councils to co-operate in implementing change. The borough councils will also have access to information which they need and will be able to make the necessary preparations, including budget setting and appointments of staff, for the exercise of the functions which they will inherit from 1st April 1996. The newly elected councils will also be required to consider whether particular functions can best be carried out through voluntary joint arrangements.
The four Cleveland boroughs will be unitary authorities and, as such, they will have responsibility for both local and strategic land-use planning. The Government are determined that, wherever reorganisation takes place, adequate arrangements should be made for strategic planning. For Cleveland, the local government commission recommended that the four authorities should maintain separate local plans but should work together on a joint structure plan.
The Government have accepted that recommendation and the draft order gives effect to it by transferring the county council's strategic planning functions to the borough councils; they can then make the necessary voluntary arrangements for joint working on the structure plan. The Government expect the borough councils to establish satisfactory arrangements and are much encouraged by the proposals that they have published for joint working on strategic planning for the Tees Valley.
The order also provides for a number of other matters on which the Local Government Commission made recommendations or which are consequent upon reorganisation. It paves the way for a combined fire authority for Cleveland which will be created by a separate order under the Fire Services Act 1947 to be made by my right honourable friend the Home Secretary. It provides for representatives of the new unitary authorities to replace the county council's nominees on the Cleveland Police Authority from 1st
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October 1995 for certain purposes so that they can be involved in decisions on the 1996–97 budget and policing plans. The county council's representatives will remain on the authority for all other purposes until the county council is wound up in the following April.
The order vests the county council's superannuation fund in Middlesbrough Borough Council, which is also designated for the purposes of certain financial regulations.
Finally, the order provides for Redcar and Cleveland's nominees to take the place of the county council's representatives on the North York Moors National Park Committee.
The Government gave very careful consideration as to whether it was necessary to make specific provision for other essential services in the order. However, we concluded that there should be no other statutory joint arrangements. Instead, the order requires authorities to consider whether any voluntary joint arrangements are necessary.
We are encouraged by the willingness of the districts to work together, as demonstrated by their plans for promoting economic development through the Tees Valley Development Company. I also understand that they already work together on a number of issues such as pollution control and transport.
We are also putting before your Lordships general regulations dealing with practical matters such as the transfer of property, rights and liabilities, technical financial matters (such as calculation of the council tax base) and staffing. In the case of staffing, after extensive consultation we have recently announced new measures for a mandatory compensation scheme for those who are made redundant as a result of reorganisation. We are also consulting on a possible scheme for detriment compensation for those who take a drop in salary as a result.
Local government reform in Cleveland has been the subject of vigorous debate locally, and there has inevitably been considerable uncertainty in the area for some time. What is important now, however, is that all concerned with local government in the area direct their efforts to making reorganisation work. The Government have every confidence in the capacity of the local authorities in Cleveland to do so. And, as I said earlier, the other place considered the order on 11 th January, and it was approved. I therefore commend it to your Lordships.
Moved, That the draft order laid before the House on 8th December 1994 be approved [4th Report from the Joint Committed]—(Viscount Ullswater.)
7.12 p.m.
Lord Bancroftrose to move, as an amendment to the above Motion, to leave out from ("That") to end and insert ("this House calls on Her Majesty's Government to withdraw the draft order laid before the House on 8th December 1994 and to re-lay it only when:

(a) they have considered the desirability of including in the draft order proper provision for essential services such as child protection, special education needs, care in the community and emergency planning, and of

929
ensuring that employees of all existing authorities in Cleveland will have equal chances of securing posts in authorities in Cleveland following reorganisation;

(b) they have published their decisions on the recommendations of the Local Government Commission in respect of all of the English counties, thereby enabling this House to consider the draft order in the light of those decisions; and

(c) the case of Regina v. Local Government Commission for England and Secretary of State for the Environment ex parte Cleveland County Council has been finally determined by the courts.")

The noble Lord said: My Lords, in moving the amending Motion standing in my name on the Order Paper I should first like to thank the Secretary of State for the Environment for his courtesy in seeing some of us a couple of weeks ago. I must thank also the noble Viscount for the typically deft exposition which he has just given; alas, I remain unconvinced.
My amendment was drafted to avoid any conflict with the conventions of your Lordships' House respecting subordinate legislation. It has been approved for propriety, both in principle and in every detail, by the House authorities. It is well precedented with precedents going back for more than a decade and, most recently, on 31st January last.
The order itself is specific to Cleveland, the first shire county proposed for abolition. But if it clears this House, as it cleared another place, it will set precedents for many other counties. I therefore ask your Lordships' indulgence if, in introducing my amendment, I gently reinterpret some of the noble Viscount's points.
To begin with there are the objectives, explicit or implicit, of reorganisation in Cleveland and elsewhere. We were told that one of the Government's prime objectives is to bring local government nearer to the citizen by creating a larger number of smaller unitary authorities, thus ensuring a more efficient delivery of services. Indeed, the Minister for Local Government, Mr. Curry, goes further in showing the original cloven hoof. The Times of 18th January —just five days ago—reported him as being,
"personally committed to seeing unitary authorities throughout England".
—throughout England!
Cleveland is a modest-sized county. It is to be split into four unitary authorities which will be among the smallest in the country. Schumacher's law does not run in a large conurbation if the units are too small. Moreover, the whimsically outspoken chairman of the commission confessed at the recent Association of County Councils' conference, that he knew,
"of no evidence that smaller unitary authorities will be better placed to deliver effective and convenient local services … Surely we are entitled to expect more than assertion before gambling literally billions of pounds of public money on a costly and risky reorganisation".
We are all indebted to Sir John Banham for putting our case so eloquently. It applies to Cleveland, in spades.
A second objective is to do away with the unpopular artificial counties created in 1974, hence the collusion made public in 1993 between the Government and the
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commission to achieve "early wins"—those are the words of Sir John Banham—in Cleveland, Avon and Humberside. That brought a rebuke from the High Court which said that this,
"does not altogether sit well with the notion that the Commission is an independent body responsive to public opinion rather than Government".
In any event, the Teesside plus separate Hartlepool option favoured by many people, including me, is a return to the pre-Cleveland concept of a single authority managing, speaking and negotiating for a major conurbation: as it were, the former county borough of Teesside. Hartlepool, itself a former county borough, is a special case for historical reasons. I add only that it was in their camp of refuge on the Coatham Marshes where the Teesside people made the last stand in England against William the Conqueror—and very nearly killed him. The king was fighting there when—predictably to those who know the area, but less predictably to those who do not—a sea fret came down and he lost his bearings. He was only just rescued from drowning. There may be the beginning of a moral there.
There is a greater level of community identity in Cleveland than in many of the so-called traditional counties and exactly twice the level of that in Avon—25 per cent. in Avon, 50 per cent. in Cleveland.
A third objective is to satisfy local opinion. Here I have some genuine sympathy for the Government and for the commission. It is devilishly difficult to find the truth about local opinion. The MORI polls can be endlessly reinterpreted so the commission and the Government can quote —and indeed the noble Viscount has just done so—results in support of the four-authority solution. On the other hand, it can be passionately argued that the commission had the views of less than 3 per cent. of the potential electorate and did not even tell them that the four-authority solution was much the most costly. Indeed, the High Court referred to the commission's consultation leaflet, with a curl of the judicial lip, as,
"conduct which in the case of a second-hand car salesman would lead to an appearance at the Old Bailey".
So, like a troop of mature Morris dancers, we could go on belabouring ourselves interminably with pigs' bladders of polls. I confine myself to the incontrovertible; that less than half of those questioned agree that any change is needed and only three out of 10 support the structure which would result from the order.
The text of the amendment is largely self-explanatory. It would defer consideration of the draft order until the Government had been able to consider more fully certain matters. It would be open to the Government to re-lay a draft Cleveland order before the House later this Session. With respect, it is misleading to claim that the amendment would kill the order or postpone it for a year or more, as indeed has been claimed outside the Chamber. The length of postponement is entirely in the Government's hands. If they were sensible, it could be for as little as a few weeks.
The amendment requires the Government to consider including in the draft order proper provision for essential services which are at present the responsibility of the county council. These include child protection, care in

931
the community, emergency planning, special education needs and trading standards. The Government's view, as the noble Viscount explained, is that after reorganisation each of the services can be adequately carried out in the county through voluntary arrangements between the borough councils. I regret to say that I am not reassured by his remarks because I believe that this situation is a serious misconception. The regional CBI, the Chamber of Commerce and the Small Business Club have all opposed the commission's proposals. Similar opposition has been expressed by the Institute of Trading Standards Administration, by local health authorities, by local educational, welfare and health professionals and by many voluntary organisations, groups of disabled people and other users of local authority services. Other noble Lords will, I know, expand on this point. Many of the most sensitive services will have to be provided by voluntary co-operation, as the noble Viscount again pointed out.
By way of particular example, there is no provision in the order for emergency planning; and this in an area with one of the largest concentrations of industrial hazard sites in the whole country. Is it really sensible to leave this to insecure voluntary co-operation? The whole concept can best be likened to deliberately pushing Humpty Dumpty off the wall and then trying to put the broken bits together again in the shape of well-intentioned but insecure joint committees, doubtfully accountable bodies and artificial loose combinations.
The amendment will also enable the Government to remedy a defect in the drafting of the Local Government Act 1992 which has produced great unfairness in the treatment of the staff of local authorities. Because of this defect, which the Government have themselves acknowledged, the staff of the county council will, alas, find themselves at a disadvantage in securing jobs in the post-reorganisation authorities because the existing borough councils cannot be dissolved unless staff remain in place. I heard what the noble Viscount said on this point but I beg the Government not to believe their own propaganda.
Paragraph (b) of the amendment will ensure that the House is not asked to reach a decision on the future of local government in Cleveland in isolation. The final batch of recommendations of the Local Government Commission was published, as the noble Viscount said, on 11th January last. Under the Local Government Act 1992 the Secretary of State can reach a decision on those recommendations six weeks thereafter. My amending Motion will enable the House to have before it the overall shape of the Government's intentions for the future of local government in England before it considers the draft Cleveland order. It is surely unreasonable to expect the House to reach a decision on Cleveland in the absence of such information which will indicate whether what is being proposed for Cleveland is an expensive anomaly.
Finally, I am advised, despite the noble Viscount's preliminary remarks on the subject, that the commission's recommendations for Cleveland, and the Government's decision based on those
932
recommendations, can at present be regarded as the subject of court proceedings. It seems doubtfully proper for this House to be asked to approve draft subordinate legislation when the very basis of that legislation is still subject to challenge in the courts. Paragraph (c) of the amending Motion would preclude such an unsatisfactory state of affairs.
I conclude by reminding your Lordships of the debate on the Local Government Commission initiated by my noble friend Lord Cornwallis on 30th March 1994. More than 40 Peers spoke. Virtually all warned of the need to approach this further round of reorganisation cautiously. They did not oppose all change, provided it passed certain tests: for example, that it was demonstrably necessary; that it would provide better and cheaper services; that it was the clear wish of the local people; and that individual authorities were not wrenched out of kilter with common sense. Despite the reassurances of the noble Viscount, I do not believe that the Cleveland case at present remotely passes these tests, least of all that of a cautious approach. The Government are pushing Cleveland well ahead of all other shire counties, for which it will set a precedent for serial murder. These are the essential reasons for tabling my amendment. I beg to move.
Moved, as an amendment to the above Motion, to leave out from ("That") to end and insert ("this House calls on Her Majesty's Government to withdraw the draft order laid before the House on 8th December 1994 and to re-lay it only when:

(a) they have considered the desirability of including in the draft order proper provision for essential services such as child protection, special education needs, care in the community and emergency planning, and of ensuring that employees of all existing authorities in Cleveland will have equal chances of securing posts in authorities in Cleveland following reorganisation;

(b) they have published their decisions on the recommendations of the Local Government Commission in respect of all of the English counties, thereby enabling this House to consider the draft order in the light of those decisions; and

(c) the case of Regina v. Local Government Commission for England and Secretary of State for the Environment ex parte Cleveland County Council has been finally determined by the courts.").—(Lord Bancroft.)

7.26 p.m.
Baroness Farrington of Ribbleton: My Lords, I begin by placing on record my interest in this subject as chair of the Association of County Councils for England and Wales. In placing that interest on record I would draw your Lordships' attention to the fact that the association has never disputed that there is a case for looking objectively and properly at the subject of the structure of local government in any part of the United Kingdom. The association believes—and many share this view—that the issue of local government reorganisation ought logically to have begun by setting terms of reference that looked at the functions and

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finance of local government before looking at the appropriate structure to carry out those functions with those financial arrangements.
In speaking in support of the amendment I would also ask your Lordships whether they believe, as many may, the repeated assertions of government Ministers that Cleveland, Avon and Humberside are unpopular. I cast that to one side and view the order without prejudice. The order and the amendment raise the issue of the faults and flaws in the order. As the noble Lord, Lord Bancroft, said, the order could apply to any county in England. It is surely important when considering the order that noble Lords should have before them the fullest information on which to make a judgment and the fullest knowledge of the implications for services and the providers of services in the future. There remain many areas of continued provision of services which are left as questions by the order. I respectfully remind the House that when legislation dealing with local government reorganisation in Scotland and Wales was before the House it contained the details of the continuing provision of those services. I repeat. I do not speak from a position of opposing all change. I believe that change must be justified.
A second reason for supporting the amendment was referred to by the noble Lord, Lord Bancroft. It is the inequitable, unjust and unacceptable fundamental flaw in the legislation which set up the commission and which governs this process. It is the principle of the continuing authority. Where an authority is created as a result of change, of Local Government Commission recommendations and ultimately orders approved by Parliament, and where that continuing authority has the same boundaries as an existing authority, the staff employed by that existing authority are deemed to be in continuing employment and those providing services which will be added to that authority's functions must apply for positions in order to carry out those functions.
That is not a matter of mere assertion. That principle has caused problems in the Isle of Wight where all concerned agreed that the particular proposal was the most logical for the Isle of Wight but where the staff of the district councils were deemed to have to apply for employment and the staff of the county council were deemed to have continuing employment.
That is a fundamental flaw in the legislation which has been acknowledged by the Secretary of State. I understand that, despite offers made from the Opposition Benches, the law has not been amended. The primary legislation which would go through Parliament very quickly to stop this lack of equity in the treatment of staff has not been accepted and therefore the order before the House will perpetuate the difficulties and deep divisions which were created in the case of the Isle of Wight.
Critically important though the unfair treatment of staff is, there is also the disruption to services and the matter of uncertainty to consider. It cannot be a good way to establish a new structure of local government to do so on the basis that some staff will be treated one way and others will be treated less favourably.
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The second point I reiterate and draw to your Lordships' attention is the final picture of local government in England as a result of the proposals that emerge now that the commission has completed its task. Surely, for anyone to vote in a responsible way, the cost and pattern of the government of England as a whole ought to be part of the consideration that is taken into account when people are considering the future structure of local government in England.
The continuation of vital services of high quality is at risk in Cleveland. As many noble Lords will recall, Cleveland went through a difficult patch in terms of its social services provision. It has since won acclaim for the way it tackled those problems and for the work it has done. There is nothing in the order about the continuation of that work and care in the community. There is nothing in the order about how to continue valuable educational work such as the special educational needs work, which may well need to be considered in detail if it is to continue.
Cleveland is a county council. I repeat that government Ministers have on many occasions said that Cleveland is unpopular. Surely even Her Majesty's Government can find some approval and praise for a county which next September will offer nursery education to all children at the appropriate age whose parents wish for it. It is a county which has the full backing and support of industrialists and commercial interests within its boundaries because of the work it has done in economic development.
Joint co-operation between groups of local authorities is surely a form of county government but under another name and run in a different way. Direct accountability is surely preferable. The proposals in the order will lead to unfair and unjust treatment of the staff concerned.
We have not had an opportunity to study and consider, as your Lordships did in the case of Scotland and Wales, the details of the continuing arrangements for the provision of services. We do not know whether the issue of the proposed abolition of Cleveland is part of a pattern or whether it is part of a particular attempt to remove certain councils and not others.
I believe that your Lordships should support the amendment and the need for proper information on these issues. It is critically important that the constitutional concerns raised as a result of the amendment are considered in detail. I understand that in a matter of two or three weeks the conditions and terms of severance and pay for staff will be debated and put before the other place by the Government. Surely, it would be more appropriate to consider then whether the proposed reorganisation of Cleveland is logical and acceptable rather than in a vacuum if the order is taken now.
As the noble Lord, Lord Bancroft, said, public opinion has not come down clearly in favour of the proposed changes. Cleveland was one of the early township authorities where the public was consulted. It was not consulted in the same manner as members of the public were in later commission proposals. The commission had to be reminded through the courts, and the Secretary of State had to be reminded by the action taken by my own county, Lancashire, and Derbyshire, that the whole raison d'être of setting up the Local

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Government Commission was that there should be a study as to whether people in the local community wanted any change at all. That was not explicitly put to the people of Cleveland.
We have a failure to create genuine, legal new authorities within the procedure proposed under the order now before us. It is premature on all these grounds to allow the order. The amendment should be supported. It is better to take time and for the result to be sound rather than to accept an argument that because there would be delay it is therefore necessary to act in haste. I do not believe that acting in haste is in the interests of good government structure for local government and the future of the Cleveland area.
7.38 p.m.
Lord Rodgers of Quarry Bank: My Lords, I rise to speak in support of the amendment so convincingly moved by the noble Lord, Lord Bancroft, and also in support of the very powerful speech of the noble Baroness, Lady Farrington of Ribbleton, who approached this matter from a very different position and point of view.
I shall not hide from your Lordships that, were it the custom of the House to vote against statutory instruments, I would want to do so this evening. In that respect, I regard the amendment of the noble Lord, Lord Bancroft, as second best. I ask the noble Viscount for a reply early in his response to the debate. As I recall, in our last Session there was primary legislation as regards local government in Scotland and Wales. They were provided with an opportunity for a full debate in this House with the possibility of amending the Government's proposals. Why is it that what was right for Scotland and Wales is thought by the Government to be wrong for England? There must be some reason other than the amount of parliamentary time that such legislation would absorb. I should be grateful if the Minister could explain that.
I am sure that we all speak as a result of personal experience. My interest in the order stems from the fact that I was the Member of Parliament for Stockton-on-Tees and then for Stockton, North from 1962 to 1983. During that time I became convinced that Stockton was part of a single conurbation on both sides of the Tees based on either travel-to-work patterns or the spread of the built environment. I also came to take the view that even at a time of relative prosperity we would have a greater prospect of attracting inward investment if we stood together. If we were fragmented, as we were, into separate boroughs, I believed that we should not be able to convince those who might consider investing in Teesside that the proposition was attractive to them.
I recognise—I am sure that we all recognise—the importance of strong local loyalties. I should add, however, that those loyalties are often not to a borough, which is an artificial creation, but to an estate or district. Notwithstanding that, again it is the case that from time to time Members of Parliament, of which I was one, and local councillors will argue strongly on behalf of those whom they have been elected to represent for the time
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being. However, I have to put it to the House and the Minister that there are times when it is important to rise above those strong but sentimental associations and to consider what is best by the most objective criteria that one can find.
I said that after I was elected to represent Stockton-on-Tees I came to believe that there was a unity which covered both sides of the Tees. However, my own views as a Member of Parliament were not significant when it came to local government reform. In 1968 such was the leadership given by local government and such was the recognition of our interest in standing together in Teesside that a voluntary amalgamation of the existing boroughs took place to create the borough of Teesside. Middlesbrough was the largest borough to come into Teesside; Stockton was the oldest; Billingham had the highest rateable value, Thornaby, Eston and Redcar were smaller in one way or another, yet those six boroughs came together to comprise what was known as the county borough of Teesside. Hartlepool stood aside because it has been extremely independent ever since it was shelled by the Germans early in the First World War. I am not proposing—nor, I think, would the noble Lord, Lord Bancroft—that Hartlepool should be clamped together with the rest of Teesside in a single borough. For that reason, we accept that there must be change in the status quo.
However, having said that, what I believe that the Government should have brought before the House today is not a proposal to go back beyond 1968, but a proposal to revert to the borough of Teesside, which served the area so well until 1974. It was not Teesside to which the people of Teesside were opposed. They wanted to retain it, but were forced into a shotgun marriage in 1974 when, as I remember plainly, they were told by the then Minister of State at the Department of the Environment that, unless they came together in a new county, adopting a name of which nobody had heard and obliging Hartlepool to join, Teesside would be divided along the Tees with part reverting to Yorkshire and part going to County Durham.
I stress again what was said by the noble Lord, Lord Bancroft: this is not a proposal simply to dismember an unpopular county council. It is a proposal to go back beyond that (with some minor amendments) to the state which prevailed before 1968. I think that that is the wrong solution and that in due course the people of Teesside will be the victims of it.
The noble Lord and the noble Baroness, Lady Farrington, referred to both Avon and Humberside. I can see—although I am an outsider and would not choose to vouchsafe a final view—the argument that the creations of both Avon and Humberside were the wrong solutions. Avon, Humberside and Cleveland are not all of a kind. I greatly regret the fact that the Government appear to believe that they are.
The Government have made a decision on, I believe, the basis of a botched job by the Local Government Commission. I cannot recall any local government reorganisation which has been approached in such an unprofessional way. The methodology in discovering

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local opinion is unconvincing and the weight that was given to the survey of local opinion is disproportionate. This is government by MORI poll and it cannot be right.
The report, which is badly ordered—it is not easy to find one's way through it—refers to the survey that was conducted 18 months ago by MORI. Page 1 of the introduction to the second part of the published document states that the basis of the survey was,
"a stratified quota sample of 1,235 adults",
interviewed across the four districts. The next page then states that, of those surveyed, only 10 per cent.,
"say that they know at least a fair amount about the subject".
It would be ridiculous if it were not tragic that the views of only 10 per cent. of the survey sample of 1,235 people —those who said that they know at least a fair amount about the subject—comprise the basis upon which the commission made its recommendation and on which the Government decided to place the order before the House.
I do not complain about the professionalism of the MORI organisation nor about the good faith of its clients, but I do not believe that such a survey should be the principal reason for concluding that the opinion of people in Cleveland is in favour of the order. The Association of County Councils has come up with its own briefing on public opinion in Cleveland. I do not intend to go through its detailed arguments now, but what I find interesting is that, however one approaches the survey data, the conclusion is always the same—that it is a quite inadequate basis upon which to reach a conclusion about the future of the area.
I have said that, if it were the custom of the House and if this course of action were open to me, I would have hoped to vote against the order. I have also said—I am sure that the Minister will reply to this—that I wish that we were dealing with primary legislation. However, we are not allowed that, although it was allowed for Scotland and for Wales.
In order to place my views fairly before the House, I should add that I am deeply sceptical about almost all local government reorganisation. In my experience, it increases the costs; it fails to deliver the benefits claimed for it and it makes more enemies than friends. It may achieve an initial popularity, but that soon gives way to discontent. I believe that both the transitional costs and the annual costs that will result from the order will be higher than those that the Government envisaged when they considered the commission's report. I also believe that, for a number of reasons concerned with the size of the boroughs which it is intended to create, in the long run services will be worse rather than better. I greatly regret it, but I believe that the order is bad news for the people of Cleveland and a model of how local government change should not be brought about.
7.51 p.m.
Lord Crathorne: My Lords, the amendment, moved so eloquently by the noble Lord, Lord Bancroft, offers us an opportunity to ensure that everything is right with the local government proposals and their implementation in Cleveland. How much better that would be than for implementation to be imposed while
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serious doubts linger. Doubts linger about whether the transfer of services has been secured properly; whether the absence of true shadow authorities can guarantee to the more than 20,000 staff who work for Cleveland County Council that they will be treated as on a level playing field with their 6,000 colleagues who work for the district councils; whether the proposals fit into the pattern proposed for English counties as a whole; and whether the courts finally agree that the commission's recommendations have been arrived at safely and correctly.
Perhaps I may turn to specific service issues. The amendment lists, as examples, community care, special education, children's services and emergency planning. Noble Lords have already referred to the dangers of leaving such services inadequately secured. It cannot be right that such vital services are left to voluntary joint arrangements to secure their delivery in Cleveland. Of course that applies also to other counties.
I have received a number of letters on this issue. They all support the Cleveland option. Not one supported the district options, except of course those from the district councils. I shall quote from a letter I received today from the NSPCC. It states:
"The NSPCC is extremely concerned that the Order gives broad powers which may be used to amend key pieces of primary legislation, without reference to what way they will be affected. It is imperative that the government issues detailed guidance to the new unitary authorities ensuring that they recognise and properly fulfil their responsibilities as set out under the Children Act 1989, and comply with the Working Together guidance.… transfer of county responsibility for children's services is assumed to be covered by the general "catch-all" clause: Clause 3(1). The Society believes that this transfer provision, by itself, is a wholly inadequate safeguard of child protection services and procedures".
I read that as an example of numerous letters I have received.
A number of services are not mentioned in the amendment, such as trading standards, structure planning, strategic transport planning, libraries, archaeological services and archives. I am especially interested in archives. The general problems likely to face that service have been debated already, and great concern was shown in our debate last July. For structure planning, which is essential in a conurbation such as Cleveland, the order makes no reference to any future joint action by the four districts to review the current plan.
Transport planning, including the power to subsidise certain services which cross the whole county, is not mentioned. Both are consigned to the goodwill of the district councils to co-operate, subject only to the Secretary of State's reserve power if or when co-operation breaks down. Frankly, that means that he can intervene only when it is too late.
For trading standards, both business and consumer interests require consistency across such a small area, which is basically a single shopping area and a single economic unit. In the case of that statutory function, the districts have virtually no plans for a joint working arrangement.
Paragraph (b) of the amendment seeks to enable your Lordships to reach a view on the Cleveland order in the light of the Government's decisions for all counties.

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Intriguingly, that now appears to be the approach preferred by the Government themselves, except, it seems, for Cleveland, because a Minister was quoted recently as saying at a local government conference that before the commission's proposals were put to Parliament he wanted to bring some coherence to the final outcome,
"so that the man from Mars can see a rationale".
It is not the "man from Mars", but the Members of the House who have the responsibility for approving decisions on the commission's proposals, and it is we who need to see a rationale.
There is then the question of the judicial review. Counsel have advised the county council that it has grounds for appeal against the High Court's rejection of its application. In any case, your Lordships will be aware that severe criticisms were made by the High Court of the commission's procedures in the Cleveland review, and particularly of the public consultation. Every noble Lord who has spoken so far has mentioned that. As was made clear by the Government in an Answer to a Question from the noble Lord, Lord Bancroft, the method of public consultation took a fundamentally different and much fairer form in all counties reviewed later. The courts have yet to give their final view on that and other issues.
Since Teesside was created in 1968—that is the area in which I live—it has had a unified voice; has been pretty successful in attracting outside investment; and has built something of its own identity. I am fearful that, however well-managed and well-run they are, much of that will be lost with the breaking down into the four districts. The amendment offers us an opportunity to ensure that all aspects of the Cleveland order are safe and satisfactory. I intend to support it.
7.58 p.m.
Baroness Stedman: I wish to support my noble friend Lord Bancroft, who has so competently introduced his amendment to the order. I share his view that Cleveland is not being treated consistently with the other counties reviewed later by the commission. I believe that I am the first speaker who has no association with Cleveland other than a long-standing personal friendship with the one-time Member for Stockton and a great admiration and respect for my old permanent secretary at the Department of the Environment (my noble friend Lord Bancroft), who guided me so well in my early days in my ministerial duties. However, I have over 50 years' association with shire counties.
It would be wrong to change local government without solid local public support. The commission did not issue the "household leaflet" setting out the options and projected costs, and the MORI poll that the commission did undertake failed to find majority support across the whole county. A more recent MORI poll, modelled on the commission's household leaflet, found less than 50 per cent. support for any form of change. There is no solid support in public opinion for the structure contained in the order.
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I have the experience of two county council reorganisations in 1965 and 1974. I have also had some experience of the problems of local government areas which are too small. Almost 50 years ago, in 1946, I was first elected to the Soke of Peterborough County Council. It was an anachronism - only Rutland had a smaller population. We could not offer the range or quality of services available in today's counties, and we had the new experience of the joint board in education—the largest spending department, with no accountability to elected authorities. It was able to precept on the two authorities concerned, and there were no rights of criticism or questioning available to the elected members who were not members of the joint board. Despite that criticism, the board did a good job for Peterborough and the villages around, though it was undemocratic and unaccountable. Yet this order proposes four unitary authorities, with three of the four falling below the commission's indicative figure of 150,000, and indeed one has fewer than 100,000 residents. That could lead to some joint provisions.
As the noble Baroness, Lady Farrington of Ribbleton, reminded us in her forceful speech, the staff placements will create problems, with the four continuing authorities making it difficult to see the potential transfer rights so far as concerns county staff. Even worse, we are being asked to approve the order before the county's legal challenge is completed.
There is real anxiety in Cleveland about the provision of essential services, such as community care for the elderly, disabled people and those with mental health problems, not to mention the full range of child care services, child protection and juvenile justice. It seems to me that there has been no proper consideration of the future of these essential services when the county is split into smaller units. Nor has any proper provision been made in the order to ensure these services.
My noble friend's amendment seeks only to delay the introduction of the order until proper consideration can be given to the adequate provision of essential services and until the county proceedings in connection with the application for an oral hearing before the Court of Appeal is completed. We are asking that the House does not reach a decision in isolation on the future of local government in Cleveland.
The final batch of recommendations to the commission were presented this month. The Secretary of State is to reach a decision on these amendments six weeks later. So, if the amendment is carried tonight, the House will be able to have before it the overall shape of the Government's intentions as regards local government throughout England. That will be the time to consider the Cleveland order—when the other orders are before us. I support the amendment.
8.1 p.m.
Baroness Faithfull: My Lords, I have not worked in Cleveland but I have visited the county. Therefore, I wish to ask my noble friend some questions rather than making statements. Is he satisfied that the people of Cleveland want this reorganisation? Other noble Lords have mentioned the MORI poll and asked whether all the forms were completed. In Oxfordshire, where I live,

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it was discovered that a number of people did not receive the forms, while others did not answer them. As a result, three residents of Oxford and I wrote to The Times and visited various people. Several people then telephoned to ask for forms, which they completed. As a result of knowing what was going on, what they could do and what they could say, there was an overall vote for the status quo. Therefore, is the Minister really convinced that the people of Cleveland knew what they were voting for and can he say how many did not vote?
I turn to consultation. Were the people of Cleveland consulted about the costs? Is it fully realised that if there are four local authorities instead of one county council there will be four chief executives, four directors of education, four directors of social services and so forth? They will not be paid as much as the county council now pays its officers, but it will be more expensive for the additional officers in four authorities to administer Acts of Parliament. Furthermore, I suggest with the greatest diffidence that the quality of the chief officers is likely to be poorer because those posts will command lower salaries, with fewer responsibilities. Will that attract the kind of people who ought to be running local government?
I look back—certainly a long way—to the great giants of education such as Mr. Brockington of Leicestershire and Mr. Clegg of North Yorkshire. Will we find similar people to run the education services in smaller authorities? We must bear in mind that one of the authorities will be the smallest in the country. Will it really attract an outstanding person? I should like to think so, but is it possible? Should that not be realised?
Has the health authority been consulted about the matter? I understand that the three divisions of the health authority have been amalgamated into one, which would have been coterminous with Cleveland. Some time ago I spoke to members of Coopers, Lybrand, Deloit. They told me that in their opinion, if we are to receive good mental health services and community care, the health authority should be coterminous with the local authority. Having been a director of social services, I know that to be true.
The health authorities have been amalgamated into one authority, but we are being asked to divide Cleveland into four authorities. That means that those in the health authority must consult with four different people. Admittedly the time and expense will be met by the health authority. However, it does not make for good administration when the health authority must work with four different authorities instead of one consistent authority. Therefore, I ask whether those in the health authorities have been consulted and, if so, what their views are.
Do my noble friend the Minister and the people of Cleveland appreciate that, as regards child care, four different authorities will administer the service and instead of one child protection team there will be four? Is it realised that no one small authority, in particular the smallest, will be able to run the services necessary for its area? That applies also to services for the elderly and handicapped. Perhaps I may give an example. I do not believe that any single authority will have in its area sufficient Alzheimer cases to set up an Alzheimer
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hostel. Therefore, it will be necessary for the four health authorities to combine together to create an overall management team.
Is it appreciated that when the London boroughs were broken up there was no overall co-ordinating authority? I suggest that our road and traffic problems would have been different had there been such an authority. An overall co-ordinating team for the four authorities will be costly and time consuming. An overall management committee must be set up in order to obtain a common policy throughout Cleveland and ensure the overall use of facilities. No one small authority will be able to set up all the facilities that it will need in its area. I hope that there has been consultation on that issue.
I am bound to ask whether the staff of the authorities and the various chief officers have been consulted. Have they been asked to write a report about what will happen if Cleveland is broken up into four authorities? I submit that as regards chief officers it is theirs but to do or die—very often to die, and in particular in this case—but I wonder whether the chief officers and officers of the county council and district councils have been consulted.
I turn now to the voluntary organisations, which have already been mentioned. In relation to social services and Part III of the Education Act, local authorities are extremely dependent upon voluntary organisations—the NSPCC, Barnardos, the National Children's Homes, the Children's Society and many others. Those organisations have made representations to me and, indeed, I am involved with Barnardos and the NSPCC. They tell me that they will have to consult with four authorities rather than one. That will be extremely time-consuming. All voluntary organisations have difficulty in raising money in order to run their services. This proposal will necessitate more staff to co-ordinate and co-operate with four authorities rather than one.
I do not believe that the people of Cleveland realise that they would receive better services from one authority rather than four authorities, because one authority would mean consistent, co-ordinated policies throughout the county. With regard to local feeling, it has been said that we want the services to be near the citizens. They are near the citizens. In Cleveland there are 20 local social services offices. The people in those areas know exactly where to go and on whom they are dependent. Sadly, there are many divorces and separations but the people know that they can go to their local office. They know the staff there and the staff know the people who need help.
In Oxfordshire, we had local offices and there was never any complaint that the citizens did not know where to go for help. That is extremely important in relation to work with the elderly and the handicapped. The offices were local and the people knew exactly where to go. I contend that the citizens in Cleveland now know where to go for help.
For those reasons, I support the amendment moved by the noble Lord, Lord Bancroft.
8.11 p.m.
Lady Kinloss: My Lords, I wish to support my noble friend Lord Bancroft in his amendment to the Cleveland

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(Structural Change) Order 1994. It seems to me that it is not just Cleveland. It would appear that the Government are flying a kite to see what feeling there is in the country for the changes proposed for this and, so it seems in the near future, other local authorities.
I listened with great care to what the noble Viscount said with regard to the case which is to go before the Court of Appeal; but I am still puzzled. How can it be that an appeal waiting to be heard in the courts—and I understand that no date has yet been set—is pre-empted by Parliament? On the face of it, it would appear to be quite unconstitutional. Surely the Government should not be passing this structural change before the oral hearing has been agreed. It could seem improper to pre-empt that resolution. It may even cause embarrassment to the Government. I am sure that the noble Viscount does not wish to do that.
I would be very grateful to be told how the structural change order is supposed to have the support of public opinion. When I spoke in the debate initiated by my noble friend Lord Cornwallis on 30th March 1994, I emphasised the need to carry the opinion of the parish councils. In the case of my own parish council, it felt that it had been brushed off. After all, parish councils are concerned with local matters and know how people feel. I read with pleasure that Sir John Banham has recently come round to a similar view. Perhaps I may hope that this evening the noble Viscount in his reply will reach similar conclusions. Will he ask his right honourable friend the Secretary of State for the Environment to think again? The Association of County Councils reports that the present proposal is supported by only three persons in 10.
There are many other things which might be said. I am greatly concerned that minuscule unitary authorities will be incapable of carrying out their duties in the spheres of social services, health and education. I stress in particular the special needs of education and community care. I doubt whether the proposed unitary authorities will have the ability to implement the Children Act 1989 in full. That is also of concern to the NSPCC.
In view of all the anxieties expressed this evening on all sides of the House, I beg the noble Viscount to bring the debate to the attention of his right honourable friend the Secretary of State for the Environment and to ask him to think again.
8.15 p.m.
Lord Gisborough: My Lords, the decision to create four unitary authorities in Cleveland naturally comes as a great relief to the district authorities. They provide no less than 20 per cent. of the spending of the county, measured for the council tax payer, and would like to spread their responsibility to cover the 80 per cent. balance now spent by the county.
Much has been said about the degree to which the order commands public support. But now MORI polls seem to indicate that there is no majority support for any change, and considerable doubt has been expressed about the validity of the consultation exercise. Forty thousand leaflets were printed for 220,000 households,
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only 12,500 of which were returned to the commission, which represents 3 per cent. of the potential electorate. Against that 3 per cent. support, I should like to record the depth of opposition to the proposals and the hope that the Government will look kindly on the amendment moved by the noble Lord, Lord Bancroft, especially in view of the support he has received this evening.
I have the honour to be Her Majesty's Lord Lieutenant for Cleveland although I try to speak not as an advocate for one side or the other but from personal experience. The proposal has aroused much anxiety and has promoted deep divisions in the county. It was somewhat predictable that local authorities would campaign vigorously for their own causes. But it cannot have been expected that completely independent organisations—many traditional allies of the Government—would campaign so vigorously against the proposal. It is with their views that I should like to deal.
For example, the editor of the local evening paper has argued:
"Teesside does not need three separate councils, three separate teams of officials and directorates. It needs what it has always needed; one council, one strong voice to make Teesside a force to be noticed by our government, by the European Commission and by governments and regions worldwide. Teesside needs one identity to be projected, proudly and confidently by its residents, its business community, its council and its MPs".
The Confederation of British Industry, the chamber of commerce and the small business club have collectively gone on record as saying:
"The Local Government Commission not only failed to give serious consideration to the views of our separate organisations but mis-quoted the views of unrepresentative organisations in support of their proposals. Extra costs incurred in running the local government service disadvantage the community. Prosperity … can be fostered by the single voice of a united Teesside—fragmentation is unhelpful".
Many other organisations and providers of services have expressed concern in a wide variety of forms. They fear that those services will become either more difficult or more expensive to maintain, or will be reduced. It is one thing for the recipient of services to say that he would feel happier if those services were to be provided by his most local council but he will not blame himself should the change lead to either a fall-off in those services or a greater expense in providing them, which-creates a higher council tax.
Sir John Banham says—the remarks were made in his now famous address to the ACC conference on 9th November—that there is no proof that smaller authorities will be better placed to deliver services than a large authority and that the experiment, which can provide no evidence of improvement, will cost billions of pounds of public money.
The following bodies or providers of services have either opposed or expressed strong concern in relation to the proposal for the four-district solution: the Association of County Councils, Age Concern, the Association for All Speech Impaired Children, the Association of Teachers and Lecturers, the British Association of Social Workers (Cleveland branch), the Carers National Association (Cleveland branch), the CBI (Northern Region), the CBI (Teesside), the

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Cleveland Co-operative Development Agency, the Cleveland County Voluntary Sector Partnership, the Cleveland Deaf Children's Society, the Cleveland Disability Forum, the Cleveland Local Medical Committee, the Cleveland Playgroup Network, the Cleveland Unit, Middlesbrough General Hospital, the Cleveland Spastics Society, the Council for National Parks, the Campaign for the Protection of Rural England, the Durham Diocesan Board of Education, English Heritage and Information North. There are many of them; I have only mentioned 10 or 12.
On the next page of my notes I have a further list of 40 organisations. I shall mention about 10 rather than take up too much of your Lordships' time. For example, there is the Anti-Counterfeiting Group which I never knew existed but which apparently is quite important. Others include the chief inspector of social services, the Consumer Credit Trade Association, the Countryside Commission, the Emergency Planning Society—which is most important for us—the Library Association, the National Children's Bureau, the National Deaf Children's Society and the Cleveland Youth Association. I shall not mention the remaining 30. However, I should point out that the NSPCC is extremely concerned regarding child protection services. My list contains 91 different organisations; I have referred only to about 20 or so.
I have also received letters from private individuals asking why there has to be a change, but I have received no letters asking for a return to the original counties or asking for change. I ask the Government: what is the most important view to heed—that of the providers of services and the creators of wealth or that of the recipients who know not from where their services come but just that they arrive?
There is no evidence that the county is unpopular with the people living there. There is none of the antipathy evidenced in Avon and Humberside. After nearly a generation of the county, most people under 40 have known nothing else. Many of us are proud of our county and of the dramatic achievements of the past few years. Indeed, only yesterday I attended a conference of the St. John Ambulance. In view of the enthusiasm, pride and progress reported there, no one who was present could say that Cleveland is unpopular. A number of other letters support the retention of the county with the identity that has been fostered and of which we are now proud without commenting on the four-district proposal.
Success will now depend on co-operation and agreement among the four district authorities in activities such as emergency planning—we are a county of severe industrial hazard—police, fire, libraries, archives, trading standards and children's services, just to mention a few. There is great danger that the fragmentation of services among four small districts could lead to services being less stable, less accountable and less effective than would be the case with direct responsibility, and all at much greater cost. I hope that the amendment will be accepted.
8.23 p.m.
Lord Simon of Glaisdale: My Lords, before I turn to the merits of the order, perhaps I may deal with two
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procedural matters which have been dealt with by my noble friend Lord Bancroft and the noble Lord, Lord Rodgers of Quarry Bank. There is no questioning the fact that your Lordships would have been fully entitled to vote against an order laid under the local government Act. I believe that that was sufficiently established in a debate which took place in this House a short time ago in which your Lordships accepted a resolution that this Chamber had unfettered freedom to vote against subordinate legislation.
My noble friend has framed his amendment in order to obviate any direct challenge; but, in effect, it is a direct challenge. It is possible that it would have been preferable to have thrown out the order right away rather than consigning it, in the way suggested by the amendment, to the Greek calends. I shall postpone dealing with the other question which concerns the relationship towards the proceedings in the Supreme Court.
As to the merits, I approach the subject with considerable diffidence. It is over 30 years since I was Member of Parliament for the Teesside constituency of Middlesbrough. Perhaps I should point out that, at that time, Middlesbrough was a county borough as it is proposed to reconstitute it under the order. I, for one, greatly admired the way that it was run as a local authority. I should add that it was under the control of a party which was different from my own; in fact, it was the party opposite to mine.
In that connection, I also had some relationship to the North Riding County Council. Although I ceased over 30 years ago to have a parliamentary connection with the area, I should say that we lived in the neighbourhood and I tried to keep in close touch as much as possible. I was left in no doubt that the construction of the Cleveland county in 1974 was an unpopular measure, and not only because the first proposal that was made managed to put Middlesbrough into the County of Durham. At that time, Middlesbrough was in Yorkshire and the latter would not recruit to its cricket team anyone who was not born in the county; and Durham was a minor county. Therefore, every father in Middlesbrough was horrified to find that his son, whom he had looked forward to see playing at Bramall Lane, was immediately disfranchised. However, that was not the only reason and the proposal was rapidly dropped.
Noble Lords have heard many detailed reasons in favour of the amendment this evening. Indeed, I am the first to oppose the amendment and to say that I am wholeheartedly in favour of the order proposed. However, before I come to that aspect of the matter, perhaps I may add the following. Those who have spoken before me, especially those who have represented the area in various capacities—such as the noble Lords, Lord Gisborough and Lord Rodgers of Quarry Bank—predisposed me in every way in favour of the amendment. In addition, a friend and former supporter of mine wrote to me to enlist my interest in favour of the amendment. It was only when I looked into the matter that I came beyond any question to the conviction that the order proposed by the Government is correct.

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Your Lordships have heard detailed arguments covering the whole ground. Certainly, as the first to support the order, it would be quite inappropriate—and, indeed, would take far too long—for me to attempt to deal with all those arguments. But at least I can say that there is not one of the arguments advanced today before the House which was not advanced to the commission; there is not one of those arguments that was not subsequently advanced to the Government; and, finally, there is not one that was not advanced in the other place on 11th January. Yet, the commission has recommended the order, the Government are propounding it to your Lordships and the other place approved it by a large majority. The spokesman for the Social Democrats was in favour of the order.
Without trying to cover all the ground that has been put forward in detail, I hope I may put forward one or two grounds in favour of this order. In the first place, it constitutes unitary authorities. Although the initial proposal of Cleveland County Council was for a two-tier authority, today no noble Lord in your Lordships' House has contradicted the theme that there is much to be said for a unitary authority in that the citizen can then look—for almost all the services that are provided for him—to one set of officials and representatives.
The second thing is that what is proposed is much closer to the people than what was proposed by the amendment and by the propaganda that we have had from Cleveland County Council and from the County Councils Association. So far no one has mentioned the word "subsidiarity". It was mentioned with force by the spokesman for the Social Democrats in the other place. Subsidiarity aroused considerable enthusiasm when the Prime Minister succeeded in getting it written into the Maastricht Treaty. I know the noble Lord, Lord Stoddart, only has to hear Maastricht mentioned and he reacts in the other direction.
Baroness Hollis of Heigham: My Lords, you are tempting him!
Lord Simon of Glaisdale: My Lords, I do not know whether the noble Baroness is on my side or not. But certainly subsidiarity has been gaining in esteem since then, and subsidiarity, like charity, begins at home. Therefore as soon as we can move the decision making to the person affected by the decision without damaging the services that will be vouchsafed, the better it will be.
I now turn to the other two questions. The noble Baroness, Lady Faithfull, asked a crucial question and it was taken up by the noble Lord, Lord Gisborough. How far do the people of Cleveland want what is proposed? The statistics, like most statistics, have been juggled considerably this evening but they are analysed with great clarity on page 23 of the report of the judgment of the Divisional Court. It seems beyond question that the people of Cleveland have been consulted and are in favour of what is proposed.
There is another thing. Members of Parliament are very close to their constituents and regard it as their duty to voice, so far as they may, the views and interests of their constituents. The interesting thing is that of the six Teesside MPs who are covered by this order—I include
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Hartlepool—four are in favour of the order. They are not all Government supporters: two of the four are Conservatives and two are distinguished Labour MPs. They spoke in the other place with great clarity and with great cogency and their speeches well deserve the closest attention.
The other question that the noble Baroness, Lady Faithfull, raised—as did, I think, the noble Lord, Lord Gisborough, and other noble Lords—is the question of costs. Again that was carefully gone into by the commission. It was very carefully considered by the Divisional Court and what seemed plain is that although there are inevitably additional costs in a transition, in three years' time those costs will be overtaken by the savings—I hope the noble Viscount will give the figures—and the further ongoing savings.
I come finally to the question of proceedings in the Supreme Court. So far they have only been in the High Court. The county council brought an application for judicial review. That was rejected. It then applied in writing for leave to appeal and the Court of Appeal refused that. It has now applied for an oral hearing of its application but no date has been fixed for it. Therefore, at the moment there are no proceedings at all before the High Court. If we wait on the High Court the proceedings can be spun out in ways that I am afraid lawyers are all too familiar with, until we do not get any effective and smooth reorganisation in Cleveland.
What my noble friend Lord Bancroft is really proposing—he is one of the most distinguished public servants of our time and carries great weight—is what used to be called the centipede syndrome. Until every 100 feet have been put forward, no one may be ventured in advance. If we have that, we shall certainly not have a profitable organisation of local government in Cleveland. Opinion there is unquestionably divided although, as I have suggested, it is preponderantly in favour of the order. It is far better that this propaganda and counter-propaganda be brought now to an end and the various local authorities allowed to get on with their reorganisation.
8.38 p.m.
Baroness Flather: My Lords, I must confess, first of-all, that I am tremendously relieved to be standing in the shadow of the noble and learned Lord, Lord Simon of Glaisdale, because it was my great fear that I would be the only one to support the order and speak against the amendment. But the noble and learned Lord has done a wonderful job and has covered areas which I am not competent to cover, and that has given me tremendous heart.
It seems to me, listening to noble Lords and to everyone who has spoken in favour of the amendment, that there is a questioning of the whole basis of the reorganisation, and that is what, in my opinion, lies at the heart of the matter. Instead of saying, "Oh, yes, we are in favour of reorganisation but we are not in favour of this particular one", it is really a question of saying, "Look it is all right if it is some other county which goes but let it not be my county.".

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I do not know the county. I have no interest to declare other than 15 years as a district councillor. As a district councillor I know that delay—that little five-letter word —is dreadful for district councillors. You cannot plan anything; you cannot do anything; you are in limbo; and you do not know what is coming next. To put this whole process back and create delay and uncertainty is extremely unfair.
I have heard a great deal about how unfair and inaccurate the polls were. Although all the polls point to one conclusion, apparently they were all incorrect. If they are so inaccurate would it not have been better to have conducted other polls to bring out a different result? We have always had this problem. We say that only 5 per cent. of the people vote or only 10 per cent. of the people vote. You cannot force people to vote, although there are countries in the European Union which have laws to make people vote. Only 55 per cent. of the people vote for Parliament, but we abide by the result. We say that it is your right not to vote as much as it is your privilege to be able to vote.
However many people voted, a far larger number voted in favour of the reorganisation than voted against it. That is a fact which is staring everybody in the face. Perhaps it would have been better if there had been parallel statistics and other polls which pointed in another direction, but we do not have those.
We have also heard a great deal about what is going to happen to the staff. The four districts have committed themselves to ensuring that all staff who want to do so can transfer to the new authorities. That is a fact. Also, your Lordships may be interested to note that most of the senior staff from the county council have already left, either to go to the new districts, to neighbouring county councils or to other councils. It is almost accepted as a fait accompli that the four districts will come into being.
We have heard from the noble Lord, Lord Bancroft, that the delay need not be a long one and may be a few weeks. That is an impossibility. If the change is delayed the process will have to start running again. It could never be a matter of a few weeks. The delay will be far longer than that.
Change is always painful, especially if it involves the loss of a particular level of authority. We have seen that time and time again. The order has come to us at a point where all the steps have been taken. I hope that your Lordships will not delay the order and will proceed with it.
8.43 p.m.
Lord Stoddart of Swindon: My Lords, I hope that the House will forgive me for speaking in the gap. I had not expected to be able to speak tonight, and that is why my name is not on the list of speakers. I shall be as brief as I possibly can.
I find myself in the unusual position of supporting the Government tonight. Like the noble Baroness, Lady Flather, I thought that I would be the only one. But I shall support the Government tonight and vote against the amendment of the noble Lord, Lord Bancroft, if he puts it to the vote. I am opposed to the amendment, first, because I believe in unitary authorities and, secondly,
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because I believe that the delay which would be caused if the amendment were adopted would not be good for local government in Cleveland.
If the amendment were carried a number of things would happen. First, preparations in Cleveland which have been under way for some considerable time would have to be put on hold. There would be no further service development work due to the uncertainty of the situation. Staff morale would certainly be adversely affected. Staff retention and recruitment would be increasingly difficult for the county council and the new authorities. Furthermore, if the amendment were passed there would inevitably be similar amendments to other orders, delaying the whole process.
A great deal has been said this evening about the public opinion polls which have been taken. Much complaint has been made against them. My guess is that if instead of 75 per cent. of the people polled being in favour of unitary authorities they had been in favour of the continuation of Cleveland County Council, far from being criticised the polls would have been lauded in the debate tonight. We can only take note of the polls that we have.
I am a county borough man. I should like to refute some of the arguments which have been raised against the unitary authority principle. For example, we are told that the NSPCC is very anxious about the future operation of children's services. In my experience, the children's services are run extremely well by the county boroughs, and very often much better than by county councils. The same applies to a range of other services, including libraries, about which we have heard tonight.
Furthermore, the question of the costs of the new authorities—which was raised by the noble and learned Lord, Lord Simon of Glaisdale—has been dealt with. The transitional costs—which may well amount to between £13 and £18 million—will be saved with the new structures. It is estimated that £6 million to £11 million per annum will be saved in administrative costs. Therefore, there is a pay-back period of between two and three years, and there will be ongoing savings for the people of the area from then on.
I have almost exhausted my time. Perhaps I should say that I have an interest as a vice-president of the ADC. Nevertheless, my interest in this subject goes back a very long time. I merely want to repeat that I am in favour of the government order. If the matter is put to a vote I fear that I shall vote against the amendment of the noble Lord, Lord Bancroft.
8.47 p.m.
Baroness Hamwee: My Lords, if ever it were apposite to say that I would not start from here, tonight must be the night. Perhaps I should begin by declaring an interest, if it is an interest. That is for noble Lords to judge by the time I come to the end of my speech. I am a member of a unitary authority.
In my view the greatest tragedy is that the whole process has gone so badly wrong. I agree with the noble Baroness, Lady Farrington, that it would have been so much better had we started with a consideration of the functions of local government and also considered the question of tax raising. However, we have been diverted

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on to matters of structure, which have tended to divide rather than unite noble Lords, who clearly have a passion for good local government, even if our analyses of how that is to be delivered may differ.
It is also a tragedy that the review must have set back further consideration of the structure of local government by some 15 or 20 years. I say that in the context of the debate about regional government. I am a supporter of regional government. I accept that there is a need for much discussion as to precisely how it should be organised and what its functions should be, but I believe that there are many services which should be taken from central government and which would be better delivered at regional level. That would be a better context for the delivery of truly local services.
The language used during the debate—I do not refer to tonight's debate but to that outside the House—has often been unfortunate. One such occasion was the reference to an "early win", to which the noble Lord, Lord Bancroft, drew attention.
Thinking increasingly about tonight's debate, I have found myself in a dilemma. We do not have an option to vote for the status quo. Indeed no one seems to want that. The advocates of the amendment in the name of the noble Lord, Lord Bancroft, seem to be supporters of the Teesside-Hartlepool option. That option is not before us. I would have some reservations on that, although I understand the anxiety for Teesside about the disparity and size of the two authorities, which might make one authority the poor relation. Those who seem to argue that we should support the amendment, however they interpret its effect, are advocates of that solution. But many of their arguments against four unitary authorities seem equally to be arguments against a solution which would lead to one small unitary authority and one bigger authority.
I have talked about the problems of the review process. I believe that the Government have wasted such opportunities. It may not be possible to please all the people all the time, but the procedure seems to be on the verge of displeasing all the people all the time. Perhaps I may say to my noble friend, Lord Rodgers—for this evening, he may be a friend but not an ally—that my colleagues in local government in Scotland and Wales have said, "At least you have had the review; you have had the commission. There has been opportunity for local people to put the local case, however badly organised that opportunity has been". The reorganisation for Scotland and Wales was kept entirely within this building. It was not a matter for local debate.
Reference has been made to cost. Of course there have been enormous costs simply to reach this point. They include the hidden cost of the hours spent working on the matter, which will never be recovered. The noble Baroness, Lady Faithfull, referred to extra cost as a result of there being four authorities. I do not believe that there will be much duplication. At the point of delivery of service there should not be duplication. The noble Baroness's concern related to the threat to attracting good quality officers. The greater threat is the centralisation of service and decision making within central government.
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The Opposition cannot set the agenda. We have to respond to this order. However, I do not regard it as a template or a precedent for future orders. I agree with the noble and learned Lord, Lord Simon in his analysis: that the amendment is opposition to the order in another form.
As regards strategic services, I am no lover of joint working, joint authorities or joint arrangements; those are all slightly different one from the other. They can be second best. My anxieties are for reasons of accountability and clarity. However, I believe that the issues raised in the amendment were addressed by the commission and the boroughs. In fact the Teesside-Hartlepool option would not avoid the need for joint arrangements. I much prefer the authorities involved to co-operate and work out their own methods of arrangements rather than having the Government impose the model from above by means of an order. I include economic development; it is an important issue raised by noble Lords.
Coterminosity is generally not on offer. The noble Baroness, Lady Faithfull, referred to the health service. But it is rare for there to be coterminosity between health and social services. Of the services to which reference has been made, care in the community (to take but one example) involves a great range of services. Of course, I bow to the great experience of the noble Baroness. It probably outweighs that of the remainder of us put together. However, I believe that many different services are delivered through care in the community, with many different client groups. Different numbers make up the critical mass for the good delivery of those services.
With regard to emergency planning, there has to be co-operation and careful working across boundaries. One cannot know whether a disaster will occur in the middle of an administrative area or on its border. Finally, perhaps I may refer to special needs, one of the many strategic services. I understand that the delivery of special needs services is already predominantly based in the districts.
I do not minimise the levels of stress and the problems for local authority staff who are subjected to what is taking place at present. However, the Minister has given us certain reassurances. I am persuaded that, though the package could be improved and one would wish to see it improved, it is less than that recommended by the staff commission and I hope that, even at this late stage, the Government may be prepared to reconsider the scheme. Nevertheless, a good deal of progress has been made. If we are ever to proceed to unitary government, on balance the position is as satisfactory as one might reasonably expect. I agree with other noble Lords that one cannot organise everything perfectly before taking the final decision.
On judicial review, it is not as though the matter has not already been considered at length by the courts. There are almost always further avenues of appeal.
The subject of polls inevitably concerned noble Lords. I noted that the latest poll—it was organised by the county —gave what one might call an answer (it may not be the right term; it is a shorthand description) which resulted in 50 per cent. support for four unitary

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authorities, and 29 per cent. support for two unitary authorities. Many other figures could be used. On balance one has to treat the polls as one factor in judging the dependability and credibility of the evidence from all sources.
The noble Lord, Lord Gisborough, gave a sample from the list of organisations which support an option other than the proposals before us. I suspect that such a list is a tribute to the quality of service that those organisations have experienced and perhaps reflects everyone's inherent resistance to change. It is not necessarily a conclusive argument against change.
I do not regard the order as a template or a precedent. Each geographical area and each group of communities poses separate issues. It is inevitable that Cleveland does not have quite the same place in people's hearts as did the old counties. I knew that I would agree with much of the argument put forward tonight. However, I diverge at the point of decision. I diverge from those noble Lords who spoke at the start of the debate. I cannot support the amendment. I am concerned about the 100-feet syndrome referred to by the noble and learned Lord, Lord Simon.
9 p.m.
Baroness Hollis of Heigham: My Lords, we have before us tonight the first order that comes from the Local Government Commission, together with the amendment of the noble Lord, Lord Bancroft. I should like to make three points.
First, we on these Benches do not necessarily quarrel with the outcome as such—to replace the county councils with four unitary authorities. Secondly, however, we do quarrel with the way that the matter has been handled by the commission and by the Government—so much so that, had the Bancroft amendment been an amendment not to an order but to a Bill, we might well have been minded to support it. Because it is an amendment to an order, which, with the consequential delays would make it essentially a wrecking amendment, we believe that we should continue to respect the long-established self-denying ordinance of this House on orders and statutory instruments not to defy the elected Chamber. Therefore we shall abstain on both the order and the amendment.
Perhaps I may say a little more about each of those points. First, we do not necessarily quarrel with the outcome. The Labour Party's position over some 15 to 20 years has been that the 1974 reorganisation of local government was mistaken, was unstable and should be reformed. We have over many years called for unitary authorities based largely on district councils where they enjoy the support of local people within a framework—which I know my noble friend Lady Farrington also supports—of elected regional authorities.
Like my noble friend Lord Stoddart, I was a councillor in a county borough both before and after the reorganisation of 1974 and am now a vice-president of the ADC as well as the AMA. The 1974 reorganisation splintered services that should be together—especially housing, which became a district function, and social services, which became a county function—at just the time when they needed to be integrated for the effective
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delivery of care in the community. At the same time it made other services such as economic development and aspects of leisure concurrent, so that in some authorities both authorities carried out the functions, while in others neither did so.
The consequence is that local residents and taxpayers to this day, as all polls have shown, still do not know who does what, to what standard of service, at what cost and in whose name. This was brought home to me forcibly just a few months ago. Our city library in Norwich, as many noble Lords will know, was burnt to the ground. It was a calamity for us. The city council, the Lord Mayor and even myself as a former leader received countless letters about the matter —as though we, the city council, were the library authority. Yet it has been a county function for 20 years. Many people in the street and almost all of those who wrote to us did not even know that fact.
If they believed that the city was responsible for the libraries, how could they hold the county council responsible? And if they could not hold the county responsible, what is local government all about? As Redcliffe Maude said—and I am only sorry that Sir John Banham did not apparently read this part of Redcliffe Maude —county boroughs and unitary authorities were the most effective form of local government England has known.
Yet the Labour Party has always argued that those unitary authorities should be within a framework of elected regional authorities in order to bring power down from Whitehall—the principle of subsidiarity mentioned by the noble and learned Lord, Lord Simon—to democratise the quangos (there are under this Government now more members of quangos than there are of elected local authorities) and to have a regional perspective on economic development, on strategic planning and on Europe. We have regional government in this country. What we do not have is regional democracy.
Therefore the Labour Party gave a cautious welcome to the original Heseltine review when, in January 1992, the Secretary of State said:
"We know that most local authorities want unitary status and we believe that such status will provide a better structure for the future in most areas".—[Official Report, Commons, 20/1/92; col. 37.]
But we also voiced our concerns: namely, that we feared that the review process would be whimsical, arbitrary even and possibly shambolic. As my right honourable friend Mr. Dobson said in the other place on this order the other night:
"After two years of wrangling, vast expense and court cases, we do not have a sensible set of propositions from the review … The process should have been clear, consistent and straightforward".—[Official Report, Commons, 11/1/95; col. 206.]
Instead, to quote my right honourable friend, it has become "a shambles". He was entirely right. Of the 296 districts that entered the review, there will probably be some 230 at the end of it.
Why has the whole thing been such a mess? We in this House must take some measure of blame. Three-and-a-half years ago my noble friend Lord McIntosh of Haringey and I argued, and we had considerable support, that the Bill should make it clear

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that the review was to establish, where appropriate, a coherent pattern of unitary authorities. That amendment was also urged by my right honourable friend Mr. Blunkett in another place. The Minister resisted it on the grounds that the Government did not want to,
"tie the hands of the commission".
With hindsight, that was a critical mistake.
Belatedly, the Secretary of State came to realise that the amendment was absolutely right and he circulated guidance to that effect—which was then struck down by the courts because it was not embodied in the Act itself. Had the Government listened, and had they accepted that amendment, none of this shambles need have happened. But the Government did not, and subsequent Ministers have had to pick up the pieces—for by refusing that amendment what subsequently happened was that the green light was given to Sir John Banham. He became not just independent of the Secretary of State but effectively independent of the will of Parliament, because the words were not in the Act. He has exercised that freedom in a way that has been deplored by one of his fellow commissioners, Mrs. Hodge. She told the other place that the chairman,
"showed no consistency of approach, was too often influenced by personal preferences and personal experiences, rather than objective assessment, and operated somewhat undemocratically and autocratically".—[Official Report, Commons, 11/1/95; cols. 223–4.]
She went on (I am quoting a commissioner):
"We should have dispensed with his services".
In consequence, each county proposal is therefore ad hoc; whereas if the guidance had been part of the legislation, as it should have been, we could have been considering today a coherent set of recommendations for England as a whole, just as the amendment of the noble Lord, Lord Bancroft, asks.
Such a position in the Act might also have checked some of the dog fights that have taken place between districts and counties. Unlike Sir John Banham, they could not have insisted that it was a free-for-all. Perhaps some of the energies and efforts that have been put into the review over the past two years could instead have been put into ensuring better services.
The amendment of the noble Lord, Lord Bancroft, also calls on the Government to ensure that there is a proper provision of essential services. The commission says that it is satisfied that such services will be provided effectively. Not surprisingly, so do four of the five authorities concerned. But given that so many noble Lords have raised the issue tonight, it is perhaps worth reminding ourselves that, of the proposed unitary authorities, three of the four are larger than Kingston-upon-Thames, which is one of the London boroughs; for Hartlepool, the fourth unitary authority proposed, even the county council itself agrees that it should have unitary status.
It is also worth reminding ourselves, since on occasion it has been said, that because those authorities co-operate to provide a specialist joint service, it does not make them a quango. They remain elected, open and accountable. Would that quangos were! Given the way that many county councils have established district
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offices for education and social services, in very many counties to my personal knowledge we already have district administration. We just do not have district accountability.
However, where we very much agree with the noble Lord's amendment is on the need to protect the position of staff. Local government services are as good as and no better than the staff who deliver them. As the noble Baroness, Lady Flather, said, there has been some movement on that issue. I understand that all employees of Cleveland will be transferred, if they wish, to the new authorities. There is a national agreement which will come into effect at the end of this month to guarantee that.
Moreover, I understand that under pressure the Government have also conceded a national detriment compensation scheme for those local government staff who would lose pay as a result of restructuring, and that is also welcomed. I also understand that Cleveland local authority leaders have given additional assurances. We have had letters to say publicly that all the district authorities support a no compulsory redundancy policy and see no reason to change in respect of the review.
So there has been some movement on staff, but not enough. It is still the case that the compensation for staff who take voluntary redundancy is simply not good enough. In the 1986 review they were entitled to up to 86 weeks' compensation. This time around the Government are offering only 66 weeks. That is not fair to those staff of Cleveland County Council who have given competent, dedicated service over many years. As my right honourable friend Mr. Dobson said in the other place, the Government must think again on this matter and meet the Staff Commission's proposal of 82 weeks.
I shall not comment on the courts, since the Minister told the other place that he would take stock of the legal position before any order was made. I shall instead turn to my final point.
Because of the shambolic state of the review in general and inadequate compensation for staff in particular, we on these Benches support much of the substance of the noble Lord's amendment. Why then do we propose to abstain from a vote? I repeat, had this matter concerned an amendment to a Bill rather than to an order we might have been minded to vote for it. Why then is there a difference? If we had amended a Bill and the other place had rejected our amendment, we should have had to acquiesce in their rejection of our amendment and the will of the democratically elected Chamber would have prevailed. But if we amend an order or a statutory instrument, that kills the order. The other place cannot override us, so that we, an unelected Chamber, will have overturned a decision of the elected Chamber. That order would then have to be re-laid before both Houses of Parliament.
The noble Lord's amendment is not technically fatal; but, in our view, it is so hostile that it has the same effect, as my noble friend Lord Stoddart made very clear. The elections to the shadow authority could not take place in April and therefore there would be delays of a year. I am sure that that would be repeated for each and every order in the pipeline which, having been passed by the other place, had come to this House. For

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every time that a local government order was introduced for half the counties of England, this House would have established a precedent for sending it away again.
This Cleveland order, precisely as the noble Lord, Lord Bancroft, said, should be taken with other orders. It cannot therefore be taken by us as a one-off. It could kill the review. The House of Lords, an unelected Chamber, would have been responsible for that. We would have thwarted the will of the other place. That convention, the self-denying ordinance, that the unelected Chamber does not thwart the will ultimately of the elected Chamber is so strong that, during the period of the last Labour Government, your Lordships sought to amend an order only twice: one on town planning and one on national parks. Neither order had the degree of political sensitivity for the other place that this order carries.
For the rest, and for the past 15 years, that self-denying ordinance on politically sensitive issues has been respected and we on this side shall expect it to be respected in the years to come. We amend as an unelected Chamber; we debate as an unelected Chamber; we revise; but ultimately as an unelected Chamber we do not thwart. For that reason and that reason alone we shall be abstaining tonight.
Lord Barnett: My Lords, before my noble friend sits down perhaps she will be kind enough to answer my question. I am totally at a loss to understand her speech. Everything she said was irrelevant to the order. She said that the Government were shambolic but that, nevertheless, she would not vote for the amendment of the noble Lord, Lord Bancroft. I cannot understand why not. Paragraph (b) of the amendment says that the order should come back to us after the Government,
"have published their decisions on the recommendations of the Local Government Commission in respect of all the English counties, thereby enabling this House to consider the draft order in the light of those decisions".
In other words, it is not suggesting that we should reject everything; it suggests that the matter should come back to us. In those circumstances, if everything the Government are doing is shambolic, why not support us?
Baroness Hollis of Heigham: My Lords, I am sorry that I was unable to persuade my noble friend, whose views on so many subjects I heartily respect, of the case that, if we supported it, a delay because of this amendment—for that is what it would mean—would hold up every other order in the pipeline. As a consequence, the long-established self-denying ordinance of this House should continue to be respected.
9.15 p.m.
Viscount Ullswater: My Lords, I shall not have the temerity to cross swords with the noble Baroness, Lady Hollis, on this occasion. The views that she put forward to the House are probably exactly the right ones.
Lord Williams of Elvel: My Lords, before the noble Viscount continues, perhaps I can say that my noble friend said that she hoped that the self-denying ordinance would continue in future years whatever the
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Government was. In accepting that the view my noble friend put forward was right, is the noble Viscount committing future Oppositions to that view?
Viscount Ullswater: My Lords, the House respects its own conventions and I welcome the opportunity that the noble Baroness gave us of keeping to those conventions. That was the purpose of my remarks.
I am grateful to your Lordships for the frank and thoughtful contribution to this evening's debate. Your Lordships raise a number of points and I shall attempt to reply to as many as possible in the time available. I must start with the noble Lord, Lord Rodgers of Quarry Bank, who asked me to identify early why a local government reform was introduced by statutory instrument and not by primary legislation. Of course, the approach adopted in England followed extensive consultation which received a wide measure of support. When the Local Government Act 1992 was taken through Parliament, those principles received widespread support.
However, I must address the issues to which the noble Lord, Lord Bancroft, drew attention in his amendment and on which he elaborated in his speech. The noble Lord mentioned the desirability of including provision for essential services. As I said earlier, the Government considered that carefully. Unitary authorities should be able to deliver the bulk of services themselves. However, the Government have always recognised that some functions may need to be considered on a wider basis than a single unitary authority. The draft order requires each of the new councils to look carefully at each function to see whether there should be voluntary arrangements—and I want to return to that later.
The noble Baroness, Lady Farrington, suggested that in the reorganisation of Scotland the legislation made clear the reorganisation of the specialist services. Of course the situation in Scotland where new councils are to be established everywhere, is entirely different. The Government's view is that voluntary arrangements are to be preferred to statutory joint arrangements, wherever possible. The benefits of unitary authorities include greater local accountability and a capacity to look at service provision in the round. Those benefits would be diluted by statutory joint arrangements. Nevertheless, the Secretary of State has powers to intervene where satisfactory voluntary arrangements are not made or where they break down, and the Government may be concerned to see that proper arrangements are made.
The noble Lord, Lord Bancroft, asked about emergency planning and specialist educational needs. I understand that, for civil defence and emergency planning, the Cleveland districts established clear and uncomplicated joint arrangement procedures. The districts are confident that the functions of those services will not be affected by reorganisation and special educational facilities and support services are already district-based, as has been mentioned.
As regards staff, ultimately, of course, it will be for the successor authorities themselves to decide on the organisation and selection of their staff. However, we expect that the great majority of staff—as my noble friend Lady Flather indicated, some 90 per cent.,

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including front line service providers—will transfer automatically by statutory transfer orders. We have always made clear that, although we hope that most staff will transfer to the reorganised authorities or accept voluntary retirement, a small proportion may be made redundant. The compensation provisions proposed for these cases have been set out in the Local Government (Compensation for Redundancy) Regulations 1994, which came into force on 28th December.
The noble Baronesses, Lady Farrington and Lady Hollis, indicated that the arrangements are not satisfactory. Local authorities are given discretion to pay up to 66 weeks' pay based on age, service and banding to eligible staff below the age of 50. I must remind the House and the noble Baroness, Lady Hollis, that these arrangements at the maximum are more than two and a half times more generous than otherwise statutorily provided under employment legislation. I know that a good many private sector employees would enjoy that form of redundancy. Other posts will be filled by recruitment. The Local Government Staff Commission is consulting on rules for ensuring that staff of outgoing authorities have as fair a chance as possible of securing a post in successor authorities. The Government have also made it clear that they expect chief officer and head of paid service posts to be filled by open competition where a continuing authority with new functions, like the Cleveland authorities, decides to create new posts with duties and responsibilities of a very different kind from existing posts. We in the Government care very much about the staff in Cleveland who have given such good service both to the county council and to the borough councils.
The noble Lord, Lord Bancroft, also proposes that this draft order should be considered only when the Government's decision on all review areas is known. That point was taken up by the noble Baroness, Lady Hollis. Such a delay would prolong uncertainty and delay the benefits of change in Cleveland and elsewhere. The Government want local government structures which meet local needs. If that means not having a pattern which is administratively tidy, so be it. Those involved in local government in Cleveland, not least council employees, have had the prospect of reorganisation hanging over them since 1992. It is time to bring that uncertainty to an end. Moreover, the residents of Cleveland deserve to begin reaping the benefits of more accountable local government with more cost-effective and better co-ordinated service delivery as early as possible.
I come to Cleveland County Council's application for judicial review. The Government thought very carefully before laying the draft order before your Lordships. The county council's legal challenge was turned down on every count in the High Court and it has twice been refused leave to appeal. At each stage the courts took the view that the county council's case was a dispute as to the merits of the commission's recommendation thinly disguised as a legal challenge. Nevertheless, because of the delay caused by the case, the Government were obliged to put back the reorganisation date for Cleveland by a year. The county council is now seeking
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an oral hearing before the Court of Appeal—its final recourse. The department has applied for the expedition of the hearing, which has not yet been scheduled. However, I understand that the county council has written opposing expedition. I am sure that noble Lords will come to their own conclusions about the council's motives.
We believe that delaying approval of the order until the case is heard, possibly leading to a further year's delay in the reorganisation date—here I have to agree with my noble friend Lady Flather and indeed the noble Lord, Lord Stoddart of Swindon—would be a great disservice to the people of Cleveland. Subject to your Lordships' approval, we will want immediately to take stock of the legal position. If we decide to proceed, we will first write to the councils involved giving notice of the Secretary of State's intention to make the order on a given date.
Perhaps I may respond to one or two other questions. The noble Lord, Lord Bancroft, and the noble Baroness, Lady Stedman, and my noble friend Lady Faithfull questioned the tests of public opinion. In all tests of public opinion the four unitary option has been more popular than the existing system or the two unitary option. It was right that the noble and learned Lord, Lord Simon of Glaisdale, should remind us that the majority, namely, four out of six of the Cleveland MPs, support the four-district option. The noble Lords, Lord Bancroft and Lord Rodgers of Quarry Bank, and my noble friend Lord Gisborough, asked: why not re-create the county borough of Teesside? That may have been appropriate in 1968; I do not believe that it is appropriate for 1996. All four existing borough councils, including the three which were formerly in Teesside, have rejected the option. A four-authority structure has consistently been shown to be much more popular with local people than the Teesside-Hartlepool option.
Not one but three surveys were carried out for the county and districts jointly, the Local Government Commission and the county on its own. They all failed to back the re-creation of Teesside. Unlike 1968, the boroughs are keen to go their own way. But if in future they want to go the same way as they did in 1968, the door is open for them to apply to do so. Perhaps I may give a quotation:
"It is very disappointing that the County council is still attempting to mislead the people of Cleveland at this stage. It really is time they accepted the decision of local people, the Commission and the Government and used their energies to help plan the way forward for the future".
I tend to agree with that view from a press release issued on behalf of the councils of Hartlepool, Middlesbrough, Stockton-on-Tees and Langbaurgh on Tees.
The noble Lord, Lord Rodgers of Quarry Bank, and my noble friend Lady Faithfull asked about the costs of reorganisation. In reaching our decision we anticipated that costs might be rather higher than the commission estimates. But we took the view that the savings and other benefits would, as the commission advised, justify the costs. The authorities who will be implementing reorganisation in Cleveland estimate that they can achieve net savings of £15 million per annum which is a little more than the estimate of the Local Government

961
Commission of between £6 million and £11 million. I believe that those are the figures which the noble Lord, Lord Stoddart, quoted. That is not a bad return. It will benefit the people of Cleveland year after year.
The noble and learned Lord, Lord Simon of Glaisdale, asked about estimates of costs. Perhaps I may indicate that these are the district estimates and, after all, they are the closest to it. They believe that the net total cost over the transitional period from 1st April 1996 to 31st March 1999 will be £25.834 million. However, if one takes away the interest which arises because of the way the Government have chosen to fund the reorganisation, that comes down to just over £18 million. As I said, they also believe that there will be total ongoing savings arising from 1999 onwards of £15 million per annum.
My noble friends Lord Crathorne and Lord Gisborough and the noble Baroness, Lady Hamwee, were interested and concerned about future strategic planning in Cleveland. The commission has proposed that the four unitary authorities should maintain separate local plans but work together on a joint structure plan. We endorse that recommendation. The draft order gives effect to that by transferring the county's strategic planning responsibilities to the four borough councils thus enabling them to make voluntary arrangements for joint working on the structure plan. We are satisfied that voluntary arrangements for joint working in Cleveland will achieve the desired results.
The Cleveland boroughs have published their suggestions for a joint committee that will take the political lead and for an overview of structure planning, strategic highway issues and the strategic elements of waste disposal and minerals. They have also developed proposals for the officer groupings which would service those functions.
My noble friend Lord Gisborough gave a list of the organisations that he said were not supporting the four unitary authorities. Perhaps it is not surprising that my noble friend received all those letters. After all, he is the Lord Lieutenant, although I believe that he failed to indicate that fact in his speech this evening.
Noble Lords: He did!
Lord Gisborough: My Lords, I most certainly did so.
Viscount Ullswater: My Lords, I apologise to my noble friend. Obviously, I did not hear him say so and I take back my remark.
The noble Baroness, Lady Stedman, my noble friend Lady Faithfull and the noble Lady, Lady Kinloss, asked about the future of care in the community and particularly about the view of the local health authorities. The chief executive of Tees Health has stated that the establishment of four unitary district authorities is not a barrier to effective collaboration and looks forward to developing, with the districts, creative and imaginative opportunities for better health and social care.
Before the noble Lord, Lord Bancroft, decides whether to seek to divide the House on his amendment, I hope that he will have regard to the words of the noble Baroness, Lady Hollis. Indeed, both noble Baronesses who spoke from the Opposition Front Benches have
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declared that they will not support the amendment. I therefore urge the noble Lord to consider this point carefully: the people of Cleveland want change. That has been amply demonstrated both through the Local Government Commission's consultation process and in the county council's own opinion poll. Of the options for change which the commission considered realistic, a structure of four unitary authorities was by far the most popular locally. It was significantly more popular than the two-authority structure which was proposed by the county council and supported by several noble Lords this evening.
The purpose of the local government review, which has been frequently stated by the Government, is to secure for each area a structure of local government which is accountable, which reflects the identity and confidence of local people and which provides services efficiently and cost-effectively to the community. The Government are confident that the structure which the commission proposed for Cleveland will achieve that. Therefore, I commend the order to the House.
9.32 p.m.
Lord Bancroft: My Lords, I echo the noble Viscount in saying that this has been an interesting debate. I am grateful to all Peers who have taken part and especially those who supported my amendment. If I may say so, tonight their lips have been brushed by the shade of John Milton.
It is unsurprising that the main points that have been made have been along predictable but important lines. I do not propose to weary the House at this hour by rehearsing them in detail. The noble Viscount has done that admirably, although with a rather different gloss from that which I would have put on them. Nor do I propose to pick out individual speakers since he has done so.
I must, however, point out that for the Government to claim that this new patchwork of authorities is where they always intended to end up is the most outrageous and hilarious claim since Arthur Askey claimed to be Charley's Aunt. The truth is that, in accordance with the old song, every time Sir John Banham turned, DoE Ministers turned too. For three years Marsham Street has resounded to the twanging of bed springs as Ministers change positions yet again.
I remain extremely anxious about the robust delivery of essential services, about the absence of a single authority for a major conurbation, the Government's unnerving ignorance about the roots of Teesside, the difficulty of establishing the truth about local opinion, the need to judge a particular case against the future shape of English local government as a whole, and the propriety of proceeding when the basis of the order is still subject to challenge in the courts.
What has been said on that last point would tempt me into the territory of Ignatius Loyola and his Jesuits, and I do not intend to tread that path. I am unchastened by charges that my amendment would prolong uncertainty; it was the Government who pressed the button of uncertainty three years ago. What about the uncertainty

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in all the other counties, miles behind Cleveland in the Government's disorderly queue? My anxieties about Cleveland extend to all of them.
But, in assessing my decision now, which, as the Minister pointed out, I must consider carefully, I have to consider matters other than the support and the opposition for my amendment so eloquently expressed tonight. They include the voting intentions, or lack of them, of the Official Opposition. I hesitate to comment upon what the police call "a domestic" and upon the fact that over 200 Members of the Opposition voted against the order in another place. We are told that the Opposition's attitude, apart from natural divisions upon the merits, is the continuation of a form of self-denying ordinance. If so, they are clearly acting on the basis that consistency is the hobgoblin of little minds, for as recently as 31st January last they voted in favour of an amendment moved by the noble Baroness, Lady Faithfull.
That amendment, like mine, would have deferred approval of a draft order. The Opposition were led into the Lobby by their Leader, the Chief Whip, and the noble Baroness, Lady Hollis. Moonbeams from the larger lunar system are shining brightly tonight. I predict that sooner rather than later the people of Teesside will have a single authority. It is the optimum practicable solution.
Baroness Hollis of Heigham: My Lords, I thank the noble Lord for giving way. I am sure that the noble Lord did not wish to mislead the House, so perhaps I may draw his attention to the fact that the order to which he referred on 31st January 1994, and the amendment to it which was in the name of the noble Baroness, Lady Faithfull, said that the House should call upon Her Majesty's Government not only to withdraw the draft order but to relay it in a month, having considered whether it should extend to social services.
In other words, unlike tonight, that order, which has been quoted twice by the noble Lord, Lord Bancroft, was a one-off, with no consequences for other services or bodies, and it was time-defined. In that sense, it may have been hostile; it was not fatal. Therefore there is a world of difference between that and what we are discussing tonight.
Lord Bancroft: My Lords, I am obliged to the noble Baroness. As I said in my opening remarks, to which she was perhaps not listening, in my view, had the Government behaved sensibly over my amendment, then it would have been a matter of a delay of a few weeks and not a year. It is not a wrecking amendment.
I repeat: sooner rather than later, the people of Teesside will have a single authority. It is the optimum practicable solution. If the order is approved, there will be a period of sad and costly turmoil, until that inevitable optimum solution is achieved.
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I hope that our debate will be a salutary foretaste for the Government of what lies ahead of them on the other orders. Given the strength of views in favour of the amendment expressed tonight, I believe it right to test the opinion of the House.
9.40 p.m.
On Question, Whether the said amendment shall be agreed to?
Their Lordships divided: Contents, 20; Not-Contents, 73.

Division No. 4

CONTENTS

Bancroft, L. [Teller.]

Kimball, L.

Barnett, L.

Kinloss, Ly.

Bridges, L.

Monkswell, L.

Carnavon, E.

Moyne, L.

Cocks of Hartcliffe, L.

Ogmore, L.

Crathorne, L.

Rodgers of Quarry Bank, L. [Teller.]

David, B.

Faithfull, B.

Selborne, E.

Farrington of Ribbleton, B.

Stedman, B.

Gisborough, L.

Thomas of Walliswood, B.

Thurlow, L.

NOT-CONTENTS

Addington, L.

Lauderdale, E.

Addison, V.

Leigh, L.

Airedale, L.

Lindsay, E.

Aldington, L.

Long, V.

Allenby of Megiddo, V.

Lucas of Chilworth, L.

Astor, V.

Lucas, L.

Balfour, E.

Lyell, L.

Blaker, L.

Mackay of Ardbrecknish, L.

Blatch, B.

Mackay of Clashfern, L. [Lord Chancellor.]

Borthwick, L.

Brabazon of Tara, L.

McColl of Dulwich, L.

Braine of Wheatley, L.

Mersey, V.

Brougham and Vaux, L.

Miller of Hendon, B.

Cadman, L.

Murton of Lindisfarne, L.

Chalker of Wallasey, B.

Northesk, E.

Chelmsford, V.

Oxfuird, V.

Clark of Kempston, L.

Pearson of Rannoch, L.

Coleraine, L.

Perry of Southwark, B.

Courtown, E.

Rawlings, B.

Cranborne, V. [Lord Privy Seal.]

Reay, L.

Cumberlege, B.

Redesdale, L.

Dean of Harptree, L.

Rees, L.

Denton of Wakefield, B.

Renton, L.

Finsberg, L.

Rodger of Earlsferry, L.

Flather, B.

Rodney, L.

Fraser of Carmyllie, L.

Seccombe, B.

Gardner of Parkes, B.

Simon of Glaisdale, L.

Goschen, V.

Stewartby, L.

Hamwee, B.

Stoddart of Swindon, L.

Harlech, L.

Strathclyde, L. [Teller.]

Harmar-Nicholls, L.

Thomas of Gwydir, L.

Henley, L.

Tope, L.

HolmPatrick, L.

Torrington, V.

Hood, V.

Trumpington, B.

Hooper, B.

Ullswater, V.

Howe, E.

Vivian, L.

Inglewood, L. [Teller.]

Wynford, L.

Resolved in the negative, and amendment disagreed to accordingly.
On Question, Motion agreed to.
House adjourned at twelve minutes before ten o'clock.