Lords Sitting of 17 July 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 St. Albans.
Lord Lindsay of Birker Lord Lindsay of Birker — Sat first in Parliament after the death of his father.

Power Stations
Viscount Hanworth Viscount Hanworth asked Her Majesty's Government:
How many of the United Kingdom's existing power stations will be time-expired by 2020; and what alternative sources of power they expect to have in place by that date to provide sufficient power.
The Minister of State, Department of Trade and Industry (Lord Fraser of Carmyllie): My Lords, the timing of closures of existing stations is a commercial matter for the companies concerned. There is a wide range of technologies available already to meet future electricity demand.
Viscount Hanworth: My Lords, I thank the Minister for that reply. However, does he agree that there is a very limited number of stations, or types of stations, that can provide the type of energy that we are likely to need and that certainly no renewable form of energy is available? Therefore, does the Minister agree that we have the choice of coal, oil, gas or nuclear? Does not the noble and learned Lord think that nuclear is inescapable?
Lord Fraser of Carmyllie: My Lords, as I am sure the noble Viscount is aware, the nuclear review considered the costs and benefits of keeping the nuclear option open. It reached the view that it was reasonable to assume, even if no more nuclear power stations were
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built—and at present they are certainly not competitive in price terms with other fuels—that the existing technology would not be lost and that the option to build nuclear power stations would be available for some time to come. It may be after the year 2010 that that option emerges as a realistic one. But certainly, on present calculations, there would not seem to be a commercial basis for so doing.
Lord Jenkins of Putney: My Lords, do the Government have plans for replacing the present nuclear stations with renewable stations? As regards the stations which will be time-expired in 2020, what are the Government's plans for disposing of the consequences of having such stations?
Lord Fraser of Carmyllie: My Lords, although there are changes to come following recent announcements on the use of the non-fossil fuel obligation, the emphasis with regard to renewables will be maintained. Indeed, through the application of that mechanism, it is expected that of the order of £150 million per year will be the cost to the consumer of ensuring that a wide base of renewables is available. That seems to be an important way forward. Following on the third order, going from the second one, it would appear that, encouragingly, they are becoming more competitive.
Lord Mackie of Benshie: My Lords, is the Minister saying that the whole of the provision of power for the United Kingdom will be left to private enterprise, according to the degree of profit that may be expected? Alternatively, do the Government have any foresight at all as to the power required for the country?
Lord Fraser of Carmyllie: My Lords, as my original Answer indicated, the timing of closures of stations and particular fuels used will indeed be a matter for the companies concerned. Following the nuclear review, it appeared that there was no immediate, present justification for the building of a new nuclear power station. It is always difficult to predict how prices will move in the future. I indicated in an earlier answer that

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it is possible that some time after 2010 the matter might be reviewed. However, there does not seem to be any immediate proposal to do so.
Lord Mackie of Benshie: My Lords, is not that a matter for the companies concerned?
Lord Fraser of Carmyllie: Yes, my Lords. I think I have now made it clear for the third time that it would not be a matter that the Government would advance.
Viscount Mersey: My Lords, I think my noble and learned friend has said that nuclear power is expensive. How does he square that with the fact that we are importing so much cheap nuclear electricity from France?
Lord Fraser of Carmyllie: My Lords, the generation of nuclear energy using nuclear power stations in this country is expensive and it is quite clear that gas is a cheaper option. So far as one can ever predict these things with any absolute certainty into the future, that appears to be the likely case. There continues to be access to large gas supplies; indeed the reserves now available are probably as great as they were in 1980.
Lord Stoddart of Swindon: My Lords, in any future energy policy, will a great deal of attention be paid to conservation? Does the Minister agree that when building power stations, whether they be powered by gas or coal, due account should be taken to ensure they are small enough and localised enough to use the combined heat and power option?
Lord Fraser of Carmyllie: My Lords, that is certainly an attractive option where it can be introduced. The noble Lord will appreciate that there are a number of circumstances where just that approach is being taken. Similarly, where renewables are being introduced, in the main they tend to be on a rather smaller scale and one hopes that in those circumstances greater advantage can be taken of the generation beyond simply the production of electricity.
Lord Jenkins of Putney: My Lords, if the House will permit me, will the noble and learned Lord be good enough to answer the second part of my supplementary question in which I asked what is being done to make sure that when the present nuclear reactors expire they do not become a menace to everyone around them?
Lord Fraser of Carmyllie: My Lords, if the noble Lord would like to sit around for the later part of this afternoon when we discuss the Atomic Energy Authority Bill, he will appreciate that the one part that will remain within government control is the licensing and the decommissioning of nuclear power stations. However, we can doubtless expand upon that at length later this evening.
Lord Peston: My Lords, I interpret the noble and learned Lord's answer to be essentially that our generation is now entirely within the private sector. Therefore he seems to be saying that it is no business of the Government's at all; in other words, the Government have ceased to have an energy policy. Will he confirm that that is what he said and that that is now the
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Government's position? Will he also confirm therefore that all the civil servants who used to work for his department in the energy division, who were previously, I believe, in the old Ministry of Energy, have left as well and that at least we have had some corresponding savings for the Government's abandonment of 50 years of policy in this area?
Lord Fraser of Carmyllie: My Lords, I do not accept that that is what I said. If that is what the noble Lord understood me to say, I must renew what I was saying. As regards the non-fossil fuel obligation, there is a clear continuing desire on the part of government to use that to stimulate the market in those renewable technologies which we hope in the years to come will increasingly play an important part in the provision of electricity in the United Kingdom. That remains clearly part of our obligation but otherwise, generally speaking, the selection of a particular fuel for the generation of electricity is indeed one for the companies involved.

Railway Passenger Franchise Bids
2.47 p.m.
Lord Peyton of Yeovil Lord Peyton of Yeovil asked Her Majesty's Government:
Whether they will instruct the franchising director, in assessing the first bids for railway passenger franchises, to make a comparison in each case with the cost of British Rail continuing to run the services, and to publish the results.
The Parliamentary Under-Secretary of State, Department of Transport (Viscount Goschen): No, my Lords. Under the Railways Act these are matters for the franchising director.
Lord Peyton of Yeovil: My Lords, does my noble friend accept that I am able on this occasion to restrain my gratitude for that Answer, even though it was hardly surprising? Why is that the case? This information must be readily available and would be useful and interesting in order to make it possible to follow the processes of thought of the franchising director, or perhaps he is affected by coyness on this subject.
Viscount Goschen: My Lords, I understand from the franchising director that, as part of his assessment of passenger franchising bids, he will be making a comparison between the bids and the cost of BR continuing to run the service, and therefore an instruction would not be necessary. The second part of my noble friend's Question concerns publication. The franchising director is unlikely to be able to publish the results of his comparison because much of the material involved would by its very nature be commercially sensitive.
Lord Clinton-Davis: My Lords, does not what has happened as regards the blocking of British Rail's application for a franchise indicate quite clearly that there is no accountability to Parliament on this issue; and that what the franchising director has done is quite

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flagrantly to breach the will of Parliament, which was to enable British Rail to enter freely into applications for franchises which he is now evidently denying?
Viscount Goschen: No, my Lords, I vehemently do not agree with the noble Lord, Lord Clinton-Davis. Parliament, through the consideration of the Railways Bill as it then was, gave this responsibility to the franchising director. The question of whether or not British Rail should be allowed to bid for franchises is not something on which Ministers can instruct the franchising director. Indeed they are specifically excluded from being able to do so.
Lord Clinton-Davis: My Lords, is it not clear that what the franchising director is now doing is to accept the Government's original arguments which were designed to disentitle British Rail from entering the franchising stakes? Is not Mr. Roger Salmon completely denying the will of Parliament in relation to the blocking of the franchise applications that British Rail has made, and is that not an absolute disgrace?
Viscount Goschen: No, my Lords, it is not. During consideration of the Bill, British Rail was permitted to bid for franchises. However, the franchising director was given discretion to decide whether or not British Rail should be allowed to bid for specific franchises. The franchising director has exercised his discretion. That is not against the will of Parliament.
Lord Marsh: My Lords, in the light of the very large sums of money involved in these transactions and the allocation of the franchises, and the enormous impact which this could have on the travelling public, is the Minister really saying that the public or Parliament will never be allowed to know whether the bids of those allocated franchises were better, worse, more expensive or cheaper than those which would have been made if the Government had taken the advice of this House and allowed British Rail at least to have its bid considered?
Viscount Goschen: My Lords, the processes are firmly laid down within the Act. I have indicated that the Franchising Director has discretion. I am sure that the noble Lord will accept that this is a commercial bidding procedure and it would not, therefore, be appropriate to publish information on a commercial procedure.
Lord Monkswell: My Lords, bearing in mind that the ITV franchises were allocated on an open bid basis and we learnt how much the individual companies had bid to secure the franchises, can the Minister explain why in this instance the situation should be different? Is it because in this instance the public are disbursing rather than receiving money?
Viscount Goschen: My Lords, we have procedures laid down within the Act for the allocation of franchises. Under the Act, that responsibility is given to the franchising director. The franchising director is exercising his responsibility in the way he feels is best to secure value for money and to secure franchises in the proper way. He has statutory responsibility under Section 5 of the Act. He also has objectives, instructions
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and guidance from the Secretary of State. He is operating within those objectives, instructions and guidance.
Baroness Thomas of Walliswood: My Lords, is the Minister aware that some of us feel a good deal of doubt that, even supposing British Rail were able to compete for the franchises, the OPRAF staff would be able to understand the value of the different bids? Is the Minister aware that the officials in that office seem not to understand the importance of a network approach to providing rail services and that, when the importance of that network approach is pointed out to them, they ask the consultees—namely, local authorities which have no access to the relevant data—to provide details as to what parts of the network and which connecting stations are the most important? Under those circumstances, would OPRAF even be able to make a judgment as to the value of one bid against another were British Rail enabled to bid?
Viscount Goschen: Yes, my Lords, of course it would. That is what the office has been specifically set up to do. There is no point in having a consultation exercise if one does not listen to the consultees.
Lord Peyton of Yeovil: My Lords, will my noble friend convey to his right honourable friends the concern that Parliament ought to be in a position to understand what influenced a decision which in itself could have serious repercussions for the taxpayer? Since my noble friend has mentioned commercial confidentiality, will he ask British Rail whether it would have any objection to the information being published?
Viscount Goschen: My Lords, it is not only British Rail which is involved in the process but all those other parties which are bidding. My noble friend requests that the process be made public. I have explained why the franchising director is unlikely to publish the information, on the grounds that he feels that the information is commercially sensitive.
Lord Eatwell: My Lords, the Minister said just now in an answer that the franchising director operated under the instructions and guidance of the Secretary of State. Will he tell the House whether the Secretary of State has provided any instructions and guidance with respect to allowing BR bids?
Viscount Goschen: My Lords, as I explained to the House, under the Act the Secretary of State and Ministers are specifically prohibited from issuing instructions to the Franchising Director about whether or not British Rail should he allowed to bid for a certain franchise.
Lord Harris of Greenwich: My Lords, perhaps I may return to a question asked by the noble Lord, Lord Peyton of Yeovil. He asked a direct question. If British Rail indicated that it was prepared for the information it had submitted to be made public, would that information be made public? Is the answer yes or no?
Viscount Goschen: My Lords, I have taken great pains to explain that this is a matter for the franchising director. The Act gives a specific role to the franchising director. There would be no point in having this set-up if Ministers immediately overruled every decision. This

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procedure has been laid down by Parliament and that role and those duties have been given to the franchising director. There is the ability for the Secretary of State to offer objectives, instructions and guidance under certain circumstances and on certain matters. Those objectives, instructions and guidance have been given firmly, have been published and reside in the Library of the House.
Lord Mackie of Benshie: My Lords, does the Minister not realise that his noble friend is trying to prove the purity of the Government's motives and that all he is asking for is that these figures be published?
Viscount Goschen: My Lords, of course I understand that my noble friend asks his Question with the best possible motives. It just happens that we do not necessarily agree with him.

Home Ownership: Government Proposals
2.55 p.m.
Earl Russell Earl Russell asked Her Majesty's Government:
Whether and, if so, how the Prime Minister's plans to increase home ownership by 1.5 million are compatible with the Secretary of State for Social Security's plans to cut back income support for mortgages.
Lord Lucas: My Lords, 1.5 million additional households in home ownership over the next 10 years is considered to be a cautious estimate. It will be assisted by the growth of private mortgage protection insurance which will be generated by the income support for mortgage interest changes.
Earl Russell: My Lords, is the Minister aware that the Secretary of State for Social Security, in his reply to the Social Security Advisory Committee, said:
"the Government believes that those taking on major financial commitments should ensure that they can sustain those commitments in the short-term if they are, for any reason, unable to work"?
Without wishing to argue with that, perhaps I may ask the Minister whether he accepts that that is a proposal to restrict home ownership to those for whom insurance is commercially profitable. Is that compatible with extending home ownership by 1.5 million?
Lord Lucas: My Lords, to answer the last question first, yes. We are quite certain that insurance will be available to anyone who qualifies for a mortgage.
Lord Molloy: My Lords, will it be possible for the Government to get involved with those local authorities which are not particularly anxious to see an increase in home ownership? In so far as this is a laudable scheme, does the noble Lord not agree that everybody who has some authority, particularly those local authorities which do not indulge, should be given more encouragement so to do?
Lord Lucas: My Lords, I could not agree more with the noble Lord.
Lord Stoddart of Swindon: My Lords, what have the Government against owner occupiers? Over the past two years they have reduced the mortgage tax relief from 25 per cent. to 15 per cent., thus putting up mortgage holders' costs considerably. Why is it that the Government are making a distinction between people who are buying their houses and those who are renting their houses? Why is it that those who are buying their houses have to take out insurance in case they become unemployed and those renting do not? It does not seem to me to be an encouragement to own one's own house if those who are renting their homes will have everything paid if they become unemployed without having had to insure themselves.
Lord Lucas: My Lords, the obvious difference is that people who have bought their houses have taken on a very large and long-term capital commitment which does not go away, whereas those who are renting their houses are in a much more flexible financial situation. I am delighted that the noble Lord now supports the housing policies which we have advocated all along and which met so much opposition in their time from the Benches opposite.
Lord Cockfield: My Lords, in order to cast further light on this problem, can my noble friend tell us how much the rate of interest charged on mortgages has been reduced over the period to which the noble Lord, Lord Stoddart of Swindon, referred?
Lord Lucas: My Lords, I do not have that figure. However, as the noble Lord, Lord Stoddart, doubtless knows, it is by a substantial amount and by a great deal more than any increases from any other direction.
Lord Dean of Beswick: My Lords, is the Minister aware that if the Government are to achieve by the millenium the objective stated by the Prime Minister, we cannot be referring to new houses? Over 150,000 new houses a year would be required to achieve that objective. Is it not true that to achieve 1.5 million new owner occupiers requires the further dispersal of council houses through sales at enormous discounts, as has occurred in the recent past, and through the very desirable housing association accommodation? Bearing in mind those factors, why is that group of people being treated so favourably when the Government at present seem to have a vendetta against struggling owner occupiers?
Lord Lucas: My Lords, I am delighted to find "old Labour" present on the Front Bench; it seems to have disappeared from the Back Benches. The noble Lord, Lord Stoddart, thinks that we are bearing down on home owners. The noble Lord, Lord Dean, from the Front Bench points in exactly the opposite direction.
We expect the trend in home ownership in this country to continue. There is every indication that that is what people want.
Lord Dean of Beswick: My Lords, will the Minister answer my question about new construction? That is the issue. There is no way that a third of the figure referred to can be achieved under the Government's present building programme.
Lord Lucas: My Lords, the proportion of people in this country who own their homes is increasing. We do not need to build new houses for them all.
Lord Barnett: My Lords, the noble Lord, Lord Cockfield, is correct in what he said about interest rates. Will the Minister, therefore, tell us why there is so much negative equity and the housing market is in a terrible state?
Lord Lucas: My Lords, house prices have gone down.
Earl Russell: My Lords, the Minister may or may not be correct in his confidence in the private insurance industry. However, will he consider accepting the recommendation of the Social Security Advisory Committee that new forms of insurance should be in place before there is any removal of mortgage income support? Alternatively, is it not possible that he may be mistaken?
Lord Lucas: My Lords, we are in very close contact with the insurance and lending industries. We are totally confident that the outcome which the noble Earl desires will he achieved.

Public Interest Certificates
3.2 p.m.
Lord Spens Lord Spens asked Her Majesty's Government:
Whether they intend to bring forward proposals to improve the law relating to the issue (and waiver) of public interest certificates, signed by Ministers.
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, the law on public interest immunity has been developed primarily by the courts. Public interest immunity certificates are one of the subjects under investigation by Sir Richard Scott. The Government will take careful note of any conclusions and recommendations in his report.
Lord Spens: My Lords, I thank the noble and learned Lord for that reply. Is he aware that outside this House the phrase "public interest" is seen, probably in the words of Mr. Bernard Levin, as the most mendacious phrase in the English language? Is it not time, with the shambles which presently surrounds this law, with Ministers apparently able to switch it on and off at whim, that a new look is taken overall at the law of confidentiality so that some way can be found out of this trap? That situation has taken the whole issue into disrepute.
The Lord Chancellor: My Lords, the courts have from time to time considered the subject at different levels and the law has developed. In consequence, Ministers have to take account of that in considering whether or not they should sign such a certificate. It is possible for people outside this House, and, possibly, people inside this House, to misunderstand the situation. However, I believe that the law has been laid down by courts, including this House in its judicial capacity, in terms that are reasonably plain.
Lord Bruce of Donington: My Lords, will the noble and learned Lord confirm that at the time of the appointment by the Prime Minister of Mr. Justice Scott to investigate these matters, the Prime Minister gave a rather firmer undertaking in regard to the result of that inquiry than merely, as the noble and learned Lord said, taking note of its findings?
The Lord Chancellor: My Lords, I am not absolutely certain what the noble Lord, Lord Bruce of Donington, has in mind. However, so far as I understand the position, the inquiry has been set up and, in regard to this subject matter—it is only one of the matters which concern the inquiry—I believe the correct position is that the Government should take note of the conclusions and have time to consider them.
Lord Strabolgi: My Lords, perhaps I may ask the noble and learned Lord when the Scott Report is likely to be published. Will it be published this year perhaps?
The Lord Chancellor: My Lords, the latest information that I have suggests that it will be "this year perhaps", to quote the noble Lord's own phrase. I think it likely that it will be this year.
Lord Skelmersdale: My Lords, is there not a certain amount of confusion over public interest immunity certificates? As I understand the matter—I am sure my noble and learned friend will correct me if I am wrong—such certificates serve as an early warning system for the courts. Courts can overrule them or disregard them if that seems pertinent to the matter in hand.
The Lord Chancellor: My Lords, my understanding of the position is that a certificate of this kind issued by a responsible Minister indicates that in his view the public interest requires that the documents should not be disclosed. There has been some modification of the test allowing the Minister to take account, in so far as he knows of them, of the issues raised in the particular case. However, the ultimate responsibility for deciding whether or not a certificate should preclude the production of the documents in court rests with the judge. The judge will weigh all aspects of public interest, including the public interest immunity, and the justice that is to be done between the parties in the case in question.
Lord Richard: My Lords, is the noble and learned Lord the Lord Chancellor aware that there seem to be far more of these certificates now than there used to be? In my own experience, for what it is worth, they were rather a rare occurrence in courts. They now seem to be cropping up in case after case. Does the noble and learned Lord share the view that it is important that such certificates should not be used as an illegitimate cloak behind which Ministers can shelter in order to avoid disclosing matters which they ought to disclose but, because of a public interest immunity certificate, they think that they might not have to disclose?
Will the noble and learned Lord expand a little on what he said about the results of the Scott Inquiry? I take it from what he said that the Lord Chancellor and the Government do not rule out the possibility of legislation in this area.
The Lord Chancellor: My Lords, I can categorically state that the Government would certainly not support the view that public interest immunity certificates should be used as an illegitimate cloak, which I believe was the noble Lord's phrase.
On the other hand, the underlying law under which documents are produced to the courts has itself developed considerably. One of the consequences is that far more documents are under consideration for disclosure, apart from questions of public interest immunity. When that occurs, it is not unnatural that there should also be a growth in the number of documents which might well qualify for public interest immunity. Therefore the growth to which the noble Lord refers—it is in particular in relation to criminal matters—has flowed, I believe to a substantial extent, from the underlying growth in the documents now produced as part of the criminal process.
Obviously it would not be wise to rule out legislation. We need to consider what Sir Richard Scott proposes and then decide whether it would be wise to bring any such matter before Parliament for legislation.

Business
3.9 p.m.
Lord Strathclyde: My Lords, at a convenient moment after 3.30 p.m., my noble and learned friend Lord Fraser of Carmyllie will, with the leave of the House, repeat a Statement that is to be made in another place on the Greenbury Report. This will be followed by my noble friend Lord Inglewood, who will, again with the leave of the House, repeat a Statement on privacy.

Business of the House: Consolidated Fund (Appropriation) Bill
The Lord Privy Seal (Viscount Cranborne): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That, if the Consolidated Fund (Appropriation) Bill is brought from the Commons, Standing Order 44 (No two stages of a bill to be taken on one day) be dispensed with on Wednesday next to enable the Bill to be taken through its remaining stages that day.—(Viscount Cranborne.)
Lord Boyd-Carpenter: My Lords, may I ask my noble friend the Leader of the House whether the Government propose to drop the ban that they have so far imposed on the debating of this important Bill, on which the House could contribute so much?
Viscount Cranborne: My Lords, I say to my noble friend with, I hope, no risk of impertinence to him, that I would be deeply disappointed if this year had proved an exception and he did not rise to make the point which he has just made. I believe he knows the answer that I feel constrained to give him. The Companion is clear about what is the present convention of the House. Indeed, I believe I am right in saying that the
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Companion also quotes precedent in that the last time a Consolidated Fund Bill was discussed substantively was in 1907, four years before the 1911 Act.
My noble friend will also know that the matter has been referred to the Procedure Committee. I wonder whether he will be content for us to wait until that committee has deliberated on it before raising the issue again.
Lord Cockfield: My Lords, I am sorry not to have given my noble friend the Leader of the House notice of the question that I propose to ask. However, as he has been a Member of another place, the point will be familiar to him. As we now appear to be following the procedure in another place—willingly or unwillingly, and with my noble friend Lord Boyd-Carpenter and the noble and learned Lord, Lord Simon of Glaisdale dissenting—under which the Consolidated Fund Bill is taken on the nod, should we not follow the other part of the procedure in another place? Under it, the Leader of the House would rise and propose the adjournment of the House. That would then enable my noble friend Lord Boyd-Carpenter, the noble and learned Lord, Lord Simon, and anyone else so moved to debate any matter which took their fancy or convenience.
Viscount Cranborne: My Lords, one part of me is extremely tempted by my noble friend's suggestion. The whole House is used to listening to both my noble friend Lord Boyd-Carpenter and the noble and learned Lord, Lord Simon of Glaisdale, with keen interest and attention. It would be most agreeable if we were to create a new procedure which would enable us to listen further to both noble Lords.
However, I have to reiterate to my noble friend that however desirable the course of action which he proposes, there are two reasons why we should not accede to his request, at least before the Procedure Committee has had a chance to examine the situation. The first is that I am increasingly convinced that the procedures in your Lordships' House are often admirably suited to the way a second House of Parliament works. With the greatest respect to another place, we should only imitate it with some diffidence.
The second reason is that we are not known to be a revolutionary House as yet. If we were to accede to my noble friend's request, we would be overturning a habit which has lasted almost as long as a lifetime and returning to matters as they stood before 1907. I am not entirely against such an idea, as your Lordships will be aware. However, it would go against all precedent and certainly against the wishes of the late Lord Lloyd George.
Lord Bruce of Donington: My Lords, would it be possible for the noble Viscount to give further consideration to the sensible proposals that have emanated from his noble friend Lord Cockfield? Will he bear in mind that the procedures of the House are flexible? Is he aware that, for example, should the noble Lord seek to move the adjournment of the House before this Parliament ends in order to move that the report on the Barings Bank disaster be discussed, he would receive the approval of the whole House?
Viscount Cranborne: My Lords, the Procedure Committee has been asked to look at the matter and I am sure that, as always, it will do as the House has requested. As regards the Barings Bank situation we await almost hourly the publication of the results of the inquiry. It will be interesting to see whether the prediction of the noble Lord, Lord Bruce, turns out to be true.
Lord Peyton of Yeovil: My Lords, perhaps I may return to the point made by my noble friend Lord Boyd-Carpenter. In answering it, my noble friend gave the impression—with the utmost courtesy—that he had heard the suggestion before. I put to him that repetition, very often necessary, does nothing to weaken a good argument. Had it not been for repetition, a warlike operation would still be going on around the city of Jericho!
Viscount Cranborne: My Lords, as always, the House is indebted to my noble friend. I do not know whether my noble friend Lord Boyd-Carpenter has as yet circled the walls seven times or more than seven times. I should be the last to suggest that a good argument is necessarily undermined by repetition.
Lord Simon of Glaisdale: My Lords, your Lordships' House has unexampled knowledge and experience to give counsel on financial and economic matters. There are three Consolidated Fund Bills a year generally and they give an opportunity for your Lordships to tender such counsel. When it has been suggested that they be used for that purpose, the suggestions have been brushed aside on the grounds that there are other opportunities. That may be roughly true on No. 1 and No. 3 Bills. No. 1 coincides roughly with the Budget Statement, the Finance Bill; No. 3 coincides roughly with the debate on the Queen's Speech. However, No. 2 is in quite a different category, and it is the one which we are discussing.
If we do not use the opportunity of the summer Bill to discuss financial matters, there is no such discussion between the spring and the late autumn when the Queen's Speech is debated. What is asked for is that the recommendation in the Companion should be altered to bring it into line with what is done in any case with the Northern Ireland Consolidated Fund (Appropriation) Bills, which are used for precisely the purpose we have been advocating.
I know that the matter is before the Procedure Committee. I also know that the discussion has been postponed and it is now too late to remedy that. However, noble Lords are entitled to ask that the point should be seriously considered in the light of the arguments that have been put forward and that something more than the objections which have so far been raised should be considered.
Viscount Cranborne: My Lords, I am conscious that I am perhaps not following the established procedures of your Lordships' House by treating this discussion as an additional Question Time. I hope that your Lordships will forgive me. I thought that I had looked round sufficiently to see whether anyone else wished to speak. However, with your Lordships' permission, I say to the
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noble and learned Lord, Lord Simon, that, of course, we have a number of opportunities for noble Lords to display their expertise in economic and financial matters and to give their counsel in matters appertaining to the economy. Nevertheless, I hope that the noble and learned Lord will feel able to wait for the opportunity, when it arises, for the Procedure Committee to examine the matter and make a report in due course to your Lordships' House.
On Question, Motion agreed to.

Atomic Energy Authority Bill
3.20 p.m.
Lord Fraser of Carmyllie: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Fraser of Carmyllie.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITIEES in the Chair.]
Clause 1 [Atomic Energy Authority to make schemes for transfer of property, rights and liabilities if so directed]:
Lord Haskel Lord Haskel moved Amendment No. 1:
Page 1, line 8, leave out ("or schemes").
The noble Lord said: In moving this amendment, I shall also speak to Amendments Nos. 2, 7 and 8.
The purpose of these amendments is to ensure AEA Technology is sold as a single integrated business. On 14th March in another place, the Minister for Industry and Energy said:
"The Government agree that AEA Technology should continue to be managed as a single integrated whole".—[Official Report, Commons, 14/3/95; col. 707.]
Since then, there have been signs of backsliding. On 23rd March in another place it was said that if AEA Technology can meet its ambitious targets, its sale as a single independent entity may be achievable. If not, another option will have to be considered.
At Second Reading in this House on 19th May, the noble Earl, Lord Ferrers, said that the form of privatisation must depend on the performance of AEA Technology over, the next few months. He went on to say that the Government must satisfy themselves that the sale of the business as a single whole will best meet the needs and requirements of customers, particularly of government customers.
During the passage of this Bill many Members have spoken of the value of the synergy in this business. The more the business is fragmented, the more the synergy is lost. In this House at Second Reading, the noble Lord, Lord Sheffield, who has spent a lifetime in this industry, told us,
"In many ways, the enterprise is unique because of the multiplicity and diversity of skills on which it can call, which enable it to deal successfully with complex contracts.… The possibility of drawing on this resource of engineering and scientific skills gives it … synergy of a high order, which enables it to land and execute complex international contracts".—[Official Report, 19/5/95; col. 741.]
It was for that reason that the noble Lord asked that the enterprise should be sold as a whole and not be broken up. Indeed, this was the main point upon which he wished to concentrate.
In the same debate I spoke about how splitting up the business could be to the detriment of our science and technology base. I said that it would be contrary to the advice of the Office of Science and Technology in its Technology Foresight Report. That office is now combined with the noble and learned Lord's own department.
In reply, the Minister said that he wanted a test lasting a few months to see whether the business achieved its objectives. For such an important and complex business, can a test lasting a few months be a proper basis for this decision? AEA Technology announced on 14th June that it had met its sales and profit targets for 1994–95. But they included profits from disposals. Is that fact included in the Government's calculations?
The Government spoke of the importance of maintaining the support of the employees in this privatisation. There is no doubt that, if the company is to be privatised, the employees prefer unitary privatisation. As the noble Lord, Lord Sheffield, told us, customers prefer unitary privatisation, because they will benefit from the synergy. Perhaps the only people who will not benefit from this policy will be those who buy key parts of the business, possibly for short-term gain, and perhaps the financial institutions that handle a multiplicity of sales rather than one sale. At present it is unclear what is to be privatised. All there seems to be is the implication: "Leave it to us. Whitehall knows best". Unitary privatisation should be a matter of clarity, and should be made clear on the face of the Bill. For that purpose, I beg leave to move this amendment.
Lord Fraser of Carmyllie: As the noble Lord indicated, the amendments are designed to remove the Secretary of State's power to make more than one transfer scheme, and to ensure that property, rights and liabilities transferred under it go to a single successor company as defined in the Bill.
I hope that by the time I conclude the Committee will not continue to believe that there is an element of backsliding on the part of the Government. I hope that our position is clear, but perhaps I may take a minute or two to explain where we stand.
The policy decision behind the drafting of this Bill has indeed been to keep sales options open. In our view it is still too early to make irrevocable decisions about the form in which AEA Technology should be privatised. I repeat: if AEA Technology can meet the ambitious targets that it has set itself, then sale as a single independent entity may well be achievable. But if it does not, then other options may have to be examined.
I am encouraged that the noble Lord has such confidence in AEA Technology's ability to succeed as a single entity. He echoed the views of a number of other noble Lords. I am very well aware that the view in this place appears to be that a unitary sale is the preferred approach. My ministerial colleagues have already indicated in another place that this may well be
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the best way forward. I very much share the hope that AEA Technology will indeed be sold as a unitary authority. Realistically, there may be no other option if the sale is to be achieved within, say, the next 12 to 18 months.
However, at this stage we cannot be certain that unitary privatisation necessarily represents the best way forward, and I hope that the Committee would agree that it would be foolhardy to put all our eggs in one basket. These amendments would close off all options and oblige us to follow a course of action which might not turn out to be in anybody's best interests.
I hope that the noble Lord will agree, on reflection, that it would be imprudent to limit our ability both to act in the best interests of AEA Technology as a business and to secure best value for money for the taxpayer.
I cannot therefore give the noble Lord the absolute commitment that he seeks, or indeed accept these amendments. As I said, the effect would be to close off all other options, no matter how much we might prefer the single entity option. It would oblige the Government to follow a course of action that might not turn out to be in the best interests of either AEA Technology or the taxpayer.
However, when the House returns to the Bill in the autumn—clearly it cannot do so at any earlier stage—for the Report stage, the position may well be clearer. We shall certainly have a much better idea as to how AEA Technology is performing, and how far other options might satisfy the Government's stated objectives for the sale. I hope with that proposal the noble Lord will agree to withdraw his amendment. He should certainly not take it that in any sense at this stage we seek in any way to exclude the single entity option for which he argued so vigorously.
Lord Thomson of Monifieth: Before the Opposition Front Bench responds to the Minister's remarks, perhaps I may say a word from these Benches. First, we strongly support the case that was made by the noble Lord, Lord Haskel. Our preferred option is to maintain AEA Technology as a unitary body. We believe that the best way to do that, in the British interest, by way of preserving this very valuable national asset, would be by flotation. The case was made, and I shall not repeat it, for the advantages of synergy. This is a high-tech industry, in which the real capital is the brilliant people who work for it. By "synergy" we mean the kind of professional camaraderie that comes from that sort of body. It takes a long time for it to be built up and it can very easily be destroyed.
For those reasons, we on these Benches strongly support the case for maintaining the unitary character of the organisation and for flotation. The Minister very reasonably put his case to us and said that these matters will be considered further. In due course we shall come to further amendments on the Marshalled List to which we shall seek the Government's agreement not merely to reconsider the matter in the autumn but, if options are to be kept open, to have them reconsidered by Parliament at a much later stage before final decisions are taken.

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In the meantime, I welcome the fact that the Minister is ready to look again at this matter in the autumn. However, we very strongly press the view that this is a national asset of great value to us and ought to be maintained as a single entity.
3.30 p.m.
Lord Peston: In joining the debate, I should first like to welcome the Minister's comments. Certainly, we look forward in the autumn to what one might call more and better particulars on this matter.
It has puzzled a number of noble Lords, and me in particular, that there is this very large, successful organisation—large in terms of capacity to carry out research and development—which is certainly very important. I find it very difficult to understand why its value would be maximised by not selling it off as a whole. In other words, separate from all other considerations, it seems to me obvious that, as an integrated whole, the organisation is worth more than it would be by selling it off in its separate parts. Without going ahead quite so strongly, the Minister seems to be saying much the same. Certainly, his honourable friend in the other place got very close to saying that.
Let me ask the Minister whether on that matter he is saying that the Secretary of State wants flexibility but he knows not what. Until one gets around to selling the body, it is best to have some flexibility just to be on the safe side. Is that the main part of the Minister's answer? Perhaps he could fill us in on that point in the autumn.
There was a separate question to which the noble Lord, Lord Thomson of Monifieth, alluded. It arises from the nature of the Bill. We did not fully appreciate a similar set of considerations with regard to the electricity privatisation Bill as has now arisen in terms of selling off the nuclear power side; namely, that having passed the Bill, the Government are under no obligation to come back to your Lordships with any of that matter. As I understand the situation, and the Minister will almost certainly confirm it, if this Bill is passed into law and then for one reason or another it turned out that AEA Technology was sold off in two parts, the Minister would simply say, "Well, that is in the Bill. We have the powers to do that and it is no longer your Lordships' business to query it". We can ask a Question or something of that nature. But in terms of a serious investigation of such a matter, this is our only chance to press the point.
I entirely accept the Minister's good faith in this matter but I hope that he understands that one of the reasons why we have pressed the point is that it is our only chance to do so. One day we shall simply be told, "Well, we have sold it off and thank you very much".
When governments bring forward skeleton Bills of this kind, one has to table amendments simply to clarify the matter. However, let me repeat my main reason for speaking, which is to thank the Minister for saying that he may have more to tell us in the autumn. We shall certainly have a chance, at least briefly, to exchange views on it at that time.
Lord Haskel: I entirely agree with my noble friend Lord Peston that this Committee stage will be our only opportunity to find out exactly what the Government intend to do. This is virtually an enabling Bill and we need to discover the Government's intentions.
I also draw to the attention of the Minister the fact that in virtually every other privatisation the restructuring of the company has taken place before the Bill has come before your Lordships. In this case, the company has not been restructured and we do not know what will be privatised. That is why we must probe these matters.
One is left with the feeling that the Government will keep their options open and they believe that Whitehall knows best. From what the Minister said, I imagine that he will leave it to the City to decide what is best. Perhaps I may remind him that the City does not have a very good record on high technology companies. I hope that he will give these matters consideration. Obviously at Report stage we shall come back to this point. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 2 not moved.]
The Earl of Courtown: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Greenbury Report
3.36 p.m.
Lord Fraser of Carmyllie: My Lords, with the leave of the House I shall repeat a Statement made in another place by the President of the Board of Trade. The Statement is as follows:
"Madam Speaker, I would like to make a Statement about the report of the Study Group on Directors' Remuneration, chaired by Sir Richard Greenbury, which was published today.
"The group was set up in January this year on the initiative of the CBI, in the wake of public concern about executive remuneration in some public limited companies. The Government supported the setting up of the group and we now welcome the publication of its report. We congratulate the group on a thorough, speedy and authoritative review of the issues. We welcome its recommendations in principle and strongly support the emphasis which the group places on the need for pay to be justified by performance.
"The group's report follows shortly after the report by the Select Committee on Employment on the Remuneration of Directors and Chief Executives of Privatised Utilities. While the Government will give a considered response to both reports when Parliament resumes after the Recess, the House will expect me to make some preliminary comments now and I willingly do so.

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"Pay in the private sector is a matter for companies and their shareholders. The Greenbury initiative demonstrates that companies and institutional investors recognise the level of concern on this issue and are determined to act. There is no doubting the authority of the group's recommendations. The group's report vindicates the self-regulatory approach. It will deliver more effective, speedier results than legislation could achieve. Indeed, there has already been a perceptible change in some companies' attitudes to these matters.
"The Greenbury Report will be underpinned by action by the Stock Exchange. Its recommendations are addressed primarily to listed companies. It is appropriate therefore that the Stock Exchange should enforce them through the Listing Rules. The Government welcome the Stock Exchange's announcement this morning that it will do so.
"The Government have no intention of introducing a top people's pay policy. We do not begrudge top salaries for top performance. Our companies must compete at world level if our nation is to prosper. We must pay the rate for the job. Greenbury points out that although comparisons are difficult, total remuneration levels in the United Kingdom are well below American levels and broadly comparable with other European countries. The fastest way to drive our best talent abroad—in any field, not just business—would be to impose restrictions on earnings.
"There has been particular concern about windfall gains arising from share option schemes in the privatised utilities. The Government accept the group's recommendation that for newly privatised companies no share options should be made until at least six months, and preferably a year or more, after privatisation. The great success of virtually all the privatisations of recent years has been a feature of the strengthening of Britain's economy. Consequently, some share options have yielded substantial benefits to those who guided that success. But the huge achievements of the privatisation programme have brought dramatic benefits for consumers in terms of lower prices, more choice, better consumer-focused service and more investment, as well as a large and growing flow of revenue to the Exchequer through taxation.
"There are three recommendations for legislative action addressed to the Government. My right honourable friend the Chancellor of the Exchequer has already announced this morning that the Government will introduce legislation in the next Finance Bill to withdraw the income tax reliefs at present available to directors and employees participating in executive share option schemes which have been approved by the Inland Revenue. The withdrawal of the reliefs will take effect in relation to grants or the exercising of options on or after today.
"The second and third recommendations are for minor amendments to the Companies Act to remove overlap with the group's proposals for comprehensive disclosure, and to amend the Companies Act rules on the disclosure of the value of pensions benefits, when
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they have been drawn up by the actuarial professional bodies. The Government will consider both recommendations carefully and quickly. We remain willing to consider other legislative back-up if experience shows it is needed.
"In summary, the Government welcome the publication of the Greenbury group's report. It is comprehensive and well judged. It will help ensure that pay is based on performance. It tackles specific problem areas with firm, fair and practical proposals. It is a package which meets today's needs and I believe it should be supported."
My Lords, that concludes the Statement.
3.40 p.m.
Lord Peston: My Lords, I thank the noble and learned Lord the Minister for repeating this rather short Statement made by his right honourable friend the President of the Board of Trade in another place. The Greenbury Report is a CBI report. I start off with one or two rather obvious questions. Is the report available to your Lordships in the Printed Paper Office, or do we have to write to the CBI and buy it? The Statement says that there is no doubting the authority of the group's recommendations. I am sorry to hear that. I doubt the authority of the group's recommendations, a matter to which I shall return. But since this is said to be authoritative, does the noble and learned Lord know whether the committee took evidence on a large scale, and is it publishing a volume of evidence to support what it has said? If that is the case, can we see it?
The Government implicitly state that these remarks are the Government's first response to the Greenbury committee. They say that a considered response will be made to the report when Parliament resumes after the Recess. Can your Lordships be assured that that considered response will include a considered response made to your Lordships, so that we can look at this matter in considerable detail and not merely be the afterthought to the other place?
It is as well to recall why this committee was set up and what it was all about. It was set up because of extreme public distaste, expressed by many people across the whole of our society—but not least by the Prime Minister and certainly not least by my right honourable friend the Leader of the Opposition—over an apparent desire on the part of certain senior executives to reward themselves to a degree, to put it as mildly as I can, that appeared to be rather unseemly. Others have made stronger statements but I shall say no more than that.
More recently, all kinds of commentators have remarked that workers—ordinary men and women—are asked to settle for pay increases little different from the rate of inflation—-in other words, very little in the way of real increases in pay—yet management, or some management, have not felt any obligation on their part to modify their demands to much the same set of numbers. Indeed, it is not merely that they have asked, "Please sir, can I have some more?"; but they have asked, "Please sir, can I have an extraordinary amount more?" In doing that they have given the lie to one of the main propositions on which the Government have based their

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policies for a great many years. They argued that if they lowered the marginal rate of income tax—that was a central plank of the Government's policy from 1979 until recently—there would be no need for senior management or executives to demand massive pay increases because at those low marginal rates quite low pay increases would still yield very considerable net gains to them. It is apparent that, having lowered the marginal rate of income tax while raising other rates of tax for other people, that has not acted in any way to moderate pay demands.
The question that caused all this was: why should there be massive differences in the rates of increase of pay within firms in particular? That has become confused with a different question of pay differentials altogether—the question of why top management should be paid more than the least skilled worker. That is a classical question and the answer is to do with rewards for ability, for investment in education and training and for scarcity. The point that Greenbury was supposed to address—on what little I know, which is only what the Statement says, it does not seem to have addressed it at all—is not the question of why the differentials should exist but why the rates of increase of pay for senior executives should be of several orders of magnitude more than for ordinary workers. In other words, if differentials are set as they are—and we can argue about that—once that has been correctly sorted out, rates of pay, it seems to me and I think to almost all serious commentators, except in very special cases, should increase at about the same rate for everyone in the organization—top management, middle management, skilled workers and unskilled workers, bearing in mind that the firm itself is an integrated unit.
To take a specific case, I have no doubt that Marks and Spencer benefits enormously from having Sir Richard Greenbury. But I have to say that I think it also benefits from the person on the till who actually serves your Lordships and serves me. They are all part of the same organisation. I can see why Sir Richard Greenbury should earn more than the person on the till but I do not remotely see why his rate of pay should increase more than that of the person on the till as the general case. That is the matter that the report was meant to be about. In my judgment it does not seem to have been addressed.
In connection with these rates and increases in top people's pay, to argue that somehow they reflect their market value flies in the face of all reason. Are we to believe that in the privatised utilities these people's world productivity suddenly sky rocketed to the degree that it did? Is that what Sir Richard is asking us to believe? Is that what the Government are asking us to believe? I do not believe it. To take the best and most productive market in the world, the United States, I have looked and asked for evidence that any of these people has been remotely even thought of in head-hunting terms in that market. Incidentally, the Statement says—I was rather taken aback by this—that,
"total remuneration levels in the United Kingdom are well below American levels".
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Jolly right they are! American GDP per capita and American productivity are far in excess of ours. It would be extraordinary if their remuneration levels were not higher than ours. What light is meant to be thrown on anything by that statement is completely beyond me.
There is a technical question to do with the privatised utilities. That was the origin of all this. It was pay in the formerly nationalised industries that caused all the fuss. The regulator exists in these industries because they retain monopoly power. The regulator is there to regulate the use of that monopoly power and to limit it as far as possible. What I do not understand—I have argued this and my noble friends have argued this for some years in your Lordships' House—is why the Government have set their face against the worst abuse of monopoly power that one knows about; namely, the use of monopoly power on the part of the management of those former nationalised industries to reward themselves. When we put down amendments to say, "Let the regulator have that as an area that he or she can look into", the Government steadfastly say no. That does not make sense to me.
The report favours self-regulation, but the report is an example of self-regulation. If one ever wanted to put up a case against self-regulation this report would be it. Can anyone really believe that the committee, which contained not a single independent element, would look harshly on its own rewards or the rewards of its friends? I must admit that until this matter came up I had no idea of the extraordinary interlinkages between those people. They all sit on each other's remuneration committees; they all know each other; many of them sit on the boards of several of the relevant firms. The idea that that somehow leads to an independent or rational outcome defies belief.
The other point that intrigues me is the obsession on the part of top management with relativities. It intrigues me because it reminds me of the worst days of trade union behaviour. It is exactly that with which the trade unions were always obsessed. There is a certain sense of schadenfreude, if I may use that word, to see the top management at least as obsessed as the trade unions were with "He is getting more than I am getting. Why?".
Lord Graham of Edmonton: My Lords, in the bad old days.
Lord Peston: My Lords, yes, in what were called the "bad old days". wish to make two or three further points. I understand that the group recommends the limitation of contracts for senior management to one year. That is a good point in the sense that, if management is rotten and does not perform, the cost of getting rid of it with a one-year contract is a good deal less than if it is a three or four-year contract. That is a good idea.
The question then arises of the special tax treatment of share options. I have two questions on that. My immediate response was that treating share options as income rather than as capital gains would make little difference to most people. We are talking of huge sums of money and most of those people will already have exhausted their allowances and would therefore be taxed in much the same way.

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What puzzles me is that, whereas this morning's press, in discussing the leakages of this document, said that the Chancellor, in making the tax changes that he forecast for the Finance Bill, said that the yield would be £80 million, there is nothing in the Statement in that regard. It is a pity because it would throw some light on how much benefit has already been received by these people. Perhaps the Minister can say whether there is some reason why we have not been told how much the withdrawal of the income tax relief will yield to the Exchequer. If it is because the Treasury cannot do the sums quickly, perhaps we can be told when we will be given the answer to that question.
My last point concerns self-regulation. If there is to be self-regulation, it must be shareholder-led. The troublesome point about the Statement, although it may be dealt with in the report, concerns the fact that the people who are really responsible are the institutional investors. There are technical problems in relation to them becoming involved in detail because of insider trading and what they may learn. But do the Government have any proposals, by way of changing companies legislation, to encourage the investment institutions to take all these matters more seriously and to speak up on behalf of the small investor? After all, most of the investment institutions are investing on behalf of small savers, even though they themselves are very big. It would not be a bad thing if they took the whole matter more seriously.
Baroness Seear: My Lords, I too thank the noble and learned Lord for repeating the Statement. I shall confine myself to commenting on the Statement because I have not had the opportunity of reading the Greenbury Report and am not prepared to rely on leaks of reports—a practice which I believe to be deplorable.
We welcome certain aspects of the report. We welcome the fact that taxation changes will be made on the share options. That is a recommendation which my party made to the Greenbury group. We need to look at the whole question of pay for directors of privatised industries in a different way from the rest of genuinely competitive industry, particularly competitive industry on an international scale.
The privatised industries still contain many of the most unacceptable features of a monopoly, as many of us said that they would when privatisation took place. It has been and remains difficult to obtain any kind of real assessment of their performance. So many of the suggestions in the report rely on a confidence that one can measure performance. But how does one do that, especially if one is using the market as a major instrument for measuring success or failure, in a privatised monopoly? Those industries need to be approached differently from other industries.
Performance is hard to judge. If one is a monopoly and is free to put up prices, although limited to some extent by the regulator, but one can control most of the factors which lead to the final outcome, it is difficult to say that because profits have gone up that has been due to any one person's efficiency, be it at director or any other level. It has been possible to control what are
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essential elements in obtaining a real measure of performance. That means that a quite different approach to regulation should be taken when considering the privatised industries as opposed to other industries.
I agree that institutional investors are extremely important in that regard. We discussed that in another connection at considerable length earlier this year and the role that they should play having regard to the great amount of money that they use and their potential power. That is something which needs to be examined. We should look at who should have decision-making power of that kind in the privatised sector. I suggest that it is something a regulator should be able to take into account and, unless there is a substantial decrease in prices, a sharp question should be asked about any increases in the remuneration of directors.
When we turn to the non-privatised sector of industry—the market sector—and particularly organisations operating internationally, the position is much more complicated. My mind goes back to the days—a long time ago now—when I was a member of what was called the Top Salaries Review Body. One of our difficulties was that we were dealing with people employed in senior positions on the boards of nationalised industries, some of whom were genuinely in an international market, but others had no place whatever in an international market. That is one reason why so-called comparability proved to be a less effective instrument in trying to decide what people ought to be paid.
The question of how rewards in the non-privatised sector should be determined is something into which I hope the Greenbury Report has gone more fully than is suggested in the Statement. Again, shareholder power is obviously very important and so is openness of all the rewards that people receive. A great deal of attention has been given to the actual amount of money paid in salary, directors' fees or whatever they are called. But in many cases a great deal of total remuneration is made up of other aspects, which are of considerable importance.
I note that the Statement refers to pension benefits. That is of enormous importance. In some cases the value of the increase in pensions is far more significant and expensive than the actual increase in the annual remuneration. But there are other issues to be considered. The determination of British management to have their motoring on the cheap has been one of the most ridiculous developments. It was introduced because under previous governments taxes had reached an absurd level and people were being remunerated in other ways, otherwise they could not be remunerated at all. But it still remains.
There are other benefits which should certainly be included when one is looking at the remuneration of top managers and directors; namely, pensions, motorcars, school fees and sickness benefit. All those can add up to a much more significant amount than that paid out in salaries. The Greenbury Report may deal with that; if not, some other body ought to.
Lord Fraser of Carmyllie: My Lords, I begin with the technical questions asked by the noble Lord, Lord Peston. He will appreciate that this is a private sector

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report rather than one commissioned and paid for by the Government. It is available at £10. However, my understanding is that a number of copies are being made available in the other place. If that is confirmed, I shall ensure that a comparable number is made available to your Lordships.
My understanding of the situation is that the group certainly took evidence from a large number of interested parties. I do not know whether it intends to publish all the evidence which it received. That is clearly a matter for the group rather than for the Government. The institutional investors were represented on the group, which produced a unanimous report. My understanding is that their representatives have welcomed the report and will be encouraging their member companies to comply with it. Indeed, I would not have thought that a weatherman was necessary in order to see which way the wind is blowing at the moment. Investors are already playing a more active part than they did at the time Greenbury was established.
I was asked whether there might be an opportunity for a considered response on some aspects of the matters considered by the Select Committee in another place. Noble Lords will appreciate that I cannot give an immediate answer now, but I have no doubt that it is something which will be of interest to your Lordships. Those with responsibility for that will doubtless have regard to what has been said.
The noble Lord, Lord Peston, was right. I suppose that the clear focus of the concerns which Greenbury was established to address relates to the privatised utilities. Perhaps I may make it absolutely clear that we look to all companies, including privatised utilities, to pay careful attention to the recommendations in the report. One of its recommendations is that the board of any company whose remuneration policies have attracted controversy may wish to seek explicit backing for them from shareholders by tabling a resolution at the annual general meeting. That is a strong recommendation at paragraph 5.31, and one which I know the President of the Board of Trade is encouraging companies to implement.
I am not sure that I entirely agree with the noble Lord, Lord Peston, that payments made to executives are out of balance or kilter with the rest of the world. Executives are not overpaid by international standards. As I have said, the total remuneration levels are well below those of the United States. A survey shows that a chief executive of an industrial company with annual sales of about 250 million dollars, would earn £512,000 in the United States compared with £249,000 in the United Kingdom. I agree that it is difficult to make comparisons, but that would seem to indicate that those companies are not marching in step.
What concerned me more was that the noble Lord seemed to be suggesting that somehow, and through a back door, we should be establishing some sort of pay policy, even a maximum pay policy. If that was his intention, I do not believe that he will be surprised to hear that I would strongly disagree with any such approach. If there have been substantial increases in pay
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for directors of former nationalised utilities, that may in part be due to their pay catching up with that in private sector companies.
The noble Lord suggested that we might address this matter by giving the regulator within the utility area the power to adjust salaries or prices by requiring them to be reduced. The noble Baroness, Lady Seear, also addressed that point. To give an example, perhaps I may deal with the matter in relation to British Gas. If the totality of the remuneration of the British Gas board were to be removed, that would mean a saving of something like 1p a week for all gas consumers. Against that, this self-same board has achieved a saving of about £77 per average consumer each year. It would be an extraordinary proposition that, if one assumed the oddity of taking out altogether any remuneration, that is a real way in which prices could be adjusted. If there were to be a direct intervention as regards salaries, the regulator could not be expected to judge on the merits of individual board members and set their remuneration. The regulator should serve the interests of the consumer, concentrating on lower prices and better services.
As regards one-year contracts, I agree with the noble Lord that that is an extremely important part of what is proposed. My understanding is that the Stock Exchange will require listed companies to comply with certain specific recommendations. One of those is the disclosure of any service contracts which provide for or imply notice periods in excess of one year. That seems correctly to emphasise what is happening with the proposed changes. A set of core requirements will be imposed on companies. But if they do not follow through other recommendations, they will be under an obligation to disclose and to give their reasons for not so doing. That seems to be an appropriate way to go forward.
Finally, as regards taxes, value would be lost. I understand that the latest figure for 1995–96, with the removal of this relief, which is what it amounts to, is something like £80 million. That is an arrangement which, if the noble Lord has not sought it, I certainly understood Mr. Gordon Brown was urging. The one respect in which he got the matter wrong was to believe that something like £200 million was the value of that relief. He was clearly wrong there.
I hope that I have answered most of the points in this detailed matter as fully as I can. I can announce that 100 copies of the report have been placed in the Vote Office.
4.7 p.m.
Lord Boyd-Carpenter: My Lords, can my noble and learned friend say whether the House will have an opportunity fully to debate this matter very soon after we return in the autumn? Can he give a firm assurance to that effect? The report raises a number of extremely important matters on which I believe the House will wish to express a view. Is my noble and learned friend in a position to say what additional revenue will accrue to the Exchequer as a result of the tax changes?
Lord Fraser of Carmyllie: My Lords, it is not for me to give absolute guarantees what the business of the House might be after it returns in the autumn. I repeated

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a Statement by my right honourable friend the President of the Board of Trade. He said that his observations on this matter were in the nature of some preliminary comments. I do not believe that there is any understanding on anyone's part that this is the end of the matter. Clearly, there will be a considered debate, not only in your Lordships' House, but, I hope, throughout the City and industry, as this matter is more clearly understood over the coming months.
I believe I gave an answer to the second part of my noble friend's question when I indicated to the noble Lord, Lord Peston, that my understanding of the matter is that for the year 1995–96 the withdrawal of tax relief, which allows those who are within an approved scheme not to pay income tax, although they have to pay a greater amount of capital gains, will amount to something like £80 million.
Lord Dean of Beswick: My Lords, in the Minister's detailed reply, he referred to the former public utilities. Is it not the case that some of the City institutions charged with dealing with the valuation of these former public utilities when they were privatised, got it wrong by as much as 30 per cent.? That left a very full trough of money for people to put their snouts in. The Minister will understand if people on this side of the House are not very enthusiastic about self-regulation once again being the order of the day at the top end of the financial scale, bearing in mind the recent failures by the City of London and Lloyd's of London.
The Minister also referred to the fact that neither the Greenbury Group nor the Government are involved in levelling rates of pay. The Minister should be aware that, in fact, members of the Greenbury Group level rates of pay of as low as £3 an hour on their employees, which I think is an absolute disgrace when we talk about people being "adequately rewarded". Although I do not single out any particular member of the Greenbury Group, some are involved in that.
The announcements that have been made today by Mr. Clarke, the Chancellor, are extremely welcome, but they will operate only from today. However, in the intervening period—that is, from the date of privatisation of those utilities to today—huge sums of money have been taken from the trough and raided by those people. Is the Minister saying that there is no way in which the Government can claw back any of that? The Minister should understand that people no longer accept that the Government cannot legislate retrospectively because it is "not done" when over the past few years, the Government have used retrospective legislation whenever it has suited them.
I support what was said by the noble Lord, Lord Boyd-Carpenter. I am sorry that we are to rise for the Recess this week. It may well be a convenient time to do so—and it happens like this under governments of various colours—but I should have thought that your Lordships' House should debate this subject as a matter of urgency. I am not by any means completely satisfied with what Greenbury said. I should like to read it in closer detail; but I do not think that it means much in the long run.
Lord Fraser of Carmyllie: My Lords, I am aware of the complaints that the Government sold the utilities at prices that were too low; but, having taken independent advice, the view was that the price was set at the maximum that the market would bear. I also recollect that when the price was set too high and a flotation was not all that successful, the noble Lord was equally vigorous in his condemnation of what was undertaken.
Given the noble Lord's anxieties, I invite him to consider what the Greenbury Group said in greater detail and its set of recommendations for listed companies. As I said in opening, the Stock Exchange accepted those recommendations and will be requiring listed companies to comply with certain specific Greenbury recommendations. Listed companies will be required, for example, to set out their remuneration policy and to disclose full details of all directors' remuneration, including share options and long-term incentive schemes. I apologise to the noble Baroness, Lady Seear, for not having answered her question on that earlier. Listed companies will also be required to invite shareholders to approve all new, long-term incentive schemes whether payable in cash or shares. They are to refrain from issuing executive share options at a discount.
Therefore, I advise the noble Lord that a set of important recommendations has now been put forward which is to be coupled with the requirement of clear disclosure if other recommendations are not to be implemented. We shall doubtless return to the matter at a later date but I hope that, having reflected on it, it will be appreciated that a real attempt has been made to address those issues that have caused public concern.
Lord Cockfield: My Lords, I wonder whether my noble and learned friend will clarify his point about the tax treatment of these matters. It will be within my noble and learned friend's recollection that capital gains tax used to be charged at 30 per cent., which corresponded to the figure which had been the standard rate of income tax for a considerable period of years. In those days, to charge capital gains tax instead of income tax represented a considerable benefit. But Mr. Nigel Lawson (as he then was) increased the rate of capital gains tax to 40 per cent.—
Noble Lords: Shame!
Lord Cockfield:—thereby removing a large amount of the incentive to dress things up as capital gains instead of income. In those circumstances, it is very difficult to see how an £80 million tax yield could come from charging those things to income tax instead of capital gains tax unless there is a great deal more which has not been revealed in the highly sanitised edition of the Greenbury Report to which your Lordships have been invited to listen.
There is another and perhaps even more important point. Does the fact that the Chancellor of the Exchequer regards this as so important a move, and one which will remove the sense of public outrage which rightly or wrongly exists, mean that for the more innocent members of the community he now proposes reducing capital gains tax to 30 per cent. or, indeed, to 25 per cent., which is the present basic rate of income tax?
Lord Fraser of Carmyllie: My Lords, I am sure that my noble friend the then Chancellor of the Exchequer is more than able to answer for himself and to explain why he raised that rate. It was clearly right to do so to ensure that such valiant efforts would not repeatedly be made to shift income into capital or vice versa as has happened from time to time. I should point out that £80 million is the figure that has been given to me. The noble Lord will appreciate that the annual capital gains tax allowance is some £6,000. The noble Lord may be surprised that because of its presence such a significant global sum should emerge at the end of the day, but that is what I am advised.
The present Chancellor of the Exchequer will have to answer for himself on his proposals for the rate of capital gains tax. However, in addressing such issues it is important to ensure that those employees who receive free and tax-free shares from their employers of up to £8,000 per annum under approved profit-sharing schemes should clearly be excluded from the provisions. Such arrangements in favour of employees are clearly desirable and one would not want to do anything to damage them.
Lord Barnett: My Lords, having handled a few tax matters when the noble Lord, Lord Lawson, was in the other place and in another capacity—when we both were—perhaps I may first take up a technical point on taxation, following the noble Lord, Lord Cockfield. Everything depends not on what the Chancellor is now saying, but on what goes into a Finance Bill and on how it ends up in a Finance Act. As I am sure that the House is aware, that is not always the same as was intended.
I assume that the Minister will be able to confirm that the saving of £80 million which he mentioned is very much a guess and depends on a whole variety of factors, not least on the question of allowances. The Minister said that there would be no allowances, but allowance is made for capital losses when set against capital gains. Indeed, it is possible to create some if they do not already exist, especially for members of Lloyd's. Perhaps the Minister will confirm that that figure of £80 million is very much a guess.
I turn now to the central and more serious point, which is what the Government propose to do about the level of pay of senior directors in all companies, not just in the utilities. I take the point that the Minister is not in favour of an incomes policy. The Minister said that we do not need to worry because this is what happens in the United States and the institutional investors are happy. My noble friend Lord Peston did not mention institutional investors; but the fact is that many of the self-same institutional investors are also board members of large companies where they are paying themselves very substantial salary increases. Therefore, it is a bit much to say that there is no incomes policy when there clearly is an incomes policy which allows that to happen. Perhaps the Minister will confirm that the Government intend to allow all this to go on with very little in the way of change. Greenbury referred to one year and said that after that there would have to be re-election, but that does not mean very much, as I am
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sure that the Minister is aware. In effect, is he not saying that it is not proposed to do anything at all about either the public utilities or other public companies?
Lord Fraser of Carmyllie: My Lords, I am reluctant to engage in a debate with the noble Lord and my noble friend on tax matters. What is being removed is the preferred status of an individual who is presently within an approved scheme. That will fall away. The individual will find himself in exactly the same position as someone who is now a member of an unapproved scheme. What will be lost is the benefit of the delay in making the capital gains payment, the annual allowance and the opportunity to set any CGT indexation against the whole gain. That is the figure that I have been given, and I have no reason to believe it is wrong. It is not simply a forward guess but is based on the position in the past.
One of the important recommendations of the report is that in future remuneration committees should be made up of non-executive directors, with no potential conflict of interest arising from cross-directorships. When the noble Lord manages to get to the Printed Paper Office and look at the code of best practice, he will find that that is the recommendation under A4. I do not suggest that that does not mean that those who are part of a remuneration committee will not have an idea of what may be comparable salaries around the industry. However, what has been regarded as objectionable by some people is the situation where there has been a rather intimate set of cross-directorships. It is now the clear recommendation that that rather cosy arrangement should not continue, certainly with regard to the remuneration committee.
Lord Mayhew: My Lords, will the Minister kindly elucidate further what he has said about exemptions? If, as I understand it, the Chancellor proposes to change the taxation of gains from capital gains tax to income tax, the taxpayer will pay 40 per cent. of the £6,000 exemption on capital gains; that is to say, £2,400. Each person will pay exactly that sum. Someone who has gained £10,000—perhaps an employee—will pay 24 per cent. of his gain, whereas someone who has made £1 million will pay 0.24 per cent. of his gain. Is that the intention of the Government?
Lord Fraser of Carmyllie: My Lords, the present situation is that if the individual is within an approved scheme and makes a gain at the time he exercises his option, no tax is then payable. It is left aside until there is a sale, at which point both the gain made earlier and on the eventual sale is all treated as capital gain. If it is so treated and in that year the £6,000 exemption is not taken up, the individual can take advantage of that. There must be a real value in not having to pay tax immediately. A further feature of that is indexation. The effect of the changes proposed by the Chancellor of the Exchequer with effect from an exercise as of today is that those who are in approved schemes will find themselves in exactly the same position as individuals in unapproved schemes; that is to say, any gain made at the point that the option is exercised will be treated as subject to income tax rather than capital gains tax at an indeterminate point in future.
Lord Morris: My Lords, many will welcome Her Majesty's Government's early support of what I understand to be the central tenet of the recommendations of the Greenbury Report, namely, that any increase in remuneration should be linked to performance. My question is simply: performance of what or by whom?
Lord Fraser of Carmyllie: My Lords, clearly there are a number of detailed features of performance that one will expect the remuneration committee to consider. What I believe is important is that there should be clearer confidence that, where the remuneration committee exercises its discretion, there should be no hint that there is a cosy relationship between the individual whose remuneration is to be considered and those who have the power to award it. I believe that if the proposals that the Greenbury group has advanced are implemented, much of the concern that has been expressed should fall away.
Lord Eatwell: My Lords, in his early consideration of this matter Sir Richard Greenbury recommended that directors' pay should normally move broadly in step with that of other employees and should not shoot ahead by the massive percentages that we have seen in the case of the utilities. However, that proposition by Sir Richard Greenbury does not appear in the report. Are the Government in agreement with Sir Richard's initial position or not?
Lord Fraser of Carmyllie: My Lords, our view is that pay should be carefully determined by a remuneration committee that can regard the matter objectively, having regard to the performance of the individual and, within that context, the performance of the company. What we do not wish to see introduced is any kind of maximum pay policy which says that because other employees receive such and such a rate it necessarily follows that the chief executive and others must receive remuneration at exactly the same rate. In certain circumstances it would not be difficult to envisage a case where the chief executive, according to some of the more modern arrangements in place, received a cut in pay related to the overall performance of a company, or employees, such as those working on the tills in Marks & Spencer last year got their pay increases while Sir Richard Greenbury did not.
Lord Boardman: My Lords, might not the quickest, most expedient and satisfactory way to deal with the recommendations of the report be to encourage the Stock Exchange—if it needed any encouragement—to include this in their rules of conduct, known as the yellow book? That would be completely binding on all listed companies, including those that had been recently privatised.
Lord Fraser of Carmyllie: My Lords, I have already indicated that it is my understanding that the Stock Exchange welcomes what has been proposed by the Greenbury group and will adopt a two-part approach to implementation by introducing these features into its listing rules: some will be core requirements and others
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recommendations. What is critical about the recommendations is that if they are not followed through there will be a requirement for the disclosure of the reasons for not following them and an explanation.

Privacy and Media Intrusion
4.28 p.m.
The Parliamentary Under-Secretary of State, Department of National Heritage (Lord Inglewood): My Lords, with the agreement of the House, it may be convenient if I repeat a Statement made by my right honourable friend the Secretary of State of the Department of National Heritage in another place on privacy and media intrusion. The Statement is as follows:
"With permission, Madam Speaker, I shall make a statement about the press and privacy.
"I am today publishing the Government's response to the Report of the National Heritage Select Committee on Privacy and Media Intrusion. Copies are available in the Library and Vote Office.
"I pay tribute to the Select Committee for their report. The Government very much appreciate the committee's patience in their long wait for this response. The issues in this area go to the heart of our democracy, and the Government have thought about them long and hard. In every democracy there is a balance to be struck between the rights of individuals to personal privacy and the freedom of the press. As the Select Committee recognise, this is not always easy to achieve.
"It is a proud feature of our free nation that for 300 years, other than as a necessity in times of war, the United Kingdom press has been at liberty to write whatever it chooses, subject to the constraints of the law as it applies equally to all citizens. Such freedoms are jealously guarded by the press itself and by this House. The surest means of protecting these freedoms is to ensure they are used responsibly.
"Overall, the quality and standards of our local, regional and national press are high. However, some newspapers have ridden roughshod over people's privacy when there was no possible justification for doing so. Cases concern not just those in public life but private citizens who become the subject of media scrutiny through circumstances not of their choosing. People are entitled to privacy for themselves and their families. In response to these concerns the industry has taken a number of steps. An independent, non-statutory Press Complaints Commission was set up at the beginning of 1991. Lord Wakeham was appointed as chairman of the commission at the beginning of this year. He has considerably strengthened it. The majority of its members are now independent of the press and bring robust common sense to the cases before them. Lord Wakeham set out the steps he has taken in a recent letter to my predecessor. It is published today as an annex to the Government's response.

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"The development of a national code of practice for the press is a significant improvement on what has gone before. The code, and how it is applied, is being shown to have effect. The House will be aware, for example, of a recent instance where the editor of a Sunday tabloid was publicly reprimanded by the newspaper's proprietor for breaching the code. More needs to be done. I am glad to note that, as the Select Committee recommended, increasingly compliance with the code is being written into the employment contracts of editors and journalists.
"Lord Wakeham is bringing forward proposals for discussion on how both the public and the PCC can contribute to revising and further toughening the code of practice. This is welcome as are his proposals for performance targets against which to measure the commission's efficiency and responsiveness.
"It is essential that self-regulation is both effective and seen to be effective. There have been improvements to the PCC. Lord Wakeham is committed to doing more.
"I have written to him setting out further improvements the Government wish to see both in the procedures of the PCC and in the code of practice itself. My letter is published as an annex to the Government's response to the Select Committee.
"We recommend that the PCC pays out compensation to those who it judges have had their privacy violated by the press. Such awards would be paid from a fund set up by the industry. This would be a collective recognition from the industry that one of its members had wronged a member of the public.
"We have proposed several ways in which the code of practice might be further tightened up. In particular, there are several points where the language of the code should be more precise, or the emphasis changed, to place greater weight on the protection of individual privacy.
"We support the Select Committee's call for a direct and rapid line of communication between the chairman of the PCC and newspaper editors. This would be used to warn them where, in the chairman's judgment on the basis of evidence submitted to him, the code was about to be breached. This could be used to head off abuses. It is also important that the public have rapid and direct access to the PCC. This facility should be well publicised in the press so the public are aware of it.
"The Government have considered carefully whether legislative options should be pursued, rather than the self-regulatory alternative. We have decided for the present to allow Lord Wakeham's commission, and the press, to demonstrate that self-regulation can be made to work. Let me say something though about each of the legislative alternatives.
"The Heritage Select Committee and Sir David Calcutt's 1993 Report before it both took the view that legislation was needed to prevent abuses by the press. However, there is disagreement about the best remedies to apply. Sir David Calcutt recommended a statutory press complaints tribunal, but this was rejected by the Select Committee.
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"The Government agree with the committee that a statutory press complaints tribunal would not be right. We believe in a free press. Like the committee, we are reluctant to see statutory controls. A statutory tribunal would be a very significant step on a path we have no wish to travel. For the same reason we cannot accept the committee's recommendation for a statutory ombudsman.
"I come next to the Heritage committee's recommendation for a protection of privacy Bill with both civil and criminal elements. The criminal elements would be similar to the intrusion offences proposed in the Calcutt Report. However, the Select Committee, unlike Calcutt, would extend the offences to cover intrusion for any purpose and not just for publication.
"The Government have made it clear that they see attractions in principle in the use of the criminal law to prevent and penalise blatant and unjustified intrusions into the privacy of individuals. Nor could the owners or editors of most newspapers, we believe, legitimately object to sensible laws in this area.
"The Government have therefore given the most painstaking consideration to how the necessary legislation might be drawn up. In particular, they examined from every angle how the Calcutt offences might work in practice. This work is described in detail in Chapter Three of the Government's response.
"We have been guided by the principle that the law must be both clear and enforceable. It must have a good chance of catching those who are abusing their powers while not inhibiting legitimate journalistic investigation. Any legislation would have to establish a balance which protects privacy while allowing responsible journalism and without creating defences that were so wide as to render the offences meaningless.
"We have been forced to conclude that the difficulties of scope and definition of the proposed offences, and the necessary defences, are formidable. The Government would prefer to see a self-regulatory process than to introduce a law which could create more problems than it is designed to solve. The Government therefore have no immediate plans to legislate in this area.
"The Select Committee also recommended a civil remedy for infringement of privacy. This would give victims of infringements of privacy a right to damages and to seek injunctions. My noble and learned friend the Lord Chancellor and the then Secretary of State for Scotland consulted on a new civil remedy in 1993.
"The consultation did not generate the clear support which the Government look for when considering major measures of law reform. The Government are not yet persuaded that there is sufficient consensus on which to base statutory intervention in this area. Moreover the Government strongly prefer the principle of self-regulation.
"On balance therefore the Government have decided not to legislate for a new civil remedy, at least for the present. We do believe however that the

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right to privacy should be more explicitly spelt out in the industry's code of practice. For this reason we are publishing, as an annex to our response, what a civil remedy might look like with the recommendation that elements of it should be incorporated into the code.
"The whole House will look to the industry to respond positively to the recommendations set out in my letter to Lord Wakeham. Self-regulation still has a case to prove. Despite the serious practical difficulties, legislative measures should not be ruled out.
"The fact is however that self-regulation is the most practical way forward. The appointment of Lord Wakeham and the approach he is taking offer the best opportunity for some time that self-regulation will be made to work in a way which commands public confidence. There are signs of a growing recognition among editors, including past miscreants, that the right of individual privacy is not to be casually cast aside.
"The industry now has to back the PCC and to make self-regulation fully effective. This is an issue which the Government and this House will and should continue to monitor and debate."
My Lords, that concludes the Statement.
3.38 p.m.
Lord Donoughue: My Lords, I thank the Minister for that Statement, such as it is. The House will be aware that the Calcutt Committee first reported on privacy five years ago, on press self-regulation two and half years ago, and the National Heritage Select Committee some time ago. A remarkably long gestation period has been needed to give birth to this little mouse. Rarely can so many have laboured so long to produce so little. There appears to be a strong whiff of appeasement in the air. I am bound to say that at least Stanley Baldwin, although afraid of the Germans, was not afraid of the press.
On the central issue of the tort of privacy, I see the Government's problems, especially where legal aid is not available, though I note that our neighbours, the French, have resolved those problems. Moreover, the European Convention on Human Rights contains a definition of, and protection for, the right of privacy. I can say now that on this side we believe that that right should be entrenched in British law together with the right to freedom of expression, when properly exercised, as also in the convention, and freedom of information, and that those three pillars (privacy, freedom of expression and freedom of information) strike the right balance between ensuring that the public interest and the right to know matters of genuine public concern are published, while protecting the right of private individuals to their privacy.
In one area of that, where the Government, as in all areas, are doing nothing, Calcutt was, in my view, good and clear on preventing technological intrusion. He states clearly that various acts of physical intrusion should be criminal offences. The Select Committee supported that and in fact widened it. I shall remind the
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House what those acts were. They were entering private property without consent to obtain personal information for publication; placing surveillance devices similarly; taking photographs or recording voices of individuals on private property for publication without consent; the improper interception of private telecommunications and, of course, the low hooliganism of journalists "doorstepping". Those seem to me to be clear offences which should not be tolerated in a civilised society. Many Members of both Houses and the Select Committee have expressed concern. I should point out that the public supports constraints in those areas. A while ago, there was a Gallup poll which showed over 80 per cent. of the public supporting constraints in those areas. But it was, surprisingly, one of the polls that the press did not consider interesting enough to print.
I am not talking about protecting the rich, the powerful and the politicians because they have their own ways of protection—and, in public life, one is properly exposed—but about ordinary citizens exploited in situations of painful, family grief. I am talking about the sick and what happens with their medical records and especially about the mentally ill, where there have been many appalling cases of abuse. The range of offences is wide and the bad record of the press is very long. I am unconvinced as to why there is no proposed legislation for those specific offences.
The Government say that there are problems with definition and enforcement. I do not accept that. Moreover, lawyers do not accept that fact. We know in this House that such problems of definition and enforcement have not deterred the Government in many other areas of legislative endeavour. Indeed, we seem to spend much of our time on such cases. I wonder whether it is true, as is widely asserted, that the Department of National Heritage—a decent department—was willing to operate in those areas but the Home Secretary refused because he was afraid to offend the press ahead of an election.
On self-regulation and the Press Complaints Commission, we welcome the recent and proposed improvements of its conduct. The membership is better now with a lay majority; but I believe that it needs an even better lay majority. It was certainly ludicrous when it was composed of representatives of the press. I remember an old saying that, if you were setting up a committee to devise a better mousetrap, you would not compose it entirely of mice. Therefore, it needs a bigger membership and a further tightening of the code would be welcome. I believe that the entrenching of code conditions in journalists' contracts of employment is an improvement, but it should be made universal. I wonder whether there are any proposals for that and if the commission will try to pursue them.
I should also say that the commission only responds to complaints. Many individuals are actually afraid to complain. They feel that the press will be vindictive towards them. They feel intimidated. I believe that the commission should be encouraged and enabled to take the initiative in pursuing the press on matters of genuine public concern. We also think that it should have a better research capacity so that it can pursue such matters.

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The Calcutt Report recommended that if the press fails to demonstrate that self-regulation works, there should be a statutory system. On this side of the House, we have reservations about a statutory system; indeed, we note that the Government have rejected it. However, the Government have also rejected the Select Committee's recommendation for an ombudsman. I do not understand that. Therefore, in this, as in other areas, they are doing nothing. Do they feel that self-regulation is now working or that it will work? It is interesting to note that, since the first Calcutt Report, the past five years have seen the most irresponsible press behaviour with the worst intrusions into privacy this century. Perhaps the Minister will tell us what degree of irresponsibility constitutes failure and where they would look again.
As the announcement makes clear, the Government are doing nothing. They are doing nothing on the criminal offences of the various kinds of physical intrusion. I must tell the Minister that that is an area which was very specifically defined in Calcutt, and indeed in the Select Committee's report, and where we on this side of the House could have joined the Minister and formed a great deal of consensus. There is nothing on the Select Committee's recommendations for a civil remedy for the infringement of privacy and nothing on the ombudsman.
The Government are relying on the Press Complaints Commission which is an honourable and well-meaning body which we give all our support. However, we really cannot believe that that will be enough when the press is inevitably a commercial operation and driven by circulation wars. In those situations, we cannot believe that the odd rap on the knuckles from the commission or a rather contrived rebuke from a newspaper proprietor to a journalist—we notice that no one is sacked—will be enough. I have to say that this is an extremely disappointing document.
Lord Thomson of Monifieth: My Lords, I join the noble Lord, Lord Donoughue, in deploring what is a very wet and timid response to one of the major concerns of our modern society. To have such a response two-and-a-half years after the Calcutt Report is very disappointing indeed. For our part, we would have wanted the starting point for the Government to have been much more wide-reaching and imaginative. One really has to start with a freedom of information Act and the incorporation of the European Convention on Human Rights into United Kingdom law, and then move on from there.
The Government are right to say, as the Statement says, that in every democracy there is a balance to be struck between the rights of individuals to personal privacy and the freedom of the press. We welcome what has been said in the Statement about the strengthening of the Press Complaints Commission. We on these Benches have recently proposed an independent media tribunal. We also welcome the proposals being made to the Press Complaints Commission for a newspaper compensation fund. It is now just two years since the party on these Benches, in the shape of my late noble friend Lord Bonham-Carter, Robert Maclennan, and myself, proposed to the Calcutt Committee in our
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evidence that newspapers should deposit a bond with the commission each year. That would need to be a significant sum related to the circulation of the publication in question. At the end of the year it would be returned with interest, subject to the proviso that the commission would have the power to retain all or part of it should the publication have broken the code or ignored the ruling of the commission. I am pleased to see some movement in that direction in the Statement.
However, as the noble Lord, Lord Donoughue, just put forward, we also proposed that legal provision should be introduced in terms of intrusion into personal privacy. We proposed that a carefully tailored civil offence of physical intrusion should be introduced to prevent the harassment of individuals by the media. It is right that peeping Toms, aggressive doorstepping and telephone harassment by the media should he regulated by law.
I find the descriptions in the Statement as regards the reasons for not making practical progress in the latter respect, after all the years and all the examinations, deeply disappointing. I suppose that all we can do is to seek some consolation. For those of us who are textual critics of Whitehall documents we must find comfort in the repeated phraseology of, "This is the Government's position at present"—until we know whether the Press Complaints Commission puts its house more strongly in order. There are remarks at the end of the Statement that if the commission does not live up to the Government's expectations then:
"Despite the serious practical difficulties, legislative matters should not be ruled out".
Those of us who know about such matters must recognise, as indeed did the noble Lord, Lord Donoughue, that those are the unmistakable marks of a department that wishes it had been able to go further but which has been defeated in Cabinet by Ministers who are determined in the run up to the next general election to do nothing to offend the great peers of the press.
Lord Inglewood: My Lords, I am grateful to the noble Lords, Lord Donoughue and Lord Thomson, for their remarks, but I must confess that I am most disappointed at the tone of their responses. I am disappointed because they seem to equate the Government's decision with some form of cowardice or inability to come forward with the right solution. This has been, as the noble Lord, Lord Donoughue, commented, a long time in gestation. When one is dealing with difficult matters it is important to think thoroughly and carefully about what is being proposed. That seems to be a point of view that does not lend itself to the Benches opposite. I am disappointed about that; it does not underscore their claims to government.
This is a difficult issue that we have been dealing with and we approached it from the same kind of perspective as the noble Lord, Lord Donoughue. The key man here is the small man who finds himself subjected to intrusion and finds that his privacy is gravely violated. We have to try to ensure that that does not happen. In this instance we are trying to establish a state of affairs where these abuses do not occur. It is because that is our aspiration that we reached the conclusions that we did. If one looks at the matter in the

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same way as the Select Committee's report and indeed the Government's response to the Select Committee's report, in terms of individuals' zones of privacy being invaded, there are all sorts and kinds of problems involved in going down a legal route, be it civil law or criminal law. It is no good simply laughing off the problems of definitions. They are not as easy as all that. That is an extremely difficult matter.
Further, in a free society where investigative journalism is a legitimate part of the system, one must have defences, and if the defences are such that they effectively negate the effect of the very rules that are being put in place, that hardly seems to be a way of protecting the small man. Another important matter in this regard concerns the consequences under this sort of system if there is litigation of some kind and the matter goes to court. What we will then find is that, under the rules of privilege, the whole world will become privy to the very breach of privacy which the system is intended not to publicise. That will be an extremely unsatisfactory way, to put it mildly, of dealing with the problem.
We believe that in the real world an effective and robust non-statutory system is that which will deliver best for our citizens. I wish to pay tribute to the work of my noble friend Lord Wakeham, who is unable to be with us here this afternoon because, since the advent of his chairmanship of the Press Complaints Commission, a number of important changes have already been instituted. In the annex to the Government's response they are set out in some detail. In addition, an exchange of correspondence between my noble friend and my right honourable friend the Secretary of State indicates the kind of direction in which the non-statutory body is likely to move. This, we believe, will provide the best protection for our citizens from the undoubted excesses of the press which have been displayed in a number of well publicised instances over recent years. It is because we believe this is the most practical and effective way of dealing with this serious problem that we have brought forward our response.
Lord Harmar-Nicholls: My Lords, it gives me no personal pleasure to find myself 100 per cent. in agreement with the two spokesmen from the Opposition Benches. Anyone with half an eye will recognise this for what it is: a fobbing off Statement to try to put under the rug something that the Government know should be dealt with because they know that to allow things to continue as they are poses a danger to society generally.
I understand the problems of obtaining statutory powers to try to deal with this matter and I know that to try to copy the French legislation would be difficult and intricate, as has been explained. However, there is no reason at all why the Government cannot make some start in some aspect of it to show that they really mean business. I say this with some feeling because I have tried to do just that. In the previous Session I brought forward my photograph Bill which would have gone some way towards closing a number of loopholes following the unfair and malicious photography that is carried out, while not settling the whole of the problem.
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The noble Baroness, who is on the Front Bench at the moment, had to answer on that occasion and give the Government's view. What was the Government's view in the previous Session? It was not a criticism of my little step forward. They said the Government could not follow my proposals because they had their own plans almost ready to put into operation. Now we are given this fobbing off Statement which means nothing. I hope that my noble friend will take the trouble, now that he has responsibility for this matter, to look up my photograph Bill. We got it through the Committee stage and we were almost at the end of the Report stage, after which the matter could have been sent to another place to receive the detailed examination that it deserves.
I am a little worried as to the contribution that my noble friend Lord Wakeham will make because his predecessor led the Opposition at the Report stage as to whether or not we should proceed with my Bill which in no way prevented a bigger move forward later and which in no way inhibited any future efforts to make it even more complete. On the promise that something would be done—nothing was done—we lost that Bill. Is there no way to make the Government realise that as regards this important matter it is better to inch forward in the right direction instead of finding words which merely mean they will put it off for another day, and another day, and another day after that?
Lord Inglewood: My Lords, I am most grateful to my noble friend for drawing my attention to his photograph Bill. I wish to assure him that I shall consider most carefully the issues that it raises. However, needless to say, I am obviously disappointed by the underlying thrust of my noble friend's remarks. As I said in repeating the Statement to your Lordships, we believe that self-regulation offers the most effective possibility of appropriate regulation in this respect.
It is, I think, agreed among your Lordships that there have been serious problems in this regard in the past. Against that background, if we look at the matter of self-regulation and its recent history in this country, it is important to see whether some of the problems relate to the detail of the system that is in place or whether the very system itself is in some way or other fundamentally flawed and cannot as a matter of principle work properly. It is our view and the view of my noble friend Lord Wakeham that it is the former, and that it is a matter of getting this system to work better which will then mean that it will be able to deliver what I am sure not only your Lordships but the vast majority of the citizens in this country want to see.
I draw the attention of noble Lords to the final words of the letter from my noble friend Lord Wakeham to the previous Secretary of State at the Department of National Heritage. It is appended to the Government's response and states,
"My central aim is, after all, very close to what I believe yours to be: to ensure proper redress for ordinary people against abuses by the press, while preserving the essential freedoms of the press—without which any democracy will surely founder".
That seems to me to sum it up.
Viscount Tonypandy: My Lords, is the Minister aware that I am also going to ask him questions that will give him no joy? He has expressed disappointment

41
about everyone's comments, but does he appreciate that the public are aware of the lower standards of the media today and that they are undermining the basic rights of people? That will continue for as long as they have a government who are afraid to do anything. The Minister stood there today and gave the weakest Statement that I have heard since I joined this House.
I join with noble Lords who have spoken both from the Opposition Benches and from the Government Benches in saying that the public want action. It is clear that self-regulation has not worked. It has been given a long time. People are being hurt and will continue to be unless the Government introduce greater penalties than they have introduced this afternoon.
5 p.m.
Lord Inglewood: My Lords, I agree entirely with the noble Viscount, Lord Tonypandy, over anxieties about lower standards. I alluded to them earlier in my remarks. It is because we want to see something happen that we propose to deal with the abuses along the lines I have described. We believe that the flexibility inherent in an effective system of self-regulation will deliver the kind of safeguards that we all want to see.
Needless to say, it is a matter of an effective method of self-regulation. I can only repeat the concluding remarks of my right honourable friend's Statement that:
"The industry now has to back the PCC and to make self-regulation fully effective. This is an issue which the Government and this House will and should continue to monitor and debate".
To use a vernacular phrase, the ball is now back in the industry's court. There is a PCC with a new chairman who is clearly and emphatically committed to a change in these matters. We believe that this will be the way forward.
Perhaps I may make one final comment. It has been intimated on two separate occasions that the Government's response to this matter has been motivated by a fear of the press. After the events of the past two or three weeks my right honourable friend the Prime Minister has no fear of the press.
Lord Monkswell: My Lords, I thank the Minister for repeating the Statement. He made reference to a fund. One could call it a slush fund or a hush fund. I am not sure what the right terminology would he. A number of questions arise in relation to the fund. I believe that it is to be run by the PCC and based on a levy from various newspapers that might be affected. Money would obviously be dispursed to complainants.
On what basis would money be dispursed? Would it he disbursed in large amounts to people who court publicity and perhaps find that following a photocall the wrong photograph appears in a newspaper? They have made a mistake. They may be a bit short of money; they make a complaint and a large chunk of dosh is doled out to them to help their finances. Or will it be used for the classic case of the unemployed person who is pilloried as a social security scrounger even though he may be making strenuous efforts to find employment? On what basis will the financial disbursement be made?
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Secondly, on what basis will money come from the various newspapers? Will it be a levy based on their circulation, turnover or profits? Will there be any connection between the levy and the number of complaints made against a particular title?
The House must be gravely concerned by the idea that an intrusion into someone's privacy can be compensated by monetary payments. There is no effective redress for that person other than in financial terms. There seems to be no penalty against the perpetrators of invasion of privacy except in monetary terms. Bearing in mind the enormous sums of money that top people pay themselves, is a financial penalty likely to have any effect whatsoever?
Lord Inglewood: My Lords, let me make it quite clear at the outset that this is not envisaged in any way as being a system under which unscrupulous newspapers may be able to buy their way into breaching people's privacy. Let us hit that idea on the head at the outset.
The Government find attractive the idea that the PCC should have a fund which would be collected from the various newspapers from which it could pay appropriate compensation. We are not here talking of punitive damages but appropriate compensation to those people who have been affected by breaches of the PCC's code of conduct. We are at an early stage of consideration of this matter. However, it is important to note that in those circumstances the fact that compensation might be payable would not be the only remedy in the hands of the PCC. It is unthinkable that it would be simply a case of buying off an incident which was in breach of the code. The Government believe that this is an attractive idea which will assist in this regard.
In this context it is important to remember that there are a number of civil remedies which may or may not have a bearing on the kind of activities with which the PCC is concerned. I am thinking in particular of the noble Lord's remarks concerning defamation.
Lord Beloff: My Lords, I suggest to the Minister that the anxieties of the public are not covered by the notion of a balance between a person's right to a private life and the freedom of the press. The former is overwhelmingly more important. After all, our legal system is based on the notion of the King's Peace, the preservation of the citizen in his life and limb, and also increasingly in our time, and rightly, his reputation. That is surely much more important than the right of tabloid newspapers, without which we could do very well, as the noble Viscount, Lord Tonypandy, reminded us, to print what they like and to obtain information by what means they like.
I find it difficult to appreciate the view of the Minister that there are technical difficulties which prevent the Government from tackling one aspect which Sir David Calcutt emphasised, namely the use of modern technological means such as long-distance cameras and eavesdropping machines of one kind or another. If the Government wish to persuade this House and the country of their sincerity in wishing to see privacy preserved, why can they not bring forward a short Bill, the work for which has already been done by Sir David

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Calcutt, which would outlaw, with criminal penalties, the use of such instruments? After that we could see whether self-regulation would get us further.
Lord Inglewood: My Lords, I am most grateful to my noble friend Lord Beloff for drawing our attention to this matter. Clause 5 of the PCC code of practice specifically covers listening devices, which is the general description of the kind of device to which my noble friend referred. That is already in the PCC code of conduct. It has been introduced into the code since it was first written in 1991. Against that background, bearing in mind his comments, surely the appropriate course is to see whether that works. If it does not then the case that my noble friend advances inevitably becomes that much stronger.
Lord Mackie of Benshie: My Lords, I have a simple question for the Minister. I should like him to explain the statement:
"There are signs of a growing recognition among editors, including past miscreants, that the right of individual privacy is not to be casually cast aside".
How does the Minister reconcile that statement with the rush by the tabloid press to pay an American prostitute for information regarding her dealings with a well-known British actor? I understand that the contest was won to the tune of £100,000 by Mr. Hughes.
There was praise also in the report for ticking off an editor. Does the Minister agree that he talks nonsense when he states that there is any desire among the tabloid press to improve?
Lord Inglewood: My Lords, the short answer to the noble Lord is no. The clear response by the industry to the proposals, and the chairmanship of my noble friend Lord Wakeham, suggest to us quite clearly that there is the shift in the general direction which I described. I made reference to the reprimand that was given to the editor of a well-known Sunday newspaper. I suggest that that would have been unthinkable even a year or so ago.
However, we believe that what I have described is the case. As I concluded when reading the Statement of my right honourable friend, it is an issue which will be taken extremely seriously by the Government. The matter is now in the hands of the industry. It is up to the industry to operate a voluntary system in accordance with the generally accepted attitudes of this House, which we believe are those of the country at large, or we shall have again to consider the matter.
Lord Elton: My Lords, I seem previously to have heard the words "It is up to the industry" in this connection. I have been listening, therefore, for some crumbs of comfort for those of us who would like Her Majesty's Government to proceed more briskly in the matter. (I am sorry if I am a little obscure in my speech; half my face is still frozen from a recent visit to the dentist.)
It seems to me that there has been insufficient recognition of what my noble friend Lord Wakeham has already achieved by getting into the contract of employment of editors an undertaking to observe the code. That has given a means of removing from office
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those who offend seriously against the code. But in the final analysis that policy transfers the onus for its observation from the editor to the proprietor. It seems to me that we are now embarking on an important experimental stage. It is just possible that the Government are right to see how that experiment works before they proceed to legislation. If proprietors are more mindful of the rights of the individual and of society as a whole than their employees have so far been, it is possible that a voluntary code may yet be effective.
If such a code is backed up by a pecuniary penalty, as is now suggested, in the form of a significant bond to be retained each year by the commission against good conduct, there will be that pecuniary pressure on the proprietors also to honour the code.
Lord Inglewood: My Lords, I am most grateful to my noble friend. Despite his half frozen mouth, he has made comments which we believe to be entirely to the point. He shares much of our analysis of the situation and the way to improve things.

Atomic Energy Authority Bill
5.14 p.m.
House again in Committee on Clause 1.
Lord Clinton-Davis Lord Clinton-Davis moved Amendment No. 3:
Page 1, leave out lines 15 to 21.
The noble Lord said: In moving Amendment No. 3 it may be for the convenience of the Committee if I take with it Amendments Nos. 4 to 6.
Amendment No. 3 is a probing amendment. What we seek to do—we could not apparently achieve it in Standing Committee in another place—is to ask the Government to suggest how the situation will work out in practice. We know that the Government have stated a number of things. They suggest that licences will be held by the AEA Government Division. The Institution of Professionals, Managers and Specialists has stated:
"The statement 'The UKAEA will remain the site licensee after these divestments and therefore ultimately responsible for safety' is misleading".
That institution goes on to say that the Government Division,
"have announced publicly at the 4th International Conference on Decommissioning of Nuclear Facilities … that they would like contractors bidding for decommissioning work to consider taking on site nuclear licences for some installations. Specifically they have invited bidders for decommissioning the Windscale Piles to construct their bids on the basis of taking over the nuclear site licence, if they wish. Whilst UKAEA might remain site licensee for the particular investments mentioned above … and for the immediate period following divestment there are strong indications that in the future UKAEA with DTI support would prefer not to remain nuclear site licensee for some contracts".
We should like to know the situation.
Perhaps I may first deal with Amendment No. 6 and then Amendment No. 4. Amendments Nos. 4 and 6 refer to Warren Spring Laboratory, or indeed its successor activities within AEA Technology. We suggest that the words should be added:

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"any property, rights, liabilities or assets that can be identified as having previously formed part of, or contributed to the work of the former Warren Spring Laboratory".
It is reasonable that we should seek to insist that the general way in which Warren Spring is set up within the AEA should be preserved in the public sector. It is appropriate that we pay tribute to the work of those engaged in Warren Spring over the years. They created a highly prestigious organisation which obtained a remarkable reputation not only nationally but internationally. Its work in the environmental field on clean air, landfill sites and all forms of pollution has been exemplary. I believe that the Government have to be assured that those activities should continue. We would have preferred to see them continue under a nationalised or publicly owned organisation, but that is not now happening.
When Warren Spring was absorbed into AEA Technology, something like 50 per cent. of those employees did not transfer. It is probably true that quite a lot of them voluntarily decided that they would not go. But the fact is—I hope that the Government will accept it—that some of the skills involved were lost when those people refused to move to Harwell.
Warren Spring is now broken up into its constituent parts. It is subsumed into the AEA organisation. We believe that that has not been helpful. Do the Government agree that they have a special responsibility to assist in monitoring the environment, and that it should be done objectively and independently of private interests? Do the Government also agree that they should maintain some expertise in the field, and that it is an issue which should not be contracted out to private agents exclusively?
A perfectly reasonable point was put by my honourable friend in another place, Dr. Lewis Moonie. He said:
"What will happen if an activity is insufficiently profitable and no private agency is prepared to undertake it?"—[Official Report, Commons, Standing Committee D, 23/3/95; col. 21.]
Will the Minister answer that specific point? It was not properly answered in the debate which took place in Standing Committee D.
It may well be that in many instances in the field work of this character cannot be carried out profitably but there is a question of national interest in it being carried out. Consequently, there may be some important residuary role for government in that regard in ensuring that work which no private company might wish to undertake in the field is done, nevertheless.
Amendment No. 4 would insert into Clause 1 the words:
"any employees of the Authority required for the safe management of any nuclear liability arising from the previous activities of the Authority".
My understanding is that Government Division is to keep responsibility as a purchaser of decommissioning services. I understand that that is what the Government wish it to remain. A purchasing authority will not necessarily include on its board anyone who has any or any sufficient expertise in nuclear waste management. That requirement is to be withdrawn subsequently in the Bill. Retaining that function allows many other
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functions to go to other companies which may bid for part of the decommissioning process for nuclear reactors. But the many responsibilities for safety should, in our submission, remain the concern of the Government rather than a company.
We are talking here about important issues. They have been listed by the IPMS as the following:
"Managing the safe decommissioning of nuclear liabilities; Custody and maintenance of radiation dose records; Medical supervision of employees in subsidiary companies; Restriction of UKAEA Constabulary's powers over employees, or extension on the same footing to subsidiaries and contractors … The definition of the nature and extent of work provided to or undertaken for [the Ministry of Defence]; Restrictions, if any, on commercial trading".
That is how the IPMS has listed the issues and no one could doubt their extreme significance.
The records have of course to be maintained over a long period, long after employees have departed from the company. It is critically important therefore that we take the issue into account. These are matters which I hope the Government will take fully on board in dealing with the amendments.
Lastly, I come to Amendment No. 5, in which we seek to prevent the transfer out, under the Bill's provisions, of people working in areas stated to be the mission of UKAEA Government Division. The Government Division published on 31st March 1995 the forward plan. The document stated that UKAEA had agreed with the DTI that Government Division's mission was to be:
"To complete the UKAEA nuclear mission, whilst rapidly reducing the annual cost to the UK taxpayer of Government Division, by:
Caring for and, at the appropriate time, safely dismantling active facilities no longer in use.
Disposing of radioactive waste in an environmentally acceptable way.
Making use of those UKAEA assets which cannot be disposed of, including live active facilities.
Always ensuring that the programme is carried out at lowest economic cost consistent with safety and environmental requirements and acceptable financial risks".
In the amendment we seek to prevent those activities from being privatised through the procedures of the Bill. We believe that privatisation along those lines would create wasteful duplication and competition between Government Division and privatised functions, with a balance in favour of Government Division which will have access to government subsidy and underwriting.
Perhaps I may offer a resumé of the Government's arguments in another place. They said that they intended Government Division to contract out all or most of the work, some to AEAT, and that putting work out to competitive tender reduces costs in itself. The Government spoke of savings of at least £50 million expected in the three years to 1996–97. What evidence is there of any such saving in terms of costs? In my submission, there is none that competition in that area is likely to reduce costs on that or any comparable scale. Government Division chief executive Dr. Derek Pooley wrote to the trade unions on 26th June this year saying that the projected savings would be due: first, to

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planning; secondly, to highly commercial, and if possible competitive, negotiations; and, thirdly, to firm management of contracts. He added:
"We do not yet have much evidence about the relative importance of these three factors".
The extra costs of items two and three, which I have just mentioned, from—to use a horrible term—"contractorisation", including maintaining an adversarial four-tier management structure, would probably outweigh any competitive savings. I believe that the provisions which we suggest would substantially improve the Bill. I beg to move.
Lord Fraser of Carmyllie: The noble Lord began by indicating that the first amendment which he moved, Amendment No. 3, is in the nature of a probing amendment. I am not entirely surprised that he indicated that, otherwise, taken at its face value, it might achieve exactly the opposite of what he was arguing for.
Clause 1(3) is in the Bill for a specific purpose. AEA Technology is currently not a legal entity, it is simply an operating division of UKAEA. In practice, there is a clear dividing line between it and the Government Division. But because it is not a legal entity, it is not possible to say expressly on the face of the Bill that the activities of the UKAEA transferred by scheme to a successor company will be those activities carried on by AEA Technology.
What is possible is to specify what will remain with UKAEA. That is what Clause 1(3) does. It makes it clear that ownership of and responsibility for the management of UKAEA's nuclear liabilities and those UKAEA sites subject to nuclear licensing will remain with Government Division in the public sector.
The noble Lord made something of a statement by Government Division at a conference, and as the noble Lord is aware, it was considered in some detail in another place during Committee stage. What was indicated then was that with regard to a particular decommissioning proposal, the Government Division is at an early stage of exploring how to structure that decommissioning project. To help inform the process, it has asked other organisations to give their views on not only the conventional option of working under the Government Division's nuclear site licence but an alternative involving the contractor holding the nuclear site licence.
That approach would involve a departure from Government Division policy, but the division would be failing in its duty if it did not examine any method of achieving value for money for the taxpayer. However, I emphasise that it would only pursue that alternative if it were to be satisfied that safety would not be compromised and significant savings could be made. Whatever views the noble Lord may take about the matter, I can confirm to him that nothing in this Bill alters that position.
I also take this opportunity to reassure the Committee that UKAEA's current responsibilities for nuclear security, the policing of nuclear sites and fusion R&D will also remain with Government Division. Government Division will retain responsibility for the management and disposal of associated radioactive waste.
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The privatised AEA Technology will be a leading player in the nuclear services market and operate some active nuclear facilities on UKAEA sites. But the nuclear market is only one of the many sectors in which AEA Technology operates and work on nuclear materials accounts for a relatively small proportion of its total business.
We are not talking here about the sale of a major nuclear operator in the privatisation of nuclear facilities. Ownership of all the facilities used by AEA Technology for its work on nuclear materials will in fact remain with Government Division.
I turn to the other two amendments. Amendment No. 6 would prevent the inclusion in transfer schemes of any property, rights and liabilities of the former Warren Spring laboratory or which contributed to the work of Warren Spring.
Warren Spring and AEA Technology's existing environmental technology business were merged last year and now operate under the flag of the National Environmental Technology Centre, NETCen, at Harwell and Culham. I join the noble Lord in paying tribute to those who worked at Warren Spring; but the merger has created a comprehensive centre of excellence in environmental technology. It will help British business both by helping it to minimise waste and pollution, itself reducing costs, and by providing a technology base to help British business meet ever more demanding international standards.
The merger has provided an organisation with a broader capability than either of its constituent parts and with a lower cost base. It is able to call on the broadly based technical skills and the marketing base of AEA Technology as a whole. It is also able to operate in wider markets than Warren Spring could ever have done it if had remained independent—and thereby make a more substantial contribution to UK competitiveness in the environmental services market.
For all these reasons it would make no sense to undo the merger, and indeed might run contrary to earlier arguments advanced that we should keep these activities all as a single unit. It would harm the prospects for AEA Technology as a whole; and it would deprive the UK of one of the world's leading environmental technology centres.
Let us now look at Amendment No. 4 and the first leg of Amendment No. 5, which would both have the same effect. Since they do not distinguish between employees of AEA Technology and UKAEA Government Division, they would deprive AEA Technology of the ability to compete effectively for future work by precluding the transfer of those of its employees currently working on projects for Government Division. They would undermine its competitive position in the UK and undermine its ability to compete in the international market for decommissioning and waste management services.
There are enormous opportunities in that market which we would all want to see AEA Technology and other British firms exploiting to the full. But this amendment would put a major obstacle in AEA Technology's way.

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It would also not only deprive the staff concerned of the opportunities that a privatised AEA Technology could offer them but could leave them stranded in Government Division with an uncertain future once the projects on which they were working come to an end. I cannot believe that that is anything other than an unintended consequence of the noble Lord's proposal.
To turn finally to the last limb of Amendment No. 5, it would, if adopted, wreck the sale. AEA Technology is a people business. It is nothing without its staff. If the staff could not be transferred, there would be no point in making a transfer scheme. No doubt we shall spend a good deal of time this afternoon debating amendments designed to improve the already very substantial protections for employees written into the Bill. I make no complaint about that. But I believe that their best hope for a prosperous future will he in privatising AEA Technology and allowing it to realise its full potential as a world-class business.
I have taken some time to respond to an important set of amendments, and the noble Lord quite properly took his time to spell out his concerns. I hope that I have answered them fully.
5.30 p.m.
Lord Clinton-Davis: I thank the Minister for that considered reply. With respect, it does not really meet the case that I put forward. I accept that the amendments as drafted are by no means perfect. The Minister is right in saying of my first amendment that it could lead to great difficulties. That is why I described it as a probing amendment. The deficiencies that we have on this side in drafting will of course fall on the noble and learned Lord in the not too distant future. He will then begin to experience the problems that we experience.
So far as Warren Spring is concerned, the Minister did not answer the point that I made which gives us some cause for concern; namely, there has been, I contend, a substantial loss of expertise on the part of those who did not want to move to Warren Spring. That cannot be to the advantage of the industry as a whole.
The Minister said something about a better contribution towards UK markets being effected as a result of this merger. I rather suspect that that has not yet happened. It may be a hope that the Minister has for the future, rather than spelling out the present situation. Perhaps he will clarify that point.
The Minister said that Amendments Nos. 4 and 5 effectively constituted wrecking amendments, since the sale would be wrecked as a result. We are dealing simply with a Bill that devises a way forward towards a sale. It does not affect the sale at the present time or when it is enacted. But when the Minister said that we should be affecting disastrously the situation of the employees, it is odd, is it not, that they have taken the view that these amendments should be moved? We are doing so on the basis of representations made to us by them. I think that they are probably in a better position than is the Minister to understand the situation—although I accept once again that the amendments may not be drafted in the most adroit way, for which I accept responsibility. It is quite a usual function on my part to submit maladroit amendments! However, one does try
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to get a point over. I invite the Minister to comment on the two or three points that I have just made and then I shall indicate that I propose to withdraw the amendment.
Lord Fraser of Carmyllie: Perhaps I may respond to two of the points. It may be that there are some within Warren Spring, previously employed before the merger took place, who did not think that that was the best way to proceed. It is certainly our view that, following on that merger last year, a first-class organisation is being brought together which is well placed now within the privatised AEA, in parts or as a whole, to take advantage of the opportunities that lie there. So it is not simply an expression of hope. I believe it is an objective assessment of the benefits of the merger.
I make no criticism of the noble Lord's amendments. I suspect that he drafts very much better than, in a modest fashion, he indicated. My clear understanding of the position—and it may not have been understood by the employees—is that there will be a number who are working for Government Division at the present time, and it would not be desirable to put them in a position of uncertainty as to where their future lay once the particular projects on which they were working came to an end. I put it in that way so that the noble Lord and those who made representations to him may reflect on what I believe may have been an unintended consequence.
Lord Clinton-Davis: I thank the noble and learned Lord for that explanation. I shall certainly reflect further on the matter, as I am sure will the employees. Having heard what the Minister said, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 4 to 8 not moved.]
Lord Haskel Lord Haskel moved Amendment No. 9:
Page 2, line 4, at end insert:
("( ) No direction to make a transfer scheme shall he made before a period of one year has elapsed after the passing of this Act").
The noble Lord said: Since Second Reading we have had the Nuclear Review and the suggestion that Nuclear Electric will be sold. It would seem to be sensible to co-ordinate the sale of AEA Technology with the nuclear power sale that is proposed in this White Paper. Not to do so would almost certainly fail to get the best price for AEA Technology because more than 50 per cent. of the work of AEA Technology is nuclear. Equally, uncertainty over the future availability of AEA Technology's services would reduce the market value of the nuclear power business when it comes to be sold. If the Government want to get the maximum value from both those sales, they should co-ordinate them. This amendment encourages them to do so. I beg to move.
Lord Fraser of Carmyllie: As I indicated previously, the Government's aim in this legislation is to keep sale options open. One element of that strategy involves preserving the possibility of early or late vesting. Once the transfer scheme powers have been used to vest property, rights and liabilities of the authority in a transferee, then in general the property concerned cannot be re-vested by the scheme.

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That argues for vesting AEA Technology in the form in which it is most likely to be sold. It is therefore possible that vesting by scheme would not take place for more than 12 months after the Bill has been passed. Equally, it is possible that, subject to the performance of AEA Technology, vesting in a shorter timescale would become desirable. That could be the case, for example, if AEA Technology were to perform in a way which confirmed that unitary sale was the best option. I understand the argument that the noble Lord advanced but I would not wish to limit the scope of the powers by introducing an arbitrary time limit on when they might apply.
I might also emphasise, although I am sure that the noble Lord is well aware of it, that what is being proposed for privatisation within the technology is not an area of expertise that is in any sense exclusively related to nuclear expertise. The expertise that they have now acquired across a broader front is equally valuable and the directness of the relationship between that and nuclear power is possibly not as tight as he suggested.
Lord Peston: Perhaps I may intervene at this point. The amendment had a slight ulterior motive, which the Minister chose to ignore. We were trying to winkle out whether the noble Lord had any news for us on nuclear power privatisation. He will have noticed the remarks made by my noble friend but he did not say a word on that subject. May I assume that he is not yet ready to tell us anything about the timetable of that particular divestment?
Lord Fraser of Carmyllie: The noble Lord makes a correct assumption. I wanted to underline also that I did not accept that in this context there was any particular parallel to be drawn. I thought that there were other reasons why he wished to delay for 12 months. We could possibly explore that point at another date.
Lord Haskel: It seems that once again the Government are using the phrase "keep our sales options open" as a means of saying that they are unprepared for what will happen. Indeed, it may well be that it will be 12 months before this privatisation goes ahead, by which time we shall know more about the position of Nuclear Electric. We shall have to come back to this matter on Report. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 1 agreed to.
Schedule 1 [Transfer schemes: supplementary provisions]:
[Amendments Nos. 10 and 11 not moved.]
5.45 p.m.
Lord Peston Lord Peston moved Amendment No. 12:
Page 9, line 4, at end insert:
("provided that no property which may contain any fissile or other controlled material shall be transferred unless the Secretary of State is satisfied that control of that material meets any requirement of the Treaty on the Non-Proliferation of Nuclear Weapons (Cmnd 4474).").
The noble Lord said: I have chosen this amendment as the peg on which to hang a number of concerns about nuclear proliferation, security, safety in an international sense and other international matters.
At Second Reading I asked various questions about whether the AEAT, once it was privatised, would be able to assist in the construction of nuclear power stations abroad. I hasten to add that I am not opposed to nuclear power—quite the contrary. I simply hold a consistent position in that I wish electricity to be generated in the "least cost" way. If nuclear power turns out to be "least cost", then that is fine and if not, it is not fine. I do not see the fundamental issue on nuclear power that often my honourable friends and noble friends have seen.
So my remarks are not antipathetic to nuclear power. My concerns are about nuclear technology one way or another falling into the hands of nations which are actually or potentially unfriendly towards us. I am concerned about the acquisition of fissile materials which could be used for other purposes by nations which are or are potentially unfriendly towards us. I believe that, over the years, our Government have kept up a very good record in that respect. I do not in any sense intend to criticise the present Government or their predecessors in this area.
All that has happened so far has been within the public sector domain, if I may use that expression. Everything changes somewhat in the context of privatisation.
The related matter—the expression that we all emphasized—is that the business we are talking about is essentially based on human capital with the expertise of individuals. Individuals are mobile. I assume that at the present time employees who are now public servants could go and work abroad, acting as advisers to governments who are unfriendly towards us. I reflect on whether the Government have considered that matter sufficiently.
The point about employees was raised in another place. Once that part of the industry is privatised, I am not entirely certain how far the kind of protection connected with the Official Secrets Act and so on will continue to help. After all, the employees of AEAT will be in the private sector and no longer in the public sector. Since they undoubtedly have knowledge and will acquire new knowledge, possibly of the kind which ought to lie within the ambit of the Official Secrets Act, it is not obvious to me how that protection can continue. What replaces the Official Secrets Act is commercial confidentiality, which is not the same thing at all. That is the area in which we now operate.
There is another related matter and I cannot now remember whether I asked the question at Second Reading. Do the Government have any view on whether the purchaser of AEAT could be wholly or largely foreign owned? More to the point—we shall come later to further transfer of these assets —will any controls remain in subsequent years over foreign acquisition of the company? Again, I pride myself on being an internationalist and my point reflects no kind of

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antipathy to foreigners. It has to do with the sensitivity of the nuclear area and in particular access to that kind of expertise and those kinds of materials.
My difficulty in pursuing this issue, as noble Lords will be aware, is that there are so many different Acts of Parliament which apply in this area. The original atomic energy Acts apply. Certainly the 1965 Act applies among other measures. It has certainly been rather difficult for me to plough my way through all the different measures to answer my own question, so to speak. But that is the whole point of having the Government and the Opposition; namely, on matters of this kind I ask the difficult questions and the Minister has to work through the problems and give me at least some semblance of an answer.
This is not a matter that we can simply let go. Serious questions arise in relation to the future stability of the world. We know, if only from hearsay, that small nations are still trying to acquire nuclear expertise and the relevant raw materials. What is of considerable interest is that, on the whole, we have prevented that from happening. The extent of nuclear proliferation is a good deal less than I would have predicted, given my worst fears.
The Bill represents a serious change. I cannot believe that neither the Minister nor his colleagues in government have thought about this issue. The reason for my raising it is to give him one additional chance to place on record any thinking that they have had. I read the remarks made by his honourable friend in another place and my interpretation was that we may be expecting a fuller statement on the whole area in due course. It may be that today the Minister wishes to make that fuller statement.
To conclude, I repeat that I do not wish my remarks to be interpreted in any way as anti-nuclear and certainly in no way as undermining the desirability of AEAT, if it is to be privatised, being commercially viable. But in that regard we must be ultra cautious so that we do not suddenly discover, whoever is in government, that nuclear expertise has developed elsewhere and that we were somehow involved in it. That would not be a satisfactory state of affairs. I beg to move.
Lord Fraser of Carmyllie: I have no intention of accusing the noble Lord of being anti-nuclear. I can say briefly to him that the amendment is unnecessary but, given the nature of his anxieties, I shall take a moment or two to explain why. I say that for two reasons. First, it is not our intention to transfer any fissile material to a successor company. Secondly, a fully adequate regulatory regime is already in place—and it is the latter reason that may be of greater interest to the noble Lord.
The Export of Goods (Control) Order 1994 provides that any exports of such materials and equipment require a licence. No licence is issued unless my right honourable friend the Secretary of State is satisfied that the requirements of the treaty are met. In addition, the Nuclear Safeguards and Electricity (Finance) Act 1978 gives effect to the international agreement between the UK, the IAEA and Euratom for the application of safeguards in the UK, pursuant to the non-proliferation treaty. And we are bound by the Euratom Treaty, under
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which all civil nuclear material in the UK is subject to safeguards administered by the Euratom Safeguards Directorate.
The regulatory framework set up under the Euratom Treaty ensures control of all civil nuclear material, wherever it may be held. That framework applies, and will continue to apply, to all activities carried out in the UK irrespective of who carries them out, and irrespective of whether they are carried out in the public or the private sector. So the noble Lord's assumption was correct; that is, that there would be the necessary continuity.
Let me now say something about the basis on which AEA Technology will carry out work on special nuclear material. After privatisation, that work will be carried on in buildings which will remain under the control of UKAEA's government division for licensing purposes and subject to arrangements for nuclear accountancy approved by Euratom. In other words, there will be no change in the basic regulatory provision. And employees of AEA Technology, or a successor company or companies, who deal with SNM will continue to be vetted in accordance with the UK Government standards.
All work on special nuclear material will be undertaken in facilities owned by UKAEA's government division, under the terms of licences to operate. The government division will make it a condition of all such licences that all employees operating these facilities continue to be appropriately vetted. Equally, the statutory framework of the Official Secrets Act binds all employees of AEA Technology and will continue to do so after its separation from UKAEA and after privatisation. Employees and ex-employees will therefore continue to be under a duty not to reveal any information gained in the course of their employment on sensitive government contracts.
I hope that that reassures the noble Lord that a solid regulatory framework is in place. He also asked a question in relation to possible foreign ownership of AEA Technology. Of course we welcome overseas investment into this country, provided that the potential buyers of a privatised company meet all the criteria attached to the sale. If that is the case, there is no reason why they should be discouraged simply on the grounds of nationality.
In this case the decision of to whom the business will be sold will depend on a wide range of criteria. They will include the need to maintain its reputation, independence and impartial advice, and the interests of its customers who will include the Government. It follows that the Government will consider the need for a special share and for any other form of protection in the light of decisions on the form and method of sale and of discussions with the business's major customers. I hope too that that explanation is helpful to the noble Lord.
Lord Peston: I thank the Minister for that explanation. It was particularly helpful for it to be on record. Again, one cannot judge these issues until we are slightly closer to knowing who the new owners may be and on seeing later developments. There is an amendment to come relating to the special share and we

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shall be able to talk about its role at that time. Again, I thank the Minister warmly for that answer and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Haskel Lord Haskel moved Amendment No. 13:
Page 13, line 19, at end insert:
("( ) Before giving or refusing his approval for the purposes of this paragraph the Secretary of State shall consult the trade unions and other bodies representing the employees of the Authority.").
The noble Lord said: In moving Amendment No. 13, I shall speak also to Amendments Nos. 20, 21, 31 and 38. These amendments concern a number of matters, one of which is that they require the Secretary of State to consult the employees and their trade unions before ordering, approving or modifying a transfer scheme or selling the shares in a successor company.
We all agreed that this is a people business and everything that that implies. We want to ensure that the Secretary of State does not simply go through the motions of consultation, but that he carries the employees with him. We are trying to ensure that he carries out best practice. We must remember that when the employees were signed up, they were employed as public servants. The Minister's department supports and encourages Investors in People. It held a seminar in London recently on that very topic. The main speaker listed a string of policies endorsed by Investors in People for improving a business by concentrating on employee development and welfare. We have all agreed that AEA Technology's competitive advantage will only be through its people. We want to make sure that those practices are carried out. It is an old saying in business that if one is not a good employer, one is training staff for one's competitors.
If the company is floated, we want to ensure that proper opportunities exist for employees to benefit—not just executive share options as in the privatised utilities. Bonuses should perhaps be paid in shares to encourage long-term management and company loyalty. We want to ensure that the result of this privatisation will not be 40 years of training and experience in AEA Technology simply being transferred to overseas competitors because of poor morale and poor management.
The amendment seeks to ensure that there is a sense of nurturing and developing a sense of direction. That is in accordance with best practice preached by the Minister's own department. The weakness in the Bill is that everything seems to require the approval of the Treasury, not the agreement of the staff and the employees. That indicates to us that the Government are purely interested in the short-term financial aspects of this privatisation. We, on the other hand, are interested in the long-term continued success of the business and so it is just as important to carry the staff and the employees. That is the difference between us.
Some of these amendments refer to the TUPE regulations. They will be dealt with by my noble friend Lady Turner of Camden. I beg to move.
6 p.m.
Baroness Turner of Camden: I believe that the Government may argue in connection with these amendments—I believe that they did in the other place—that the TUPE regulations cover consultation and cover it at the appropriate level. The Government made that point in Committee in the other place. However, it is not all that clear how TUPE will operate and in the meantime the staff could be left in limbo. As this is a publicly-owned enterprise, the Government have the main responsibility for ensuring that consultation takes place at the appropriate time and cannot simply leave things, as I think they may argue, as a matter for the current management of the authority. The main responsibility is that of government.
I should have thought that the Government would want to retain the support of this highly trained and extremely valuable staff. As my noble friend has just indicated, we are talking about a very sophisticated workforce. They are unlikely to do so if the people are left in doubt and are not taken along with the arrangements that will be made on their behalf about their futures. It was to relieve employees of that kind of anxiety that the acquired rights directive was first promulgated. That is referred to in Amendments Nos. 14 and 15 but it is part of this whole group of amendments which concern consultation. I hope that the Government will agree this time round that what is being suggested here is important and that they will accept what is being said. While they may argue that they do not have to put it into the Bill because the TUPE regulations are there anyway, in order to ensure that people know that they will be properly covered and appreciate that they are being cared about, I think that it has to be put on the face of the Bill.
Lord Peston: Before the Minister replies to those comments, we may be—I am sure it is my fault—slightly at cross purposes. I have in this group Amendments Nos. 31 and 38 which relate to Clause 7 and Schedule 2. They are to do with the disposal of securities. I had intended to raise the question of the so-called golden share, or government share, under that heading. Would the noble and learned Lord rather deal with the points that have just been raised and then I can speak later? Which would he prefer?
Lord Fraser of Carmyllie: Given the width of the querying from the Opposition Front Bench, perhaps I may leave the golden share issue until later.
In spite of the comment of the noble Lord, Lord Haskel, that we were concerned only with short-term financial aspects of the privatisation, I would wish to reassure him that I entirely agree with him that AEA Technology is a people business. I have used the term already. I have no doubt that one of management's key tasks now, as well as after privatisation, must be to ensure that staff are properly incentivised. The performance and profitability of the business depend on that. As regards employee participation, we believe that it is in the long-term interests of any privatised company that a significant measure of employee share ownership is provided for. The noble Lord may wish to return to this at a later point in the Bill, but perhaps I may say to

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him that we shall look carefully at any proposals for employee participation put forward by the management of AEA Technology or its successors.
The Government would expect any scheme that is put forward to be broadly-based and recognise that AEA Technology ultimately depends on the efforts of all its staff. We are committed to involving employees as much as possible in the privatisation process. Where we part company is in our assessment of what is the impact of these amendments. It would appear that the trade unions and staff associations would have an automatic right of consultation before the Secretary of State was able to exercise any of his powers in relation to transfer schemes or before either the Secretary of State or the authority could dispose of any of their securities in a successor company. While they are not overtly asking for a union veto over the purchaser of AEA Technology, it appears to us to be tantamount to that. I do not think that would be right. The final decision on the sale has to be made by the Government in the light of market circumstances at the time and in the best interests of both AEA Technology as a business and of the taxpayer.
Turning to the TUPE amendments—I anticipate that we shall be returning to them before the evening is over—I would remind the Committee that the authority will in any event be under a duty to consult staff on the transfer of terms and conditions under the TUPE provisions. In addition, paragraph 9 of Schedule 1 to the Bill specifically places a duty on the Secretary of State, before giving any direction, to give sufficient notice to the authority to enable it to comply with its obligations under TUPE. I hope that that has been helpful in bringing together what we wish to achieve and giving a specific impact—
Baroness Turner of Camden: Does that mean that the Secretary of State will do the consulting? It seems to us that the Secretary of State is taking the decisions rather than the authority. He has an obligation to consult rather than simply leaving it to the authority. I have raised this point because I believe it was raised in Committee in the other place. The view expressed there was that this is a publicly-owned undertaking which is being privatised and it is up to the Secretary of State to undertake, and take responsibility for, consultations under TUPE.
Lord Fraser of Carmyllie: As I understand the arrangement that we are allowing for here, the Secretary of State, before giving any direction to make a scheme, should ensure that there is sufficient notice so that the authority can carry out proper consultation. I could see a legitimate complaint if the Secretary of State made a direction in such circumstances that, however willing the authority was to carry out that consultation, it was effectively precluded by the shortness of time. That is the purpose behind allowing for this specific provision within Schedule 1.
Lord Peston: Perhaps I may comment on the Minister's choice of words. The amendments were not tabled, and one or two subsequent amendments on consultation were not tabled, to give the unions a right of veto. The unions do not own these enterprises; the taxpayer does. But there is a difference between saying
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that the employees, particularly where the employees are the essence, ought to have some chance to be consulted and to make representations, even though in the end the Minister is free to say, "I am still going to sell this business, and I am going to sell it in my way rather than in the way you would like", and a veto power.
Certainly, I do not think that I or my noble friends are asking for a veto power. If I were a senior scientist who had devoted my life to AEA Technology and had been a public servant I would accept that in the end Parliament decides these matters, but I would not regard it as unreasonable on my part to say, "But don't you think you ought at least to talk to me and my representatives on matters of this kind?" That is what we are saying. I do not expect the noble and learned Lord to agree with that, but our point was certainly not to ask for a veto.
Lord Fraser of Carmyllie: I accept that from the noble Lord. I am at pains to stress that as regards the taking forward of AEA Technology, I would be very concerned if that were to happen with any feeling, sense or perception that there was to be unthinking hostility between management and staff. On the contrary, we would very much welcome participation in taking the company forward.
Lord Haskel: I was delighted to hear the Minister say that it is the managers' task to "incentivise"—
Lord Peston: That is not an acceptable word. It should be, "give incentives to".
Lord Haskel: "Incentivise" must be in the Department of Trade and Industry dictionary of words in order to confuse the public. I was also delighted to hear the Minister say that it is part of the management's duty to look at proposals for employee participation. Perhaps I may point out that the Government, through the Secretary of State, are the owners of the business. It is their duty to give a lead. Having put this matter on the record, I hope that the Secretary of State will now give a lead to the management and try to encourage it. Certainly, there is no intention that the staff association or the trade union should have a veto. But they should have a right of consultation, again, largely because the plans are very unclear and they need to know what their future is. Having made that point, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 14 and 15 not moved.]
Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 16:
Page 15, line 25, at end insert:
("Redundancy
If any employee is transferred to a new employer by a transfer scheme and is declared redundant,

(a) the Authority's redundancy rules and benefits applicable to that employee at the date of the transfer shall apply unless the trade unions or other bodies representing the employees transferred by the transfer scheme have agreed to their modification for such employees, and

(b) the redundancy rules shall be applied as if the Authority were the employer and all employees transferred from the Authority's employment by transfer schemes were employees of the Authority.").

The noble Baroness said: This amendment carries on from earlier amendments when we spoke about the TUPE regulations. This amendment seeks to make clear that any employee who is transferred to a new employer by a transfer scheme, takes with him his redundancy rights. That is very important because a possible transfer to a smaller unit could mean that redundancy is more likely than it would have been had privatisation not taken place.
I gather that the present redundancy scheme is a good one. It provides good compensation for long years of service. It is essentially a voluntary scheme based on the first option being an attempt at redeployment. As I say, it is essentially voluntary and under its provisions I understand that the authority has been able to reduce its workforce from 14,000 to 7,000 with hardly any compulsory redundancies. In the main, it has been reduced through voluntary means.
It is hoped to achieve a profit target within a year of £20 million as a result of privatisation. That means between 300 and 400 people will probably have to go, many of them scientists and engineers. However, I understand that a great many of them will be administrative staff. I am informed that scientists and engineers will also be included in that number.
That seems entirely inappropriate. Surely, they are capable of being redeployed because there may be a waste of highly skilled labour involved. If such people are to be made redundant as a result of decisions made by Parliament, which decided to privatise, at least let the employees keep the favourable terms they had. That is the very least that can be done. If it is claimed that a smaller enterprise cannot afford it, then let the Government stand as a guarantor. We owe something to employees who over the years have committed themselves to a highly skilled and successful enterprise. If they are to be made redundant, they should have that kind of guarantee, which should be written on the face of the Bill. I beg to move.
6.15 p.m.
Lord Fraser of Carmyllie: Perhaps I may answer briefly. Employees will have all the protections in respect of redundancy provided by the TUPE regulations. I know that that will be appreciated by the noble Baroness, but I repeat it for the record. Modifications to contractual redundancy rights will require the consent of the employees. Where the agreement of the trade union is required at present, the requirement for that agreement will be preserved. If the noble Baroness is seeking yet further confirmation that the TUPE regulations will apply, I am happy to give that to her.
The large majority of the 300 to 400 redundancies announced by AEA Technology last February involves administrative staff. Management is simultaneously recruiting technical staff. All the redundancies are taking place on UKAEA terms. While I understand what it seeks to achieve, I hope that it will be understood that this amendment does not add anything to the protection which is already available under the TUPE regulations. On that basis I hope that it can be withdrawn.
Baroness Turner of Camden: I thank the Minister for his assurances to the effect that the amendment does not add anything to the protection which he confirms already exists under the TUPE regulations. We shall look carefully at those assurances when we read Hansard tomorrow. I was simply anxious to ensure that something was written on the face of the Bill because of the concern that has been expressed to us by the employees represented by the unions who have been in touch with us.
We note the assurances that, in the main, it is administrative staff who are being made redundant. I have already been told that, although I have also been told, as I said earlier, that scientists and engineers are included in that number. I also note that simultaneous recruiting among staff of that calibre is taking place. I agree at this time that there is no point in pressing the amendment. We shall look again to see whether there is a need to do anything further at Report stage. I am glad to have the assurances from the Minister on the record. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 1 agreed to.
Clause 2 [Powers of Secretary of State]:
Lord Clinton-Davis Lord Clinton-Davis moved Amendment No. 17:
Page 2, line 9, at end insert:
("( ) No direction under subsection (1) above shall be given unless a draft of such a direction has been laid before both Houses of Parliament and approved by members of each House.").
The noble Lord said: In moving this amendment, it may be convenient to speak to Amendments Nos. 18, 19, 30, 34 and 37, in various names. This group of amendments deals with parliamentary accountability—or, to put it more accurately, the lack of it—as far as this Bill is concerned. It really is not good enough that this Bill should be allowed to leave the House in its present form. That would be an insult to Parliament.
The Government are seeking to assert here a "trust us" policy. Nobody will trust them. The fact of the matter is that it would be quite wrong for Parliament to have no role at all in dealing with these issues. The Government would be able to say "We have a general enabling Bill". The Government can do whatever they like as regards any schemes without giving Parliament any meaningful role whatever. It will be interesting to learn from the Minister what role he believes Parliament can possibly assert in dealing with these schemes. Are we just to rubber stamp them now? If that is what the Government believe, then they will be strongly challenged on that issue.
What it comes to is as serious as this. As a result of the Bill, the Government will be in a position to sell off the entire atomic energy generating capacity, subject only to Magnox reactors, without reference to Parliament. That is a grotesque abuse of the powers of the Executive. It is a pity that we have such a thin House today because that is a serious constitutional point.
It is not only the Opposition who have taken up the point. It was raised by a very respected Back-Bench Member of another place, Mr. Robert Jackson, who is a Conservative and the Member for Wantage. Perhaps I should say by way of a preliminary—this is my second

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preliminary point—that Mr. Jackson was excluded from serving on the Standing Committee which considered the Bill. It was known that he was a critic of the Bill. The same happened to another critic of the Bill whose name eludes me at present. The two of them, but particularly Mr. Jackson, made strong representations to the Government Whips' Office that they should be permitted to be involved in that Standing Committee because they not only had considerable expertise on which to draw but also a substantial contribution to make which might not have been all that convenient for the Government but would certainly have been convenient for Parliament as a whole. It is not the job of the Government to silence all opposition—although they did so on this occasion.
I refer the Government to a cogent statement that was made by Mr. Jackson in another place. I am afraid that I cannot quote from it, but I shall give your Lordships a résumé. It came to this: Mr. Jackson took the view that the Government behaved as though they regarded the House, the Standing Committees of the House and, indeed, the elected Members of the House as a dignified rather than a working part of the constitution. That is a pretty serious indictment for an honoured Member of Parliament to make about his colleagues. However, Mr. Jackson said some very complimentary things about this House. Again, I can offer only a résumé. He thought that the unelected Peers were more dignified—
Lord Peston: Hear, hear!
Lord Clinton-Davis: That ought to carry the amendment. The Minister is on difficult ground already. Mr. Jackson also thought that this House was more effective than the House of Commons—
Lord Haskel: Hear, hear!
Lord Clinton-Davis:—is permitted to be. To use a Conservative word which is so frequently overused, Mr. Jackson looked forward to a "robust" attitude being adopted by Members of this House. His statement was a serious indictment of the procedures adopted by the Whips' Office in another place.
We are talking about a unitary process and about the preservation of an important national asset. However, we are also talking about Parliament being able to decide how that organisation should be sold, if at all, and to whom. What the Government want is a blank cheque. They want a blank cheque so that they can rearrange, break up and sell parts of UKAEA. That is what they had under the Electricity Act 1989.
I know what the Minister is likely to say—that is, unless there is complete inconsistency between the Minister in this place and his honourable friend in another place. He will say that the Secretary of State can direct the transfer scheme only at the point of sale; that time taken by parliamentary processes could jeopardise the sale or reduce the proceeds; that bidders might be deterred because of the possibility of public scrutiny in a trade sale or that bids might be reduced contrary to the interests of the taxpayer, as though the Government considered the taxpayer in all regards, which is certainly not the case.
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This is not the sale of a manufacturing operation. We are talking about a research institution which provides commercial services to the Government and to industry. Its form of ownership and the provision and availability of its services must be approved by Parliament. The arguments that have been adduced in another place are simply not good enough. A trade sale should be made only to an organisation of such standing that it is able to accept public scrutiny of the sale. The arguments relied on by Mr. Jackson were powerful, but they did not receive a sufficient reply from the Minister. If, for the reasons that they adduced in another place, the Government feel that they cannot make a clear statement about the form of the privatisation in line with their commitment to keep AEA Technology as a single integrated whole, when on earth will they be required to make a statement? What is the Minister's view of parliamentary accountability? Are we here simply to rubber-stamp the Government's suggestions?
I think that Mr. Jackson's arguments deserve better treatment than the almost contemptuous dismissal that they were given in another place. I hope that the Minister will give Mr. Jackson and this Committee of your Lordships' House the benefit of a proper response. I am told that it was Mr. Ian Bruce, another Conservative Member of Parliament, who was also excluded from that Standing Committee. I am not arguing that both of them should have been included, but it might have been polite to their own side if the Government had included one of them. I beg to move.
Lord Thomson of Monifieth: I should like to say just a word or two about this group of amendments and to speak in particular to Amendment No. 18 which stands in the name of my noble friend Lord Ezra, who is unfortunately prevented from being here today. I am a very unsatisfactory substitute. Since we on these Benches do not deploy quite such an impressive batting order, I am here because there is a broadcasting order down for consideration later. Nevertheless, I turn my hand with good heart to this issue because the more I have studied it, the stronger appear the arguments which the noble Lord, Lord Clinton-Davis, has made.
My noble friend Lord Ezra is employed in industry and knows these matters in great detail. He declared on Second Reading that he was a very satisfied customer of the energy technological support unit and described it as a valuable national asset. He argued strongly that we should maintain the unitary character of the AEAT organisation. I add that there should be a public flotation of the operation. The alternative of fragmentation, which is among the many options which the Government want to leave entirely open, seems to have grave disadvantages. The most probable is that purchasers of the organisation would presumably be its competitors. That does not seem to be in the national interest. The Government have a proper interest in competition, but a sale to an existing competitor would simply reduce competition in the marketplace.
I am sure that the Minister recognises that we fear that, if it is not possible for the Government to deal with the organisation as a unit and to handle its sale by means of a public flotation, they will be driven by the Treasury into purely short-term financial considerations and into

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what would amount to little more than asset-stripping. It is against that background that this group of amendments has been tabled.
On Second Reading, my noble friend Lord Ezra said that in his experience—which is very considerable—no other privatisation measure had retained such wide options. It is a rather extraordinary situation that in your Lordships' House, which is very properly concerned about Henry VIII clauses, the disposal of a vital national asset such as this should be subject to a wide variety of possible options, all of which are entirely at the discretion of the Government once the legislation has passed through Parliament. It is against that background that we strongly commend these particular amendments.
It is a false economy to believe that fragmentation of the organisation will produce financial benefits. On balance, I doubt whether that will happen. In debate on previous amendments mention has been made of the co of TUPE. I am told that the severance costs of a relatively small number of staff may amount to several tens of millions of pounds. I was modestly reassured by what the Minister said at an early stage in the discussions about the Government's genuine feeling that the unitary option was a serious one. I hope that that is the final outcome of this matter. However, on the principle of the matter and the rights of Parliament, I believe that the arguments in favour of one or other of these amendments are very strong, and I give my fullest support to them.
Lord Fraser of Carmyllie: The noble Lord, Lord Clinton-Davis, asks far too much of me. It is one thing to have to promote the Government's legislation and argue in support of it but quite another for the noble Lord to try to get me to answer on behalf of the Government Whips' Office in another place as to what they may or may not have done in twisting arms or otherwise.
I do not believe that these amendments are helpful, not because I wish to be contemptuous in my dismissal of them but because I am concerned that, against the very interests that he wishes to promote, he may be overstating the situation. Two possible consequences may flow from these amendments. First, they may reduce the proceeds of the eventual sale. The noble Lord may not be particularly concerned about that, but no doubt he will wish to see that a proper price is secured.
Secondly, I would be concerned, as I am sure he would be, that these amendments could work against the best interests of AEA Technology and staff. Whatever form the sale takes, the Government must have the necessary flexibility to manage the sale process and the inevitable uncertainties involved in it. Any restrictions on that flexibility would, in our view, work against the interests of all concerned. For that reason, they are inherently undesirable. For example, if it is assumed that the decision is taken to offer AEA Technology for sale as a single whole, choices will have to be made on whether to vest AEA Technology as an independent company early in the sale process or at the point of sale. A consistent line will be taken between what has been said in another place and what I say. Whichever route is adopted, the requirement to secure parliamentary
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approval for the direction to make the requisite transfer scheme, and for the scheme itself, will inevitably make for delay which will perhaps be considerable. If vesting were tied to the point of sale, those delays might well undermine the whole sale process.
Equally, Amendments Nos. 30, 33 and 34 would require the Secretary of State or the authority, as appropriate, to secure parliamentary approval for the disposal of any shares in the company. The consequence of that, however, might well be to deter potential purchasers—whether they be financial institutions backing a sale to management and employees or trade purchasers—from bidding on the basis that their bids would be subject to close parliamentary scrutiny, even before detailed negotiations about the terms of sale could begin.
Lord Clinton-Davis: I am obliged to the Minister for allowing me to intervene. Is he saying that there is to be no parliamentary scrutiny, other than in the course of this Bill, in relation to any scheme that the Government may devise?
Lord Fraser of Carmyllie: The Bill has to pass further stages. I have no doubt that, as has been the case in another place and in the course of this afternoon and this evening, detailed consideration will be given to what is proposed and careful attempts made to secure a particular line of approach. At the present time I am not prepared to give an indication one way or the other. Let us see how matters stand in the autumn. The noble Lord is correct. I am in the business of explaining why it may be against the best interests of the very people that the noble Lord wishes to see protected if we introduce unnecessarily elaborate arrangements. Even if bidders were not deterred, it might only be possible to explain a preference for one bidder over another by revealing information that the bidder was not prepared to have disclosed for good commercial reasons. Equally, it might not be in the interests of the taxpayer to disclose details of competing bids, because that might cause the lead bidder to reduce the value of his offer or back out of the purchase. These are not academic points; they reflect commercial reality. Delay and consequent uncertainty may easily cause a sale to fall through or reduce sale proceeds.
I appreciate that on the Opposition Front Bench there is a genuine concern to achieve a unitary privatisation. I believe that the Government must have the freedom and flexibility to act in the best interests of the taxpayer and to deal with the business on the basis which best enables it to maximise its contribution to the national economy. That is also the course best calculated to serve the interests of the business and its staff. It is in nobody's interests, least of all theirs, that the business should be sold in one form and then restructured, or broken up more or less immediately, because it is not commercially viable in that form. That is why the Bill is structured as it is, and why the Government wish to keep open their options.
We recognise that the Government are accountable to Parliament and the taxpayer for decisions that they will have to take in the near future on the form and method of sale. But, consistent with that accountability, the

65
Government must retain flexibility to act in the light of information that will become available over the course of the next few months and market circumstances at the time of sale.
I do not suppose that that answer will immediately satisfy the noble Lord.
Lord Clinton-Davis: The Minister is right!
Lord Fraser of Carmyllie: Nevertheless, I hope that the noble Lord appreciates that there are good reasons for this, not least the interests of those who work for AEA Technology, to which regard must be had before any precipitate change is made.
Lord Haskel: Before the noble Lord sits down, perhaps I may ask him why the arguments that he has given this evening apply to this privatisation but have not applied to other privatisations. In other privatisations a considerable amount of restructuring took place before the businesses were sold. For instance, the electricity industry was restructured into supply companies. The Water Act 1989 created a number of water and sewerage companies to succeed the regional water boards. As a result, Parliament knew what was to happen. However, in the case of AEA Technology we know nothing. AEA Technology as a company does not even exist yet.
Lord Fraser of Carmyllie: Given the scale and nature of what is to be privatised, I believe that these are very different animals. I have indicated to the noble Lord that when we return to this Bill for further consideration at a later stage we hope to be in a position to indicate rather more clearly the intention of the President of the Board of Trade. I would hope then that if noble Lords were concerned that insufficient explanation had been given to Parliament as to what was proposed, that concern would be allayed. It may well be that the way in which we wish to privatise this undertaking will be in the very form that the noble Lord has been urging upon us this afternoon.
Lord Clinton-Davis: Those words are not exactly Delphic. We thank the Minister for his response. He has not given an undertaking, and we understand that. We have a new and rather more caring, at least in the terms of Parliament, President of the Board of Trade. What do they do about industry? The Government are always dropping industry. That is typical, is it not? It seems that the new President of the Board of Trade will consider the representations that have been made. That is good news.
The Minister said that I was asking too much when I asked him to condemn his own Whips' Office in another place. I suppose that I was, but I did not think that he would respond to that. I wanted to make the point, because I think it was worth putting on the record.
There is no point in prolonging this discussion. My noble friend Lord Haskel made a powerful point. There seems to be an exceptional situation which did not apply in relation to other privatisations. All the arguments adduced in this and another place could perhaps have been anticipated by the Minister. They have at least caused a little ripple in the Department of Trade and Industry. In those circumstances, we look forward to the spill-over in the autumn and to the Minister coming
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forward with amendments along the lines we have contemplated here. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 18 not moved.]
Lord Thomson of Monifieth: Perhaps I may say one word in relation to Amendment No. 18. In the light of the hopeful, if not promising, tone in which the Minister has responded, I am sure that in October my noble friend Lord Ezra will be here to give his considered reaction to whatever the Minister says.
Lord Fraser of Carmyllie: Before the noble Lord sits down, I hope that what I said was not in any way misinterpreted. I was not offering to bring forward amendments. What I was indicating, as I have done on previous occasions, is that what has been urged upon me is that the appropriate mode of disposal is in a unitary form. I said that we should look at that matter in the autumn, because if that were to be the preferred model many of the concerns expressed from the Opposition Front Bench would fall away.
Lord Peston: I had interpreted what the Minister said as being that in the autumn he would try to give us some more information. Is not that right?
Lord Fraser of Carmyllie: Yes.
[Amendments Nos. 19 to 21 not moved.]
6.45 p.m.
Lord Peston Lord Peston moved Amendment No. 22:
Page 2, line 44, leave out subsection (8).
The noble Lord said: Amendment No. 22 is grouped with Amendments Nos. 23 and 24. The amendments raise a matter of some seriousness. The essential amendment is Amendment No. 22. It is an attempt to discover why Clause 2(8) is there. My honourable friend the Member for Kirkcaldy in another place referred to this point. He referred to the Atomic Energy Authority Bill as one in which the Secretary of State may do whatever he likes to facilitate this. That echoes the point made by my noble friend Lord Clinton-Davis on the previous group of amendments. This is an enabling Bill which allows the Secretary of State to do whatever he likes.
I speak as someone who is always studying drafting and trying to understand the law. This is one of those bizarre clauses. First, it tells us that the Secretary of State may exercise his powers. I do not understand the nature of the legislation if one has to say in the middle of it, having given the Secretary of State his powers, that he is allowed to exercise them. That strikes me as being most strange. Then, in lines 12, 13 and 14 we get the bit that really puzzled me. It is:
"whether or not the exercise of those powers, the giving of that direction or the doing of that thing is consistent with promoting or controlling the development of atomic energy".
I was completely mystified by that, because the Bill is called the Atomic Energy Authority Bill. It appears that the Secretary of State can exercise his powers whether or not they have anything to do with atomic energy. As far as I can see, under this provision he could decide to reform the football Premier League, or anything else he dreams of. One sits here saying, "What is this all about?"
Then one has the Notes on Clauses, a document which becomes increasingly useless. I say "increasingly useless" because nowadays Notes on Clauses do not seem to be notes on clauses but just the clauses themselves repeated. If one looks at page 4 of the Notes on Clauses it says that subsection (8) makes it clear that the Secretary of State may exercise his powers under that clause. It goes on and on and on. Then it explains that that is so whether or not it is consistent with promoting or controlling the development of atomic energy; that is, his general duty under Section 1 of the Atomic Energy Authority Act 1946.
The upshot of all that is that the Notes on Clauses throw no light on the subsection. The Bill is mystifying as to why the provision is needed. Even if one does not have a suspicious disposition, one asks oneself why it is there. The next thing one can do is to turn to the Minister's statement in another place. The Parliamentary Under-Secretary—I do not know whether he is still the Parliamentary Under-Secretary—in the middle of a reply, most of which had nothing to do with the amendment—I believe I am allowed to quote the Parliamentary Under-Secretary, am I not?—said that it is intended to avoid any argument that the transfer to the private sector of any activities carried on by the authority might be inconsistent with the duty placed on the Secretary of State under Section 1 of the Atomic Energy Authority Act 1946 to promote and control the development of atomic energy.
One presses the point because it all seems very strange in terms of the drafting of legislation. Either the legislation is drafted correctly, in which case no problem can possibly arise, or somehow it has got itself drafted incorrectly so that this blanket provision has to be added: "Well, if we have made a mess of it, then we add the following excuse that it does not count". It is like what we used to do as children when we played games. If we did not like the outcome, we just invented a new rule.
I seek two things. First, I should like an explanation of what this is all about, and if I have a point—I have a strong feeling as a layman that I do—it has nothing to do with undermining the Bill or anything like that; it is to do with good legislation. If I do have a point, I should like the Minister to go away and think about it and come back with at least a better answer than the one his honourable friend gave in another place.
I agree with the point made earlier by my noble friend when he quoted Tory MPs in another place. We do things much better here, as we all agree. We also have the great benefit that when your Lordships sit as a Committee we debate the things we want and we do not have any arguments as to who is on the Committee and what amendments we debate. We do things in a sensible way. This is an example of where we have a responsibility to try to clarify what the Government mean. It reads as if the Government are somehow worried about the Bill, so they think that they had better throw in the extra clause just to be on the safe side. I ask myself whether it would not be rather better if the Bill were drafted properly in the first place. I beg to move.
Lord Fraser of Carmyllie: I appreciate that in advancing his amendment the noble Lord is not trying in any sense to wreck the Bill. Similarly, perhaps I may reassure him that there is nothing suspicious about the provision. Clause 2(8) is designed to put beyond doubt the ability of the Secretary of State to exercise his powers under the Bill. It is intended to avoid any possible argument that the transfer to the private sector of any activities carried on by the authority might be inconsistent with the duty placed on the Secretary of State under Section 1 of the Atomic Energy Act 1946 to promote and control the development of atomic energy. The provision makes it clear that the Secretary of State is entitled to exercise his powers under the Bill, irrespective of any constraint arising from that duty.
Once upon a time I had responsibility for the drafting of legislation. Therefore, I can understand the argument that the provision is unnecessary. However, I think that I had better leave that to those who have responsibility for drafting now. As I said, I can understand the noble Lord arguing that it is unnecessary, but we have to be careful even though our caution may seem to the noble Lord to be excessive. Nevertheless, I assure him that there is nothing sinister about the provision. Indeed, it is appropriate to have such a provision in the Bill.
Lord Peston: I thank the Minister for that response. However, I am not entirely happy with the situation. The Minister has admitted in his response that the expression used by his honourable friend in another place is the correct one; namely that it,
"might be inconsistent with the duty placed on the Secretary of State under Section 1 of the Atomic Energy Act 1946".
The Minister did not say that it is not inconsistent; he said, "Well, in case it is or it might be, we had better throw the clause in". My worry is: how might it be? Someone must have been advising the Minister and saying, "Minister, we are doing this Bill and on these grounds it might be inconsistent with your responsibilities under the 1946 Act. Therefore, you had better throw in this blanket clause to protect yourself. That does not seem to me to be the correct way to do it. My point is that, if there is such a danger, then the Bill should have been drafted so that it was not inconsistent with the Minister's responsibility.
I do not know enough to know whether or not it is inconsistent. However, I do know that such blanket clauses ought not. to be in legislation. Someone ought to do the work and either say, "Yes it is inconsistent, so we will write the Bill so it is not"; or, they ought to be able to say to the Minister, "It is not inconsistent, so don't put that clause in because it is silly".
All I am asking the Minister to do is, in the interests of good drafting, to convince us that his department has thought through the matter properly—with, of course, no commitment because this is not that kind of Bill— and to say that he will ask the experts who advise him on the matter to tell him a little more about it so that, if we return to it, he can then tell me more about it. I am rather uneasy when it is said that it might be inconsistent and, therefore, the clause must be put in. The point is that it ought not to be inconsistent if we have done the job properly.
Lord Fraser of Carmyllie: I shall certainly look again at the matter to see whether the drafting can be polished. It may be that the accusation can be made that we are unduly cautious in the matter, although, as the noble Lord pointed out, the matter was considered in another place. No doubt the draftsman has already reflected on the provision. It is possible that we shall find it difficult to improve upon it. There is nothing of substance here which needs to be addressed, but we just want to make absolutely sure that a continuing duty imposed on the Secretary of State in terms of Section 1 of the 1946 Act should continue. However, there is no risk that the powers given to the Secretary of State or the President of the Board of Trade under the Bill would give rise to a conflict between the two sets of provisions.
Lord Peston: I thank the Minister. I do not wish to prolong the discussion because I think that we have reached a stage where we could continue all night as regards what the precise words are and what they mean. It is possible that the noble and learned Lord would not wish to weary Members of the Committee with the matter and that he may wish to write to me in that respect. Indeed, I shall be happy if that is the case. I shall not pursue the matter at present, but it is one that I should like clarified. We can do it one way or the other: either by returning to this kind of amendment or to one in some other form. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 23 and 24 not moved.]
Lord Haskel Lord Haskel moved Amendment No. 25:
Page 3, line 14, at end insert:
("( ) The Secretary of State shall not give any direction to the Authority under subsection (2) of section 3 of the Atomic Energy Authority Act 1954 to acquire an undertaking unless a draft of such a direction has been laid before both Houses of Parliament and approved by a resolution of each House.").
The noble Lord said: In moving the above amendment, I shall speak also to Amendment No. 27. The purpose of the amendment is to draw to the Minister's attention the fact that the Bill as worded is unnecessarily all embracing. At present, the Bill can be used to privatise any part of the Civil Service or other publicly-owned undertakings. All the Minister has to do is to transfer the undertakings into the United Kingdom Atomic Energy Authority and order a transfer scheme under the Bill. Indeed, that has already happened to Warren Spring Laboratories, which were transferred into the UKAEA in 1994 and which are now expected to be privatised under the Bill.
At one point there was discussion in the nuclear review and it was suggested that Berkeley Nuclear Laboratories should be transferred to AEA Technology and then privatised. Another possible candidate could be the Office of Fair Trading or any other government organisation. I cannot believe that that is the intention of the Minister. The purpose of my amendments is to draw his attention to that fact. I beg to move.
Lord Fraser of Carmyllie: I am not sure that I entirely understand what is sought by Amendment No. 25. However, my understanding is that it seeks to prevent the Secretary of State from using his powers
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under Section 3 of the Atomic Energy Authority Act 1954 to direct the authority to acquire an undertaking in which to vest AEA Technology without parliamentary approval. Amendment No. 27 appears to prevent the authority from acquiring such a company, for what I assume to be that purpose, without parliamentary scrutiny.
If I have understood the position correctly, the approach would appear to be flawed. It would be open to the authority to dispose of AEA Technology without first acquiring a company in which to vest its assets. It could, if it wished, use one of its existing subsidiaries.
What the amendments would do is make any acquisitions by the residual UKAEA subject to parliamentary approval. I do not believe that that is what the noble Lord intended.
My noble friend Lord Ferrers made it clear on Second Reading that Government Division, which will remain in the public sector as the residual UKAEA, is a management and procurement organisation charged with managing the safe and cost-effective decommissioning of the authority's nuclear liabilities. It has no plans to make acquisitions. It is not a commercial business.
Government Division has suggested that in the longer term it might be given the responsibility of managing other civil nuclear liabilities in the public sector. That is a worthy enough aspiration, but the Government made it clear in the Nuclear Review White Paper that they have no plan to move in that direction. It is a possible option for the future but Government Division has to prove itself first.
I may yet not understand the position, but I hope that I have explained what we certainly understand to be the import of the noble Lord's amendments.
Lord Haskel: I thank the Minister for that clarification. The amendment was purely designed to draw the noble and learned Lord's attention to the fact that the Bill is all embracing. However, having placed my concerns on record, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2 agreed to.
Lord Chesham: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Wild Mammals (Protection) Bill
Brought from the Commons; read a first time, and to be printed.

Broadcasting (Restrictions on the Holding of Licences)(Amendment) Order 1995
7.1 p.m.
Lord Inglewood Lord Inglewood rose to move, That the draft order laid before the House on 23rd May be approved [22nd Report from the Joint Committee].
The noble Lord said: My Lords, on 23rd May the Government announced the conclusions of their review of the media ownership regulations. As part of the extensive package of legislative measures proposed, the Government undertook to enact immediate secondary legislation to amend the Broadcasting (Restrictions on the Holding of Licences) Orders with the aim of liberalising the ownership arrangements for radio. These measures were developed after widespread consultation and have the support of the majority of the radio industry, including the Association of Independent Radio Companies and the Radio Authority.
I would like to assure the House categorically that the Government remain committed to the continuing development of the sector and to the principles of diversity, choice and quality set out in the Broadcasting Act. However, it is also important to allow the sector to take advantage of the new opportunities that will arise as the result of recent technological change across the media as a whole. In this context the Government propose to enact two changes to the existing rules.
The first is to increase the upper limit on the number of local radio licences which may be held by any one person from 20 to £35. This adjustment to the numerical limit takes account of the significant growth that has taken place within the radio sector and effectively restores the previous balance of licences that can be held as a proportion of the whole. This measure forms the first stage of the Government's proposed changes to the radio ownership rules and represents a way of responding quickly to the immediate needs of the industry in advance of possible primary legislation. In the primary legislation proposed on media ownership we intend to remove the limit on the absolute number of local radio licences altogether and to rely instead on the points system established by the Radio Authority.
Our second proposed change is to remove the restrictions on the joint holdings of category A and category B radio licences. A category A licence is defined as one in which the number of persons over the age of 15 resident in the area for which the service is provided exceeds 4.5 million. A category B licence is defined as one in which the number of persons over the age of 15 resident in the area for which the service is provided exceeds 1 million but does not exceed 4.5 million. At present a person may hold a total of no more than six category A and B licences, of which no more than two may be category A licences. The effect of our proposal is to remove the restrictions on the holding of category B licences while retaining the two licence limit for category A licences. This change, as I shall explain in a moment, leaves the so-called points system unaffected.
At the same time we propose to remove the rule preventing national radio companies from holding more than a maximum of four category A and B licences. They will remain subject, like anyone else, to the two licence limit for category A licences but will be free to own any number of B licences subject to the overall 15 per cent. threshold established by the Radio Authority's existing points system. These changes do not affect the Radio Authority's points system. Companies will therefore continue to be required to ensure that their radio holdings do not exceed 15 per cent. of the total number of points in the Radio Authority system. Points in this system will continue to be allocated to each licence on the basis of the size of population served by the licence concerned.
The amendment to this statutory instrument represents a necessary response to the needs of the media industry during a period of great change. This proposal has received the overwhelming support of the industry itself and it will ensure that listeners will continue to benefit from the high standards they have come to expect from the broadcasting industry. I commend the order to the House.
Lord Harris of Greenwich: My Lords, before the noble Lord finishes his speech, would he like to explain to us what exactly happened in the House of Commons when these orders were rejected by the appropriate House of Commons committee?
Lord Inglewood: My Lords, my understanding is that the matter was debated in Committee and the measures were lost in Committee. However, the matter will be considered in the normal way by the House as a whole. I beg to move.
Moved, That the draft order laid before the House on 23rd May be approved [22nd Report from the Joint Committee].—(Lord Inglewood.)
Lord Donoughue: My Lords, first I would like to pursue the point which I think may be—
7.6 p.m.
Viscount Astor: My Lords, there is a speakers' list which I do not know whether the noble Lord has seen.
First, I congratulate my noble friend on his new position. It is one in which I spent an immensely enjoyable and interesting time in the Department of National Heritage and I wish him luck and great success in that position. He did not mention the independent productions order. Are we debating that at the same time or separately?
Noble Lords: Separately.
Viscount Astor: My Lords, I should then turn to the broadcasting restrictions order on radios. The primary aim of the amendment order is to liberalise the ownership arrangements for radio. The radio sector has expanded rapidly during the past few years and it is vital that the regulatory regime should recognise that and, where necessary, adapt to those changes. It is expanding faster than any other media businesses, including television, and for two years running has been the fastest growing advertising medium.

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There has been a huge surge in the number of licences over the past few years. The number of licensed independent local radio stations has grown by 30 per cent. in the previous three years from 135 in 1992 to 175 in 1995. The proposed change in the licence limit is therefore proportionally less than the increase in the total number of licences. As a result, many of the existing ownership rules are redundant. These changes represent a way to respond quickly to the immediate needs of the industry.
The current rules prevent UK companies which have a relatively large number of licences from expanding. One of the deficiencies of the present system as it is at the moment with the outdated 20 licence limit is that it prevents companies from expanding to reach anywhere near the 15 per cent. points limit without exceeding the 20 licence threshold. This position has of course favoured the expansion of overseas companies with little or no UK presence rather than established UK media companies.
More importantly, a licence with a small share of the market is treated in the same way as a licence with a large market coverage. For example, the Isle of Wight with a total survey area of just over 100,000 adults and Capital Radio with a total survey area of over 9 million adults are each counted as one licence. The current rules clearly favour city licence operations over those acting in the more rural parts of the country. Rural licences have smaller audiences and tend to be more financially marginal.
These changes have been welcomed by the industry, including the association of independent radio contractors. They are necessary because we must not treat this important industry as a cottage industry. For these companies to be major players they have to achieve a certain size. There was an interesting debate in the Standing Committee in another place. Perhaps the noble Lord, Lord Donoughue, after the leader of his party has been on an excursion to Australia, will give us the entire new Labour broadcasting policy and will explain to us what this now means after this "love-in" with Mr. Murdoch. I look forward to hearing that.
There were objections to this order in another place. One can deal with them quite simply. Why should we allow these mergers? They allow a more effective use of capital and consequently more production. That increases the overall level of investment in the industry. More value is created by putting two companies in the same industry sector together than by combining two in related sectors; for example, a newspaper and a radio station as opposed to two radio stations. There are good reasons not to delay. Shareholders are not being disadvantaged, but they would be if the order were delayed, as was suggested in another place.
I also welcome the brief glint of light introduced by the Minister in another place when he opened the door on the possibility of cash auction bids for independent national radio licences when he said that he would look at the issue again. That is to be welcomed.
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The order is an improvement for the industry. I wholeheartedly endorse it and welcome it. So does the industry. I hope that the noble Lord, Lord Thomson of Monifieth, and the noble Lord, Lord Donoughue, will also do so.
7.10 p.m.
Lord Thomson of Monifieth: My Lords, the noble Lord, Lord Inglewood, as a new Minister, whom we have all congratulated, is having an interesting day. He did not have the happiest of times earlier when, from both sides of the House, he had to defend the Government, who, two-and-a-half years after the Calcutt Report, managed to come to us with a very tepid Statement of their intentions. Now we have the interesting situation of the new Minister for the Department of National Heritage describing the orders to us, followed immediately by his immediate predecessor defending one of the orders strongly. I am sorry to say to the noble Viscount, Lord Astor, for whom I always had the highest regard when he sat in the Minister's place, that I am going to disappoint him and will not support him. One of the orders raises some serious issues which the House ought to consider very carefully before reaching a conclusion.
Whereas the Government took two-and-a-half years to come to their decision on the Calcutt Report, it was on 23rd May that the then Secretary of State for the Department of National Heritage put forward his White Paper on cross-media ownership, among which were the proposals we have before us now. Within three days, one of the local radio companies had made a hostile bid for another local radio company. Here we are in the dying days of this particular part of the Session being asked to take this order through both Houses, and in circumstances in which the Government have announced major primary legislation in this field for the Queen's Speech and the next Session.
That situation caused such disagreement in the Standing Committee on Statutory Instruments in the other place, where nobody but the Minister spoke up for this particular order, that at the end of the day it was rejected by the committee in the other place which deals with these matters.
I am not sufficiently experienced in the procedures of your Lordships' House to know whether it is unusual for us to be asked to pass an order after it has been rejected by the appropriate committee of the other place, but it seems an odd procedure. I know that the general convention in your Lordships' House with statutory instruments is that, if they have been accepted by the elected Chamber, they should not be disputed, although they may be debated, here in your Lordships' House. This is an important constitutional issue. We are being asked to pass an order at the tail end of the summer when the other place has voted against it.
Perhaps the Minister can enlighten us on this matter, but I understand that the Government hope that, having obtained the acquiescence of your Lordships' House in the dinner interval when we are not at our most numerous, the matter can then be raised on the last day of the Session in the other place and, on the basis of the House of Lords having agreed to it, the other place will

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be asked to turn a somersault and go against the majority view of its own Standing Committee. It is not a procedure that I am prepared to commend to your Lordships. We require a very serious reply and a more serious indication than we have had so far from the Minister.
Behind that issue lies the other issue of policy that I have mentioned. I agree that in the White Paper it was forecast that this secondary legislation would come forward immediately. However, I remain puzzled as to why in this particular field it is necessary to rush matters in this way. I have no objection to the other order relating to independent producers and am all in favour of the Government showing proper expedition in their legislation. However, the holdings order deals with the pattern of ownership of commercial local radio and does so against the background of an important Statement by the Government that they intend to introduce major primary legislation in the Queen's Speech in November which will greatly liberalise this whole matter. That is bound to affect the pattern of ownership of independent local radio.
Certainly those who are engaged in the present takeover battle between GWR and Chiltern Radio recognise that the rushing of this particular order has major implications for both sides. It is not for this House or for me to take sides in that takeover battle, and I do not seek to do so. In these situations my emotional sympathy tends to lie with the small shareholder. I know from my past connection with the commercial radio industry as one of its regulators that it is often the small shareholders who help to found these companies in the first place. Therefore, on the whole my sympathies are with them as against the great battalions.
It is, however, on the policy that I want to press the Minister. Is it sensible that at this stage, in July, on a matter of such importance that the Government should be rushing the order through in the last 72 hours before the Summer Recess? It is a very strange business indeed that the Government, having been unable to carry their own business in Standing Committee 3 in the other place last Wednesday, have thought fit to bring the order to your Lordships this evening. I suggest to the Minister that at the least that is pretty high-handed action. We are entitled to a thorough explanation before we decide what course of action we pursue.
7.17 p.m.
Lord Donoughue: My Lords, first I should like to welcome the noble Viscount, Lord Astor, to the Back Benches, where I notice he looks much happier than he ever did on the Front Bench. He certainly must be pleased not to have had to defend this afternoon's Statement on privacy. In relation to the question of politicians dealing with newspaper proprietors, which the noble Viscount mentioned, that is not a question of policy. It is a matter of the personal taste of individual politicians; some presumably have more catholic tastes than others.
As regards the broadcasting order, I want to speak mainly on timing and to support everything that my noble friend Lord Thomson said. I should like to start
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with what is almost a constitutional point. It certainly concerns the conventions of our conduct of business in this House. I accept that the way we do things is our own and differs from the other place. However, I should like to ask why on earth the order had to be rushed into the House of Lords when it was defeated in another place last week. The Government asked the view of the relevant committee of another place and are now apparently ignoring it. What is worse, they may be trying to use the approval of the House of Lords to assist in pushing the other place tomorrow to reverse its decision. In that sense the Government are almost abusing our convention that the Opposition Front Bench does not vote against orders. That is partly based on the fact that we accept the will of the elected House. However, the Commons' will was to reject it. I do not believe that that is the best of behaviour.
Regarding the draft order relating to the holding of licences, I must ask another question on timing; the matter was raised by the noble Lord, Lord Thomson. Having delayed the issue so long, why not wait a few more months until it is covered by the promised primary legislation? Why are we debating secondary legislation ahead of the primary legislation on television and newspapers? By so doing, it gives the big radio companies an advantage over television and newspaper companies in potential mergers in this field. It also produces an unwelcome concentration.
For instance, should GWR obtain Chiltern Radio, then GWR and Capital will shortly own all the main-line independent local radio stations in Southern England. Those two companies already have a 20 per cent. cross-holding. Therefore the Government are in the process of creating an artificial market tilted in favour of a few big radio companies. That will mean less return for those companies in any merger situations; and if the big television and newspaper companies were able to bid, they would be able to bid more and in cash rather than offering volatile shares.
The legislation gives small radio stations no chance to seek and accept a white knight—an acceptable controller—as opposed to one of those in the radio field. Therefore I believe that the small shareholders are disadvantaged. Surely there are serious reasons not to proceed, and good reasons to delay until the primary legislation comes before us. We could then have a complete level playing field.
Perhaps I may say a little on the points of substance. We on this side of the Chamber deplore the fact that sufficient weighting is not given to quality regarding radio stations. For instance, when Classic FM's licence expires, it could be bought by a higher bidder which has no intention to supply the special quality which Classic FM provides. We believe that the radio authority should be given the extra powers to negotiate higher quality, as does the ITC for television.
We are also worried about lack of protection for community radio stations which in this bout of prospective expansion may be taken over and eliminated effectively as community radio stations. Could we not have special licences for community radio stations, accepting that they do not compete on the same scale as the large commercial companies?

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However, the main issues are these. It is surely wrong to push this measure through in this Chamber tonight after rejection by the Commons. I simply cannot understand why it has to be dealt with now. Why cannot we wait until the primary legislation comes through, which gives a level playing field regarding television, newspapers and radios? The Government may have a secret agenda for rushing the measure through. We should like to know that. However, if there is no such agenda, why do not the Government withdraw one of the two orders and then bring back the measure when the Commons have decided?
7.24 p.m.
Lord Inglewood: My Lords, I was extremely grateful to my noble friend Lord Astor for his kind remarks. It seems as though I am an enormous disappointment to the remainder of your Lordships today. Every time I have opened my mouth, I have been told that I have been a huge disappointment. However, in responding to the remarks of the noble Lord, Lord Thomson of Monifieth, and the noble Lord, Lord Donoughue, it is important to be clear about this. I have made inquiries to check the position. There is nothing in any way untoward about dealing with this particular order in the manner that we propose tonight. After all, the matter was rejected in Committee in another place, not by the whole House in another place. The matter will go forward to another place for consideration by the whole House which is what I understand happens in any event, whatever decision the Committee may reach.
When all is said and done, these are matters to be determined by each House against the background of its procedures and conventions. Of one thing we can be reasonably sure; it is improbable that another place will take a view on the matter, acquiescing with the decision of your Lordships' House. It is rather contrary to the normal practice in that regard. There is nothing in any way constitutionally improper.
Lord Harris of Greenwich: My Lords, perhaps I may intervene on that point. It is a matter of some significance. The noble Lord indicates that when this matter is debated, his honourable friend in another place will not call in aid any decision of your Lordships' House on this order. Is that right?
Lord Inglewood: My Lords, I cannot speak for any Member of another place. No doubt those who are interested will be able to hear what I have said in this Chamber. Having said that, there is nothing in any way improper about dealing with the matter in the way that we propose this evening.
Perhaps I may now turn to other points of substance about which we have had a certain amount of debate. It is important to be clear about one point at the outset. As the noble Lord, Lord Donoughue, commented, in the Government's media ownership proposals it is indeed proposed to bring forward certain primary legislation in the future. However, what we debate this afternoon is secondary legislation which derives its potency from
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existing legislation. We are not talking about secondary legislation in some way derived from future legislation. We are talking about secondary legislation derived from primary legislation already on the statute hook. There is nothing remotely unusual about doing that.
Criticism was levelled against the Government, in particular by the noble Lord, Lord Thomson of Monifieth, that we were too fast. Only a few hours ago the Government were accused of being too slow in response to matters.
Lord Thomson of Monifieth: Moderation in all things!
Lord Inglewood: My Lords, that is a characteristic of this excellent Government, as the noble Lord knows only too well. However, in the Government's media ownership proposals, we have a number of policy statements. On page 2 in the summary of the document, the Government propose to enact immediately certain pieces of secondary legislation which includes the orders that we discuss this afternoon. Other matters in those proposals are those considered to be appropriate for further consultation consideration. We now have a position where the Government have determined that it would be appropriate to legislate now and they therefore propose to do so. If that is the Government's policy, it seems to me in no way inconsistent to bring the orders forward. Indeed, in the circumstances it would be slightly surprising if the Government did not bring those orders forward. Against that background, there has been a considerable amount of debate about the merits of a specific proposal and whether it is right or wrong. I do not propose to go over the ground that I covered in my opening remarks. Suffice it to say that if it is appropriate to go forward, we believe that we have a formula which is correct, and that we should therefore do so.
The noble Lord, Lord Donoughue, made two points in relation to a specific bid which has been made, subject to this order going forward. Clearly it is not for me to go into the merits of any proposal. Suffice it to say that in this case the bid came forward after the proposals were made public; and it is all above board. It is inevitably the case that if any statutory regulation changes, it may have economic consequences. But that is true of all regulations of this type. It is in no way unique to what we debate this evening.
I wish to comment on two remarks made by the noble Lord, Lord Donoughue, one relating to the quality of Classic FM, and the other to community radio stations. I can do no better than to refer to the remarks of my honourable friend who is now Minister of State in another place at col. 23 of Hansard for 12th July this year. He made a number of remarks which will, I am sure, allay the noble Lord's fears in that regard. Finally, there is no secret agenda here. The reason is that the agenda on the face of the proposals is self-evident and in our view it should commend itself to the House.
Lord Thomson of Monifieth: My Lords, before the noble Lord sits down, will he confirm that a period of consultation is going on in connection with the proposed

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primary legislation later this year? If so, and if the radio companies are among those being consulted, given the controversy over the matter and that the events have taken place at the other end of the corridor, why do not the Government at least wait until the consultation period finishes in August? Then they could come back to us in the light of the consultation.
Lord Inglewood: My Lords, I had hoped that I had made the point clear in my remarks. The document indicates that certain longer term changes will be considered. Comments are invited on the basis of what is contained in the Government's policy. As I also explained, the Government are of the view that certain matters should be taken forward immediately in secondary legislation, of which the two orders we are debating this evening are part.
Lord Thomson of Monifieth: My Lords, I do not wish to try the patience of the House, and I thank the Minister for his reply. However, I feel that an issue of principle is involved here and I wish to express that issue of principle in the Lobbies.
7.32 p.m.
On Question, Whether the said Motion shall be agreed to?
Their Lordships divided: contents, 70; Not-Contents, 21.

Division No. 1

CONTENTS

Aldington, L.

Inglewood, L.

Alexander of Weedon, L.

Kimball, L.

Ampthill, L.

Kitchener, E.

Astor, V.

Leigh, L.

Balfour, E.

Lindsay, E.

Blaker, L.

Long, V.

Blatch, B.

Lucas, L.

Boardman, L.

Lyell, L.

Borthwick, L.

Mackay of Ardbrecknish, L.

Brougham and Vaux, L.

Massereene and Ferrard, V.

Burnham, L.

Miller of Hendon, B.

Chalker of Wallasey, B.

Milverton, L.

Chesham, L. [Teller]

Mountevans, L.

Clark of Kempston, L.

Moyne, L.

Courtown, E.

Napier and Ettrick, L.

Cranborne, V. [L. Privy Seal]

Newall, L.

Cross, V.

O'Cathain, B.

Cumberlege, B.

Oxfuird, V.

Dean of Harptree, L.

Perry of Southwark, B.

Deedes, L.

Rankeillour, L.

Denham, L.

Reay, L.

Digby, L.

Rennell, L.

Dixon-Smith, L.

Renton, L.

Elliott of Morpeth, L.

Rodger of Earlsferry, L.

Faithfull, B.

St. John of Bletso, L.

Flather, B.

Saltoun of Abernethy, Ly.

Fraser of Carmyllie, L.

Seccombe, B.

Gardner of Parkes, B.

Shaw of Northstead, L.

Glenarthur, L.

Stewartby, L.

Goschen, V.

Strathmore and Kinghorne, E.

Hayhoe, L.

Thomas of Gwydir, L.

Henley, L.

Thomas of Swynnerton, L.

Hooper, B.

Trumpington, B. [Teller]

Howe, E.

Vivian, L.

Howe of Aberavon, L.

Wade of Chorlton, L.

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NOT-CONTENTS

Airedale, L.

Monkswell, L.

Bradford, E.

Palmer, L.

Craigavon, V.

Reading, M.

Elis-Thomas, L.

Rodgers of Quarry Bank, L

Falkland, V.

St. Albans, Bp.

Harris of Greenwich, L. [Teller]

Seear, B. Sharpies, B.

Stoddart of Swindon, L.

Holme of Cheltenham, L.

Thomson of Monifieth, L. [Teller]

Howie of Troon, L.

Lawrence, L.

Tope, L.

McNair, L.

Tordoff, L.

Resolved in the affirmative, and Motion agreed to accordingly.

Broadcasting (Independent Productions) Amendment Order 1995
7.40 p.m.
Lord Inglewood Lord Inglewood rose to move, That the draft order laid before the House on 29th June be approved [25th Report from the Joint Committee].
The noble Lord said: My Lords, I now turn to move the Broadcasting (Independent Productions) Amendment Order 1995. This too forms part of the extensive package of legislative measures proposed by the Government's policy document on media ownership. In accordance with our statutory obligations, it has been the subject of consultation with both the BBC and the ITC. The Broadcasting Act 1990 requires that in each year not less than 25 per cent. of the total amount of time allocated to the broadcasting of qualifying programmes by each regional Channel 3 service, Channel 4, Channel 5 and the BBC is allocated to
"a range and diversity of independent productions".
The aim of this measure is to stimulate the development of a successful and competitive independent production sector in the UK and extend further the diversity and range of programming available to consumers. It has been successful in these aims, and there are now over 900 independent producers established in the country.
The Independent Production Order 1991 defines what constitutes an "independent producer" for the purposes of the 25 per cent. quota. During the widespread consultations that took place as part of the review of the media ownership rules, a number of anxieties were raised by the industry about the content of the current Independent Productions Order and its effect on the future development of the sector. The changes proposed in this amending order reflect the needs and wishes of the broadcasting and production industries, and the advice of the BBC and ITC.
The Government propose to make four main changes. All move in the direction of liberalising the system of ownership control so as to encourage the further development of the independent production sector.
First, and most significantly, we propose to increase from 15 per cent. to 25 per cent. the stake that broadcasters may have in an independent producer, and vice versa, without the producers losing their independent status. This measure is designed to encourage greater investment and financial stability

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within the sector without prejudicing the distinctive nature of independent production companies. With the latter point in mind, we propose to retain an aggregate maximum of 50 per cent. for the proportion of equity in an independent producer which broadcasters (as a whole) may earn. Moreover, the existing "connected persons" provisions in the 1991 order will ensure that two or more broadcasting companies cannot, if they are connected in some way, each take stakes of up to 25 per cent. in the same independent production company.
Our second proposed change is to allow United Kingdom producers to invest in broadcasters outside the European Economic Area without losing their independent status. This means that a production company would retain its independent status if, for example, it held stakes above 15 per cent. in a broadcaster operating solely in the Caribbean. This arrangement is a one-way street. A broadcaster operating outside the EEA will not be permitted to acquire a producer within the EEA without that producer losing its independent status. This prevents large non-European broadcasters purchasing EEA-based independent production companies in order to take advantage of the favourable market access arrangements resulting from the independent production quota.
Thirdly, and in connection with the same control, the Government propose to simplify the nationality restrictions on producers. At present, a producer is defined so as to include all connected persons (in effect, connected companies). This has caused difficulties in determining the country of incorporation or principal place of business of a producer who may have connected persons established in different countries. The proposed amendment simplifies this by stating that the location of any connected persons shall be disregarded in determining the country where the producer is established. Remembering that the proposed liberalisation applies only to the control of non-EU broadcasters, this relaxation in no way weakens the protection that the law gives against non-European control of UK independent producers.
Finally, the Government propose to exclude the providers of Teletext and similar services from the definition of a broadcaster. Such services are currently caught by the existing definition. Teletext providers are thus limited to a 15 per cent. stake in independent producers. We see no reason for this, given the marked distinction between broadcast and Teletext services, and the amendment that we propose leaves the Teletext provider completely free to invest in independent producers. I commend the order to the House.
Moved, That the draft order laid before the House on 29th June be approved [25th Report from the Joint Committee].—(Lord Inglewood.)
7.44 p.m.
Lord Thomson of Monifieth: My Lords, I thank the Minister for that very thorough, clear and detailed description of the order. To show him how reasonable I normally am, in this case I see no particular reason why it should not go through in advance of the more general broadcasting legislation that will come next year. It does not raise the same issues as the previous order did.
On Question, Motion agreed to.
Baroness Trumpington: My Lords, I beg to move that the House do now adjourn during pleasure until 8 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.45 to 8 p.m.]

Atomic Energy Authority Bill
House again in Committee.
Clause 3 [Supplementary provisions as to the Authority's powers]:
Lord Haskel Lord Haskel moved Amendment No. 26:
Page 3, line 20, at end insert:
("( ) The Authority shall not have the power to dispose of any undertaking unless provided for by a transfer scheme.").
The noble Lord said: This amendment is designed to prevent the United Kingdom Atomic Energy Authority selling off parts of itself other than by the process described in the Bill. In recent weeks the United Kingdom Atomic Energy Authority has announced a further nine businesses for sale in addition to AEA Technology. The process set out in the Bill should be used to ensure that the interests of the public and the employees will be protected as provided for by the Bill.
But the fact that those additional businesses have now been offered for sale brings into question the whole issue of why indeed we need the Bill. The purpose of the amendment is to bring this matter to the Minister's attention. Perhaps he can explain to us why those nine companies have been offered for sale while the Bill is under discussion. I beg to move.
Lord Fraser of Carmyllie: Unless the noble Lord wishes to resume the discussions that we have previously had on the desirability or otherwise of a unitary scheme for the disposal of AEA Technology, perhaps I may say to him that most disposals by the authority other than AEA Technology involve the sale of small operational units with few assets and only a handful of staff.
In such cases, sale by normal commercial contract is all that is required. Giving effect to all such sales—some of them are indeed very small—by way of a transfer scheme would be to make something of a mountain out of a molehill. For example, if AEA Technology is to be disposed of by way of a unitary arrangement, clearly a transfer scheme, as the Bill requires, is appropriate. In our view, it is not appropriate to require such an arrangement to be made in each and every circumstance when such a small disposal is carried out.
I am sure that the noble Lord appreciates that probably the least satisfactory way to go forward for AEA Technology would be an arrangement taking out this little part and that little part. It would be more desirable to regard the two matters separately and appreciate that the small disposals are rather separate from the major objective of the Bill, which is to deal with AEA Technology as a whole.
Lord Haskel: I thank the Minister for that explanation. We realise that these are small disposals. But I raise the point because at some time presumably

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someone will ask where the line is drawn. When does a small disposal become a large disposal and affect the privatisation that we are discussing? Having made the point, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 27 and 28 not moved.]
Clause 3 agreed to.
Clause 4 agreed to.
Clause 5 [Duty of Authority to assist Secretary of State in connection with transfer schemes]:
Lord Peston Lord Peston moved Amendment No. 29:
Page 4, line 2, leave out (", as far as practicable,").
The noble Lord said: This is a very simple probing amendment that was raised in another place. I should like a brief account from the Minister as to what he has in mind at this point. Clause 5 deals with the authority furnishing the Secretary of State with the information that the Secretary of State may require in connection with transfer schemes.
Subsection (2) deals with the obligation of the authority to:
"include a duty to secure, as far as practicable, that their subsidiaries furnish all such information and assistance as the Secretary of State may require".
I do not understand why the phrase "as far as practicable" is inserted. It seems to me that if it were taken out, the sentence would have exactly the same meaning. Obviously, a duty to secure means a duty to secure as far as practicable. What else could it possibly mean? Having a duty to do something does not mean there is a duty to do the impossible. It means that there is a duty to do what one can do.
This point was raised in the other place. I did not at that time see an answer that made any sense. I had hoped to receive an answer today. I always ask whether there is some clever point that I have missed. But, if I were to say that a Minister had a duty to do something, I should mean that within the bounds of what is practicable he must do it. It would not occur to me to say that he had a duty to do this and then add "as far as practicable".
The Minister may be aware that it is part of my campaign, which is often joined by some of his noble friends but they are not here this evening, to have Bills that we pass into law written in English as we know it. This passage may be an illustration of that. However, there may be some deep philosophical consideration that his officials may wish to draw to our attention on this occasion. If so, I should like to know it.
Lord Fraser of Carmyllie: Whether or not it is particularly clever, perhaps I may offer the following explanation. The subsection to which this amendment relates places an obligation on the authority to secure an equivalent degree of co-operation from its subsidiaries. The duty in relation to those subsidiaries is qualified by the phrase "as far as practicable". I understand that it is that phrase which the noble Lord wishes to remove. The effect would be to place the authority under the same duty to secure the assistance of its subsidiaries as it is under itself.
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In fact, it would make the Secretary of State's task easier if there were to be an absolute duty on the authority to secure the co-operation of its subsidiaries. But there is a practical problem. The reason why the duty in Clause 5(2) is constrained is that a subsidiary of the authority, even if wholly owned, is a separate corporate entity. The authority's relationship to that company is one of shareholder. There are limitations to the extent of the control which a shareholder can have over a company. Accordingly, it would not be right for the authority to be placed under an absolute duty where it might not be able to discharge that duty. That is the reason for the qualification.
I should have thought that the noble Lord would agree that it is unreasonable to place the authority under a statutory duty which it may be unable to fulfil through no fault of its own. It may be an extremely technical explanation to offer to the noble Lord. Perhaps his ears will prick up when he hears from me that so far as concerns the Secretary of State the task would be easier if the words that the noble Lord wishes to remove were indeed removed.
Lord Peston: I have no objection to that, for fairly obvious reasons. I found what the Minister said most enlightening. Clearly, the obligation is there so that the Secretary of State can do his job. It is all about assisting the Secretary of State. I think the noble and learned Lord is saying that if we left out those words, then the sentence would not be construed to mean absolute duty within the bounds of reality; it would mean absolute duty no matter what.
The Minister is simply adding to my education. I take it for granted that a duty to do something always means a duty within the bounds of reality. The noble and learned Lord is saying that if I do not include "as far as practicable", the duty would somehow be interpreted to mean a duty whether or not it is practicable. That must be the way in which lawyers think—not the lawyers in your Lordships' Chamber, of course. I cannot think anybody else would think about the real world in that way.
However, at least we have the answer on the record. The point has been made. It does not make sense to me but I have at least obtained an answer and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clauses 5 and 6 agreed to.
Schedule 2 [Successor companies]:
[Amendments Nos. 30 and 31 not moved.]
Lord Peston Lord Peston moved Amendment No. 32:
Page 16, line 9, at end insert:
("( ) The Secretary of State shall not dispose of more than one half of any of the securities issued to him under sub-paragraph (1) above.".).
The noble Lord said: As the Committee will be aware, when we dealt with an earlier group of amendments I thought Amendments Nos. 31 and 38, which involved consultation with trade unions, also covered the area of so-called "golden shares". However, we did not discuss them under that heading at that point. The Minister

85
indicated that he would rather discuss this subject subsequently and this is the heading under which we are dealing with the matter.
As always with legislation, I find myself in the position of only beginning to understand it when we are a long way into it. I confess that when we were debating this matter at Second Reading, I did not understand this part of the Bill at all. But, looking at the relevant clause and schedule, it is clear that the possibility exists within the Bill of the Secretary of State retaining a share (which would be interpreted as a so-called "golden share"), and I now believe I am right in thinking—the Minister will correct me if I am mistaken—that the authority will also own such shares.
The question arises—the Minister gave some clue as to this earlier—of what the purpose of such shares would be. They may be connected with two things that come to my mind. First, they could influence some of the activities of privatised AEA Technology; and, secondly, they could influence who the successor company could one day be sold on to. The amendments were tabled for clarification. First, am I right to interpret this part of the Bill as relating to golden shares? Secondly, am I right that the purpose of such golden shares would be as I outlined? Thirdly, if I am right on both those accounts—this may be of complete irrelevance if I am wrong—should not such disbursal be a matter for consideration in your Lordships' Chamber and the other place rather than within government?
To put it at its mildest, there would certainly be considerable interest in Parliament if the events I described should occur. This is therefore a probing amendment so that I and others who are interested in the matter can learn something more about the Government's intentions. I beg to move.
8.15 p.m.
Lord Fraser of Carmyllie: Management, as well as everyone else who has looked at the position objectively, is clear that privatisation offers the best means of securing a prosperous and successful future for the business and its employees. Some have suggested that all commercial benefits of privatisation could be achieved in the public sector if AEAT were given greater commercial freedom. But I do not believe that that is the right way forward.
Full commercial freedom means the freedom to take risks and to reap the rewards. That is not consistent with a degree of public ownership. Where companies remain publicly owned, the Government are seen to be standing behind them. In that circumstance the Government have their ever-continuing obligation to protect the taxpayer's interest in such companies. That being so, it is less likely that they will have the free commercial rein that may be desirable.
There are no provisions in the Bill that relate specifically to special shares, on the view that none is necessary. The policy question as to whether a special share should be retained by the Secretary of State will be considered in the light of developments, in particular, should customers have any anxieties—and particularly government customers—as to the future ownership of the purchased entity.
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I was asked a direct question and must offer a qualification. There are sets of qualifications which the noble Lord has, in a sense, teased out of me which I am not reluctant to give, but I would not want to indicate that behind all this we have a series of proposals which we are declining to reveal. The noble Lord asked the question and I must explain that these are options that are available, albeit that it is our view that at the present time they look remote. Certainly they are sets of suggestions which seem to be going well away from the first amendment that the noble Lord suggested was the right way forward if AEA Technology is to be privatised.
Lord Peston: I am sorry to interrupt the Minister. I thought it would be a convenient moment as he said something very definite and clear. If the Minister looks at page 16 of the Bill, Clause 2 of the Schedule has the heading,
"Government investment in securities of successor company"
The clause states:
"The Treasury or, with the consent of the Treasury, the Secretary of State may at any time acquire … securities of a successor company".
There is something a little further on relating to the selling of securities in successor companies. I interpreted that, possibly erroneously, as being included in the Bill for a purpose; that is, that the Government would not sell 100 per cent. of the AEAT, but would have the opportunity to continue to own some of it. I interrupted the Minister, I am afraid discourteously, to ask whether that is a complete misinterpretation.
Lord Fraser of Carmyllie: The noble Lord identified in that provision that,
"The Treasury or, with the consent of the Treasury, the Secretary of State may at any time acquire … securities of a successor company, or … rights to subscribe for any such securities".
In his opening remarks I understood the noble Lord to be asking whether a set of special share arrangements is contained in the Bill. There is not. There are these more general provisions but I am anxious to avoid suggesting to him that we have in any sense in a bottom drawer a set of proposals that we would pull out. The noble Lord may again think that we are being unduly cautious about this and that we ought to come forward and say exactly what is our preferred manner of disposal. However, I repeat that I would have thought it more appropriate to leave that until we get to the autumn.
Lord Peston: The noble and learned Lord may have misunderstood me slightly. I did not for one moment think that there was a bottom drawer or, even if there was, that he would tell me what is in it. I was simply trying to find out the purpose of the paragraph. Am I right that the purpose of the paragraph is to enable the Treasury, or the Secretary of State with the consent of the Treasury, to acquire some of these shares in the successor company? That is what it says. I assume, without pushing the Minister, that they would acquire them for a reason. I gave reasons, but that is different. I do not expect the Minister necessarily to agree with my reasons. I simply want to know whether I am right that

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that power is there so that the Treasury or the Secretary of State could acquire such shares. Otherwise it does not mean anything.
Lord Fraser of Carmyllie: At an earlier stage the noble Lord was anxious to ensure his reputation as one who wants plain and simple language in legislation. Looking to the terms of paragraph 2 of Schedule 2, it would seem to me clear enough that the Treasury may at any time acquire securities in a successor company. However, if I am wrong about that, I shall write to the noble Lord. I do not believe there to be anything strange in that. Indeed, I believe it to be simply a standard provision.
Lord Clinton-Davis: Perhaps I may look at this issue from another point of view to supplement what my noble friend Lord Peston has said. We take the view—this was clear in our Second Reading contributions and in today's debates—that AEA Technology will carry out work that is crucial to the United Kingdom. It is involved in research into decommissioning and the operation of nuclear power stations and in extensions of that research into other areas. It is undoubtedly a critically important industry. It is the kind of industry in respect of which in the past the Government retained a golden share, a golden share designed to be able to assert the national interest, notwithstanding the competition laws of the European Commission which permit, as I think the noble and learned Lord will agree, foreign ownership to be excluded as a matter of principle. Provided it can be asserted successfully by the Government that a vital national interest is involved, they are perfectly entitled to operate through those procedures.
Does the noble and learned Lord accept that in principle at least it is correct that one does not have to adhere to the ordinary rules relating to competition if one can establish that a vital national interest is involved and that foreign ownership—even ownership from within the European Union—would not be acceptable? That is a general legal proposition that I put to him. I do not expect him to assert with me that AEA Technology could fall into that category. What I want to do is establish that there is at least a point of agreement between us with regard to the law. The rest can take care of itself. I should like to hear what the Minister has to say about that.
Lord Fraser of Carmyllie: I can briefly answer the noble Lord by going back to what I said earlier. A wide range of options is available to the Secretary of State in taking this forward. However, I was seeking to emphasise to the noble Lord, Lord Peston, that as we looked at matters we did not see that there was any value to AEA Technology if we were to seek to continue to maintain a particular arrangement within it on the lines of special shares or the like. I then went on to spell out that in paragraphs 1 and 2 of Schedule 2 there are provisions which would allow the Treasury or the Secretary of State to acquire securities of a successor company. What I am at pains to emphasise is that there is nothing buried in the schedule that is to be taken as an indication of a particular model that we would wish to pursue in taking forward this privatisation.
Lord Peston: I thank the noble and learned Lord. Occasionally what I am asking is less than he assumed—and this is one of those occasions. I am particularly impressed with the argument that paragraph 2 of Schedule 2 is a standard clause anyway and therefore that the authority to dispose of any securities in Clause 7(2) is also standard. Given that, I am somewhat intrigued that nonetheless the power remains both to acquire securities of the successor company and to sell them. Therefore, even if the Minister would not want to do any of the things to which I have referred, someone else might want to do them, so that is an extremely useful clarification. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Clinton-Davis Lord Clinton-Davis moved Amendment No. 33:
Page 16, line 9, at end insert:
("( ) Before any disposal by him of securities in any successor company the Secretary of State shall offer those securities for sale to the employees of that company.").
The noble Lord said: In moving this amendment it may be for the convenience of the Committee to take with it Amendment No. 39. The Minister said earlier—I hope I am not misquoting him: I am not against misquoting him but I do not want to do it deliberately—words to the effect that the Government are anxious to involve employees as much as possible in privatisation. With respect, the enthusiasm of the Minister has some limitations, as I hope to demonstrate in a moment or two.
If we are to go down the route of privatising this enterprise, we believe that the right thing to do in the light of the characteristics of this industry—the nature of the workforce, this being a "people control enterprise", and so on—is to have a preference in the Bill for a management/employee buy-out. It is important to do that for a whole variety of reasons, some of which were set out in an article in the Financial Times on 15th February 1994. The article referred to the desirability of selling the industry in a unitary way. It went on to say that,
"the assets being sold will consist largely of the employees' brainpower rather than plant and equipment. Valuing the business will therefore provide a special challenge to City advisers".
The leading article in the Financial Times on that day stated that,
"the ideal solution must be a management buy-out. This would create a sense of partnership among the company's employees, and guarantee the AEA the independence to underpin its credibility as a consultancy. However it may be too much to expect a state-owned scientific agency to make that sort of leap in one bound—particularly when it does not even have a chief executive".
In fact, it did acquire after that a chief executive.
That summarised the situation very adequately. However, the position of the Government is in marked contrast to that which was utilised in relation to the Railways Act 1993. In that Act, provision was made under Section 141, which gave financial assistance for employees who were seeking to acquire franchises or part of the board's undertaking. Therefore, they were given a priority which is singularly missing so far as this Bill is concerned. The Minister made an assertion that they are anxious to involve employees as much as possible in privatisation. What does that mean? Why is

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there a distinction drawn between the route that was followed under the Railways Act and the omission of such a provision from this Bill?
My amendment goes further than Section 141. The Minister could at least give us an indication tonight that the Government will be prepared to import just such a provision into this Bill. That would be a very good message. It is fair to say that, in relation to the Bill, although the Government said that they were quite satisfied I was wrong, in fact a priority of this kind might offend European Community law. The Government said I was wrong about that. Let us accept that for the sake of this argument. In those circumstances, why do not the Government show some consistency and say that Section 141 of the Railways Act provides an ideal model for what we should be doing here? That is the best way in which to translate into reality what the Minister said earlier. This is an appropriate amendment to pursue and therefore I have pleasure in moving it.
8.30 p.m.
Lord Fraser of Carmyllie: The noble Lord made reference to a number of observations which I offered earlier, not least by saying that I recognised that one of the management's key tasks, now as well as after privatisation, was to ensure that the staff were properly "incentivised". The noble Lord, Lord Peston, took exception to that word. I was scorched by his observation and instead I say that they should get the proper incentives to motivate them. I am happy to do that, because the performance and profitability of business depends on staff responding to incentives that are attractive to them.
The Government would be prepared to consider seriously any bid from a management and employee buy-out consortium. As the Committee will know, bids from MEBOs have been a feature of many competitive trade sales. Benefits can include increasing the level of competition, maximising sale proceeds, and, in many respects, pre-eminently maintaining the commitment of management and staff in the run-up to a sale. As I have already indicated as regards employee participation, the Government believe that it is indeed in the long-term interests of any privatised company that a significant measure of employee share ownership should be provided for. Accordingly, the Government will look carefully at any proposals for employee participation put forward by the management of AEA Technology or its successor.
In the course of this Committee stage, on a number of occasions I have been asked to draw parallels with other privatisations. They do not seem to be wholly apt, although in many respects at the end of the day the aim is the same. They are not wholly apt because we are not seeking to privatise the complete entity. Here we are seeking to extract part of it, albeit a very important part. I should prefer to rest on the basis that the undertaking that I have given on behalf of the Government, with the assurance that we look at such a proposal very
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favourably, is the right one, rather than offering, as I understand, particularly the provisions of Amendment No. 39, which state:
"Before disposing of its securities in any successor company the Authority shall offer those securities for sale to the employees of that company".
There may be a prospect that such an arrangement would be desirable, but to impose such an absolute duty would not be appropriate. I hope that, in view of the assurance I have given, the noble Lord will be satisfied.
Lord Clinton-Davis: The Minister is always extremely pleasing and helpful up to a point. However, I do not believe that he has gone far enough. I draw a parallel, but one of principle. Perhaps I may deal very briefly with the history of this particular concession made by the Government in the Railways Act. The noble Lord will remember that the Railways Bill was the subject of considerable controversy. The Government met hostility not simply from this side and from the Liberal Democrats, but from a number of their own Back-Benchers, and, indeed, from all round the House.
One of the issues which was sharply focused on was the question of a management and employee buy-out. Frankly, I am not thrilled about it in the context of the railways. I believe that the utmost caution should be expressed by people involved in the railway industry at the present time before engaging in that kind of enterprise. I am not dealing with particulars of the railway industry here, but the principle.
The Government saw fit to provide that there should be some help given to the promotion of MEBOs. They went to the extraordinary lengths of providing that not only a measure of priority but a whole series of financial assistances should be given to the proposed management and employee buy-out so that they could get their act together. Therefore, it is perfectly reasonable to ask, if that was good enough for the railway industry, then why not here?
The Minister says that he does not want to be under any duty. There was a duty here. He says that one cannot consider other precedents because they may not apply. He says that in this case one is not privatising a whole entity, but neither were they doing so in the case of the railways. It was a question of bidding for a franchise, which is very different from going into a complete privatisation.
I ask the Minister to give an undertaking to the House tonight that, in the context of this amendment—on reflection, I should have preferred simply to graft on to it tonight the provision of the Government's own Act, and we may come back on that basis—he will consider his reply in the wider context of looking at that particular section of the Act and will say, "I shall reflect further on the matter". In so doing it does not mean that he has to accede to a MEBO. He would be giving it some assistance as regards its formation, so that it could rival more powerful organisations engaged in a similar enterprise. I ask the Minister to reply to that. I shall withdraw the amendment, but I should like to hear what he has to say in principle about these issues.
Lord Fraser of Carmyllie: I do not believe that there is much point in pursuing whether the examples given are exact parallels or not. I understand the point that the noble Lord, Lord Clinton-Davis, is making. I repeat that I have some concern about introducing particular rights which might require a degree of inflexibility that would serve no one any valuable purpose. However, I say to the noble Lord—and I hope that this will satisfy him— that I shall be prepared to examine the scope for offering assistance, which is somewhat in the nature of the language to which he made reference; namely, the scope for offering assistance to a management and employee buy-out. But I repeat: MEBOs should compete on all fours with other prospective purchasers. I hope that that is sufficient assurance for the present purposes.
Lord Clinton-Davis: I am grateful to the Minister, but he almost spoiled what he was saying in his last sentence which was in conflict with his own Government's philosophy. In the light of his response, I look forward to returning to the matter on Report and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 34 and 35 not moved.]
Schedule 2 agreed to.
Clause 7 [Disposal by Authority or Secretary of State of shares in successor companies]:
Lord Haskel Lord Haskel moved Amendment No. 36:
Page 4, line 13, leave out subsection (1).
The noble Lord said: The purpose of the amendment is to seek some clarification because under the Bill as drafted the Secretary of State is not obliged to act in the national interest. The amendment requires the Secretary of State to be of the opinion that sales of shares in successor companies would promote the national interest.
It is difficult to understand the need for Clause 7(1). Presumably the Secretary of State would not order a sale of shares unless he thought that it was in the national interest. The clause simply allows the Secretary of State to do things that he does not consider to be in the national interest. I should be interested to know whether the Minister can give us an example of what the Secretary of State would do which is not in the national interest. I beg to move.
Lord Fraser of Carmyllie: It is a neat point and the noble Lord clearly enjoys it. There is no question of the Government acting against the national interest. The whole point of Clause 7(1) is to remove any possibility that the provisions of the 1981 Act might be held to limit the powers of sale provided by this Bill and prevent the Secretary of State or the authority from securing the sale of AEA Technology on a basis which they believe best serves the interests of the nation.
As I have said repeatedly in this Committee, the Government are committed to putting AEA Technology into the private sector on the basis which secures the best possible future for the business and its staff, maximises its contribution to UK competitiveness and provides best value for money for the taxpayer. That is what we are working to achieve. That is what we are determined to achieve. Therefore, I reassure the noble
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Lord that in that fabled bottom drawer there is no proposal which is designed to secure a sale which would be contrary to the national interest.
Lord Haskel: I thank the Minister for that reply, but I must confess to being a little disappointed because I had hoped that we would all be enlightened by it. However, in view of the Minister's reply, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 37 to 40 not moved.]
Clause 7 agreed to.
Clause 8 agreed to.
Schedule 3 agreed to.
Clause 9 agreed to.
Schedule 4 [Pensions]:
8.45 p.m.
Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 41:
Page 29, line 3, leave out ("sub-paragraphs (2) and (4)") and insert ("sub-paragraph (2)").
The noble Baroness said: We now reach a group of amendments on pension entitlement. In moving Amendment No. 41, I should like to speak also to Amendments Nos. 42 to 46, 46A and 49. This group of amendments is intended to allow UKAEA employees to remain in their pension schemes after privatisation. The amendments are similar to a series moved in Committee in another place. They were opposed by the Government then and I hope that in the intervening period there has been time for the Government to think again. The reasons advanced for opposing them then were far from convincing.
As we know, we are talking about a sophisticated and highly trained workforce. It is usual in such circumstances for employees also to be committed to their pension scheme and to value their scheme membership very highly. As I understand it, the scheme is a fairly standard public sector scheme. The benefits are reasonably good and, among other things, contain provision for complete indexation of pensions in payment. I understand that the Government's argument is that it is not government policy to allow membership of the scheme to continue. It is, however, said that the benefits provided will be "equivalent", whatever that may mean. It certainly does not seem to mean that they will be the same. Indeed, I believe that full indexation may not be envisaged. This is an important point.
The staff who joined the authority became civil servants. They knew that they would be doing so and therefore expected, as part of the package, that they would be members of a public sector scheme guaranteeing certain benefits. I cannot stress too strongly that many people nowadays—perhaps always as far as this type of employment is concerned— structure their lives very much on what they may expect to receive when they retire. Until recently, it had always been public perception that such Civil Service jobs, although perhaps not as lucrative as many in a more entrepreneurial environment, had the compensating

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factor that there was security both in regard to the employment itself and in relation to ultimate retirement benefits.
However, along came the Government with wide-ranging plans to privatise. That sense of security disappeared almost overnight. Removing the right to remain in the pension scheme after privatisation is therefore of considerable detriment. The Government may argue, as they did in the other place, that there will be provision of an equivalent standard. That is not good enough when many people fear that they may lose the vital element of indexation. I understand that continued membership was allowed some years ago when Amersham International was privatised. I gather that the Government argue that most of Amersham International's employees eventually opted for transfer to the private sector AI Pension Scheme. That may well be so, but it was a matter of choice for the individuals who had the opportunity of looking at the relative benefits.
According to what has already been said, the Government do not intend that to happen in this case. I think that that is wrong. I remind the Government—my noble friend Lord Clinton-Davis has already done so in relation to other aspects of the Bill—of the problems that they encountered over pensions when railway privatisation was under consideration in your Lordships' House. Eventually the Government had to shift from their original position and make some concessions. I hope that they may be persuaded to do so in the present case. I beg to move.
Lord Fraser of Carmyllie: I appreciate the desire of the noble Baroness to allow employees to remain in the authority's pension scheme. However, I am bound to say that there can be no question of employees staying in such schemes once they are in the private sector. Standard practice in transfers of employees from the public sector, whether in privatisations or contracting out, has been to end public service scheme membership on the move to the private sector. Given her expertise in such matters, I am sure that the noble Baroness knows (whether she likes it or not) that that practice has been consistently followed.
Government policy is clear. We do not believe that it would be appropriate to allow private sector employees to remain as members of a pension scheme that was set up for members of the authority. The authority, as an employer, has devised its public service scheme to provide what it considers to be appropriate pensions for its employees. It is for the private sector employer to develop arrangements appropriate for its employees and for the operation of its business.
I understand that the core of the concern expressed by the noble Baroness is whether there should be index-linking. I must advise the noble Baroness that nothing in the Bill rules out index-linking, but although it is common for private sector schemes to provide some element of index-linking—your Lordships will be aware that the Pensions Bill will impose some minimum requirement—it would be wrong of me to suggest that full index-linking was a common feature of private sector schemes.
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Obviously, I cannot say at this stage what terms an employer may wish to propose, but whatever happens the terms must be no less favourable overall. In coming to a view on whether or not the scheme is no less favourable employee representatives have to be consulted. I have no doubt that at that time they will make their views known on all of the features of the package. I say to the noble Baroness that if full index-linking was included in the new scheme it would reduce the scope for increasing other benefits. As she has pre-empted me, it is interesting to note that when last offered the opportunity, the overwhelming majority of Amersham's employees decided to join Amersham's own scheme, even though that scheme did not guarantee full index-linking.
We have moved a long way since the introduction in 1981 of the legislation relating to the pensions of Amersham's employees. We have written statutory safeguards into the Bill, to which we shall turn later. We shall ensure that employees can join a scheme that overall is no less favourable than the authority's scheme. Therefore, employees should have no fear about their future pension scheme.
Amendment No. 46 also suggests that employees who have already left the authority's employment should be allowed back into the authority's schemes. That is considered to be wholly unacceptable. It would reopen the basis on which the businesses were sold earlier. It would be a substantial breach of faith with the purchasers who bought the authority's operations on one basis only to be told several months later that, with regret, it would have to be rewritten. It would also create substantial uncertainty for the employees involved and potentially put their jobs at risk.
I have no doubt that the noble Baroness wishes to see the staff treated fairly. That is a desire which I endorse. However, given the range of options available, it would not appear to me to be the outcome of this amendment.
Lord Clinton-Davis: Is the Minister aware that in relation to the sales the situation was not resolved? The purchasers were under no illusion about that. They understood that this was a matter that Parliament had to consider and there was a possibility of the situation being resolved in a different direction from that which the Minister might prefer. They have gone into it with their eyes open. Consequently, I suggest to the Minister that that argument is not open to him tonight. Though I do not charge him with bad faith, my information is as I have recorded it.
Lord Fraser of Carmyllie: I am grateful to the noble Lord for not accusing me of bad faith in this matter, but what I seek to convey is the principle at the centre of what we want to do. While there are certain fixed points which we believe cannot be offered, such as full indexation, we shall ensure that employees who join any scheme find that overall the scheme is no less favourable than the authority's scheme. Clearly, if such a scheme is put forward, there will be full consultation.
Lord Peston: Happily, I am not in the position in which these employees will find themselves. I have an index-linked pension. I would be horrified if anything happened to take that away from me. One of the things

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I was told by my late mother when I started my career was that I should get a job with a good pension. It reminds one of the standards that applied in the old days when pensions were index-linked. One does not think about it when one is a young person, but the time comes when one finds that one draws a pension. This is a matter of serious concern to the individuals involved.
The Minister, his predecessor and his honourable friend in another place have all used expressions like "equivalent to or no less favourable than". If I were an individual employee of AEAT and believed that my pension was not equivalent or less favourable, whom would I sue? Would I take legal action against the successor body or the Government? Perhaps that is not an easy question to answer from the Dispatch Box at this time, but the employees may be quite interested to know the answer. It will be noted that I ask what an individual employee will do if he takes that view.
Lord Fraser of Carmyllie: The idea that following the change there will be an opportunity for each individual member of the pension fund to engage in a discussion about it and have an opportunity to sue, seems to be unrealistic. I have indicated, I hope not too harshly but clearly enough, that matters have moved on since the Amersham scheme. What I sought to do in drawing that parallel was to give broad reassurance to those who might be deeply suspicious, like the noble Lord's mother, that if any change was made it must necessarily be to the individual's disadvantage. I believe that approximately 90 per cent, of those in the Amersham case, when given the choice, selected the Amersham scheme. I believe that that ought to be a matter of reassurance and that when words such as "broadly", "comparable", "no less favourable than", or whatever it may be, are used, though they may not be identical, once the various benefits are looked at, individuals will not have serious cause to complain.
Lord Clinton-Davis: I ask the Minister to reflect on the fact that the Amersham International case is now quite considerably removed in time. I believe that it occurred in 1981. I differ from him on the interpretation of Amersham; but let us leave that aside. During the course of the passage of the Railways Bill, the Minister, although he did not participate in it, may well recall the furore that accompanied the discussion on pensions. I believe that the Government had to make concessions far wider than the provision made in this Bill. The Minister may say that one privatisation has nothing to do with another, but I believe that the employees of this enterprise may well ask why railway workers should achieve a better result, simply because Members of this House primarily were absolutely amazed by the way in which the Government went about it at the very beginning. Your Lordships on all sides in effect drummed into the Government the necessity to change their view.
I am convinced that the provision that is to be made for these employees is materially less good than that accomplished for the railway industry. That is not equitable. I believe that the Minister ought to look again at the situation which arose in the course of those
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debates and use his best endeavours to ensure that the people employed in this industry are not treated differently from employees in the railway industry. I believe that is a perfectly fair proposition to make. The Minister has been very fair this evening. Though he has not made concessions, he has said that he will look at various matters. All I ask him to do now is look again at this situation in the light of the debates which then took place. It would be wrong to differentiate between one group of workers, albeit far fewer in number in this instance, and those engaged in the railway industry. The Government had to give a great deal of thought to that. I am not satisfied that the end result was even proper in that case. However, the Government made one concession after another, and the result was infinitely better than that which could have been imagined at the beginning. I ask the Minister not to be hidebound by what appears in the Bill at the present time and to say that the Government will look at it again, without any commitment, to ensure that justice is done to these employees.
Lord Fraser of Carmyllie: The noble Lord, Lord Clinton-Davis, has the advantage of me. I confess that I do not have intimate knowledge of the details of the pension arrangements under the Railways Bill. The employees of AEA Technology have a proper concern that if they move from one pension scheme to another, what they receive at the end of the day is no less favourable than that which they enjoy at the moment. Paragraph 6 of Schedule 4 imposes a duty upon the Secretary of State or the authority to ensure that just that is secured.
I said previously that perhaps no one could sue, but I am advised that I may have mis-stated that point. Should an individual be dissatisfied, there might be a redress against the Secretary of State, or the authority, as appropriate. I give the undertaking to the noble Lord, Lord Clinton-Davis, that I shall look at what he said about the Railways Bill, because I do not know enough about it. I rest with the broad proposition that when one is looking at pension schemes, people moving from one to another should be allowed to see what they enjoyed previously and what they will enjoy, rather than looking at a different group of prospective pensioners.
9 p.m.
Baroness Turner of Camden: I thank the Minister for that response. We are glad that he has given an undertaking to look at what was agreed in relation to the Railways Act, because, as my noble friend Lord Clinton-Davis said, many concessions were obtained from the Government during the passage of that Bill. As a result, the railway employees on whose behalf we were speaking were much more satisfied than they were when the Bill first started.
The Minister says that the terms offered will be no less favourable. That is not necessarily the same as we are seeking. My noble friend Lord Peston made it clear that indexation matters a great deal to people in this situation. Public service employees value highly the fact that, generally speaking, their pensions are subject in payment to full indexation relative to the RPI. That does

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not apply generally throughout the private sector. However there are private sector schemes where it does apply.
In any event, I understand that under the TUPE regulations there is a commitment to provide comparable benefits. A comparable benefit must be that people have protection against inflation when their pensions are in payment. However we are obviously not going to press this matter at this time of night. We shall look forward to hearing what the Minister has to say on Report. It is to be hoped that by that time he will have had the opportunity to consider the arguments mounted tonight and to look at the situation with regard to the Railways Act. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 42 to 46A not moved.]
Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 47:
Page 30, line 2, after ("transferred") insert ("such that each year of service in the Authority pension scheme gives rise to at least one year of service in the pension scheme to which the amounts are transferred").
The noble Baroness said: It may be for the convenience of the Committee if I speak also to Amendments Nos. 51, 52, 53, 57, 58 and 59. The intention of the amendments is to give year-for-year transfer benefits from the authority pension scheme to the new one. Without the amendments, it is up to the Secretary of State or the authority to decide how transfer values to the new pension schemes are calculated.
It is possible that the Government would consult the Government Actuary, but the unions representing the employees are not all that happy about that. Their fears have already been made plain at previous stages of the Bill when it was discussed in the other place. Therefore a simple, easily understood formula is required, and this is the formula suggested. In view of what has been said on the previous amendments, I am afraid the Government are not likely to take kindly to Amendments Nos. 57 and 58.
The intention of those amendments is to compel a new scheme to provide like-for-like benefits, apart from injury and redundancy benefits which we understand cannot be part of a tax-exempt scheme. Without the amendments, the Secretary of State or the authority could trade off between the terms of the old and the new pension schemes and other terms and conditions of employment.
I understand that the Government position—I had some hint of it on the previous amendment—is that new pension schemes should be able to offer a different mix of benefits, but again that mix of benefits could result in the loss of index linking. As I have already said, the unions and the employees whom they represent would view that with a great deal of concern.
I understand that the Government may be relying on advice from the Government Actuary's Department, but the GAD bases its advice and its assumptions on the idea that inflation may never rise above 5 per cent, per annum. We all hope that it will not, but it may well do in the future. Therefore the employees concerned would
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value an index-linking arrangement without a ceiling of 5 per cent, per annum. I know that 5 per cent, is common in private sector schemes, but that has not been the case with public sector schemes. For those reasons we want to maintain the ability to have complete coverage for the future. I beg to move.
Lord Fraser of Carmyllie: When I spoke earlier to Amendment No. 16, to which the noble Lord, Lord Thomson, spoke, I made a number of observations relating to redundancy benefits. This is not his fault; it is entirely mine. When I said to him that the amendments did not add anything to the protection already available under the TUPE regulations, I was in fact referring to Amendments Nos. 14 and 15 which were not moved but which he may recall were part of the same group. Rather than write to the noble Lord and others later, it might be helpful if I were to clarify the position.
Under the Bill, employees will benefit from the protection given by TUPE. Their consent, or that of the trade union acting on their behalf, would be required before changes in the contractual redundancy terms could be made. I hope that that brief clarification is helpful.
Despite the fact that the amendment was moved briskly by the noble Baroness, perhaps I may take a moment or two to explain our position on pensions. That may save us time and allow for some consideration of the Government's position before we return to the matter on Report.
As I said previously, every privatisation and related set of pension provisions is different, but that is not to go back on what I have just said about the Railways Act. The provisions have to be tailored to the particular circumstances applying. We have sought to tailor the pension provisions in the Bill to the particular circumstances of AEA Technology.
Some public sector companies already had funded pension schemes which were in the private sector mould and so could be transferred and continued on privatisation. In some cases whole industries were being moved from the public to the private sector and the specialised nature of the work of those employees was likely to lead to movement between many new employers emerging from a single public-sector organisation.
In those circumstances it was not unreasonable that some additional protection was given to employees to ensure that their pension rights could continue to accrue on the same basis while they remained in that industry. However, protection of that kind has been very much the exception rather than the rule. In other privatizations—for example, the privatisation of the Property Services Agency —there were no specific pensions provisions at all because they were not considered to be either appropriate or necessary.
The United Kingdom Atomic Energy Authority pension schemes cannot be directly converted into private sector tax exempt occupational pension schemes. It would, therefore, not be possible to replicate the authority schemes in the private sector. At the risk of repeating myself, the approach that we have taken is to

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ensure that those employees transferring who participate in an authority scheme will be able to join another pension scheme, either a new or an existing scheme, operated by their new employer. The Bill provides the protection that it must be no less favourable overall than the authority scheme.
The phrase "no less favourable" means that the benefits overall must be at least equivalent to the benefits in the authority scheme, although, as the noble Baroness indicated, the mix of those benefits may be different. For example, if a pension in the new scheme was based on one-sixtieth of pensionable final pay for each year of service rather than one-eightieth, as in the authority schemes, that could be a significant improvement. There would then need to be a reduction in other benefits to compensate for that improvement.
The Government Actuary, who has wide experience in these matters, would be asked to verify that the new scheme met the requirements of the schedule; that is, taken as a whole, that it was no less favourable than the authority scheme. The Government Actuary is completely independent and impartial in these matters. In coming to his view, he would make the criteria that he had used available so that interested parties could scrutinise them for themselves. I do believe that the actuary is independent, but should there be any suspicion that he is not, I believe that that assurance is most important.
The amendments proposed would restrict the ability of the vendor to decide that a new scheme was comparable when the provisions of the scheme were taken as a whole. Leaving aside redundancy and injury benefits, they would effectively require each and every other benefit to be at least as good as at present. That is not possible. As I have already indicated, there are some features of the authority schemes which cannot be reproduced in a tax exempt occupational pension scheme. While they include certain redundancy and injury benefits as reflected in the noble Baroness's amendments, they are not the only examples of the point. There are other benefits in the authority schemes which mean that if the amendments were accepted the new scheme could not be a tax exempt scheme.
I am not sure that employees would thank the noble Baroness if they had to pay tax on their own and their employers' pension contributions and also on lump sum benefits paid from the scheme. That might be the effect of the amendments and represents one very good reason why they are unacceptable.
I have a number of further detailed points to make, but I believe that I have probably spelled out sufficiently our reservations on the amendments. Clearly, the noble Baroness will want to reflect on what I have said. Indeed, I expect that she will want to return to the matter at a later stage. However, for present purposes I hope that I have given sufficient explanation on at least some of the amendments and certainly of the fundamental basis upon which exception has to be taken to them by the Government.
Baroness Turner of Camden: I am obliged to the Minister for the statement that he made in response to the amendments. We shall certainly read very carefully
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what he has said in Hansard when we get the opportunity. However, there are one or two points which I should like to raise with the noble and learned Lord and I wonder whether now is the appropriate time.
Can the Minister tell us whether the Government have sought the views of the trustees in relation to their propositions? The noble and learned Lord mentioned that the mix of benefits would be different. Of course, we realised that fact and that is one of the reasons why we tabled the amendments. We did not know what the mix would be and we felt that it could conceivably prove to be not as popular with the staff as the present arrangements.
The Minister said that there would be a sixtieth instead of an eightieth scheme, with the public sector being in eightieths, and that that would be of benefit. But, on the other hand, I would remind the noble and learned Lord that, if it is a standard one-eightieth scheme in the public sector, that is usually because there is an opportunity to have a lump sum commutation which goes with the eightieths but which amounts to sixtieths when it really comes to it. Therefore, we would not expect to have any adjustments made, so to speak, to pay for sixtieths. Presumably the lump sum would disappear because one-eightieths would be replaced by sixtieths. Can the Minister confirm, as we are in Committee, that there will be negotiations with the unions with regard to the terms of these schemes? It is important that there should be an opportunity to negotiate on the new mix which is proposed as regards the employees. Have the trustees expressed a view and have the Government asked for that view?
9.15 p.m.
Lord Fraser of Carmyllie: So far as I am aware, the trustees have not been consulted. First of all, I am advised that there are no trustees under the authority scheme. But the more fundamental point is that before anyone could offer up a judgment we would have to see what is being proposed. As I have indicated, the Government Actuary in his independent position is probably best placed to do that. Of course if there are any changes there would be an opportunity for some discussion and negotiation on them. What it is important that we establish within this Bill is that there will not be a significant diminution of the rights of employees as they move from one pension scheme to another.
Baroness Turner of Camden: Before the noble and learned Lord sits down, he said there would not be a significant diminution; we do not want any diminution at all.
Lord Fraser of Carmyllie: I apologise to the noble Baroness. I was looking for an elegant variation which clearly was not elegant. I shall stick to the terminology that is provided within the Bill and say something that is no less favourable. I shall stick with that terminology; it is probably safer.
Baroness Turner of Camden: I note what the Minister has said. As I indicated earlier, we shall withdraw these amendments and return to the matter on

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Report. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 48:
Page 30, line 11, at end insert ("which shall include any trade unions representing any such employees.")
The noble Baroness said: In moving Amendment No. 48 I wish to speak also to Amendments Nos. 50, 54, 56, 60 and 62. This represents a kind of fallback position because we intended this option to apply if the Government did not like our preceding amendments. It provides for consultation with the unions regarding amendment to pension provision. It is a good proposition in that it allows flexibility in a way that perhaps the Government did not feel the previous amendments did. It answers the Government's objections which they made in another place that unions may unreasonably exercise a veto, as Amendment No. 50 clearly indicates that there is a case for overruling what is proposed if it is felt that there has been an unreasonable veto. That is provided for in Amendment No. 50. The Minister has indicated in his previous response that the matter would in any event be subject to negotiation with the unions representing the staff, and I hope that in those circumstances he will be prepared to write this onto the face of the Bill to indicate that that is the Government's position. I beg to move.
Lord Fraser of Carmyllie: I appreciate the desire of the noble Baroness to ensure that trade unions are consulted by the Secretary of State or the authority. I believe I can set her mind at rest. It is undoubtedly the case that the trade unions are persons who, under the provisions of the Bill, represent the employees. I can therefore assure the noble Baroness that all the relevant trade unions will be consulted and, accordingly, her amendments on this point are unnecessary.
Amendments Nos. 50, 56 and 62 would in effect give the unions, or indeed any other person consulted, a power of veto over the direction to be issued to allow employees to remain in the authority's pension schemes and over the shape of the new pension scheme. I have noted, too, that the noble Baroness has made a subtle change to the amendments compared with those discussed in another place.
Lord Clinton-Davis: She is just more subtle.
Lord Fraser of Carmyllie: Indeed, she is much more subtle. She has added the phrase,
"unless that person has unreasonably withheld his satisfaction".
But that does not really change the effect of the amendments. What may appear to be reasonable to one person may not be to another. The amendment would be a recipe for litigation. Moreover, a person consulted may have reason to be dissatisfied with a particular aspect of a new scheme, however minor, even when it was perfectly reasonable for the Secretary of State to take the view that the benefits provided by the new scheme were overall no less favourable. This amendment would, therefore, still give those being consulted an effective power of veto unless they had no reason at all not to be dissatisfied.
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We are placing a statutory duty on the Secretary of State or the authority to be satisfied that there is a scheme which, taken as a whole, is no less favourable than the authority scheme. This duty reflects the long-standing practice of the Government. However, our intention is to reassure employees by placing it on the face of the Bill. With that explanation, I hope that the noble Baroness can withdraw her amendment.
Lord Peston: I am certain that my noble friend will withdraw the amendment but I want to make certain that I did not mishear what the Minister said. He said that where consultation with the representatives of employees is specified in the Bill, that means without a shadow of doubt the trade unions, where they exist. I think he said that, but I was not listening quite as attentively as I should. Will he confirm that that is what he said?
Lord Fraser of Carmyllie: Unless I said what I did not intend to say, what I said was that it was undoubtedly the case that, under the provisions of the Bill, trade unions are persons who represent employees. Accordingly, I give the assurance to the noble Lord, which will be welcome to him, that all the relevant trade unions will be consulted. I therefore invite the noble Baroness to withdraw the amendment on the basis that it is unnecessary.
Baroness Turner of Camden: I am much obliged to the Minister for that assurance. On the basis of that assurance, I am happy to withdraw the amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 49 to 62 not moved.]
Schedule 4 agreed to.
Clause 10 [Extinguishment of certain liabilities]:
[Amendments Nos. 63 and 64 not moved.]
Clause 10 agreed to.
Clause 11 [Membership of the Authority]:
[Amendments Nos. 65 and 66 not moved.]
Clause 11 agreed to.
Remaining clauses agreed to.
House resumed: Bill reported without amendment.

Sale of Goods (Amendment) Bill [H.L.]
Returned from the Commons agreed to.
Child Support Bill
Returned from the Commons with the amendments agreed to.

Criminal Appeal Bill
Returned from the Commons with certain amendments disagreed to with reasons for such disagreement and with the remaining amendments agreed to; the reasons ordered to be printed.
House adjourned at twenty-two minutes past nine o'clock.