Lords Sitting of 5 June 1995

Preamble
Reassembling after the Spring Bank Holiday Recess, the House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Oxford.

Rural Roads: Maintenance
The Marquess of Aberdeen and Temair The Marquess of Aberdeen and Temair asked Her Majesty's Government:
What proposals they have to improve the state of rural roads which are now in poor condition due to the lack of money available to county councils.
The Parliamentary Under-Secretary of State, Department of Transport (Viscount Goschen): My Lords, the Government provide considerable support to counties in respect of their highways duties, but we believe that it must be for local authorities to decide their own local spending priorities within their budgets.
The Marquess of Aberdeen and Temair: My Lords, since putting down the Question I have had much support not only from my local council in Berkshire but from the British Road Federation Ltd., which sent me a five-page detail of the serious deterioration of roads, in particular rural and country roads. Is the Minister aware that unless funds become available very soon to local councils the serious deterioration will make roads quite unusable and the cost of keeping them up will be beyond the scope of government or local government?
Viscount Goschen: My Lords, the point is that funds are made available. Within those funds local authorities must determine their own priorities. In considering the Question it is important to note that the 1994 report of the National Road Maintenance Condition Survey indicated a steady overall improvement in the condition of rural roads since the mid-1980s.
Lord Monkswell: My Lords, bearing in mind the reorganisation of local government which the Government have engendered over the past couple of years, will the Government give the House an indication of the extra funds being made available to the new smaller district authorities for maintaining roads to compensate for the reduction in economies of scale in the county councils?
Viscount Goschen: My Lords, proper allocation of resources is made by central government by way of the revenue support grant, based on the standard spending assessment. That assessment is used to calculate the sum of money provided by central government in terms of the revenue support grant. Beyond that it really must be for local authorities to decide how to spend their money.
Baroness Gardner of Parkes: My Lords, does the Minister agree that in country areas where little public transport is available people are far more dependent on the use of their local roads than in city areas?
Viscount Goschen: My Lords, yes, where public transport is not available, people are naturally more dependent on the use of their roads. I believe that the National Road Maintenance Condition Survey, to which I referred earlier, gives an indication of the quality of our local roads and, indeed, indicates that it has improved since the mid-1980s.
Lord Walpole: My Lords, while I agree with the Minister that some rural roads may not be too bad, does he not think that it would be a better use of resources in rural areas if county councils and the relevant authorities maintained their A and B roads to the present standard, developed a series of tertiary routes—a system that has gone out of fashion—and left the remainder for access only, to be maintained to a low standard? At present such a proposal is, I know, against the law because a county council which fails to maintain a road can be sued. But is it not more sensible to maintain a few roads to a higher standard and leave other roads for access only?
Viscount Goschen: My Lords, it is important to note that central government are, of course, the relevant highway authority for trunk roads. Beyond that we already provide direct funding to local authorities in respect of structural maintenance of roads of more than local importance, and for bridge assessment and strengthening on all roads. Beyond that, for roads for which the local authority is the highway authority it must be a local decision in respect of the local circumstances.
Baroness Farrington of Ribbleton: My Lords, when local authorities state that there are inadequate funds for social, education, fire, environmental health, and maintenance of roads services, Government Ministers constantly fall back on the statement that it is a matter for local authorities to determine. Does not the Minister agree that if the total amount is inadequate—people want adequate fire and education services—the Government cannot hide behind their constant reiteration that local authorities can take the funds intended for some other purpose?
Viscount Goschen: My Lords, there will always be calls for more public expenditure. Ministers are responsible for the level of money that is spent and local authorities have their role to play in constraining public expenditure.
Lord Stoddart of Swindon: My Lords, in the supplementary to his original Question the noble Marquess mentioned that he had received representations from Berkshire County Council. Is the noble Viscount aware that Berkshire County Council wastes millions of pounds in building unnecessary road schemes which simply attract traffic? If some of that money were diverted to improving rural roads it would be far better for the county.
Viscount Goschen: My Lords, local authorities must be responsible for their own decisions. I believe that the noble Lord's question should be addressed to the local authority, not to the Government.
Baroness Thomas of Walliswood: My Lords, is the Minister aware that, in relation to the total capital value of our roads, most local authorities are able to put into road

1175
maintenance a sum which would not be considered anything like sufficient if it were compared with the relative amount that private home owners put into maintaining their homes? Does the Minister think that the way in which the money is allocated by government sufficiently reflects the weight of traffic on the road network of local authorities? That weight of traffic is the main cause of the destruction of road surfaces.
Viscount Goschen: My Lords, I am afraid that I do not accept the noble Baroness's comparison. Traffic levels are taken into account in deciding the level of money which is provided via the revenue support grant.
Lord Clinton-Davis: My Lords, is the Minister aware that the AA and Transport 2000 do not share his expressions—which, with respect, are rather complacent—about the state of rural roads? Is he aware that the decline in accidents which has occurred on urban roads is far less for rural roads? A great deal of that has something to do with the failure to look after the roads and maintain them properly. Local authorities do not share the Minister's view that they have sufficient spending provision to be able to keep the roads properly signed and in good condition.
Viscount Goschen: My Lords, local authorities are responsible for their own roads for which they are the local highway authority. We believe that adequate funding is available from central government. Beyond that, it must be for the local authorities to decide their own spending commitments. If the noble Lord feels that a particular local authority is not fulfilling its duty, then he must take it up with that local authority. We provide specific safety funding. Since 1992 the department has allocated £193 million to local authorities to spend on local safety schemes.
Earl Russell: My Lords, is the Minister aware that local authority capping limits are subject to judicial review?
Viscount Goschen: My Lords, I am sure that the House is grateful to the noble Earl for giving us that information.

EU Brussels Offices: Costs
2.45 p.m.
Lord Boyd-Carpenter Lord Boyd-Carpenter asked Her Majesty's Government:
What was the total annual cost of the Brussels offices of the European Union for the last year for which figures are available; and what was the corresponding figure for five years prior to that date.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, the total cost in 1993 was £416 million. The total cost in 1988 was £213 million. At 1988 prices, the figure for 1993 would be £318 million, which represents an average increase of 8 per cent. per annum, which was within the expenditure ceilings for the period.
Lord Boyd-Carpenter: My Lords, I thank my noble friend for that reply. Can she say whether Her Majesty's Government are exerting themselves to restrain that growth of expenditure which costs the British taxpayer a substantial amount?
Baroness Chalker of Wallasey: Yes, my Lords. It is largely as a result of UK pressure that we have succeeded in improving the financial management in a number of ways, including making better use of the budget discharge procedures and the work of the European Court of Auditors. So we are certainly working in the direction that my noble friend wishes and so is the new commissioner in charge of that area of expenditure.
Lord Bruce of Donington: My Lords, the Treasury has a permanent representative or permanent staff in the budget department of the European Commission. Will the Minister confirm that the figures that she has given include all capital expenditure on new buildings, whether obtained by loan from the EIB or by virtue of guarantees? Will she confirm that the entire expenditure is accounted for in the European budget? For the year 1994, that budget contained a number of blanks against expenditure on new buildings. As the noble Baroness knows, some of that was incurred illegally and in breach of the financial regulations applicable to the institutions.
Baroness Chalker of Wallasey: My Lords, the noble Lord knows that illegal expenditure is being investigated at present. The point is that since the Community has increased from six members—for whose Council the Charlemagne building was built—to 15 members, it obviously needs additional houseroom. In order that that new building should not be found too small with further expansion to the east, provision has been made for more than 15 members. Therefore, at the moment the building may seem a little large but I am confident that the new Council building has been properly built. I am also confident that the contract was on terms favourable to the Council: there is only a peppercorn rent of one Belgian franc, the equivalent of 2p, to be paid on the land which is available; the Council will become the owner of the land and there will be no rent. The parliament buildings are another matter which is under close control and will remain so.
Lord Peston: My Lords, the noble Baroness said that the figures were within the agreed limits. Can she clarify that? Is it the nominal figure that is within the agreed limit or is it the real figure? Is the 8 per cent. per annum the real agreed limit? For how long has the figure been agreed? Within that, can the noble Baroness assure us that the value of what the office does is increasing at least at 8 per cent. per annum in real terms?
Baroness Chalker of Wallasey: My Lords, I am afraid that it is not for me to answer yes to the noble Lord's last question. I can, however, assure him that the figures are real. They have been calculated in real terms, and I believe that they cover all the costs involved.
Lord Peston: My Lords, can the noble Baroness repeat for how long that growth path has been agreed? Will the real figure be 8 per cent. indefinitely?
Baroness Chalker of Wallasey: My Lords, we would hope that it is not so. It certainly comes within the Edinburgh ceilings and is therefore limited until 1998.
Lord Campbell of Alloway: My Lords, apart from office accommodation, do we now have to envisage expenditure on interpreters into 15 languages and the translation of all documents into 15 languages; or is there a limited area of language choice, for instance into five languages?
Baroness Chalker of Wallasey: My Lords, I find that, now, with not 15 but 11 languages used in the Community, there are something over 100 manners of translation. Documents have to be in all 11 languages, and that is obviously one of the increased costs with which we have to cope.
Lord Walpole: My Lords, can the noble Baroness give the same figures for a similar multifunctional organisation; namely, the Scottish Office?
Baroness Chalker of Wallasey: My Lords, I cannot give that information without notice, but I will let the noble Lord have the figures and place them in the Library.
Lord Shaw of Northstead: My Lords, can my noble friend say whether the reflection group is considering how far the Commission and others are seeking to bring greater responsibility to national governments to look after the grants, and the proper application of grants, within their own countries?
Baroness Chalker of Wallasey: My Lords, there is no reason why the reflection group, which began its processes only on Saturday, should not so look. There is a very long way to go. One thing, with the help of the new commissioner, we have been able to do is to make many other countries as aware of the need for tight budgeting and the proper auditing of all expenditure; and we shall continue to do so.
Lord Stoddart of Swindon: My Lords, can the noble Baroness clarify this matter for me? When I was in Brussels with the IGC sub-committee, I saw the enormous edifice that was being built for the Parliament, the Council and the Commission. Obviously, it will cost hundreds of millions of pounds. Did the figures that the Minister gave at the outset include a projection of the costs of that great edifice; and, if not, are there any estimates of what the new offices will cost the taxpayers of Europe?
Baroness Chalker of Wallasey: My Lords, the figures gave at the beginning were in answer to my noble friend's Question about the costs of the buildings of the European Union in Brussels on an annual basis. I gave the figure for five years ago and the figures for 1993. The figures that we have for the 19 buildings that the European Parliament rents are not included so far as I know beyond that for 1998. As I gave an annual figure, I am obviously not giving a total for the next five years or for any other single period.
As regards the building for the Council in Brussels—the matter that has attracted most comment, some of it critical—the cost is £237 million at 1989 prices but at current exchange rates.
Lord Whaddon: My Lords, will the noble Baroness clarify this point? I believe that she said earlier that the buildings were being constructed with more accommodation than is needed for the present membership. For how many members are they being constructed?
Baroness Chalker of Wallasey: My Lords, certainly, to be flexible, the number is between another three or four and another seven or eight.

Organophosphate Pesticides
2.54 p.m.
The Countess of Mar The Countess of Mar asked Her Majesty's Government:
What action they propose for those individuals suffering chronic ill health as a result of long-term exposure to organophosphate pesticides following the publication of An Investigation into the Possible Chronic Neuropsychological and Neurological Effects of Occupational Exposure to Organophosphates in Sheep Farmers by the Institute of Occupational Health, University of Birmingham.
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe): The Government are pleased that this report has now been published and welcome the contribution it makes to the body of information on organophosphate dips. The Veterinary Products Committee was immediately asked to consider the report and its advice has now been received. Health and agriculture Ministers will wish to consider that advice carefully before making any announcement.
The Countess of Mar: My Lords, I thank the noble Earl for that reply. But does he appreciate that the results of this research indicate that subtle damage is being done to ostensibly healthy farmers? Does he accept that anyone who had only a sign of illness was cut out from the research study? In view of the fact that large numbers of farmers complain of gross damage to their central and peripheral nervous systems, will the Minister ask his right honourable friend the Secretary of State for Health whether she will consider setting up regional centres with multi-disciplinary teams with an expertise in toxicology so that GPs can report patients to those learns since GPs themselves have very little training in toxicology? Does he agree that in that way those patients could be helped? At the moment they are receiving no help at all.
Earl Howe: My Lords, clearly I cannot comment on the substance of the report until the Government's response has been published. With regard to the second part of the noble Countess's question, I shall be happy to consider, with my noble friend and my right honourable friend, whether there are more effective ways of co-ordinating reports of suspected adverse reactions, and I shall write to the noble Countess.
Lord Gallacher: My Lords, in view of previous and continuing concern about organophosphate pesticides, which now includes levels of OP in insecticides found in some carrots—I emphasise "some"—will the

1179
Government urgently consider the transfer of lead responsibility in this matter from the Ministry of Agriculture to the Department of Health?
Earl Howe: My Lords, the key principle in matters such as this is that the Government should make decisions based on scientific advice. In many cases it is a matter not just for agriculture Ministers but for Ministers in the Department of Health as well. The Veterinary Products Committee is a mechanism that has served us well over the years. In this instance it has examined the question of OP dips at considerable length with the advice of medical specialists. It concluded that there was no justification for a ban. As the noble Lord will be aware, the Government have sought an urgent review by the VPC of the latest findings from the IoH. As I have said, the Government's official response will be published as soon as possible. There is effective co-ordination already.
Earl Russell: My Lords, does the Minister agree that the amount of work that it has taken the noble Countess to get information on this subject has been great enough to strengthen the case for a freedom of information Act?
Earl Howe: My Lords, as usual, the noble Earl is ahead of me. However, I should like to say—I am sure that noble Lords will share this view—that the work that the noble Countess has put in on this issue has been of great benefit. Certainly the Government take very seriously the concerns that she has raised.
The Countess of Mar: My Lords, I very much appreciate the Minister's sentiments and those of all noble Lords. Will he stress, when he speaks to his right honourable friend, that we are looking for diagnosis and treatment for the people who currently believe that they are suffering from organophosphate poisoning? If that treatment can be given in regional centres, that would be a great help.
Earl Howe: My Lords, I have already said that I shall give constructive consideration to that idea. The noble Countess will be aware that GPs have been notified at least twice in the past four years or so of the hazards associated with the misuse of OPs. When the Government's response to the IoH report is published, clearly we shall be in a position to judge whether further notification is advisable.

Former Yugoslavia: British Armed Forces
2.58 p.m.
Lord Campbell of Croy Lord Campbell of Croy asked Her Majesty's Government:
Whether they propose to change the numbers or the role of British Armed Forces involved in peacekeeping operations in the former Yugoslavia.
The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Henley): My Lords, as we announced last week, around 1,000 additional British personnel are deploying to Bosnia to reinforce our existing contingent. These men and women will carry out
1180
the present United Nations humanitarian and peacekeeping mandate and will enhance UNPROFOR's ability to protect itself.
Lord Campbell of Croy: My Lords, I thank my noble friend for his reply, especially as a lot has happened since this Question was tabled and much since last Wednesday's debate. How much discretion will General Smith have to authorise responding with field artillery—now available for the first time—within the welcome flexibility provided by a rapid reaction force, in support of the peacekeeping troops, who have hitherto been lightly armed and extremely vulnerable?
Lord Henley: My Lords, as my noble friend makes quite clear—I agree with him—much has happened since his Question was tabled and since the debate in this House last Wednesday. As regards his specific Question about the discretion available to the United Nations commander in Bosnia, General Rupert Smith, obviously General Smith is bound by the UN mandate. As my right honourable friend the Prime Minister made quite clear last Wednesday, the protection force must be able to protect itself and take whatever action is necessary and justifiable in self-defence. Certainly when it does so it will have the unqualified backing of Her Majesty's Government. With regard to the detailed use of any individual weapon or weapons system, my noble friend will understand that I prefer not to comment.
Lord Cledwyn of Penrhos: My Lords, if events move towards an all-out war between the Bosnian Serbs and the other factions in that unhappy country, what will be the advice of Her Majesty's Government to the Security Council?
Lord Henley: My Lords, as we have made clear on a number of occasions, we do not believe that it would be possible for our troops, or for that matter the other forces from other countries taking part in UNPROFOR, to remain in that country should the unhappy situation arise to which the noble Lord refers. Their position would no longer be tenable.
Lord Chalfont: My Lords, although many of us share the concerns that are being expressed, now that a substantial British force—additional British troops—is being deployed in the theatre of operations, does the Minister agree that it would be wise for us all to observe a brief period of silence and not say or do anything to make their already unenviable task more difficult and more dangerous?
Lord Henley: My Lords, I fully agree with the noble Lord. Many commentators both in this House and elsewhere might bear his words in mind.
Lord Merlyn-Rees: My Lords, what is the legal status of those British troops now sent to that theatre who are not subject to the UN mandate?
Lord Henley: My Lords, they are all subject to the UN mandate. They all come within the ceiling imposed by the UN. As the noble Lord will be aware, we are not up to that ceiling. Obviously if we wish to send more troops—we have offered 24 Air Mobile Brigade—we should need to seek agreement from the United Nations.
Lord Elis-Thomas: My Lords, we welcome warmly the release of certain hostages, including the RWF hostages. Will the Minister now assure the House that all possible international diplomatic pressure is being placed upon possible intermediaries who can deal directly with the Bosnian Serbs, particularly in view of the reported failure of a UN mission this morning?
Lord Henley: My Lords, like the noble Lord, I welcome the release of a number of hostages and particularly the release of something of the order of one third of those who are British hostages. I repeat the assurance that I gave to the noble Lord when we debated these matters on Wednesday; namely, that all possible routes will be pursued in seeking the release of those hostages and certainly all possible diplomatic avenues.
Lord Richard: My Lords, will the Minister accept that I do not entirely follow what he and the Government are trying to say? Does he recall that in the debate last Wednesday I asked specifically whether the result of the reinforcement meant that the number of British UN troops in Yugoslavia would have increased from 3,400 to something like 9,400? It will be within the recollection of the House that I thought—I believe that everybody would have thought—that I received an affirmative answer to that question. Is that the position or is it not the position? We understand, as the Minister told us, that the 1,000 troops are to be part of the British UN contingent. What is the precise status of the 5,500 other British troops who apparently will be used in Bosnia?
Lord Henley: My Lords, I believe we made it quite clear last Wednesday—I am sorry that the noble Lord did riot understand—that we are in the process of deploying those 1,000 troops that I mentioned under the UN mandate. There are roughly a further 5,500 troops of 24 Air Mobile Brigade which we have offered to the United Nations. That matter is being considered and obviously the United Nations would have to raise the ceiling of the number of forces permissible in the former Yugoslavia should it wish them to be deployed.
Lord Richard: My Lords, so was I wrong last Wednesday in assuming that 9,500 represented the number of British UN troops? If so, it is a great pity that the noble Lord did not tell me then.
Lord Henley: My Lords, I am sorry if the noble Lord was somewhat confused about these matters. He is trying to make a mountain out of a molehill. I made clear then and I make clear now that we are in the process of deploying some 1,000 troops. The others have been offered to the United Nations. That was made clear in this House and in another place last Wednesday. I think that the noble Lord is wrong to try to imply that he was misled on that occasion.
Lord Mayhew: My Lords, will the noble Lord tell us what help the United Nations can expect from the United States since the most recent pronouncement of President Clinton? Does he agree that if the United States had shown something of the resolution of France, Britain and other countries, the prospects would now be much better?
Lord Henley: My Lords, I believe that the noble Lord is wrong to criticise our allies in the United States. They have offered considerable support over the years as we
1182
have dealt with this problem. I do not feel that anything is served by making criticisms of that kind. We are grateful for the support that they have offered and for the support offered from the French and other troop contributing nations.
Lord Kennet: My Lords, one of the things that has happened since last Saturday has been a meeting of defence Ministers in Brussels, which took far-reaching decisions. Does Russia go along with those decisions?
Lord Henley: My Lords, we are aware of the meeting to which the noble Lord referred. It took place in Paris on Saturday. The Russians were represented by an observer. Since that observer raised no comments, we have nothing to show that they did not approve of the conclusions of that meeting. I can give the noble Lord an assurance that my right honourable friend the Foreign Secretary will meet Kozyrev on Wednesday when he comes to London. Certainly he will make it quite clear to them that we see the Russian position as being of extreme importance. We should certainly like them to use their influence in both Belgrade and Pale.
Lord Craig of Radley: My Lords, will Her Majesty's Government accept that, if the situation in Bosnia were to deteriorate further, the British forces operating in Bosnia or earmarked for Bosnia may have to be given rules of engagement which lie outside those necessary to operate the United Nations mandate?
Lord Henley: My Lords, the noble and gallant Lord will be aware that we do not comment on rules of engagement in these matters. I can assure him that should it be necessary to seek to withdraw our forces and the United Nations forces from Bosnia should the position worsen, the planning for such a withdrawal certainly continues as a precautionary measure.

Disability Discrimination Bill
3.7 p.m.
The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That it be an instruction to the Committee of the Whole House to whom the Disability Discrimination Bill has been committed that they consider the Bill in the following order—

Clause 1,

Schedule 1,

Clauses 2 to 23,

Schedule 3,

Clauses 24 to 40,

Schedule 2,

Schedules 4 to 6.—(Lord Mackay of Ardbrecknish.)

On Question, Motion agreed to.

Employment Rights Bill [H.L.]
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, I beg to move that this Bill be now read a second time.
This Bill is the first of two linked consolidation Bills on the Order Paper in my name. If I may, I shall speak to them both together, and then move the second formally.
These two Bills restate most of the employment legislation which remained unconsolidated after the Trade Union and Labour Relations (Consolidation) Act 1992. Although the 1992 Act did include some provisions about individual employment rights and the tribunal system for employment cases, it did so only to the extent that they related to the other matters with which the Act dealt. The Employment Rights Bill now before your Lordships' House consolidates the remaining provisions of the Employment Protection (Consolidation) Act 1978 about the rights of employers and employees together with three sets of free-standing provisions about workers' rights.
The Act of 1978 has been substantially amended, and it has become increasingly difficult for practitioners in employment law, not to mention employers (in particular small businesses) and employees, to find their way around the statutory provisions. The consolidation of a field of law where individuals often have to act without professional advice will be very welcome, and I should like to take this opportunity to thank the draftsman for continuing this important consolidation work.
In the 1994 Green Paper, Resolving Employment Rights Disputes, the Government included a commitment to bring forward legislation to consolidate individual employment rights legislation at the earliest practicable opportunity. The introduction of the Employment Rights Bill fulfils that commitment. If your Lordships are content to give these Bills a Second Reading, they will be referred in the usual way to the Joint Committee on Consolidation Bills. I commend the Bills to your Lordships.
Moved, That the Bill he now read a second time.—(The Lord Chancellor.)
Baroness Turner of Camden: My Lords, I thank the noble and learned Lord for introducing these two Bills. Obviously it is to the advantage of everybody concerned with employment law to have them consolidated into two separate Bills. I should like to raise one question in regard to the Industrial Tribunals Bill. As I have raised these issues before, I do not suppose the noble and learned Lord will be surprised.
The Industrial Tribunals Bill also covers the Employment Arbitration Tribunal. What continues to concern me in regard to EAT and IT operations is the length of time it still takes for cases to be resolved. Industrial tribunal cases still take some time to be heard, but in relation to appeals to the EAT it can take a long time before a case is finally resolved.
Technically it is possible for an industrial tribunal to order reinstatement. If an employee has to wait while a case proceeds to appeal in an issue where reinstatement has been ordered, it is not realistic to expect that to be considered and agreed upon if the EAT takes around three years to hear the case. The other issue is that employers
1184
themselves can appeal and, if an employer appeals against an IT case which has been resolved in favour of the employee, it is a bit hard on the employee to have to wait a number of years before the issue is resolved on appeal, particularly as I understand that no interest is payable on any amount awarded.
I understand that further judges have been appointed—we raised this issue some time ago in your Lordships' House—but the numbers still do not seem to be sufficient. I therefore appeal to the noble and learned Lord to give this issue some consideration. Otherwise we welcome the consolidation of these Bills into this form and thank those who are responsible for the drafting.
The Lord Chancellor: My Lords, as the noble Baroness is aware, the need for judicial resources in the Employment Appeal Tribunal was one of the matters considered by the working party set up by my noble and learned friend the Lord Chief Justice and myself some time ago, which resulted in a substantial increase in the judicial power of the High Court. One result of that has been to reduce substantially the waiting time for cases being heard by the Employment Appeal Tribunal. I should like to see that waiting time reduced still further, but, as the noble Baroness is aware, there are many calls on the judicial strength of the High Court and the question of how many judges should be in the Employment Appeal Tribunal is one that must be reviewed from time to time. The noble Baroness has my assurance that I shall keep under review this important area of High Court judge deployment. I commend the Bill to the House.
On Question, Bill read a second time, and committed to the Joint Committee on Consolidation Bills.

Industrial Tribunals Bill [H.L.]
The Lord Chancellor: My Lords, I beg to move that this Bill be now read a second time. I have already referred to this Bill and I commend it to the House.
Moved, That the Bill be now read a second time.—(The Lord Chancellor.)
On Question, Bill read a second time and committed to the Joint Committee on Consolidation Bills.

Proceeds of Crime Bill [H.L.]
Lord Chesham: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Lord Chesham.)
On Question, Motion agreed to.

Human Tissue (Amendment) Bill [H.L.]
Lord Finsberg: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Lord Finsberg.)
On Question, Motion agreed to.

Child Support Bill
3.15 p.m.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that this Bill be now read a second time.
The 1991 Child Support Act set up a new child maintenance system. At that time the existing system of child maintenance was clearly failing large numbers of children. Almost three in four parents with care received not a penny in regular maintenance for their children. The proportion was lower still—and falling even further as time went by—for those families receiving income support.
The system for assessing maintenance was fragmented with a variety of levels of courts involved. This resulted in inconsistent awards of maintenance with people in similar circumstances being required to pay vastly different amounts of maintenance depending on, first, the court attended; secondly, which magistrate or judge they appeared before; or, thirdly, what agreement DSS officers could reach with absent parents.
When maintenance orders were made under the old system, parents faced a return to court if they wished to vary their order, or if enforcement action were needed, with no guarantee of success. The new system was to be based on a maintenance formula which was intended to ensure consistency in assessing the level of maintenance payable. The Child Support Agency was set up to provide a "one stop" service for the assessment and collection of child maintenance. It is easy, with the benefit of hindsight, to see that there were potential problems with the child support system. However, at the time it was introduced, the proposed system was widely supported, although I understand your Lordships had reservations which were expressed during the passage of the Bill.
The Child Support Agency has now been operating for two years and although it has had a less than comfortable time since its inception it is already achieving a great deal. The need for the new child maintenance system has been borne out by the high number and proportion of cases taken on by the agency where no maintenance was being paid. Of the 400,000 cases taken on in 1994–95, 77 per cent. were not receiving maintenance. In 1994–95 the agency collected over £70 million in maintenance, which compares favourably with the £13 million the previous year. Additionally, £100 million in child maintenance, arising from agency assessments, was paid directly to people with care by absent parents. This represents a
1186
significant contribution to maintaining children and is illustrative of the agency's improved performance in 1994–95.
The Government have monitored progress closely: first, when, during the first year, we identified cause for concern as to the operation of the child support scheme we introduced reforms rapidly; secondly, in February 1994 we reduced the level of many assessments, allowed absent parents more time to adjust to increased bills and stopped charging some collection fees; thirdly, we responded to parliamentary concerns and in some respects went further than the recommendations of the Social Security Select Committee in its first report on the agency; fourthly, we continued to monitor the position closely and considered very carefully the Social Security Select Committee's second report.
We consequently published the White Paper, Improving Child Support, in January, which set out our plans for the reform of child maintenance provision. Those plans encompassed subordinate legislation to bring in speedily those measures which could be effected through regulation and primary legislation for those that could not.
In April we debated the important first step in implementing these measures in a package of regulations which changed the formula by: first, ensuring that absent parents normally keep at least 70 per cent. of their net income after maintenance; secondly, introducing a broad-brush allowance in recognition of property settlements and towards high travel-to-work costs; thirdly, allowing for the housing costs of new partners and step families; and, fourthly, reducing the maximum level of maintenance payable. That package also abolished interest and suspended the collection of fees for new cases for two years and deferred the liability by eight weeks for those absent parents who supply basic information quickly. During that debate I was heartened by the continued clear commitment of both the noble Lord, Lord Haskel, who was leading for the official Opposition, and the noble Earl, Lord Russell, to the principle that both parents are responsible for their children even if they live apart.
Today, I am pleased to bring forward primary legislation from another place. The Bill will represent a significant step forward. The Opposition in another place recognised that and agreed not to engage in "trench warfare", whatever "trench warfare" might be in the other place. The honourable Member for Glasgow, Garscadden commented during the Third Reading debate on 22nd May, "I accept that much of what is happening is what we have requested".
Lord McIntosh of Haringey: My Lords, the Minister is of course paraphrasing.
Lord Mackay of Ardbrecknish: My Lords, of course I am paraphrasing. I know the honourable Member for Garscadden well enough to know that I would have to paraphrase; otherwise I might be here for quite some time. I hope that your Lordships will approach the Bill in a similarly constructive spirit.

1187
The Bill includes important measures, first, to introduce an element of discretion to depart from the standard maintenance formula in special cases; secondly, to increase support to parents with care; and, thirdly, to improve the operation of the Child Support Agency.
The Bill amends the 1991 Act to enable a better service to be provided to both sides of a broken partnership. It will improve the assessment, collection and enforcement of child support maintenance and will enable our child support system to ensure that more maintenance is paid, more regularly, for more children.
The key provision in the Bill builds on the introduction of broad-brush allowances within the maintenance formula, by introducing an element of flexibility in the small proportion of cases where the formula-based assessment causes particular difficulties.
The existing child maintenance formula will continue to be appropriate for the assessment of child support in most cases. However, to recognise pre-existing arrangements, or to take account of special circumstances, the Bill will introduce a system of departures. This will allow flexibility to depart from the formula assessment in clearly defined circumstances where that is fair to all parties.
The Bill also introduces a number of other changes: first, a child maintenance bonus of up to £1,000 payable to parents with care when starting work; secondly, provision to compensate people on family credit or disability working allowance whose income drops as a result of changes in child support legislation; thirdly, refinements to the way disputes over parentage are resolved; fourthly, improvements to the review and appeal procedure; and, fifthly, provision to defer take-on of some cases by the Child Support Agency.
We have listened carefully to the concerns expressed both in and outside Parliament. Our response addresses many of those concerns effectively. The revised formula for maintenance assessments is fairer, and the introduction of simplifications will ease the task of administering child support and enable the agency to improve its service. This will help maintenance assessed to become maintenance paid. I believe that these proposals are consistent with the original purpose of the Child Support Act and that that is what Parliament wants.
I turn now to how the departure system will work. The starting point for calculating liability for child maintenance continues to be the formula. This will be the method of assessment in the majority of cases. The formula ensures that people in similar financial circumstances pay similar amounts of maintenance. But the Government accept that a small minority of people who face additional costs because of special circumstances would not be treated fairly under the formula. We therefore propose to allow some strictly limited discretion to depart from the formula assessment in such cases for: unavoidable high costs of travel to work; high costs of maintaining contact with children; extra costs arising from long-term illness or disability of the applicant or a dependant; for the costs of step-children, in exceptional cases; and for some debts, either from the
1188
relationship, or arising from pre-1993 commitments when those concerned believed their maintenance position to be settled.
Subject to some rules about minimum amounts, either parent will be able to apply for their maintenance assessment to be reduced to take account of the costs. Specially trained staff within the Child Support Agency will consider applications in the first instance. Any direction to depart from the formula will be given on behalf of the Secretary of State. Either parent can subsequently appeal to an independent child support appeal tribunal.
A departure will be allowed only if it would be "just and equitable", taking into account the circumstances of both parties and the best interests of the children and the taxpayer. Any expenses allowed will then be treated like other allowable expenses and deducted from the parent's income before maintenance is assessed. The regulation-making powers in the Bill will enable us to ensure that those to gain most from departure directions will be those on whom the formula bears hardest.
A major criticism of the Child Support Act has been the treatment of past property or capital settlements within the formula. Although the formula took account of many of the practical consequences of property or capital transfers which were intended to contribute to child maintenance, it did not explicitly reflect their value.
The April regulations introduced a "broad-brush" allowance for past property transfers, but inevitably some parents will find that the broad-brush allowance does not reflect the true value of their property settlement. In these cases, the departure system will allow flexibility to recognise all the relevant factors.
The departure provisions relating to special expenses will apply more usually to absent parents, but either parent could apply where appropriate in their circumstances. For example, those parents with care earning enough to contribute to maintenance with high travel-to-work costs can apply.
I also intend to introduce some grounds for departures which will be particularly relevant to parents with care. These grounds will include: first, assets which do not produce income, but are incapable of doing so; secondly, the other parent's standard of living appearing to be inconsistent with their declared income; thirdly, unduly high housing costs or such costs that a new partner should meet; and, fourthly, where the broad-brush allowance towards the other parent's travel-to-work costs is not reasonable.
For absent parents, consideration of a departure from the formula may be conditional on their making regular payments of child maintenance, although, if paying the full assessment would cause difficulty, a lower amount may be permitted until the application is decided.
The costs of the departure system are estimated as £10 million a year in benefit savings foregone, and £25 million in 1997–98 reducing to £15 million a year thereafter in administration.
The administration of a departures system will be complex. To ensure its effective introduction it is important to avoid overloading the agency. For this reason the Government propose to defer the take-on of

1189
applications from parents who have a court order or written agreement made before April 1993 when the parent with care is not receiving benefit. They will retain their right to use the courts if they wish to vary the amount of maintenance. I shall also offer them the opportunity to use the agency's collection and enforcement service.
It is important to achieve the right balance for both parents, for their children and for the needs of the taxpayer. The provision in the Bill for a child maintenance bonus will help the parent with care to improve her family' s standard of living by smoothing her transition to work. It will accrue at the rate of £5 a week or at the rate of maintenance paid, if less, and will be paid to the parent with care on leaving benefit because either they or their partner has returned to work. This measure will every year provide 60,000 parents with care with a greater interest in securing maintenance and an increased incentive to work. The annual cost of the child maintenance bonus will be £10 million in 1997–98 rising ultimately to £20 million.
Where maintenance is reduced because of child support policy changes, parents with care on income support will not lose money since income support is adjusted immediately. Awards of family credit and disability working allowance are, however, set for six months and some parents on those benefits could lose financially if their maintenance assessment drops. The Government wish to be able to give some compensation until the end of the award period and the Bill will provide the necessary power to make compensatory payments.
The Bill also makes provision for overpaid maintenance. At present an overpayment of maintenance is repaid by a reduction in the absent parent's maintenance assessment until it has been cleared. Most overpayments will continue to be dealt with in that way. In some cases, however, a reduction in maintenance may not be possible, or it would not clear the overpayment in a reasonable time. For example, maintenance liability may be about to cease because the child will leave school soon. The Bill therefore introduces a provision which will allow for a cash reimbursement in suitable cases.
We are introducing a number of administrative easements which will reduce the pressure on the agency, including simplifying the review process in cases where circumstances change; and replacing the current charging of interest where maintenance is paid late with an alternative financial charge.
We are also introducing a measure to clarify and merge the legislative provisions for joint payment of income support and maintenance which will ensure that the parent with care continues to receive her full entitlement whether or not the absent parent pays fully or regularly. This measure will also be extended to the income-based jobseeker's allowance.
Subject to the approval of Parliament, some of these measures will be introduced this year after the Bill becomes law. Most of the changes will require detailed operational planning and will take effect as soon as is practicable during 1996–97.
The new child maintenance bonus scheme will start from April 1997. None of these changes will pre-date the enactment of the Bill.
1190
I note that the noble and learned Lord, Lord Simon of Glaisdale, has put down an amendment regretting certain aspects of the Bill. As always, I look forward with interest to what the noble and learned Lord has to say. While I can guess from the terms of his amendment at least some of the points he is likely to make, I shall discuss the amendment in my wind-up after I have had the pleasure of listening to the noble and learned Lord.
The Government have responded positively to criticism of the child maintenance system by producing a fair and just package of measures which balances carefully the interests of both parents, their children and the taxpayer.
These changes will improve our child support scheme for both parents and should encourage and enable more absent parents to pay child maintenance regularly. No absent parent will be able reasonably to refuse to pay their child maintenance.
I believe the changes we made in April will ensure that the formula produces fair and realistic results in the vast majority of cases, but the new departures system introduced in this Bill will deal with those exceptional cases. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Lord Mackay of Ardbrecknish.)
3.32 p.m.
Lord Simon of Glaisdale Lord Simon of Glaisdale rose to move, as an amendment to the Motion, That the Bill be now read a second time, at end insert ("but that this House regrets that the Bill does not fully obviate the hardships and injustices caused by the Child Support Act 1991; that it maintains those provisions of the 1991 Act which are inconsistent with the long-established principles of the rule of law; and that, like the 1991 Act, it is largely a skeleton Bill, leaving its effect to be achieved by subordinate regulations, orders or prescriptions.")
The noble and learned Lord said: I beg to move the amendment standing in my name.
Your Lordships will be grateful to the Minister for the very clear and engaging way in which he has moved the Second Reading of this Bill. But that very ability and clarity emphasise the absence of what your Lordships were looking for in the Second Reading speech, without which we shall have another legislative disaster like the legislation which became the 1991 Act. That Act has been an unprecedented legislative disaster. It has caused injustice; it has caused hardship; it has caused enormous public expense resulting in administrative chaos. Having listened to the noble Lord, from what he said your Lordships would have no idea that that was the history of the matter. In fact, your Lordships will not have had such bland assurances since we debated the 1991 Bill. Unless these things are recognised, we are in for another legislative disaster and further hardship.
The noble Lord said that it was easy with hindsight to see that things were not altogether right. But it was not a question of hindsight. Your Lordships, with foresight, identified precisely the things that have gone wrong. I am very glad that the noble Baroness, Lady Hollis, the noble Earl, Lord Russell, the noble Baroness, Lady Faithfull, and the noble Lord, Lord Houghton, are speaking in this

1191
debate. They were in the forefront of criticising what was put forward with such assurance and confidence in 1991, but they were disregarded.
Indeed, business was so arranged that it was impossible politically for your Lordships to amend the Bill. I have the timing. There were three days spent in Committee. The earliest time at which we adjourned was nearly a quarter-past 10 and the latest just short of midnight. There were two Report days. On the first we adjourned just short of 11 o'clock and on the second day just short of 1 o'clock in the morning. At Third Reading our proceedings were altogether truncated because the Chief Whip had arranged business for the following day and we were assured that unless we finished the Third Reading of the Bill the other business would be lost. It is your Lordships' practice to let any government get their business done, so the Third Reading was truncated. I am sorry that the noble Lord, Lord Mishcon, is not here today. He played a prominent part in 1991. I remember him saying at Third Reading that he would postpone his observations on the way in which the Bill was a skeleton Bill until the debate that the Bill do now pass. But there was no opportunity for him to tell us that, although in fact the matter had been analysed.
The Minister said today—and it has been said before—that there was general approval of what was proposed in the 1991 Act; namely, that an absent parent should pay reasonable maintenance for the support of the child. But that is what the pre-existing law said. The magistrates' courts had jurisdiction to fix reasonable maintenance for the child and for the mother on exactly the same basis—that is to say, what was reasonable under the circumstances and as was stipulated in the 1991 Act.
It has been again criticised that there were discrepancies between the decision of one tribunal and another. Of course there were. In this class of case, one case has infinite differences from another. What the courts did, but what was not done in the 1991 Act, was to allow such things as the cost of travel to work, the cost of travelling to keep contact with an absent child and the exceptional circumstances where there had been a transfer of property at the cost of foregoing maintenance. All those sorts of things were taken into account by the magistrates. That resulted in one case being different from another. But those are exactly the cases that are taken up in this Bill under the name of "departure". It did not require hindsight to see that such provisions would be needed. They were identified by foresight, and now, belatedly, the claim is made that the Government are being entirely reasonable in introducing provisions which were asked for at the time of the 1991 Act.
This Bill and the 1991 Act made no difference to the general underlying principle; namely, that an absent parent should pay what maintenance was reasonable in the circumstances for an absent child. However, the legislation removed the jurisdiction to award the maintenance from the magistracy—lay justices knowing local conditions who were close to the cases upon which they had to adjudicate. The legislation transferred that jurisdiction from the "great unpaid", as they are called, to the "great well paid" of Whitehall. That has resulted in the disasters with which all of your Lordships are familiar.
The other odd thing that was done, and is perpetuated, is to transfer to the Child Support Agency, which operates a formula, the jurisdiction to deal with a child's maintenance while leaving the jurisdiction to deal with the mother's maintenance still in the hands of the magistrates. Of course, common sense tells us that you cannot deal with the one without dealing with the other. They are intimately interrelated. But those provisions remain.
Therefore, we have to try to repair the damage that has been done by a fixed formula, a sort of procrustean bed, which no doubt eliminates some inconsistencies by lopping off a bit of the scalp at one end and a bit of the toes at the other. You do get consistency in that way, but can the Government really claim that the result of setting up the Child Support Agency—operating that extraordinary and incomprehensible formula—has obviated all inconsistencies?
I have dwelt on those aspects because, unless there is recognition that things have gone seriously wrong, they will go seriously wrong again. These days we are not only concerned with our own bureaucracy. Those of us who wish to see ourselves at the heart of Europe, promoting its cohesion, are embarrassed by the bureaucracy of Brussels. However, it is no use girning at that bureaucracy when we fail to put our own bureaucracy in order.
I should like to deal with one or two issues that are mentioned in the middle part of my amendment. I prefer to leave the first part to the noble Baronesses and the noble Earl, who are much more conversant with such matters. The second part deals with the rule of law. The classic statement of the rule of law is, as your Lordships know, contained in Dicey's Law of the Constitution. Dicey dealt with various aspects, one of the most important being that all citizens, including officials, are amenable to the ordinary law of the land. Let us consider the 1991 Act in that respect. Officials are given leave—power—to enter private premises. They may enter the premises of the employer. They are also given the power to interrogate employers and fellow employees. Those are exceptional powers, mercifully not vouchsafed to the ordinary citizen.
There is also the exceptional remedy of distress. That is self-help in repayment of a debt. It is a harsh procedure. Therefore, the common law makes sure that it is operated only with safeguards. However, in 1991 all those safeguards were swept away. Officials can now levy distress without any of the common law safeguards.
Those are three aspects of the matter. The fourth is that officials are given leave to breach Inland Revenue confidentiality. The noble Lord, Lord Houghton of Sowerby, has much to say about that and I am glad that he is to speak today. Those four invasions of the rule of law are left inviolate by this Bill which is supposed to ameliorate the situation.
Moved, as an amendment to the Motion, That the Bill be now read a second time, at end insert ("but that this House regrets that the Bill does not fully obviate the hardships and injustices caused by the Child Support Act 1991; that it maintains those provisions of the 1991 Act which are inconsistent with the long-established principles of the rule of law; and that, like the 1991 Act, it

1193
is largely a skeleton Bill, leaving its effect to be achieved by subordinate regulations, orders or prescriptions.").— (Lord Simon of Glaisdale.)
3.47 p.m.
Baroness Hollis of Heigham: My Lords, on this side of the House we have always believed that, although parents may divorce each other, they may not divorce themselves from their children. By having a child, both parents commit themselves to a family covenant to support, and to ensure the well-being of, that child. However, we also believed that the old court system was breaking down. Barely one-quarter of lone parents received regular maintenance. The amount was often low, irregularly paid and payment was seldom enforced. To that degree, therefore, and for those two reasons, we supported the principle, the concept, of the Child Support Agency.
However, the Child Support Agency, as established by the Government, was deeply flawed. As the noble and learned Lord, Lord Simon, rightly said, it is not a question of the Government not knowing that. They knew it; they were told it; they were warned about it—and they ignored all that. From the beginning, the Government in their arrogance—I do not use that word lightly—ignored opposition from all around the House. They ignored opposition from almost every voluntary organisation and they ignored the experience of the Australian system.
What have we been saying? What have all those in opposition to the Act consistently said? First, they said that the 1991 Act was harsh both on the parent with care, usually the mother, and on the absent parent, usually the father. It was harsh on the parent with care because it merely replaced that parent's benefit pound for pound with maintenance, often leaving that parent poorer. I shall return to that point later. As was repeatedly said in 1991, that Bill was clearly not a child support Bill, but a Treasury support Bill.
From all around the House, we also argued that the Bill was harsh on absent parents—usually men—especially the low-paid absent parent, and especially those absent parents who—over half of such men are—were in second families with stepchildren. Such men found that clean-break settlements and the costs of travel to work and seeing their children were not taken into account. They found themselves obliged to maintain the children of their first marriage while out of decency often maintaining the stepchildren the new partners brought with them.
In 1991, 1993, and 1994 we told the Government repeatedly that absent parents, especially low-paid absent fathers, could not support two families without plunging both into poverty, but the Government muttered imprecations about the taxpayer and ignored us.
Thirdly, all of us around the House told the Government that the formula was too rigid; it needed to be more inclusive and more flexible; to include matters such as property settlements and the like; and to allow for appeals—the Government now call them departures from the formula—to reflect that the world outside, people's lives and people's incomes, are not as tidy as the Treasury would have us believe.
1194
Fourthly, we were all, I think, worried about administration—from problems of privacy and civil liberties, upon some of which the noble and learned Lord has already commented, to worries about threats of violence to women who failed to disclose the information that the Government were seeking. We were worried about contested paternity cases, and, above all, the simple ability of the organisation to take on such a huge swathe of cases all at once.
Finally, we believed—we argued this at the time—that all those problems were compounded because the Government refused to follow the Australian experience and insisted upon making the Act retrospective. Nearly all the problems that have so far arisen flow from that. It meant that many people who had made a court settlement, which however generous to one party or unreasonable to another, was, nonetheless, a legal settlement—a framework upon which both parties expected to get on with the rest of their lives and to make other financial commitments accordingly—had that settlement overturned at a stroke. The Government were not forgiven.
Those were our worries, and that is why we have so much sympathy with the substance of the amendment moved by the noble and learned Lord. We have reservations only about that part of his amendment which suggests that the Bill is inconsistent with the rule of law, which is why we shall not support it as presently worded. But the worries outlined by the noble and learned Lord are exactly right. We debated them, we referred to them, and we returned to them as regulations came before your Lordships' House. At every stage, on every occasion, the Government ignored your Lordships' House.
Having ignored parliamentary dissent, the Government then found themselves overwhelmed by extra-parliamentary dissent and have created such a culture of resistance that the Act has become unenforceable. That is why we are seeing it amended today. It is not because the Government want to amend the administration to make it more equitable, but because the Act has become unenforceable. Just like the poll tax, now the CSA. The Government Benches remind us strongly of the dying years of the Bourbons who learnt nothing and forgot nothing. We all know what happened to them.
The Bill is the second part of the package outlined in the Government's document, Improving Child Support. For starters, that is a misnomer: it does not improve child support, but it does improve the Child Support Act. Taken together, to what extent do the regulations and the Bill meet the five criticisms that I have outlined? Because it is the last chance—I mean it—for the Government to get the agency right.
First, does the Bill improve the position of the parent with care? Barely. Lone parents are poor: 42 per cent. of those having deductions for social fund loans are lone parents; nearly half are having their benefits top-sliced for fuel debts; and over half of them have rent arrears. When, under the CSA, their benefit is replaced by maintenance, many find themselves worse off because their maintenance payments, unlike income support, can be irregular, and mothers with care are on and off. If the CSA

1195
were to pay mothers the maintenance and then claw it back from the father, they would at least have a secure income.
It is even worse than that, because once a mother loses benefit—even if it is replaced pound for pound with maintenance—she loses the passported benefits, such as free school meals, which go with income support. As a result, under the Act many women who care for their children at poverty levels are worse off, and the Bill does not make them any better off. That is why we on this side will argue for the principle of introducing a disregard in order, at the very least, to ensure that women are no worse off by going onto maintenance from benefit and thus losing access to free school dinners and the like.
Will the Minister also tell us to what extent such women will be deleteriously affected by the new changes in mortgage support for people on income support, particularly when they go on to maintenance? What protection will they then have in order to keep a roof over their heads? I hope that the Minister will come back to that point for us.
We shall be pressing, as I said, for the principle of a modest disregard. In the other place the Minister had two objections. The first was on the grounds of cost, and the second was on the grounds that it was a disincentive to work. On the first of those, the Minister is expecting to make significant benefit savings when the Bill is running smoothly—some £800 million a year. We ask that a small proportion of those savings be recycled back to target—one of the Government's favourite words, and certainly one of their most used words—the poorest and most vulnerable; that is, women on the poverty line. We refuse to accept that, when we recycle some fraction of savings, that is therefore an expenditure commitment. It is the difference between gross and net savings, and an honourable difference.
Secondly, I am confident that the Minister will argue that a disregard is a disincentive to work. I have a couple of points to make on that. First, perhaps other noble Lords may share my apprehensions about expecting a parent with a child of one year and one of three years to be back in work, against her choice, leaving those children to other people to look after them. The Government are merely offering a back-to-work bonus which will take at least four years to be arrived at, and gives the wrong money to the wrong mothers at the wrong time for the wrong reasons. Most lone parents want to work, and seek work when their children are of school age. The problem that stops them is child care and the new arrangements still do not allow for any of that. So, are the mothers with care better off? No; barely. But for the back-to-work bonus, which will be irrelevant for most of them, mothers with care—those who have remained silent over the past two years—are not being helped one little bit.
Does it improve the other group—the absent parents? Yes, but disproportionately for the better-off who have shouted loudest. What would one expect when the Government have bowed to the pressure of the sharp-elbowed? They have had a ceiling placed on their contributions. We welcome the fact that property settlements on a broad-brush basis are to be taken into account, although we urge the Minister to extend that and
1196
not to limit it merely to property settlements agreed before 1993. However, as the Government are deferring indefinitely the taking on of those maintenance cases where the mother is not on benefit, that means that a man whose second wife brings children with her into the marriage may now find that he is still supporting the children of his first marriage and the children of his second; and, because the mother is not on benefit, the agency will not have a role to play. We want to ensure that all absent fathers, including the absent father of his stepchildren, contribute properly to the maintenance of their children.
Thirdly, we ask whether the formula is too rigid. The Government are belatedly accepting the Australian principle of appeals on well defined grounds. The Minister calls them "departures", but they are the same as the Australian grounds. It is right that either side should appeal and we welcome that. However, if the Australian evidence is anything to go by, approximately 40,000 appeals will be added to the 140,000 appeals that the Minister expects in respect of incapacity benefit and the high number from jobseekers. Can we hope that the independent tribunal system will cope with that? What will be the implications for legal aid? Will the Minister tell us what numbers he expects?
More worryingly is our anxiety about the quality of the administration, which we have continuously raised. Last October, the chief child support officer found that 86 per cent. of child support assessments were incorrect or unsound. In other words, he found that six out of seven were incorrect or unsound; that only one in seven was correct. That was confirmed by the National Audit Office. As a result, in January the ombudsman reported that he had,
"found mistaken identity, inadequate procedures, failure to answer correspondence, incorrect or misleading advice, delay in the assessment and review of child support maintenance and delay in its payment to the parent with care".
The chief child support officer, the National Audit Office and the ombudsman have all stated that the CSA administration is faulty. Therefore, we cannot be assured when those in the Child Support Agency tell us that women fearing violence are fully protected or that benefit deductions, which are running at 60,000 and take £10 away from women who refuse to co-operate, are correct. If six out of seven such formulations were previously suspect, why should we now have any confidence in the figures?
The Select Committee dealing with the report of the Parliamentary Commission concluded:
"The work of the CSA touches on the most difficult and sensitive aspect of many people's lives. The agency should not add to the individual's distress by sloppy procedures, carelessness, delay, inattention or incompetence".
The CSA did all those things.
I repeat the fact that those problems would have been greatly mitigated had the Government learnt from Australia, where the introduction of a similar agency was relatively trouble-free. The reason was that the Australian system was not retrospective, which brings me to the final criticism of the Act. In our judgment, that failure was the greatest folly of all.

1197
The Government are now removing from the review of the Child Support Agency all maintenance cases in respect of which the parent with care is not in receipt of benefit. That effectively means that in respect of all those families the Act is no longer retrospective. While that is to be welcomed on the one hand, on the other it introduces new unfairnesses. Women in low paid work may well receive low and erratic maintenance and have few powers to obtain it. We hope that the courts will be more pro-active and that in more cases women will return to the courts to claim the maintenance that the law has bestowed on them. Equally, we hope that the settlements will increasingly come more into line with the CSA.
In many ways, the Bill meets many of the anxieties that we have expressed time and again since 1991. It helps the absent parent; it introduces a modified appeals system; it removes retrospection in respect of non-benefit cases; it may—and I hope will—improve the administration of the agency; and it introduces new flexibility into the formula. We welcome all that. But—and it is a very large "but"—the Bill does virtually nothing for the parents with care and therefore for the children of the first marriages. They remain as poor as ever. The maintenance payments may be as erratic as ever, and their ability to enter the world of work as difficult as ever. The number of children in poverty grows annually. The Government concede that some 50,000 first families will be worse off as a result of the Bill and its accompanying regulations. Two million children are in single parent families and three-quarters of those families are in receipt of income support. Many will become poorer as a result of the Bill.
However, because women caring for children will not go on strike, will not walk away, will not defy the Government and will not abandon their children, as many of their partners have done, they will be punished for being law abiding while their former partners will be rewarded for their law breaking, for refusing to pay. The Government have acceded to the pressure not of the lawful but of the law breakers. They have mitigated the plight not of the poorest—the parents with care—but of the less poor—the absent parents—who in all circumstances are better off than the parents with care.
The Government have listened to those who have shouted a macho message. I do not say that they should not have listened, because at this stage any listening is welcome. However, those who stayed mute, in particular the mothers, have received nothing. And all because the Government in their arrogance refused to listen the first time around, the second time around and the third time around.
Now that we are dealing with this Bill, will the Government exhibit the same arrogance and the same indifference to parliamentary opinion? Will they again refuse to listen? Will the Minister's brief be marked with the word "resist", as it was again and again and again during the passage of the Jobseekers Bill? We want the Child Support Agency to work, but it will work only if it is seen as being fair and equitable. It is not that yet, which is why the Bill must be amended.
I said at the beginning that parents who support their children are fulfilling their family covenant. But we as a society have a covenant; that all children should have the chances and opportunities that we wish for our own
1198
children. Nothing less is anywhere near good enough. We shall seek to amend the Bill to enable that to happen. I suggest that the Government would be wise to listen this time around.
4.7 p.m.
Earl Russell: My Lords, before normal service is resumed, I hope that the House will join me in expressing our sympathy for the Minister for the extraordinary burden of work that he is having to carry at present—
Baroness Hollis of Heigham: My Lords, what about us? At least he has civil servants.
Earl Russell: My Lords, of course, they might increase the work load.
On 23rd May, the Tuesday before the Recess, when the Bill was given a First Reading and the Jobseekers Bill was undergoing its Third Reading, the Minister was responsible for three Bills before this House at one time. That is a hat trick that I do not envy him. We on these Benches agree with practically every word uttered today by the noble and learned Lord, Lord Simon of Glaisdale. He was one of those who showed us the way in 1991. We shall support his reasoned amendment, and if he chooses to put it to a Division we shall be happy to go into the Lobby with him.
We all know that in the Palace of Westminster we live in a micro climate. In respect of some issues a kind of culture sweeps across the Palace of Westminster and carries away everything, even when the rest of the world is unaffected by it. Any member of my profession knows that perfectly well. The 1991 Act was the product of one of those parliamentary cultures. When they grow, they seem to be proof against almost any manner of evidence or outside appearance. I cannot see how one can puncture them.
In respect of this matter, the media, much maligned, and justly maligned, though they often are, are a great deal nearer to understanding what is going on than those in the Palace of Westminster—and I do not refer only to the Government. Your Lordships know that it is the policy of the Liberal Democrats to repeal the 1991 Act lock, stock and barrel. I am grateful to the Minister for recognising that that does not mean that we abandon the principle that parents are financially responsible for their children. But we reject the formula, and we reject it first, and foremost because it is a formula. The Minister said—and I believe that I have his words correctly—that a formula means that people in similar financial circumstances pay similar amounts. I am sorry, but that really is not accurate. It means only that people whose circumstances are similar in relation to those points which it has occurred to the draftsman to mention are treated alike.
Once again I must remind the House of the principle of the Renton Report: that no draftsman can possibly foresee all contingencies. I hope that the Department of Social Security possesses a copy of that report. Therefore, all that happens is that cases which in fact are very different are treated alike. That is why the defence of consistency in relation to a formula is entirely misleading.
Perhaps I may give two examples, both of which will be familiar to the Minister or at least to his department. A man in Henley-in-Arden lived 30 miles away from his

1199
work. There was no public transport. He was buying a car on hire purchase which was costing him £1,500 per year. He could not pay the amount which the CSA assessed him to pay and keep up the HP payments on his car. Because he was one of the very early cases when people still believed that some form of help, co-operation or negotiation was available, he rang the CSA helpline and was advised to sell his car.
I wrote to Mr. Burt about that and asked whether he could assure me that that was not government policy. He wrote back an extremely helpful and considerate letter, but he could not give me the assurance for which I had asked because the formula had not foreseen that case.
I have another example where I do not have to rely on ex parte information because the person in question is well known to some senior members of my party. The gentleman had been married and had made a settlement on his ex-wife and daughter which was well above any amount which the CSA might have asked him to pay. His ex-wife then married again and allowed her second husband to get his paws on the money. He put it into risky investments where it all disappeared. He then left her, leaving her on benefit, whereat her first husband was again clobbered by the CSA for the misdemeanours of his wife's second husband, for which he believed himself not to be answerable. The noble Viscount, Lord Astor, to whom I wrote, was extremely sympathetic about that case, but he could not do anything about it because the draftsman had not foreseen it. That is what is wrong with the formula.
My second objection to the formula is that it attempts to make people pay too much. We are in favour of parents paying but we are not in favour of them paying what they do not have. The formula seems to produce a significant poverty trap in levels of income between £13,000 and £18,000 per year, which of course covers a very large proportion of the population.
I have a letter from somebody affected by the Act whose husband is paying to his daughter, aged 13, more than he is able to keep back for himself and his household. That is not right. That results also from the fact that the formula is assessed on gross income which, as we all know, is very different from our disposable income. For many years I never bothered to know what was my gross income. It was of no interest to me and had nothing whatever to do with how much I had to spend. That person sent me a payslip. His pay is £985 per month and the CSA assessment is £371. That sounds reasonable enough until one sees £49 council tax, £65 national insurance, £122 income tax and £58 for pension. Therefore, that person brings home £316 and is paying to his daughter £371. I believe that that is a disproportionate amount to be made available to one single "daughter. That shows how misleading is the reliance on gross income.
This Act attempts to stand on a one-legged tripod, which is a rather unstable position. We think that there should be three different legs to support separated families. First, we think that the father should pay what he really can afford to pay. Secondly, almost all mothers who are caring for children on their own say that they would like help with childcare in order to go out to work so that they can make a contribution towards supporting the
1200
children. We support that, as does the noble Baroness. We believe that one of the problems with the Act is its reliance on the old-fashioned world of the breadwinner, which disappeared quite a long time ago. In relying on childcare, we go with the grain of letting people do what they want to do, which is a much more constructive way in which to legislate.
Thirdly, when we have relied on what the father can pay and what the mother can earn if she has help with childcare, the state must accept that it must bring up the tail and look after what is left. The state is entitled to wish to reduce the amount that it spends in that regard, but it cannot abolish it altogether.
Who gains from the 1991 Act? The Treasury does not. We have a new study which shows that the noble Baroness, Lady Faithfull, was right all along in what she told us in 1991; that the trouble arose because of cut-backs in the number of staff in the liable relative unit, which was doing a fairly good job until those cut-backs were made. That just goes to show that if economies are not undertaken intelligently, they may become an extremely expensive habit.
The CSA's claims of savings are based on some fairly questionable figures. According to a Written Answer of 7th March in another place, of the amount that it is bringing in, £108 million is from old maintenance achieved by the liable relative unit, which is still continuing; £44 million is from new maintenance, not a particularly impressive figure; and £165 million is from people no longer claiming benefit. But we are not told how those figures are compiled. Before the Act, an average of 24,000 parents every month went off benefit for the ordinary normal reasons: they got married; they left the country; or occasionally they even managed to find a job. It looks as though all those are lumped together as savings which are all ascribed to the Act. That is misleading.
We are told also that all those women who have gone off benefit rather than naming the father of their children are savings due to the Act. Occasionally the Secretary of State tries to make out that that is uncovering fraud. I should like to know whether there is any concrete evidence for that statement because, if it is only a hypothesis, I can offer a contrary hypothesis. Most people do not understand quite how terrified women are of contact with the men who have inflicted domestic violence upon them. I know that there is the harm and undue distress provision for which I am grateful. Ministers do their best to make it operate. But a case which came to me only last week involved a woman who not once, but twice, had had her name revealed to a violent former partner and who had had to change her name and move house at a loss on each occasion. I do not blame Ministers for that. I blame Ministers for creating a situation in which that can happen all too easily.
Also, most men do not understand—I am sure that I do not myself, although I try—quite how much women may mind intrusive questioning about the circumstances of a former relationship. One case which came to me from a CAB involved a woman who was questioned about the putative father of her child. She was asked how many times she had had intercourse with him and how long it had lasted on each occasion. The noble Viscount, Lord

1201
Astor, was as horrified as I was by that case. But if you set up "Jacks" in office—or nowadays one should add "Jills"—you give them power, and sometimes people will abuse it. I should like to know how many women who have come off benefit rather than name the father have done so for such a reason. I should also like to know in how many such cases there is evidence which can be ascribed to fraud and in how many such cases we simply do not know what actually happened.
The noble Baroness is entirely right to say that women have not benefited from the Act. By "women" we must include second as well as first wives: they are not honorary men and are not to be treated as such.
I agree with what the noble Baroness said about the disregard. We on these Benches will work for it. I also agree with what the noble Baroness said about passported benefits. The noble Lord, Lord Carter, divided the House on that subject in 1991; indeed, he was quite right to do so. I believe that the noble Baroness also mentioned the benefit penalty. That was something which the House rejected in 1991. I hope that it will do so again.
I very warmly welcome something for which the noble Baroness and myself have pressed; namely, the concession to women on family credit. I refer to those women who lose family credit because of child maintenance but who, when the child maintenance is reduced, do not have the family credit returned to them. However, now that the Minister has made a concession in that respect, why is it only partial? Why not go the whole hog? That is a matter to which we must return in Committee.
On these Benches we also believe that an injustice is an injustice no matter whether it is done to men, to women, to children or to people having a sex-change operation. The Act has done no more justice to men or to children. We were told in 1991 that children come first. But Mr. David Pannick QC, appearing for the Secretary of State in the case of Biggin v. Secretary of State, told the court that the welfare of the child is not a paramount or even a particularly significant consideration under the 1991 Act. Now they tell us! They did not tell us that when the legislation was before the House. We said it; but it was hotly denied from the Government Bench. I am glad to see that the truth has now come to light.
Whatever the noble Baroness said, what is done for men is not done in response to law breaking; it is done, first and foremost, in response to a careful, well-argued campaign in letter writing. I have received many hundreds of such letters and they are very powerful and well argued. Most of those people to whom I have talked are attempting to use the legitimate, democratic and political channels. The noble Baroness's response in that respect may run the risk of discouraging them from doing so. I would regret that. We all agree that law breaking should be discouraged, but one way to do that is to allow people the hope of achieving change by legitimate means.
I turn now to travel costs. At 250 miles a person has £10 a week exempt income and £1.50 maintenance reduction a week. That is not especially generous. Then there are capital settlements. Over £25,000, a person has £60 a month exempt income and £9 maintenance reduction. That, too, is not especially generous. It reminds me of Richard Hooker on irresponsible child minders, who, he
1202
said, used to eat the baby's dinner and then smear its mouth with a spoonful so that when the parents returned and found the child crying they could say, "It must be colic; you see he has eaten". In my view, the concessions are really a little like that.
On capital settlements, people have to produce documentation dating from a settlement which was made before the Act to show what proportion was for the wife and what was for the children. Before 1993, no one felt the need to do so. That shows the problems of retroactive legislation. That retroaction must go.
The Minister knows my views on the use of cars for people who cannot travel to work by any other means. He will hear them again. Why does the White Paper say that departures are allowed only in a small minority of cases? Why is there no general reduction in the amounts assessed, which are generally and universally too heavy? Why is there no change in the 104-night rule? Further, why is there no change in the principle of spousal maintenance? Why are caring costs allowed for stepchildren only in exceptional cases; and which "exceptional cases"? What if the father is dead and cannot maintain them? Why is there such a patriarchal and limited assumption?
I shall not detain the House by discussing the wording of the Bill. But once again we have words with such meaning as may be prescribed. I should like to know when the noble Lord, Lord Boyd-Carpenter, is going to receive the letter that he has been promised stating where that has been done in previous legislation. When the noble Lord receives that letter, I should be grateful if I could have a copy of it.
Most of the big changes in the Bill are ones which this House cannot address. The House of Lords lives by its capacity to amend government legislation. If such legislation is to be done in a form which we cannot amend, that is something which threatens the future of this House more than anything that has been said by the Opposition.
4.27 p.m.
Baroness Faithfull: My Lords, first, I should like to thank my noble friend the Minister for his explanation of the Bill. Secondly, I must offer him my deep condolences for the fact that, although he has charge of this Bill, he did not take the 1991 legislation through the House; indeed, I have great sympathy with him, especially after listening to all the speeches that have been made hitherto.
I should like to begin by looking at the past to which the noble Earl, Lord Russell, also made reference. In about 1985 I went to a member of Her Majesty's Government and pointed out that there was a rise in unemployment and that, because of such a rise, the social security offices were being overworked and overburdened. Those concerned were quite unable to deal with all the applicants who came to the social services departments. At that time, as has already been said, there was the liable relative unit of the Department of Social Security. As a director of social services and a children's officer, I came into contact with that unit. Its officers did a magnificent job of work. The cases came before the court; the court made a decision; and the officers of the

1203
unit—who used to be called "the matrimonial men"—would visit the father who was not paying the wife according to the court's recommendations.
The procedure worked very well. On a casework and mediation basis, fathers were persuaded to pay. But if they could not do so, the matrimonial men would help them to return to court and ask for a readjustment. The courts did not have a formula and were able to judge each case on its merits and determine how each father could pay. Therefore, it was a court-centred discretion.
As I said, in about 1985, I went to the social security offices and I found that because there was growing unemployment the matrimonial men were being taken off their matrimonial work to be put on work on the counter. I could not believe that that was the case and therefore I went to see Sir Peter Barclay who was then the chairman of the Social Security Advisory Committee. Sir Peter Barclay and his committee then looked into the matter and made recommendations to Her Majesty's Government. They advised Her Majesty's Government that as the matrimonial men were being taken off their matrimonial work, the men they had been pursuing for non-payment of moneys were no longer being pursued and taken to court and the sums of money owed were therefore gradually accumulating. Her Majesty's Government sent someone to report on the situation in a social security office. That person reported that things were awful in the social security office and that staff were having a terrible time. However, nothing was done about that.
In 1990 the figures were considered and it was discovered that there was a tremendous amount of arrears. Then the Government began to consider the Child Support Bill. As has already been said, the Government produced the White Paper, Children Come First. We all thought at the time that it was a good White Paper. However, I must say that the mediation method of dealing with cases before 1985 and before the matrimonial men were drafted onto work on the counter was usually successful. However, it was not always successful and when it was not successful the matrimonial men returned the case to court and the court decided what should be done. Something was worked out which was to the benefit of the mother, the father and the children.
I now wish to discuss a completely different point. I hope that in the very near future a divorce Bill will come before your Lordships' House. The divorce Bill lays down that there should be mediation between the divorcing parents before a divorce is granted, and that there should be a year in which the divorcing parents can work out the arrangements that are to be established for the father, the mother and the children. I take this opportunity to say that I hope that reference to the divorce Bill will appear in the Queen's Speech because I think that the mediation system which is recommended in that divorce Bill will possibly forestall a great many of the problems that we face today.
I wish to pay tribute to the staff of the Child Support Agency. I believe they have had an impossible task and they have had to face almost insoluble problems. As the noble Earl, Lord Russell, said, they have had to work with a formula which they must have known could not
1204
work. I pay tribute to them for having to deal with such a difficult Bill. I particularly pay tribute to the staff in the appeals section who have tried hard to show compassion and understanding of the problems. However, they have been held back by the formula with which they have had to work, as has already been said by many noble Lords.
All the parties supported the principle that absent parents should accept a responsibility where appropriate rather than rely on the state to meet obligations which should be those of a parent. It is the detailed implementation of the measure which has created so much disagreement. The two main areas of contention appear to be first, balance; and, secondly, efficiency. First, where should the balance be between the rights of the first family and the second family; between the interest of the lone parent on the one hand and the absent father on the other; between the state/taxpayer and the deserted wife/mother and her children? The second issue concerns administration, which by all accounts has been pretty chaotic during the first year. The wrong decisions have been taken; the wrong letters have been sent to the wrong people; and not enough cases have been dealt with in a timely manner.
Here again I must say that I still support the principle of court centred discretion which meant that the court took into account all the circumstances. That is something which the formula cannot do. I suppose it will never be possible to return to the principle of court centred discretion, but nevertheless the Child Support Agency might well take into account all the circumstances of all the members of a family. I refer again to the White Paper Children Come First. However, in this instance, children do not come first. I submit that in this Bill, as it stands at present, it is a case of the Treasury coming first, and not children. In the Children Act 1989 the welfare of the child is paramount. However, that is not the case in this Bill.
I do not believe that we have thought about research. When I opposed the Bill when it came before your Lordships' House in 1991, I particularly asked for some research to be done. I was grateful to Mr. John Eekelaar, a research worker at Pembroke College, Oxford, who carried out some careful research. That research was forwarded to the Ministry and it was given to me. That, together with my own experience of having worked with these families, made me realise that the Bill would not work, and that it would not be possible to make it work. The various points that I wished to make have already been made by other speakers. I cannot see how the formula can ever be successful unless it has much more flexibility than at present.
I fully support the comments made today by the noble and learned Lord, Lord Simon of Glaisdale. If there is a Division on his amendment, I shall vote with him. I shall not detain your Lordships further because, as I said, the points I wished to make have already been made. But could we not consider what has happened in the past and build on the best of the past instead of on the poorest of the future?
4.37 p.m.
Lord Houghton of Sowerby: My Lords, when we finished with the Child Support Act 1991 some of my noble friends accused me of having used intemperate language about the principal Act. I do not apologise for that. I regret that it stirred me to a state of mind that no previous legislation had done. I thought it was an affront to a large section of the people and an insult to the magistracy and other machinery that dealt with these matters in a more temperate way.
The Minister in his introductory speech this afternoon spoke as if little had happened for which he had to apologise. The chaos behind the child support scheme, the near disaster to which it came, and the drastic steps that had to be taken to change management while the engine was at full steam all showed what a morass had been created in this field of administration. It is all very well for the noble Lord to say that it is easy to speak with hindsight. But as my noble and learned friend Lord Simon of Glaisdale said, it was not hindsight that was needed but foresight. We were telling the Government that they were entering a minefield of delicate emotional human relationships. One feels that the original Act intruded a new bureaucracy, a new instrument of interference, with powers in hand to settle difficulties and disputes between men and women who had a responsibility for children.
In introducing this Bill, I had thought that the Minister would tell us something about the present state of affairs in the Child Support Agency. It is the first debate on the issue since we parted with the relevant Bill in 1991. Much has happened since then, but there is still something to be told. The noble Lord just brushed aside that aspect as though all were well. However, the explanatory notes refer to a backlog which has still to be overcome. The truth is that a large slice of the work of the agency had to be set aside completely in order to leave the agency free to deal with other work which appeared to be more urgent. What was that work? We ought to know whether the Government are within sight of getting on top of that complex task and how many more staff will be required to do so. We have heard nothing about the increases in expenditure or staff which have been given to the agency over several years.
Noble Lords might have known that any legislation coming out of the 1990–91 Session would be faulty. Look what came out of that period, my Lords. I refer to the Environmental Protection Act 1990. The Government went through the most amazing parliamentary gymnastics to prevent both Houses from registering sympathy with the idea of a national registration scheme for dogs. But it was the dying period of the Thatcher despotism. The Government also took from the magistrates their customary role with regard to mandatory death sentences in the Dangerous Dogs Act. They relieved magistrates completely of their powers in that delicate field of human relationships.
Bills which require regulations have needed a wheelbarrow to take the regulations from one part of a department to another. Look what we have coming in the field of regulation, my Lords. Look at the Jobseekers Bill. Look at the Disability Discrimination Bill. Heaps of regulations are still to come. With regard to this Bill, the regulations are still to come. It is a regulation-creating
1206
Bill. If noble Lords want to know what the regulations will be, let them read the schedules. Your Lordships will see the hairsplitting which will be brought into the regulations. Regulations may be made to see whether assets which do not produce income are capable of producing income in order that those assets may be brought into the picture regarding allocation income. That is not the only provision. I invite noble Lords to read Schedules 1 and 2 and they will see what is coming.
I assume that the Bill is largely concentrating on that part of the work which formula assessments could not reach, or if they reached it they messed it up, or were unfair or inadequate. The first nine clauses of the Bill create a new superstructure of assessments of liability which goes under the name of departure directions. That is nothing to do with "goodbye" or "au revoir". Departure from what? What directions? The Bill almost states that a departure direction means a departure direction; it is almost as informative as that.
The Bill provides a departure from the inadequacy or unfairness of what are called formula assessments. We ought to have a glossary of words and phrases in common use in the bureaucracy of Britain today. I note that a list of abbreviations is published in many official publications in which initials are used and the Government do not want to print the whole word every time. But it is becoming increasingly difficult to follow the technique of legislative practice.
There is another aspect of this superstructure. I surmise that the provisions deal with cases which brought so many people out on the streets. It is no good glossing over the difficulties of the past when more than once women paraded with children in perambulators protesting about the injustices of the Child Support Act. I guess that in those cases an allocation of income had already been made towards the children but the agency decided to have a go to see whether it was right. The agency increased agreements which had been reached, in some cases doubling the contribution of the father towards the maintenance of the children.
With regard to Clauses 1 to 9, the Bill deals with a small minority of cases. What is "small minority" in this context? How many? Are they cases where no state funds are employed? Are they cases where it is a matter of an allocation or re-allocation between the parties but no state benefit is being paid? I do not know. Should those cases be in the scheme? We want a little information on that.
Let us turn to the consequences regarding staff and expenditure. That is where we find a clue to what things mean. My estimate is that the Bill will cost the expenses of 1,000 extra staff; 750 are already mentioned as being necessary for the initial reassessment of cases which will come within the provisions of the Bill. The departure directions can have two stages: applications can be thrown out at a preliminary stage, or they can go straight to a final stage. The strictest discipline will be exercised on discretion. It is a form of taxation far more meticulous and rigid than income tax.
The Minister puts the proposals over in his benign and persuasive way but he is an expert in the art of persuasion. I remember his maiden speech from the Back Benches when he was so persuasive in his promotion of the consumption of Scotch whisky that a number of us went

1207
out and bought a bottle to see what it tasted like. What can you do with a Minister like that! He tells us that this is a benign scheme, holding the hand of justice evenly between the parties. However, the Act has already created more additional domestic worry than probably any other similar Act. There may be benefits in the legislation but what a price has been paid for them. I have in mind the results of various monitoring bodies throughout the country which have sent reports of what they experienced at the hands of the system. Those reports were very worrying indeed.
My noble and learned friend Lord Simon of Glaisdale referred to the part played by the Inland Revenue in the matter. I took the strongest objection to the inclusion in the principal Act of a provision for child support officers to be entitled to apply to local inspectors of taxes for the right to look at the payroll particulars delivered to them by employers in their district. The provision was surrounded by conditions: the officers were not to be told the person's earnings; they were not to be allowed to roam over all the payrolls in the office; they had to know which firm was suspected of having in its employment someone who was wanted for child benefit payments. The applications had to go to the board of the Inland Revenue.
I was shocked to find that in the first period of a year or less no fewer than 113,000 applications had been made to the Inland Revenue for permission to look at payrolls. That is an unjustified intrusion into the affairs of the revenue and the relations between the Inland Revenue and taxpayers. What is more, not even the police are allowed to do what child support officers are asking for. Police officers are not permitted by tax officers to scour through payrolls, except in cases of murder. So the child support officer has been put in a position equal to that of a policeman looking for a murderer. What a state of affairs!
I believe that there are some things which you do not do, even if it means that you have to find alternative methods of pursuing your purpose or even if you are frustrated. Sometimes the means matter more than the end and we must beware of that. We must beware of anything that imposes a feeling of inferiority on a large section of society, with people having lost their dignity and being put in the hands of bureaucracy, in order that officers may go into the intimate details of relationships and why people are not paying more towards the support of the child. In some circumstances, it would be worth while the state taking over the responsibility rather than allowing the kind of problem that can occur between a father and a mother. I went into all that on the original Bill and I am not without hope that one day something better than this scheme may be used.
I finish by saying that we have quite a Committee stage on the Bill in front of us. I sometimes wonder what the House of Commons is doing after what we went through on the Jobseekers and the disability benefit Bills, the flaws that could be found and the difficulties that might arise. When we consider what was needed to make the legislation better understood and more acceptable, there is something wrong with the system. This Bill ought to go to a committee which could go over all the details with care, free from the spirit of debate. The difficulty with the administration of the Act is that it began with a perfectly
1208
good intention and a simple purpose. The intention was to provide better provision for children who ought to receive support from a parent. The principle was, in civil terms: "Make the blighters pay". That is all we need say. The child support scheme was set up, with nothing like the consultation that was necessary as a precaution to introducing legislation of such complexity and sensitivity.
I believe that my noble and learned friend Lord Simon was fully justified in putting the amendment on the Order Paper. Why do I call him "my noble and learned friend"? Because he has been a friend of many years; not all our friends are on one side of the House. I say to noble Lords that if they do their duty, they will pass the amendment and let the Government know that, at any rate in this Chamber, we are sensitive to all that has happened under the Act, moving the House to refer to the agonies which we know have arisen behind the scenes in recent times. I hope that out of the Bill will come a better approach to the problem. Perhaps the Minister has introduced a more benign climate with the Bill, it is not laced with hostility, as was the original Act. It does not confer the disgrace of defaulter, deserter, repudiator of responsibilities and all the language that can be used about someone who is believed not to be doing what he ought in the interests of his family.
I welcome the amendment, although I wonder whether we are spending time and money on rearranging the allocation between fathers and mothers, who are above the range of social benefits, to support the children. I do not know why the agency had to assume a wide brief over the subject when in the beginning its main purpose was to ascertain whether the public interest was being properly defended in the application of social benefits to thousands of cases. What shall we do about the women who refuse to have anything to do with the agency? Presumably they are now themselves defaulters or have got on the wrong side of the agency and lost its sympathy. And why an agency? This is a matter of public administration. Under this scheme we have removed maturity from those who deal with the clients of the state, when some better understanding would probably have been needful and possible at the level of court jurisdiction.
I have made my speech. I hope that I shall have the energy to go through a Committee stage if it lasts from now until Christmas. Let us see whether we can improve the Bill. I hope that my noble friends will see that the final stages of this Bill are kept free—as the final stages of other Bills should be—at Third Reading and Bill do now pass for some summary to be given of what we have done with the Bill and where we are proceeding with it. To put down amendments at the last minute, and then at two o'clock in the morning debate the Motion that the Bill do now pass, is not fair given all the work that will have been put into it. Let us have a little space for an assessment of what we are doing and of the impression that we are making upon red tape and a Ministry that has less resilience than any in my long experience.
5.1 p.m.
Lord McIntosh of Haringey: My Lords, this debate has been, sadly, short in numbers of speakers. That is perhaps because it has taken place on the first day back

1209
following a week's Recess and on a day when the House of Commons does not seem to think it worth while working. However, it has certainly not been short on quality or understanding and sympathy with the issues that arise in relation to this Bill. And it has certainly not been short on agreement on the fundamental ends that we all seek to achieve. We disagree in many respects about the means to achieve those ends, but I believe we are all agreed, as my noble friend Lady Hollis said at the very outset, that the principle on which we base our approach to the legislation is that you cannot divorce children. You can divorce a wife or husband, but responsibility for children continues throughout their childhood. That means financial responsibility on both sides.
This problem of the break-up of marriages and of lone parents is only one aspect of a whole series of social problems which have been, as I believe everybody would agree, getting worse in recent years. We have to look at the life chances of children and what makes those chances more difficult to achieve. It could be low pay; it could be the unemployment, disability or sickness of their parents. Now, added to that is the undoubted increase in family break-up.
When, over 50 years ago, Beveridge set out the skeleton, and indeed some of the detail, of the welfare state, he made assumptions that we cannot any longer make. He made assumptions about stable family relationships; about a divorce rate that was far lower than it is now; about a level of full employment to which at the moment we can only aspire without doing anything very effective to achieve; and even, for those in employment, about lifetime stable employment conditions, which we do not seem to be able to achieve either. All these aspects, from the point of view of children, have gone to make life enormously more difficult and to increase the numbers of children in families that are themselves subject to dependency on the state.
There has been much philosophical discussion about that aspect—not so much this afternoon, but particularly in the United States. I find that unrealistic and very often unwelcome. I do not find acceptable some of the talk about dependency on the state being replaced by dependency on communities in the way that Etzioni and his rather unwelcome disciple Newt Gingrich seem to think is possible. I certainly do not believe, along with Charles Murray, that we should look on dependency as the cause of family break-up. It is fairly clear that dependency is the effect of family break-up and all the other sorts of insecurity. Therefore we are bound to look to the state as the saviour, the provider, where other conditions do not exist to give children the life that they deserve.
The problem has been that, increasingly, demands on the state have meant that dependency has itself led to a degradation in the quality of life of those who are forced into dependency. Some of that seems to me to be quite avoidable. It seems to me that the conditions imposed, for example, on jobseekers, on those who are unemployed, must affect the children in those families and must affect their life chances. The Social Fund replacing grants for household equipment and so on with loans that have to be repaid is surely an avoidable way of degrading those in a dependency situation.
1210
There can be no doubt that the Child Support Bill before us now is a special case of a much more general problem. But it is a very important special case. My noble friend Lady Hollis said that there are nearly a million children in families where the parent or parents are unemployed and on income support, but there are nearly two million families with lone parents who are on income support. We must—and I believe it is possible—do better than we have been doing in making life better for those children. After all, dependency of the kind that we have created in this country is not universal in civilised Western countries. In the UK 70 per cent. of all lone parents are in families on income support. However, in Sweden, which has a much more coherent social security and welfare state system, 70 per cent. of lone parents are in the labour market. That is the kind of objective that we must seek in our approach to this aspect of social policy.
I shall not go over the history of the Child Support Act and what has gone wrong with it. That has been very fully aired in the debate, and in any case I am not particularly qualified to deal with it. However, I wish to make clear that when we consider the policy that underlies this Bill, we are considering not only the Bill but the regulations that were introduced in April this year. It is that package of regulations plus the Bill that we have to judge. That is what I propose to do.
I have to say a word about the amendment moved by the noble and learned Lord, Lord Simon of Glaisdale, for whom I have an enormous respect and with whose judgment on these matters I do not normally find myself in disagreement. The noble and learned Lord is of course right in two of the three parts to his amendment; namely, that the Bill does not fully obviate the faults of the 1991 Act and that it is a skeleton Bill, leaving far too much to regulation. But these are matters that we ought to address in Committee. It would be a grave mistake—I say this having made the same mistake myself—to put such an expression of opinion about the content of the Bill into a reasoned amendment of this kind, have it inevitably defeated by the Government in a Division, and then find ourselves up against the argument in Committee that the House has already expressed an opinion on the matter that we seek to amend—
Earl Russell: My Lords, does the noble Lord remember the Education (Student Loans) Bill 1990? I believe that if he checks the precedent, he will find that his argument is mistaken.
Lord McIntosh of Haringey: My Lords, there are a number of precedents for reasoned amendments and, generally speaking, they do not encourage us to think either that we can win reasoned amendments at Second Reading or indeed that, even were we to win them, it would make any difference to the subsequent passage of the Bill. But that is a tactical argument rather than an argument of principle which I make to the noble and learned Lord.
One comment that I would like to make is about the noble and learned Lord's second point on the rule of law. I cannot agree with him that there is anything new about the provision that civil servants in the Child Support Agency shall make decisions about people's lives. That happens all the time. Indeed, the noble and learned Lord

1211
himself voted with the Government in a Division on an amendment to the Jobseekers Bill which sought to overcome the principle that jobseekers could be deprived of their benefit while the case was being heard by the appropriate officials. I found that a surprising judgment on his part, on a much more serious issue than the issues raised by this Bill. So, although I have much sympathy with what he says, I find it impossible to recommend my noble friends to support him in a Division, should he call one. He has made valuable points and the House should be grateful for them.
Similarly, there is the position of the Liberal Democrats. I listened to the speech of the noble Earl, Lord Russell, who said in terms that his party rejects lock, stock and barrel the Child Support Act of 1991. The noble Earl rejects that Act because he rejects a formula. What does that mean? It means that we return to the courts—very largely to the magistrates' courts and perhaps to a unified family court. That would be very valuable for all kinds of other reasons but it does not solve the problems which led to the introduction of the Child Support Act in the first place.
If these matters are left to the courts, there will be huge variations in different parts of the country. The chance of a single mother obtaining a decent settlement will depend on the judgment of local magistrates rather than on an attempt—only an attempt and it is a difficult thing to do—to find a formula on which to operate. The balance of a formula with departures, which is the appeals procedure now proposed in the Bill, may not be perfect and may never be perfect, but it is better than relying on the courts and magistrates alone. The noble Baroness, Lady Faithfull, made that point very effectively when she said, perhaps sadly, that we cannot go back to the original system. That time has passed.
That does not mean that there is not very much more still to be done. The Child Support Agency has had enormous difficulties, partly—I believe largely—for the reason given by my noble friend Lady Hollis; namely, that the original Act was retrospective. That led immediately to a huge backlog and huge delays. But the difficulties also arose because insensitive performance targets were set for the agency by Ministers. If performance targets were set, they were rather low targets which have not been achieved. But, if the agency is set targets which depend, for example, on the amount of money collected from absent fathers and there are no further qualitative targets, then inevitably the agency will try to get more money from the absent parents whom it knows and with whom it already has contact rather than look for the ones it does not know.
It is rather like the drunk who is found looking for his keys underneath the lamp post. A passer-by asks him, "Did you lose your keys here?" and he replies, "No, I didn't lose my keys here but the light is better here to look for them." That is exactly what has been happening with insensitive ministerial directions. The figure given by my noble friend of 86 per cent. incorrect assessments is absolutely horrifying. The suggestion in the targets for the CSA that it should be looking for only 75 per cent. correct assessments seems to me to be even more horrifying.
1212
We have to say that the package of Bill plus regulation, which is before Parliament and which has been the policy of the Government, benefits the absent parent and particularly the absent parent in better-off conditions rather than the parent with care or the children. The benefit to the absent parent appears in the regulations; the improvements appear in this Bill. That is why we do not propose to vote against the Second Reading and why our approach to the Committee stage of the Bill will be constructive. We do not indulge in trench warfare, as I am sure the Minister will agree.
However, we must somehow ensure that what comes out of this legislation is benefit for children rather than benefit for the Treasury. Of the many lines of amendment about which my noble friend has given notice the most important is the issue of maintenance disregard. It is essential to make sure that a certain amount of the money that is obtained from the absent parent does not just go to the Treasury by being offset by a reduction in benefit but that it goes to the quality of life and the resources of the parent with care and the children. I believe that if we could achieve that—it does not have to entail enormous amounts of money—we should overcome some of the problems of the resistance of absent parents to making payments and some of the difficulties which the hard pressed staff of the Child Support Agency have experienced.
This is not a bad Bill. It is not as good a Bill as it should be. It does not address many of the problems that still exist. Perhaps they cannot be addressed simply in the context of the problem of child support. Perhaps the social policy issues are very much wider. But it is a Bill which deserves your Lordships' attention. It deserves careful consideration in Committee and on Report. I hope that the House will give it that attention.
5.17 p.m.
Lord Mackay of Ardbrecknish: My Lords, we have had an interesting debate. It has been a little shorter than the normal run of Second Reading debates in which I have participated in this Session. It is nonetheless welcome for that. As the noble Lord, Lord McIntosh, said, although the debate has been short and had a limited number of speakers, it has certainly been interesting and has effectively covered the field.
My noble friend Lady Faithfull indicated, perhaps in an attempt to throw a lifebelt in my general direction, that somehow she did not hold me responsible because I had not been involved in the 1991 Bill. I cannot even remember whether I had arrived in your Lordships' House at that time and therefore whether I had voted on that Bill. I may check on that point before we come to Committee.
The noble Earl, Lord Russell, who has been present at all my previous performances at the Dispatch Box on legislation this year, discussed the matter of my hat trick, which occurred one day when I had three Bills up in the air, so to speak, at the same time. I am happy to say that one of them is now safely down from the air and at the other end. I am now dealing with only two Bills.
I am grateful to the noble Lord, Lord Houghton, for remembering my maiden speech and the influence that it obviously had. He was very charitable in not reminding

1213
the House of some of my other speeches in response to his Bills to amend various dogs Acts. I am grateful to him for that. Perhaps he has a less charitable view of me on the subject of dogs than of whisky.
The debate showed that there were differences between the Government, myself and other noble Lords. But it also showed that there were considerable differences between some of the other noble Lords who spoke. Clearly, the official Opposition, as we heard from the noble Lord, Lord McIntosh of Haringey, and the noble Baroness, Lady Hollis of Heigham, understand, appreciate and wish to deal with the problem of absent parents paying their contribution to the maintenance of the children for whom they have responsibility. I am not sure that that is entirely agreed everywhere. I read the speeches in the other place at Third Reading and have to say to the noble Lord, Lord Houghton of Sowerby, that we have had significant Bill-do-now-pass speeches in the last two Bills in which I have been involved. The noble Baroness, Lady Hollis, made substantial speeches pointing out the error of my ways. I made substantial speeches at Third Reading pointing out why I was right. The noble Baroness is saying that she is waiting for repentance; she will have to wait for a long time.
In the other place the Opposition and the Government were accused by Mrs. Liz Lynne, the Liberal Democrat spokesman, of being in collusion on this matter. I do not believe that we are in collusion. But we are in agreement with the widespread and continuing support for the underlying principles of child support: that a parent should be responsible for supporting his child when he can afford to do so.
I was chided by someone for not dealing with the problems that have occurred with the agency since the Bill became an Act. However, I thought I had. Clearly, it has not been easy to translate that expression of support into practice. Reversing a culture where all too often the taxpayer took care of the bill was never likely to be easy. There has been resistance to the move away from the court system despite the inconsistent and unpredictable results with low awards of maintenance for children which that system produced. We now accept that we have gained some experience in the difficult business of running a child support system, and I hope that the House recognises that we have not been intransigent. We are working to restore the balance. We have undertaken a review of both the policy and the workings of the agency. We welcomed the helpful advice; we listened and acted. Indeed, we have gone further than the recommendations of the Social Security Select Committee and that is evidence of our commitment to get it right. The changes introduced in April are already producing tangible results for many absent parents; and those, together with the changes contained in this Bill, will improve the way in which maintenance is assessed, collected and enforced.
Perhaps I can deal with a number of the issues raised. There were a fair number, and I shall try to do as many as I can without trying the patience of your Lordships too long. On the question of maintenance disregard, to which the noble Baroness, Lady Hollis, and her noble friend Lord McIntosh of Haringey referred—I have no doubt we shall return to this issue—experience has shown that the best way of helping families to improve their standard of
1214
living is to ease the move from benefit dependence into work. Surveys of lone parents, and indeed some of the debates we have had in this House, show that the majority want to return to work, and there is no great disagreement between us on that.
Where there may be disagreement is that we believe that the £15 maintenance disregard within the in-work benefits—family credit, disability working allowance, housing benefit and council tax benefit—is a better way of providing help to parents with care to help themselves and their children rather than a disregard in income support. The Bill contains the provision I mentioned which will further improve work incentives—that is, the proposed maintenance bonus which is worth up to £1,000. That will give a boost for a parent with care when that parent moves into work. An income support disregard would make it more difficult for a parent with care to earn enough to make her better off in work than on benefit. It would increase her dependency on benefit rather than reduce it. Noble Lords will not be surprised when I say that we estimate that the long-run cost of a £5 per week disregard in all cases would be around £110 million a year. The proposed maintenance bonus is a more imaginative and effective use of resources.
The noble Earl, Lord Russell, asked, as did the noble Baroness, Lady Hollis, about the number of appeals and the number of departures. The noble Earl asked also why I thought we would have departures in only a small minority of cases. As I explained in my initial speech, the standard formula approach is needed to achieve consistent results in the majority of cases and the departure should only come into play in exceptional circumstances.
On the Australian experience, which has been prayed in aid on a number of occasions, in only 7 per cent. of Australian child maintenance cases is there an application for a departure. The Australian system is very different from the UK system. For example, the assessment is made on the basis of taxable income for the year before last; a broad percentage of gross income is taken for child support and there is no protected income to avoid hardship as there is in our system. There are various reasons therefore, which do not apply here, why Australian absent parents and parents with care may ask for departure. It would not be wise to try to extrapolate their experience in order to make estimates. Our own experience in social security is that appeal rates in general are under 2 per cent. However, for estimating purposes we assumed that applications for departures may well run closer to 6 per cent. or 7 per cent.
Baroness Hollis of Heigham: My Lords, can the Minister turn those percentages into figures? What numbers of appeals does he expect?
Lord Mackay of Ardbrecknish: My Lords, I am afraid that while on my feet I cannot turn the percentages into figures. I shall have to examine the calculations first and return to that in Committee.
The noble Earl, Lord Russell, brought to the Jobseekers Bill his anxieties in relation to the fear of violence felt by, largely, women. He mentioned it again today on the question of absent parents. The policy in relation to potential violence from a former partner appears to be working well in our current system. Between the agency's

1215
launch and 27th April this year, good cause not to name the father had been accepted in over 73,000 cases from over 156,000 which are being or have been investigated. In only 18,000 cases so far has it been necessary to impose a reduced benefit direction.
The noble Earl asked also about the formula. The formula provides for basic living costs. It also provides for protected income ensuring that an absent parent and any new family remain well above income support levels after paying maintenance. It is true that it does not provide for debts, for example. We believe that it would be wrong to allow any commitment automatically to come ahead of one's children. In individual cases the new departure system will be able to take account of specific expenses not included in the formula.
I listened with some interest to one of the noble Earl's many examples—he always brings a fair number to the Chamber—where, if I can paraphrase it, a man started with £900 and got down to paying out more for his daughter than he had, and therefore he had nothing left to live on. The noble Earl puzzled me because he started working from gross income. The formula works on net income. It allows for living expenses and housing costs. It is only after those deductions that we take 50p. in the pound until the maintenance requirement is met. I find it hard to follow the arithmetic of his case, though it is always easier to do so the following day when one reads Hansard. I shall look at it again tomorrow.
Earl Russell: My Lords, if I might assist the Minister, does he agree that the formula does not allow for council tax or 50 per cent. of superannuation payment?
Lord Mackay of Ardbrecknish: My Lords, I thought it did allow for 50 per cent. of superannuation payment. I am not sure about council tax; but if the noble Earl says that it does not allow for it, I shall accept that. Indeed, in a way people have to be left to pay their own bills, just as the rest of us have to pay our bills and things like council tax. Many people would be happy to be relieved of council tax commitments, but there you are.
The other question relating to property was the property settlement example where the parent with care's new partner—obviously not very well chosen for financial management attributes—had squandered all the resources. The new provisions will allow for that type of case to be dealt with. The absent parent will receive his allowance for the settlement irrespective of the fact that the money has now been spent. That should help in that circumstance.
Still on property, I was asked by the noble Baroness what will be done to help parents with care on income support when help with mortgage interest payments for the first nine months is withdrawn. We are considering the report by the Social Security Advisory Committee on the new arrangements for income support mortgage interest. I have to say that the noble Baroness will not tempt me into forecasting our conclusions, but they should be along shortly.
The noble Earl asked me about the father of step-children who is dead and therefore can no longer maintain them. In such cases a departure can be asked for.
1216
The noble Lord, Lord Houghton of Sowerby, asked me about the expression,
"assets which do not produce income are capable of producing income".
While that might be a rather legalistic phrasing in the Bill, it should not prevent us from recognising the intention behind it, which is that in this case we intend to allow a parent with care to ask for a departure on the ground that the absent parent is diverting what should properly be income into some form of asset so that his child or children support liability would be lower than it ought to be. That is why that rather legalistic phrase is in the Bill.
The noble Lord, Lord Sowerby—
Noble Lords: Oh!
Lord Mackay of Ardbrecknish: My Lords, I am sorry about that, but who am Ito complain about our titles when I have one which I constantly have to pronounce and spell. The noble Lord, Lord Houghton, and the noble Baroness, Lady Hollis, asked me about the agency's performance, a matter raised by the ombudsman and by others. As I admitted at the beginning of my contribution, the agency had a difficult start. But in the past year it has undertaken a full review of its business and it has taken measures to improve both its productivity and the quality of its service. That includes methods for improving accuracy, additional check-ups to prevent errors, enhanced training for staff, better targeted quality checks and new working arrangements. As a result, we believe that the improvements already apparent during the second year will be built on during this year.
The Bill sets out that around 750 staff will be required to administer the scheme, split between the agency and the independent tribunal service. As old cases—pre-departure scheme ones—are dealt with, the number of staff will be reduced. The news of the agency's performance is that by the end of March 1995 it had completed more than 450,000 maintenance assessments, issued more than 1 million application forms to parents with care and secured more than £890 million in benefits savings. Full details of the agency's activities are placed in the Library of the House each month.
Perhaps I may turn to the speech of the noble and learned Lord, Lord Simon of Glaisdale, who has an amendment down on the Order Paper, and take up one or two of the points that he made. He suggested that it was contrary to the rule of law for the Child Support Agency to use distress for enforcement. As he will know, the use of distress to enforce a civil debt is normal. The agency does not and cannot employ distress without a liability order issued by the courts.
Lord Simon of Glaisdale: My Lords, what is objected to is that the child support officer could enter private premises and interrogate employers and fellow employees who would be bound to answer as otherwise they would incur a penalty. It was that that was said to be contrary to the rule of law, because officials enjoy that and ordinary citizens, rightly, do not.
Lord Mackay of Ardbrecknish: My Lords, I was going to come on to that point but I shall do so now rather than later. I refer to the question of Inland Revenue confidentiality, which was raised not only by the noble

1217
and learned Lord but also by the noble Lord, Lord Houghton of Sowerby. The CSA does not approach the Inland Revenue for information on income. There are no powers for the Revenue's records to be used except to determine the current address of an absent parent or the current employer of an absent parent. The CSA has no power to ask the Revenue for any information except in those two areas. It has power to send in inspectors to obtain information from unco-operative employers but it has done so in only a handful of cases so far. It may approach employers for information as a matter of routine. The fact that inspectors who are appointed to acquire information under the Child Support Act have that power is not unlike other inspectors in similar areas where they are appointed for the purposes of gathering information. For example, National Insurance inspectors enter premises to examine wages and other records. As I said, in the case of Child Support Agency inspectors approaching the Inland Revenue, it is to check on addresses and not on income. So I do not believe the inspectors have been given sweeping powers that are not given anywhere else.
The noble and learned Lord, Lord Simon of Glaisdale, and my noble friend Lady Faithfull rather took us back to the court system and looked back as if, before the Child Support Agency, all was well. The system before 1993 was fragmented. Assessments were being done in a range of courts as well as in DSS local offices. They were inconsistent and maintenance was often not paid. Fewer than 50 per cent. of lone parents received maintenance. It is easy to think that the past was ideal, especially when we remember some aspects of the agency's earlier performance. But the agency is improving all the time.
Earl Russell: My Lords, has not the noble Baroness, Lady Faithful!, given us the explanation of why the amount of maintenance paid was so little?
Lord Mackay of Ardbrecknish: My Lords, I heard that and I explained that I think we look back perhaps through more rose-tinted spectacles than the situation of those years merits. In the year prior to the introduction of the scheme only around 20 per cent. of parents with care on income support had maintenance arranged. In that year £330 million in benefits savings were secured. The position in 1994–95 had changed so that 96 per cent. of the agency's work involved parents on benefit, of whom an estimated 77 per cent. had not previously received maintenance. That secured £479 million of benefits savings.
The noble and learned Lord, Lord Simon of Glaisdale, said that the 1991 Act had caused great public expense. In 1994–95 the agency achieved benefits savings of £479 million, at an administrative cost of £184 million. It is expected to achieve savings of £540 million next year, with an administrative cost of £183 million.
The noble and learned Lord said that maintenance for ex-partners and for children were intimately inter-related and that we should abandon an agency and formula-related system and revert to a court-related system. We have encouraged adults who separate to reach a clean-break agreement so that each can then rebuild his or her life. But there can be no clean break between parent and child. There is no full and final settlement. Indeed, the
1218
noble Baroness, Lady Hollis of Heigham, put that point in her usual very strong manner. It is right that the courts should determine the disposition of assets between the adults, but we believe that the best way of ensuring proper maintenance for children is through a fair and consistent formula system with departures, where appropriate, in a minority of cases.
We believe that the Bill will make the child support system a fairer system. Any absent parent who has special expenses and genuine difficulties in meeting his commitments will now have the opportunity for his case to be looked at again. Absent parents will not be able to say that their assessment is unfair. I trust that the noble Baroness will not be able to accuse me of bending to the campaigns of organisations like, I suppose, Network against the Child Support Act, where it would appear she was suggesting that former partners were being rewarded for their law breaking. That is certainly not our intention. We believe that former partners will not be able reasonably to refuse to pay. Anyone simply intent on avoiding his responsibilities to his children will find the agency better equipped to secure his compliance. The whole purpose of the child support scheme continues to be to secure more maintenance more regularly for more children. I believe that these changes will help to achieve that aim.
I do not know what the noble and learned Lord, Lord Simon of Glaisdale, intends to do, but if he were to respond to the request of the noble Earl, Lord Russell, and my noble friend Lady Faithfull and put his amendment to the test, I trust that the rest of my noble friends will support me in the Lobby. I trust that your Lordships—
Baroness Faithfull: My Lords, I am still the Minister's friend.
Lord Mackay of Ardbrecknish: My Lords, I shall not split hairs about that. I hope that the rest of my noble friends will support me in the Lobby and that the House will give this Bill a Second Reading.
5.40 p.m.
Lord Simon of Glaisdale: My Lords, I am extremely grateful to noble Lords who have participated in this debate. Of those who spoke only the noble Lord, Lord McIntosh, and the Minister did not participate in 1991. We are very grateful for the thoughtful way in which the noble Lord, Lord McIntosh, put this question in its wider social context. As for the Minister, I presume to say that he did valiantly. Of course, he has to defend his department, but I respectfully join with the noble Earl in expressing sympathy with the Minister about the case that he has to meet.
I believe that the noble Baroness misunderstood—I am sure that it was my fault—as to the rule of law. I did not say that erecting a child support agency as a statutory agency in place of the jurisdiction of the magistrates' court was in itself an infringement of the rule of law. But I adopt what the noble Lord, Lord Houghton of Sowerby, said. It is a monstrous arrogation and proliferation of bureaucracy. It is an aggrandisement of bureaucracy at the expense of the judiciary. What I did say was contrary to the rule of law was based on what I cited from Dicey; namely, that it is a fundamental part of the rule of law that

1219
you do not put officials in an exceptional position; that they should be like their fellow citizens, amenable to the ordinary law of the land.
I indicated four respects in which that was infringed in 1991, and this Act does nothing to remedy the situation. The first was to give officials the right to enter private premises and, if they were denied, they were denied on the threat of a penalty. The second was to interrogate employers of fellow employees as to the circumstances of the person they were investigating. That again is an exceptional power. I am bound to ask from the Cross-Benches this question: what are a Conservative Government doing introducing such a power?
The third point I indicated was not referred to at all, even obliquely, by the Minister—that is to say, the exceptional power of distress. As your Lordships know, that is a self-remedy to recover a debt. It is a very harsh process. The common law has fringed it around with safeguards. All those safeguards are swept away in the case of officials. It is that, with the other matters, which are contrary to the rule of law. I ask again: what are a Conservative Government doing about that?
The fourth matter is one to which the noble Lord, Lord Houghton of Sowerby, referred so robustly; that is the power to infringe the confidentiality of the Inland Revenue. The Minister said that it is a limited power. Even so, it is a grotesque power to put into the hands of officials. The Minister said that as regards some of those matters there are precedents. So be it. That is the way in which bureaucracy works. It encroaches from precedent to precedent. In the last century it was said that freedom goes from precedent to precedent. Under this regime it is bureaucracy that goes from precedent to precedent. It is a major matter that these four points are not faced at all in this Bill and are barely defended by the Minister in his very able speeches.
Contrary to what the noble Earl has advocated, the noble Baroness wants to keep the Child Support Agency. I am afraid that she has contaminated the noble Lord, Lord McIntosh of Haringey. I am afraid that she has allowed a cloven Fabian foot to escape from her elegant footwear. I entirely agree with the noble Earl. We want to return to a judicial system. Naturally, it was not perfect, but magistrates are human beings, as are, dare I say, the officials who put forward these two Bills. Of course the magistrates' courts system could be improved. It could have been greatly improved at a tenth of the effort which has been put into the Child Support Agency if that effort had been devoted to trying to improve the system of the magistrates' matrimonial jurisdiction.
The noble Earl invited me to divide the House on this issue. I am most grateful to him for saying that he will support me, as did the noble Baroness, Lady Faithfull, and, I believe, the noble Lord, Lord Houghton of Sowerby. But during the speech of the Minister I have been conscious of the way in which the Benches on my left have been filling up. I am also conscious of absent friends who may be lurking outside the Chamber. To divide the House, realistically looking at it, would at least show that there are more just men in your Lordships' House than were found in the cities of the plain. But the result in the end would be the same. The noble Lord, Lord
1220
Strathclyde, would emerge as flagella intacta as he has proved to date. I shall not withdraw the amendment because that might seem to be an admission that the Government have vindicated their arguments and I do not think that anybody listening to the debate could really claim that to be so, so I shall simply go as far as a collection of voices and shall not ask your Lordships to divide on the matter.
The Deputy Speaker (Viscount Allenby of Megiddo): My Lords, the original Question was that the Bill be now read a second time, since when an amendment has been moved at the end to insert the words set out on the Order Paper. The Question is that the amendment be agreed to. As many as are of that opinion shall say, "Content". To the contrary, "Not-Content".
Noble Lords: Not-Content.
The Deputy Speaker: The Not-Contents have it. The amendment is therefore negatived.
On Question, Bill read a second time and committed to a Committee of the Whole House.

Commonwealth Development Corporation (No. 2) Bill [H.L.]
5.50 p.m.
Lord Trefgarne: 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 Trefgarne.)
On Question, Motion agreed to
House in Committee accordingly.
[The DEPUTY CHAIRMAN OF COMMITTEES in the Chair.]
Clause 1 [Powers of the Commonwealth Development Corporation]:
Lord Trefgarne Lord Trefgarne moved Amendment No. 1:
Page 1, line 5, leave out ("Section 2 or).
The noble Lord said: In moving this amendment, I should like to speak to a number of other amendments. All of the amendments that I have tabled are in the nature of drafting amendments. They are in no case intended to change the substance of the Bill. On the contrary, they are intended simply to improve the drafting, wording and effect of the Bill. They are the result of widespread consultations between myself and the officials responsible for these things in various places.
Amendment No. 1 is a formal drafting amendment and I do not wish to detain the Committee on it. Moving then to Amendment No. 5, this amendment is intended to make no change to the substance of the Bill. As I explained on Second Reading, the purpose of Clauses 1, 2 and 3 of the Bill is to remove the limitation in the present CDC Act on the CDC purchasing existing shares, securities or assets, which severely inhibits the role which CDC will be playing to facilitate projects involving rehabilitation, buy-outs, buy-ins and similar "unbundling". I do not want to detain your Lordships on this extensive list of mere drafting amendments, and I therefore beg to move Amendment No. 1.
On Question, amendment agreed to.
Lord Trefgarne Lord Trefgarne moved Amendment No.2:
Page 1, line 6, leave out ("as follows") and insert ("in accordance with subsections (2) to (5B) below.").
The noble Lord said: Again this is a straightforward drafting amendment. I beg to move.
On Question, amendment agreed to.
Lord Judd Lord Judd moved Amendment No. 3:
Page 1, line 6, at end insert:
("( ) After subsection (1) there shall be inserted—
"(1A) Up to 25 per cent of Corporation investment may be allocated to assisting overseas countries not currently in receipt of Corporation funds.
(1B) When considering projects for investment, the Corporation shall have power to take cognisance of the 1994 Priority Objectives listed by the Overseas Development Administration in its Annual Report."").
The noble Lord said: The purpose of this amendment is to get on the record a cast-iron assurance from the Minister that she and the CDC are together firmly resolved to keep the corporation as an instrument of overall aid policy, with that policy's primary objective, as we understand it, of combating poverty by sustained development. It is also intended similarly to get equally firmly on the record art assurance that there will be no question of using the position of strength built up by the CDC, with its existing geographical involvements, as a base for speculating elsewhere where the glitter of short-term high returns may be attractive, thereby perhaps turning the corporation's back on at least some of those with whom it has co-operated successfully in the past or whose needs may be greater.
Whatever the arguments by CDC executives that the corporation has no intention of changing market focus from existing Commonwealth countries, page 11 of the corporate plan speaks of targeting, "turning-point countries" with their "high growth potential" and "comprehensive programmes of economic reform"—language which I take it is intended to refer to the prospects of privatisation.
If the CDC wants to be a bank, it has to realise that it is not a big bank. We shall therefore need to be convinced of, for example, the operational soundness of venturing into places like China, South-East Asia and Latin America. That is in addition to the importance of being absolutely clear about how greater involvement in countries like China can be reconciled with the Minister's repeated commitment to human rights and good governance.
On Second Reading the Minister underlined that at least 70 per cent. of new investment should be in poorer countries. That is reflected on page 20 of the corporation's current corporate plan. If we look carefully at the chart on page 20, however, we see interestingly that, although board approvals in the private sector are expected to rise from 90 per cent. in 1994 to 98 per cent. in 1997, board approvals in poor countries are expected to fall from 80 per cent. to 70 per cent. in the same period. It is imperative that the Minister addresses that point in her reply.
On page 7 of the corporate plan we are told in highlighted print that the fundamental objective of the corporation is,
1222
"to contribute to economic development by investing in and supporting the operations of financially viable and developmentally sound business enterprises".
No mention here of the Commonwealth or of poor countries.
Perhaps it is not surprising, therefore, that some sceptics have suggested that that would make CDC little different from Barclays International. They have asked why we need a CDC if it has no specific. Commonwealth commitment and no overriding criterion of seeking development in poorer countries. There is genuine anxiety that CDC is becoming over-ambitious about its rate of return on investment. According to the corporate plan, that is to go up from 8.4 per cent. in 1995 (which is already better than it could do in the long run by investing in UK blue-chip equities) to 9.9 per cent. in 1997. The fear is that in consequence CDC will increasingly have to look for isolated high return opportunities elsewhere. They are likely to be high risk. Is that really the way CDC wants to go? We need to know a good deal about the real rationale behind that policy.
The Minister and the board must surely be aware of the misgivings which are generated when everything to which I have referred is coupled with the reference on page 24 of the plan to "performance-related culture", with the inevitable deduction that performance in this context is above all about the return on financial investment rather than about a healthy balance between essential financial disciplines and social development as part of the aid and development programme.
The Minister is a consummate politician. If I may say so, she is a real charmer. At times I believe that she could be a masterful salesman of refrigerators to Eskimos, but we cannot let her get away without facing the analysis that this apparently innocuous little Bill of the noble Lord, Lord Trefgarne, is so warmly supported by the Government because with all its emphasis on achieving high rates of return—according to page 48 of the plan, there is the prospect of a net asset position of £1,309 million in 1996—CDC could be sold off quite easily to a major bank, allowing yet another nice little nest-egg for the Chancellor to add to a pre-election tax-cutting Budget. No, the Minister and, indeed, the noble Lord, Lord Trefgarne, still have a good deal of convincing to do. They must reassure us today as to how, well into the future, the proposed changes will fulfil the purpose of the corporation as enshrined in the 1978 Act; namely:
"to assist overseas countries … in the development of their economies".
That is a very much bigger challenge than merely concentrating upon maximising rates of return.
By restraining any excesses in the: new financial enthusiasms, by retaining a significant commitment to spheres where CDC has an effective proven record, our amendment is intended to help deal with the uncertainties which have arisen. I fervently hope that by their specific undertakings today the Minister and the noble Lord, Lord Trefgarne, will render the amendment unnecessary. I beg to move.
6 p.m.
Lord Thurlow: The noble Lord, Lord Judd, has made our hair stand on end by painting a picture of possible

1223
changes in the administration and policies of the CDC, which would, in effect, transform it from the CDC to which we have become used over so many years and indeed whose purpose we have admired so much for so many years. I have some sympathy of course with the point that the noble Lord made: that if such a transformation were to take effect none of us in the House would welcome it, including, I am sure, those on the Government Benches and certainly not the noble Lord, Lord Trefgarne.
It seems to me that there are two large and substantial safeguards against such a transformation. First, there is the practice of close consultation between the CDC and the ODA. As I understand it, that has become an institutional convention, and I would find it difficult to believe that in the course of such periodical and renewed consultations changes of the kind that the noble Lord, Lord Judd, fears would not come to light and be disposed of.
The second safeguard is the track record. Those of us who have watched the work of the CDC over the years have great confidence in the way that its work has developed and the manner in which it has achieved its objectives. I for one retain confidence that in the future the objectives and principles will continue to determine how changes are handled, and, I believe, like the noble Lord, Lord Trefgarne, as was made clear on Second Reading, that those will contribute greatly to valuable further expansion to the great benefit of the recipient countries, including the poorer countries.
Baroness Chalker of Wallasey: It may be for the convenience of the Committee if I intervene at this stage. When the noble Lord, Lord Judd, was inviting me to think about selling fridges to Eskimos I wondered whether I should not just put him right. If an Eskimo really wanted a fridge and wanted to pay the right price for it, I would be willing to sell it to him, but my concern is to get fridges for drugs to hot countries; in other words, I look at the real situation and what is needed. That is when I begin my selling. I do not sell things to people who neither want them nor can afford to pay for them.
With that preamble, I say to the noble Lord, Lord Judd, that there is nothing in his amendment except that it is a probing amendment. He believes genuinely, as do the Government, that aid policy and indeed the CDC (the private investment arm of aid policy) are designed to combat poverty by sustainable development. That is the cast-iron assurance for which he asked me.
The amendments tabled by the noble Lord would prevent more than 25 per cent. of CDC funds going to countries in which the CDC does not currently invest, and would also give the CDC power to take account of ODA priorities. There is nothing in my noble friend's Bill as it stands that would change the spread of countries in which the CDC works. Rather, the provisions which are the result of the quinquennial review of the CDC will enable it to respond more effectively to the changing needs of those countries; in other words, to provide for the hot countries the fridges in which to keep their immunisation drugs. I return to the analogy.
1224
We have always looked to the CDC to take a view on where it is best placed to deploy its particular skills. It needs specific ministerial permission to extend its activities to new countries, or indeed new ventures, which the noble Lord feared might take it down the path of suddenly turning itself into a bank. I can assure the noble Lord that that is not within its remit. We obviously consider carefully each application, looking at CDC's remit and wider aid policy interests. Nevertheless, it is right that additions are made from time to time. I am sure that the noble Lord, Lord Judd, welcomed the important recent extension of CDC's operations to South Africa, for instance.
The noble Lord mentioned China, Latin America, and other countries in South-East Asia in general terms. Investment in China is not an immediate prospect. The CDC has not asked to operate there. I realise that there will always be informal discussions between officials of the issues that might be addressed should it so ask, but it has not done so.
With regard to Latin America, I am not aware of any great interest on the part of CDC in extending its work into South America. It has some recent permissions to operate in a number of central American countries, but those are all countries which fit entirely within the remit which the noble Lord would give it: to combat poverty by sustainable development. I speak of Nicaragua in 1991, the Dominican Republic in 1992, Guatemala in 1993 and E1 Salvador last year. Those fit extremely well alongside the CDC's regional operations in the Caribbean and are certainly nothing to be afraid of. The same policy goes for other countries as well.
We realise that many countries do not have the respect for the rule of law and human rights that we would wish them to have, but we know that we persuade better through contact with them rather than eliminating prospects for change by isolating them still further.
Perhaps I may return to our present position. The main driver of the CDC's country coverage is the 70 per cent. target which I have set for poor countries. Although the noble Lord made play with the 1994 versus the 1997 figures in the CDC plan, the 70 per cent. target is reasonable when one looks at the per capita incomes of the poor countries and their proportion, in particular within the Commonwealth. I believe that that 70 per cent. target is as it should be and it certainly is not being changed. When I intervened on Second Reading, I said that there should be no diversion of activity to middle-income countries. The CDC is well aware of the fact that the ODA will watch that most carefully.
The CDC still has a large proportion of its investments in Commonwealth countries; it is now some 71 per cent. I am delighted that the majority of its offices are in Commonwealth countries, although that does not mean that it should operate only in Commonwealth countries—we have never restricted it to that. I understand that the CDC has set an internal target of putting not less than 30 per cent. of its new investments in sub-Saharan Africa. That is where there is a concentration of Commonwealth countries and of need. We welcome what the CDC is doing. It has more than half of its

1225
overseas offices in sub-Saharan Africa and it is constantly looking for new ways to stimulate the economies of those countries.
There is much that one could say about the role of the CDC and our objectives. Above all, using different instruments, we seek to address the individual objectives of countries. The CDC has a particular focus on the priority objectives of promoting economic reform and enhancing productive capacity, rather than the equally important objectives, which the ODA certainly has, of better education and health, children by choice and so forth. Therefore, the CDC is an important vehicle and I believe that through our established strategic planning system it already has clear regard to the objectives of the ODA. It is a public-sector body and as such it will continue to do so. In that regard, no change is envisaged either by my department or in the Bill brought forward by my noble friend Lord Trefgarne. That is why I do not believe that it would be appropriate to write into the Bill as specific a requirement as that proposed by the noble Lord, Lord Judd, in his amendment, and I urge the Committee to reject it.
6.15 p.m.
Lord Trefgarne: I wish to deal in more general terms with the anxieties expressed by the noble Lords, Lord Judd and Lord Rea, not only today but during the earlier stage of the Bill. In responding to the amendments tabled by both noble Lords, I propose to look beyond their texts, as did my noble friend Lady Chalker most eloquently and helpfully, and to direct my remarks to the anxieties which seem to underlie them. They were addressed by the noble Lord, Lord Judd, today and in his speech on Second Reading. He made clear the fact that what matters is not only the present situation, with the present human chemistry, but what might be opened up to a completely different set of players at some time in the future.
It is right that Members of the Committee should air their anxieties, many of which I have shared and would continue to share had I not had the benefit of receiving a great deal of information from the corporation about itself and its operations. I understand that recently the noble Lords, Lord Judd and Lord Rea, had discussions with the corporation. It is also right that the Committee stage of the Bill should provide an occasion on which Members should be more generally and publicly reassured on such issues. Therefore, I counsel against assigning to my Bill any greater importance than it has.
Neither the Bill as a whole nor any amendment which stands in my name is intended to change the CDC, its purpose or the long-standing principles on which it operates. All are centred on assisting overseas countries to achieve sustainable economic development. The CDC's sole statutory purpose under Section 2(1) of the 1978 Act is to assist overseas countries in the development of their economies. It has no separate or hidden agenda. Although, obviously, it seeks to invest in financially and economically viable projects, and thus to operate in surplus, it does not do that for its own sake but for the benefits of the countries in which it operates.
An enfeebled CDC is no good to anyone. The CDC has no shareholders; its surpluses are not distributed; and the greater the surplus the more development the CDC can
1226
undertake. Development is at the very centre of the CDC. That is reflected even in its logo, where the central D is printed much larger and in a more striking form than the Cs on either side. The CDC is and will remain first and foremost a development organisation.
The wording of Section 2 of the 1978 consolidating Act, which this Bill will amend, has been substantially unchanged since 1956. This Bill and the amendments seek to give the CDC means which are appropriate in this day and age, given the present economic order in the developing countries and the changing priorities in the host countries themselves. There is nothing sinister in the Bill. The amendments, which employ words such as "reorganisation", "rationalisation" and "reconstruction", seek to describe the possible means by which, among other things, productive capacity may ultimately be increased and solid economic development achieved.
Nor will the Bill and the amendments affect the CDC's commitment to pursue its targets; for instance, providing assistance predominantly to poor countries. In 1994, 82 per cent. of approvals were in poor countries, which is well above the target set by Ministers. Nor will the Bill affect the CDC's practice of assessing the economic rate of return as part of project appraisal and its consideration of other development criteria, such as environmental impact, health and safety and other social issues.
Therefore, it is safe to assume that the CDC, following the enactment of the Bill with its amendments, will be pursuing the same objectives by substantially the same means but with important new powers to do better more effectively, at an earlier stage and in a more fundamental way. For example, in a single southern African country there is at present a long list of projects which would manifestly benefit the economy of the country concerned but which are either outside the CDC's present powers or will severely challenge the lawyers to construct the project in such a way as to bring it within its present powers.
It cannot be in the CDC's interests—nor in the interests of those, including ultimately Parliament, whose task it is to monitor the CDC's operations—for the CDC to be operating at the margin of its powers. It has been given a mandate within the aid programme administered by the ODA to be the principal instrument of aid in the private sector. That reflects current economic thinking throughout the developed and developing world, as is evidenced by the IMF and World Bank-promoted economic recovery programmes. Sometimes following such a programme, economic conditions in a country may be more robust but simply not conducive to new investment. In some cases, the CDC as a development organisation is almost isolated in its willingness to stay with investment in a host country and to act as a vital catalyst in demonstrating that profitable investment can be made.
Given the widespread support for the work of the corporation which was expressed in all parts of the Chamber during the passage of the recent Government CDC Bill and during the Second Reading debate of this Bill, I believe that Parliament may be willing to give the CDC the tools that it needs to fulfil its mandate as efficiently and effectively as possible. My noble friend

1227
Lady Chalker touched on the question of the countries in which the CDC may be allowed to operate and therefore I do not need to dwell on that matter.
I turn now to the criticism that has been made that CDC is in some way duplicating the operations of other institutions. It is not. Members of the Committee will not need reminding of the size of the task in relation to development in the poorer countries. As CDC does not intend to operate in Eastern Europe, there is clearly no conflict with the operations of the European Bank for Reconstruction and Development, although even in its area of operation, the EBRD would presumably not do everything which is required. Other institutions are active there, including other bilateral institutions of European Union countries broadly comparable with CDC.
Although flows of private capital are increasing gratifyingly in global terms, they still tend to be concentrated in Asia and, to some extent, in Latin America. In the poorer countries—in particular in sub-Saharan Africa, where CDC concentrates its efforts—the task requires the efforts of more than one institution, although probably none offers quite the unique contribution which CDC has traditionally made and continues to make, particularly by offering management, especially in agri-business.
CDC has no intention of departing from its core activities and nothing in the Bill nor the amendments implies that. CDC's international reputation is built largely on its capacity to assist in making development happen. That frequently involves a hands-on approach which leads to corporate management. That area of CDC's activities has been strengthened recently by the creation of a managed business department which currently has responsibility for some 27 businesses, employing 44,000 people mainly in agri-business but also in industry. Fourteen of those businesses are in sub-Saharan Africa.
How then will the extended powers proposed in this Bill help? The most important proposed new power is that which, in the language of the amendments, will enable CDC to be involved in reorganisation, rationalisation and reconstruction of enterprises. At present CDC can be involved only in the promotion of new or the expansion of existing enterprises with the implication that CDC's funds can be applied normally only to funding the purchase of new shares, securities or assets so as to create some additionality.
As I outlined on Second Reading, that restriction has seriously inhibited CDC's role in a number of projects which are eminently worth while for the benefit of the economies of host countries. Whether an existing enterprise is in the private or public sector, it is frequently a change of ownership with the consequential change of management which is the key to transforming the enterprise for the benefit of the economy. That always involves an element of organisation, rationalisation or reconstruction, whether corporate or financial.
Expansion often follows at a significantly later stage in the process. If CDC is to be confined to investing in the expansion of the enterprise, it will be deprived of having influence at the vital formative stage. To require CDC to participate in the equity at a significantly more expensive
1228
stage when the enterprise is ready to undertake its expansion is unduly limiting. That confines the CDC to funding the expansion with loan only, with less opportunity to influence outcomes or share in any upside potential. If CDC shares in the risk of investing in poor developing countries, it seems reasonable that it should share also in the reward. The greater the reward, the greater the resource CDC has to undertake more development. Present limitations prevent many worthwhile projects even being considered. A number of CDC's representatives regard that as a serious obstacle to bringing forward new projects.
In the area of capital or other financial markets, CDC is not looking for powers to circulate by way of passive investment. It is looking to have positive development benefit directed less to investment activity than focusing on the promotion of successful funds which may attract private sector investors. There may be cases where the economic development of host countries is assisted by the promotion of funds which are able to invest in existing equities. It was the inability of CDC to fulfil its natural and expected role as primary UK investor in the Commonwealth Equity Fund, promoted by Commonwealth Finance Ministers and heads of government in 1988–89, that first prompted CDC, supported by the ODA, to seek this power. Even then there were proposals for a rapid enabling Bill but that had to be dropped because of pressures on the parliamentary timetable. Since then, CDC has had to decline invitations to participate in funds sponsored by IFC, the private sector affiliate of the World Bank designed to benefit the emerging economies of overseas countries.
The extended power is not intended to enable CDC to engage in derivatives or other more exotic markets. The Committee will remember that, before any investment decision is made by CDC, the corporation must be satisfied that it will contribute to its sole purpose of assisting the development of economies in host countries.
In regard to the extended power of consultancy, it is necessary only to facilitate the occasional positive response to a request for consultancy in or in relation to developing countries but which is unrelated to a project in which CDC might invest. It is likely to be in an area where CDC has particular knowledge and experience through its core activities, including financial intermediaries and institution-building.
I hope that I have dealt with the main anxieties expressed by the noble Lords, Lord Judd and Lord Rea, but, if I can give any further help or reassurance, I shall be happy to do so either now or in response to later amendments.
Lord Judd: I hope that the noble Lord, Lord Trefgarne, will forgive me if I do not deal with all the points that he raised at this stage, because I am sure that Members of the Committee will agree that, in a very useful intervention, he has dealt with some of the matters which arise under subsequent amendments.
First, I turn to what the noble Lord, Lord Thurlow, said, in what I thought was a very considered and helpful intervention. He emphasised the tremendous record of good working relationships between CDC and Ministers and the importance of consultation. That is certainly my

1229
experience. It is part of the fine tradition which we all applaud. That is why it has worked well. But that is a tradition based upon the reasonableness of Ministers and Ministers' understanding of the issues in relation to development and the needs of countries with which the noble Lord is so well acquainted.
My anxiety is that we cannot be absolutely certain, particularly in the times in which we live, that that balanced reasonableness will always exist. I am worried that inadvertently, we shall open the way for people who have very different approaches to CDC's task. None of us has any anxieties about the noble Baroness opposite. We all know that she masquerades on those Benches but she belongs to us. We have no difficulty about that. But the difficulty is that she cannot be expected to be there for ever. We know also that quite often she has problems and difficulties in seeing that her priorities prevail. There are others elsewhere in government who sometimes undermine her intentions. For those reasons, we have raised the anxieties behind these amendments.
The Minister spoke—I said that she is a charmer and I thought that she was at her best this evening—about her joy in selling people what they want. I do not doubt that she gets tremendous satisfaction from selling people what they want. But that is not the issue. Which people are we talking about? Are we talking about the impoverished millions still in the third world whom we wish to bring in to participate in the real economy? That is a task to which the CDC has lent itself with distinction in the past. Are we talking about the overwhelming desire of millions of people in Africa, Asia, and Latin America who wish for nothing more than to be able to become productive? Or are we talking about business people in the third world who may not share that priority and who see business as an opportunity to maximise personal advantage? We need to be reassured about that.
The Minister referred to South Africa. She knew that she would strike a chord when she did it because she and I have a strong mutual interest in South Africa and the well-being of that great country. But it is not just a question of ensuring that businessmen or business interests in South Africa are helped; it is which businessmen and which business interests are helped and how far those interests and those business people are committed to the people as a whole and to ensuring that their businesses contribute to social development. That of course brings us to the essence of what is behind so much of the anxiety about change in the role of the CDC.
While we have such admiration for CDC's record in the past, there must always be a tension. That tension is between business disciplines, which we all applaud—a belief that the private sector has a real contribution to make—again, that is something upon which we are all agreed—the desire to help the private sector make that contribution effectively, and at the same time, the need to ensure that all that is attuned to the strategy of social development for the people as a whole and maximising the number of those who are put in a position in which they can find their own way forward by participating in the processes of self-generating development.
When I refer to what I might describe as that "necessary tension", I must say that I could not help being a little confused by what the Minister said this afternoon. Again,
1230
the noble Baroness emphasised her commitment to 70 per cent. However, if she will forgive me for saying so, what the noble Baroness glossed over is the fact that in 1994 it was 80 per cent. in the poorer countries. Therefore, that is a decline in the proportionate sense in the period of the business plan. I see that the Minister wishes to intervene. I give way.
6.30 p.m.
Baroness Chalker of Wallasey: I am much obliged. I am sorry that the noble Lord, Lord Judd, either misheard me or I was perhaps indistinct; indeed, only the record of Hansard will show which is the case. However, perhaps I may remind the noble Lord that the CDC has to operate within the ministerial directives which I set out in my statement to the House last year following the quinquennial review. Those directives stress the following: at least 70 per cent. of new investment should be in poor countries; and there should be a rate of return on capital of at least 8 per cent. The CDC has to meet both those objectives. Therefore it is no good the noble Lord, Lord Judd, quoting selectively, as he did when speaking to an earlier amendment, from the corporate plan on the objectives without mentioning its work for the other sectors. Both those objectives have to be achieved. I hope that we are now clear that at least 70 per cent. of new investment must be in poor countries and that a rate of return on capital of at least 8 per cent. must be achieved.
Lord Judd: I am most grateful to the Minister for her intervention. However, it still leaves unanswered—if the noble Baroness will forgive me for saying so—the fact that in 1994 the figure was 80 per cent. in respect of poorer countries. The Minister also referred to the target of at least 8 per cent. return; indeed, the CDC prides itself on doing better. In its corporate plan, it has set itself the objective of moving to 9.9 per cent. as I said when introducing the amendment. That is where the anxieties begin to arise because, inevitably, people begin to feel that the balance between the business discipline and the social purpose is getting out of hand. In that sense, it is inevitable that people will look most closely at what is happening.
Before I conclude, perhaps I may deal with one or two of the points raised by the noble Lord, Lord Trefgarne. He said that his Bill was not about changing the role of the CDC. I find that a bit disingenuous; indeed, it seems to me that the legislation is very much about extending and thereby changing the role of the corporation. The noble Lord should be proud that he is introducing a Bill which has purpose. It is not just a cypher, it is a real Bill with a real purpose. All we are saying is that, as the change takes place, we must be quite certain not just about what happens now but also about what may happen down the road.
I was both interested and reassured by what the noble Lord said about the emphasis on the "hands-on" approach by the CDC and about the importance of the creation of the managed business department within the corporation. Those are all good things. However, we have listened to all the arguments. There is much meat and much good intent there. We shall want to take the matter away and ponder carefully upon it. As I said, I do not in any way question the commitment of the present Minister; nor, I

1231
think, do I challenge the present leadership of the CDC. However, we do not want the CDC inadvertently to desert the distinguished and effective role that it has played in development as it chases after a new, glittering temptation of becoming a kind of investment bank. Of course, we made such points on Second Reading. In the present circumstances, I believe that it is important to look most carefully at what the Minister said. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Trefgarne Lord Trefgarne moved Amendment No. 4:
Page 1, line 7, after ("(2) (a)") insert ("of section 2 (purpose and powers of Corporation)").
The noble Lord said: When I spoke to Amendment No. 1 a few moments ago, I inadvertently jumbled the amendments to which I was also supposed to be speaking. I apologise to Members of the Committee for that fact. I should have said that I was speaking at the same time to Amendments Nos. 2, 4, 8, 12 and 16. We have of course now dealt with Amendment No. 2 and are currently dealing with Amendment No. 4. Moreover, in a moment or two we shall be dealing with Amendments Nos. 8, 12 and 16. However, the arguments are not the same. They are simple drafting amendments. The earlier amendments commended themselves to the Committee. I hope that that will be the case with Amendment No. 4. I beg to move.
On Question, amendment agreed to.
Lord Trefgarne Lord Trefgarne moved Amendment No. 5:
Page 1, line 9, leave out from ("words") to ("in") in line 10 and insert (""creation, promotion, expansion, reorganisation or rationalisation").
The noble Lord said: Again, as I said earlier, the amendment is not one of substance. However, perhaps I may speak at the same time to Amendments Nos. 9 and 18, which are related. As I explained on Second Reading, the purpose of Clause 1(2) and (3) of my Bill is to remove the limitation in the present CDC Act on the corporation's purchasing of existing shares, securities or assets which severely inhibits the role that the corporation should be playing in facilitating projects involving rehabilitation, buy-outs, buy-ins or similar unbundling exercises which are likely to continue to constitute a significant part of CDC's new investment, particularly in Africa.
On further examination, it was felt that the words "regeneration" or "reconstruction" did not fully and clearly reflect the variety of projects which need to be covered. It was also felt to be neater and more consistent to the scheme of the present CDC Act not to include a definition of "reconstruction" within Section 2 of the 1978 Act, but rather to list it in a different style as one of the provisions supplemental to Section 2 along with the others in Section 4 of the Act.
The words, "promotion" and "expansion" are already contained in Section 2 of the legislation. The words added to my Bill are, "creation … reorganisation [and] rationalisation". The word "creation" was added because the Bill removes the present distinction between new and existing enterprises. The word "reorganisation" is defined as including corporate or financial reconstruction, while
1232
rationalisation recognises the variety of situations in which the CDC may be involved in different projects involving existing enterprises.
I repeat that the clause, with its proposed amendments, is intended to give CDC more flexibility, in particular to enable it to purchase existing shares, securities or assets. On the basis of that explanation, I hope that Members of the Committee will agree to Amendment No. 5 and those subsequent to it that I have mentioned. I beg to move.
On Question, amendment agreed to.
Lord Judd Lord Judd moved Amendment No. 6:
Page 1, line 10, after ("reconstruction)") insert ("where such reconstruction leads directly to increased investment in productive capacity").
The noble Lord said: In speaking to the above amendment, I should like to speak also to Amendments Nos. 7, 10 and 11; and, indeed, say a few words about Amendment No. 14 in that context. On page 8 of the CDC's corporate plan we read:
"Additionality is central to the rationale for CDC's existence as a public sector body".
What is not clear, we suggest, from this Bill is precisely how the new powers of purchasing equity funds—tokens of ownership of existing assets, not the creation of new assets—meet this criterion.
I have been rereading our Second Reading debate. In that debate the noble Lord, Lord Trefgarne, drew attention to how Section 2 of the 1978 Act—indeed he has done it again today—envisages CDC's investment funds passing directly or indirectly to the project company for the promotion of new or the expansion of existing enterprises, and how CDC's funds should be applied primarily to additional assets or capacity. The noble Lord emphasised in the Second Reading debate—as I say, he has done it again this evening—the word "additional". He then spoke of what he perceived as the limitations and inhibitions of these arrangements. But why should CDC get involved in asset trading related to buy outs and the like—that is, of course, coded language for privatisation—if such activity leads to no new investment? There will, of course, be juicy commissions and merchant bank fees associated with such activity, but exactly what is its relevance to development?
The Minister really must demonstrate this relationship if we are to be reassured. Shares, securities and assets, to which the noble Lord referred, lead us into the realm of derivatives. Is this an aspect of western capital markets that would really help the third world? As the distinguished CDC board member, Sir William Ryrie, a director of Barings, knows all too well, Barings went broke through derivatives. It would be good to know what lesson from that he believes should be applied at CDC to guarantee protection against a similar fate for the corporation itself, or for those it aims to assist. It is salutary to note that the UK, as Europe's leading privatiser, has had the lowest average growth rate over the past 15 years. Where is the evidence of a demonstrable correlation between privatisation and economic growth?
As I have already argued, the 1978 Act firmly charges CDC with assisting overseas countries in the development of their economies as a whole. There was an interesting reference in our Second Reading

1233
deliberations on the part of the noble Viscount, Lord Waverley, to CDC's intention to shift from support for primary agricultural production to,
"more downstream processing and marketing".
This, I would suggest, is precisely the wrong time to be disengaging from investment in food production. There is at last a prospect of a significant diminishing of food dumping by wealthier countries. When that happens, food prices will go up and developing countries can only benefit as a result. Just what is the CDC analysis that is leading it by contrast to concentrate at this very time on the frothy end of the economy, presumably including the service sector? Surely the priority remains to secure the basic infrastructure. It is our concern for the real economy of developing countries and the real people who make the real economies of developing countries, and for widening the base of both people involved in that real productive economy and the people benefiting from it, which leads us to table this amendment.
In the United Kingdom the poorest have become poorer in the age of privatisation. The overseas aid and development programme, of which CDC is a part, is about assisting the poor. How does the Minister square this circle? I very much hope she can reassure us today that the CDC mesmerisation with pump-priming privatisations is not being allowed to carry it away. I conclude by drawing attention to Amendments Nos. 7 and 11. In these amendments we are basically saying that, whatever the merits for the new investment which the Bill will make possible, it must not be allowed to create a situation in which new investment is conditional on privatisation, and that there will still be a very important need for investment in the public sector and indeed for investment in other aspects of social and economic infrastructure. Our amendments are intended to underline this. I beg to move.
6.45 p.m.
Lord Trefgarne: I hope that the noble Lord will allow me to say again that there is absolutely no intention within my Bill to drive CDC into the new areas of activity, many of which he considers undesirable and many of which I equally consider undesirable, and many of which—if not all of which—the CDC likewise considers undesirable. I dare say that my noble friend Lady Chalker also considers them undesirable. I believe that the noble Lord's fears are unfounded. His aspirations for CDC are, I believe, the same as mine. I hope therefore that on that basis he will consider his fears unfounded.
Lord Kindersley: I declare an interest as chairman of CDC during nine years of the 1980s. It was the most fulfilling time of my career and I have an enormous affection and admiration for the corporation and everything that it still does. I detect in the amendments being put forward a fear of privatisation and financial manipulation that may stem from this Bill. That distresses me enormously because during my time with CDC it was clear that the countries which had recently gained independence and had nationalised much of their prime assets, including their agricultural estates, had got themselves into a terrible mess, particularly in Africa.
1234
Before I left just a few glimmers of light were appearing and even countries still devoted to government power in its many facets were beginning to hand back those estates to the likes of CDC and even private entrepreneurs to try to get them to replace the enormous void that had been opened up by the mismanagement of those affairs. That is a role that I am sure CDC is continuing to play, and will continue to play, and is certainly not prevented from playing by anything that I can see in this Bill.
The other fear seems to be that anything to do with finance is bad and anything to do with production, manufacturing, or production of agricultural goods, is good. Mention was made of Sir William Ryrie who happened to be permanent secretary at ODA for part of the time that I was chairman of CDC. He was a marvellous permanent secretary and he later became chief executive of the IFC where he performed another tremendous job in building up IFC and its role in the developing world. One of his targets was to set up stock exchanges in developing countries where people did not feel that there was any prospect of that sort of thing coming about. He succeeded, and by so doing he succeeded in attracting investors and private capital to those countries. That has made an enormous impact on those countries. That is just one example of the way in which the financial role that is being allowed to CDC by this Bill could provide CDC with a marvellous new dimension for CDC to continue to make its mark in the developing world.
There are two more points which I hope I shall be allowed to make. First, it seems to me that it is essential to allow CDC, which has had much consultation in the preparation of this Bill, to interpret how most effectively it can fulfil its developmental role. I am sure that Members of the Committee on both sides of the Chamber would agree that CDC is the most effectively placed to make that interpretation. The developing world does not stand still. Even the poorest countries move forward, and CDC has to keep in step with the movements in those countries. They include—thank goodness—a certain element of financial sophistication. It is that which CDC must encourage in order to make those countries of interest to private capital from all parts of the world, not just from this country.
Secondly, please do not hamstring CDC still further with amendments to the Bill. It is a simple Bill. It gives CDC the necessary powers. However, during my time at CDC I have seen that any amendment can be interpreted in a very negative way by those who wish so to interpret it. There are so many constraints on the activities of CDC. My enjoyment of my nine years was enormous, but to some degree it was spoilt by seeing how much time I and many other members of senior management had to take with specific and general reviews of its activities. The more amendments and the more complicated such Bills are, the more scope there is for the most well intentioned civil servants to waste the time and divert the efforts of management from development into very negative processes. So please let this Bill fulfil its intent: that is, to give CDC more

1235
powers. Do not litter the Bill with amendments which will be time consuming in their interpretation in the future.
Baroness Chalker of Wallasey: Perhaps I may respond in some way to the speech of the noble Lord, Lord Judd, on Amendment No. 6, which is grouped with Amendments Nos. 7, 10 and 11. It may be for the convenience of the Committee if I say at the outset that the amendments of the noble Lord, Lord Judd, would nullify the proposed changes to CDC's powers. They would result in denying the CDC the very powers which it seeks under the legislation before the Committee tonight.
The amendments may be probing. Perhaps they are put forward in order to examine the extent to which the amendments of the noble Lord, Lord Trefgarne, will affect what CDC does. However, as my noble friend Lord Kindersley said, in the remarks of the noble Lord, Lord Judd, one senses a rather deep dislike of anything to do with privatisation.
I remember well the time when my noble friend Lord Kindersley was chairman of CDC. He is absolutely right to say that those who sought to take into public ownership many of the previously profitable organisations in those countries did not look far ahead in what they were doing. The contrast between that time and now is this. Having realised that parastatals were wasteful and did not produce what their countries needed, country after country has begged help to denationalise (if I may use a British word). They have begged us to help with reform of their parastatals. The question that they ask is: "How do we put ourselves in a position where we can attract investment in order to get us out of this trough of zero—in some cases negative—growth"? In many countries areas of agriculture in particular have literally lain fallow because of the lack of investment and management.
Therefore the situation is not as the noble Lord, Lord Judd, sought to state: that privatisation has been a bad thing. Help for parastatal reform is a constant request to my department; and help with new investment is a constant request to CDC in the countries in which it operates. I cannot believe that the noble Lord's fears are based on anything except a misreading of the real situation.
When the noble Viscount, Lord Waverley, spoke at Second Reading—sadly, he is not present tonight—he talked about additionality, as did my noble friend Lord Trefgarne. Countries wish to add value to their basic production in order to obtain a greater growth in their agro-industries. They wish to widen the base of their agro-economies. That is one of the aspects on which CDC has been most successful in helping many developing countries: to widen the base of their operation in order to obtain growth. It is that very growth which will help those countries to have a sound indigenous private sector. In the long term the developing countries will reduce their dependence on foreign investment. I know that to be the ultimate aim of CDC: to assist successful businesses so that they can stand on their own feet and reduce dependence on foreign investment.
1236
I turn back to the Bill and the amendments before us. There is nothing in my noble friend's Bill which fundamentally changes the way that CDC operates. It does not affect CDC's statutory purpose: to assist in the development of the economies of the developing countries. Everything that CDC does has to serve that purpose. What the Bill allows CDC to do is associate itself with the very necessary preliminary steps to develop those economies: to put businesses into a shape in which in due course they can be more productive.
I have made it quite clear to CDC, and I repeat it to the Committee tonight, that CDC should not engage in financial engineering for its own sake, either in relation to the reconstruction of businesses or the promotion of capital and other financial markets. Financial reconstruction should always be a means to an end, not an end in itself. Sometimes it may be a necessary precursor to further development. In such circumstances it would be wrong to prevent that being a condition, as the Opposition amendment would require.
CDC has no powers, nor does it have any intention, to become involved in derivatives. I wish to make that clear. CDC does not derive income from merchant banking activities such as advising on share placement. What it does and what it wants to do, by agreement with Government, is to help restore failed public companies in poor countries. Indeed, many ask for help and to rescue them often requires a financial reconstruction first, as I mentioned a moment ago, before one can undertake any new fiscal investment. That is what the Bill permits CDC to do. I give way to the noble Lord, Lord Judd.
Lord Judd: I am most grateful to the Minister for giving way. I find some of her remarks the most helpful and reassuring that we have heard today. However, I hope that she will go a little further. I hope that I do not anticipate what she had intended to do.
I detect a slight difference of emphasis—it may be more than slight—between her approach and, with great respect, what the noble Lord, Lord Trefgarne, appears to have said. At both Second Reading and tonight he expressed some anxiety about the inhibitions placed upon CDC with existing legislation because of its emphasis on additionality. I understand the Minister to say that she looks to anything which CDC does as a means to an end. By implication I hope that she means expansion, more production, and so on. Could she say a little more about that?
7 p.m.
Baroness Chalker of Wallasey: I am not entirely sure that I grasp what the noble Lord is getting at. I sought to be absolutely clear and I do not find my remarks to be at variance with anything that my noble friends Lord Trefgarne and Lord Kindersley have said in this House on the subject. The point about the needs of the developing countries which have businesses in a parlous state is that frequently those countries not only need the professional advice which CDC can give but also a high degree of financial restructuring where a business is no business at all, where it is in dire financial straits.

1237
We have always felt that it is important to ensure that there is supervision over the CDC's statutory powers. But we have a well-established system for doing that. When CDC considers a parastatal to be in great trouble or that a public company could do far better and, for example, could bring back into production fields of sugar beet and arable areas which have been lying fallow because they have not received investment either in machinery or activity, sometimes that public company in a poor country has to give up an activity which it should not be engaged in. That requires a degree of financial restructuring. One could say that getting a country or business into an area in which it has not been engaged is an additional activity. That activity is usually a new physical investment, but other things can be done with existing production which may add value. That could also be an additional activity in another sense.
For example, there is no harm in helping a cocoa-producing country to add value to its product so that it can earn a higher return in overseas exports. If that kind of advice is being given, it makes good, sound common sense. I repeat that I see nothing in what my noble friends Lord Trefgarne and Lord Kindersley have said that differs from anything I have said.
Under my noble friend's Bill, we see no radical departure from the kind of projects that CDC undertakes. I should not expect that projects where previously CDC would have had carefully to consider its vires under the current legislation would make up more than about 15 per cent. of new board approvals each year. The point is that we have a well-established system of looking at areas which may be "new" in the terms of the noble Lord, Lord Judd, but I see no dramatic change in CDC's operations. What I do see is a greater flexibility being brought about by my noble friend's Bill and a greater means for CDC to help the developing countries with their public companies which badly need the expertise and investment which CDC can bring to them.
In view of what I have said and the fact that the amendments of the noble Lord, Lord Judd, would nullify the changes CDC wants for the benefit of developing countries, I hope that he will withdraw his amendment.
Lord Thurlow: First, I apologise to the Committee for my remarks on the first amendment, when I strayed into the field of later amendments. I was glad to hear the noble Lord express his reassurance about some of the noble Baroness's comments. I warmly support the amendments proposed by the noble Lord, Lord Trefgarne, but I cannot support those of the noble Lords, Lord Judd and Lord Rea.
I am sure that Members of the Committee were all much impressed by what the noble Lord, Lord Kindersley, said on the basis of his deep experience of the working of the CDC. I can see nothing but danger in adding in any way to the restrictions and constraints under which the CDC operates. As the noble Lord, Lord Kindersley, explained, if conditions are written into the statute, it is an invitation for nit-picking by over-zealous officials. Let us concentrate on the objective which all Members of the Committee supported at Second Reading of allowing the CDC to escape from śome of
1238
the existing constraints. Let us not return to qualifying that by writing new conditions and restraints, however well intentioned, into the Bill.
Lord Judd: I am grateful to those who have participated in the debate on my amendment. I am sure that other Members of the Committee will not take exception if I say that it has been particularly good to hear the noble Lord, Lord Kindersley. I wish he had been able to be with us in our earlier deliberations because the tributes to the CDC from all parts of the Chamber were consistent and warm. If we are paying those tributes, this is a good opportunity to look the noble Lord in the eye and thank him for the extraordinarily distinguished contribution he made in his role and leadership of the CDC. I assure him that everything that we are putting forward from this side of the Committee in our deliberations this evening is about preserving the best that he and his predecessors helped to build in the story of CDC. We do not want to see that inadvertently laid waste.
I quite understand the anxieties of people who want to get on with the job and not be encumbered with all kinds of qualifying legislation around which well-intentioned, zealous public servants might focus to the exclusion of the task. All we are trying to do in our minimal observations is to bring home the importance of keeping CDC firmly part of the overall overseas aid and development programme of the United Kingdom. Its unique contribution speaks for itself, because, so far in its history, it has in an exemplary fashion managed to get the balance right between financial disciplines and the importance of development, bringing people into participation in the economy.
I ask the Minister to read carefully the record of our debate today when it is published in Hansard. I am not aware of any arguments from this side of the Committee which suggest that the private sector does not have an important part to play in development; quite the reverse. I have been at pains to underline the significant role that the private sector has to play. However, what matters is which part of the private sector does this and how that role is being played, as well as how the role relates to the overall strategy of sustained economic and social development for the country as a whole. It would be a shame if, as the nation begins to emerge from what can in some ways be described as years of ideological preoccupation to a more mature, balanced approach to the management of our affairs, we should allow a hangover of a nightmarish decade or more adversely to influence the role of CDC in the future. Pragmatism is what matters and I am sure that the Minister agrees.
In some parts of the third world strengthening the private sector will be a real priority because there will be a dynamic contribution to be made, but in other parts, as indeed in our own society, the challenge will be to strengthen the public sector not to say that because the public sector has been badly or incompetently managed in the past that is a reason to get rid of it. It will be to say that, if the public sector is necessary and sensible in any sphere of national life, it should be strengthened and made more efficient. That is the challenge. Therefore we want to see in this context an approach to a mixed

1239
economy in the third world, with the balance falling as makes most pragmatic sense and the CDC able to help in this respect.
Before I sit down, I should like the Minister to understand the basis of some of the anxieties that are definitely there. One is that, with the tremendous emphasis on privatisation in our own society, we have had a sluggish overall average growth rate compared with our main partners in Europe. We need to ponder that, and to recognise that an ideological approach to privatisation is therefore not enough. Where privatisation makes pragmatic sense, let us go for it, and let CDC play a key part in achieving it. But let us not fall into the trap of saying that we must be in favour of privatisation above all.
The second anxiety that exists, one which is central to the mandate of the Minister and her department—and I know that there is no one more compassionate; she is genuinely committed to the poor—is that in our own society we have not seen the poor becoming better off automatically under the prevailing ideology. Coupled with that is the anxiety that, as privatisation goes ahead, with the tremendous emphasis on maximising the rate of return on investments, which the CDC underlined in its corporate plan with its objective of 9.9 per cent., there may be a temptation to go for short-term profit, for asset stripping and the rest, rather than building up the contribution and strength of industries in the future. These are real anxieties.
However, we have had a very good opportunity tonight to hear the Minister's ongoing commitment and her determination to see CDC fulfilling the social and economic objectives in her development programme. We may differ from time to time on specific parts of it, but we all know that in that general thrust no one is more sincere than the Minister. Therefore, on balance, as with the previous amendment, I want to go away and ponder carefully the arguments that she used. This would be the wrong time to pursue this amendment. I therefore beg leave to withdraw it.
Amendment, by leave, withdrawn.
[Amendment No. 7 not moved.]
Lord Trefgarne Lord Trefgarne moved Amendment No. 8:
Page 1, line 11, after ("(2) (b)") insert ("of that section").
The noble Lord said: I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Lord Trefgarne Lord Trefgarne moved Amendment No. 9:
Page 1, line 13, leave out from ("words") to ("in") in line 14 and insert (""creation, promotion, expansion, reorganisation or rationalisation").
The noble Lord said: Again, I spoke to this amendment with an earlier one. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 10 and 11 not moved.]
Lord Trefgarne Lord Trefgarne moved Amendment No. 12:
Page 1, line 16, after ("(2) (b)") insert ("of that section").
The noble Lord said: I have spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Lord Trefgarne Lord Trefgarne moved Amendment No. 13:
Page 1, line 17, leave out from beginning to end of line 21 and insert:
(""(ba) to investigate, formulate and carry out projects, or to make investments, for the encouragement, stimulation or development of capital or other financial markets in overseas countries;
(bb) to provide consultancy services;".").
The noble Lord said: This amendment is slightly different from the ones that I moved earlier, but it touches on points that we have already debated at some length. I beg to move.
On Question, amendment agreed to.
[Amendment No. 14 not moved.]
7.15 p.m.
Lord Judd Lord Judd had given notice of his intention to move Amendment No. 15:
Page 1, line 21, at end insert ("where such consultancy is directly linked to new investment and enhanced economic activity in conjunction with application of Corporation funds"").
The noble Lord said: Perhaps I may just add a word on Amendment No. 15, as it does not sit precisely in all respects alongside the other amendments.
A real danger that we perceive is that CDC could perhaps inadvertently cross the dividing line between assistance to third world countries and exploitation of those countries. In our view, we must very carefully guard against CDC's being used as an umbrella by privatisation consultants who have made rich pickings in the United Kingdom and who now wish to get a toe-hold in other countries. We believe that CDC should stick to what it is good at and avoid being distracted by the lure of so-called dry consultancy—in other words, the raking in of fat fees without putting in a penny of investment. The purpose of this amendment is to prevent that obscenity from happening.
In relation to this amendment we were looking for reassurances from the Minister. She may not believe that I always listen, but I do listen very carefully to what she says. Tonight I was greatly cheered when I heard her, at an early stage in our proceedings, deal very specifically with this point, and say that she wanted to see consultancy and that kind of advice, service and support always related to assisting in the process of enhanced economic and social development. At least, that is what I thought I heard her say. I am sure that I did. Because I thought I heard the Minister say that, I shall not move this amendment.
[Amendment No. 15 not moved.]
Lord Trefgarne Lord Trefgarne moved Amendment No. 16:
Page 1, line 22, after ("(2) (c)") insert ("of that section").
The noble Lord said: I spoke to this amendment earlier. I beg to move.
On Question, amendment agreed to.
Lord Trefgarne Lord Trefgarne moved Amendment No. 17:
Page 1, line 25, leave out from ("words") to end of line 2 on page 2 and insert (""which are incidental to the performance of any functions which the Corporation is empowered to perform by virtue of any of paragraphs (a) to (bb) above and"; and
(b) for the words "that project or undertaking" there shall be substituted the words "the performance of any such functions".").
The noble Lord said: I spoke to this amendment before. It is purely a drafting amendment.
While I am on my feet, perhaps I may mention that, as noble Lords will have seen, the noble Viscount, Lord Waverley, was good enough to indicate that he supported my amendments and to attach his name to them. He has asked me to say that he is very sorry not to be able to be in the Committee this afternoon. I understand that he is abroad, in Africa, and that he has been visiting some CDC projects. That is the reason he is not able to be here tonight although he had hoped to be. I hope that Members of the Committee will understand. I beg to move Amendment No. 17.
On Question, amendment agreed to.
Lord Trefgarne Lord Trefgarne moved Amendment No. 18:
Page 2, line 2, at end insert:
("(5A) In subsection (3) of section 4 (provisions supplemental to sections 2 and 3), for the words "promoting or expanding" there shall he substituted the words "creating, promoting, expanding, reorganising or rationalizing".
(5B) After subsection (5) (b) of that section there shall be inserted—
"and

(c) any reference to reorganisation includes a reference to corporate or financial reconstruction."

(5C) In consequence of subsection (3) above, paragraph (a) of section 1(2) of the Commonwealth Development Corporation Act 1986 is hereby repealed.").
On Question, amendment agreed to.
Clause 1, as amended, agreed to.
Clause 2 [Short title and extent]:
Lord Trefgarne Lord Trefgarne moved Amendment No. 19:
Page 2, line 4, at end insert:
("(1A) This Act shall come into force at the end of the period of two months beginning with the day on which it is passed.").
The noble Lord said: This amendment is intended solely to ensure that everything is correctly in place, administratively speaking, for the Act to be implemented once it has been passed. I hope that the Committee will agree with that honourable intention. I beg to move.
Lord Rea: My normal trusting and, I hope, rational self accepts completely what the noble Lord, Lord Trefgarne said. When a slightly more leisurely timetable is sometimes found between the passage of a Bill and its enactment, it may perhaps be reasonable to raise at least one eyebrow at this amendment. I wonder whether it could be that the powers given to the CDC by this Bill will make it, as my noble friend Lord Judd suggested, a slightly more attractive proposition for a subsequent privatisation. Is this rapid timetable possibly because this Government can, at the outside, last only another 21 months and may well be forced to go earlier? It does not leave much time to enact a Bill to privatise the CDC. I am quite sure that the noble Lord will scotch that thinking on my part.
I rise to speak to the amendment so that the noble Lord can say a few words perhaps to allay any problems that the Bill might have in another place. It will be quite
1242
a precarious Bill when it goes into the other place, as he must realise. It will be very much dependent on all-party support. I wonder whether he could say a few more words about why it will be only two months after the Bill's passage before it becomes an Act.
Lord Trefgarne: I have to confess that this amendment was proposed to me by experts. Experts within the parliamentary drafting world, if I am allowed to refer to them sotto voce, proposed the amendment. It is apparently more or less normal that a period of grace is given between the passage of a Bill and its coming into force as an Act. Two months was thought to be appropriate in this case. I hope that on reflection the noble Lord will agree that that is right. I can assure him that there are no plans whatever, so far as I know, to proceed in the dastardly way that he proposes. I dare say that my noble friend Lady Chalker will now be able to reassure him of that.
Baroness Chalker of Wallasey: It may be for the convenience of the Committee if I put to rest the suspicions of the noble Lord, Lord Rea. I can assure him that not only are these amendments formal and, as my noble friend said, were suggested by parliamentary counsel but also they are very normal.
I realise that adding up is not everybody's forte. Perhaps I may point out to the noble Lord, Lord Rea, that the present Government could run for another 23 months—not 21 months—there being 12 months in a year. I should also point out to him that the normal period between passing an Act and the day when it comes into force is in fact two months. So that is normal now. Therefore, I can lay to rest his suspicions once and for all. Certainly, there is no need for a more leisurely timetable. It would have been out of the ordinary and therefore suspicious in the other direction, if we had not kept to the normal timetable.
Such a lot of suspicion exists on those Benches about privatisation and whether the CDC will remain in the public sector. There will be no change in the policy. The reason were clearly given at Second Reading (col. 1520). With CDC being a key instrument of ODA assessment in the private sector, there is no way in which any sensible Minister for Overseas Development would want to give that up. I hope once and for all that, with the noble Lords, Lord Judd and Lord Rea, we can put to rest all the hares that they set running every time that we discuss the CDC. Both the amendments of my noble friend Lord Trefgarne—Amendment No. 19 and Amendment No. 20 which is grouped with it—are purely formal and there should not have been a debate.
Baroness Seear: Does the noble Baroness agree that it is a question not so much of hares as of leopards, which do not change their spots?
Baroness Chalker of Wallasey: I do not believe in chasing hares or leopards. I am all in favour of looking at them for the additions that they bring to the countryside and to wildlife. I feel that that is where we should leave both hares and leopards.
Lord Rea: The noble Baroness mentioned in a rather scathing way that the remarks that came from these Benches were to be classified as "suspicions". Is it not

1243
the function of an Opposition not to take things at face value but always to be suspicious? Would we not be failing in our duty if in fact we were not suspicious?
On Question, amendment agreed to.
Clause 2, as amended, agreed to.
In the Title:
Lord Trefgarne Lord Trefgarne moved Amendment No. 20:
Line 3, at end insert ("; and for connected purposes").
The noble Lord said: This is a short amendment to the Title. Amendments to the Title are not normally approved by the Chamber. I hope that, on this occasion, this special amendment, duly recommended by the authorities, will be agreed to. I beg to move.
On Question, amendment agreed to.
Title, as amended, agreed to.
House resumed: Bill reported with amendments.

Bahrain
7.27 p.m.
Lord Avebury Lord Avebury rose to ask Her Majesty's Government what steps they will take to encourage the Government of Bahrain to promote democracy and human rights.
The noble Lord said: My Lords, there has been a close relationship between Britain and Bahrain ever since 1820. The ties of friendship, business and common purpose in the Gulf make us sympathetic to the needs and aspirations of her people. For 150 years, down to the date of independence in 1971, our policy was to maintain the power of the ruling family but to encourage gradual change in the direction of better government and increasing democracy. The pace of change may have been rather slower than it was in other parts of the globe that came under British influence, and in the mid-1950s we suppressed a movement which demanded an elected parliament, a written constitution, trade union rights and freedom of expression.
But then, after independence, it looked as though Bahrain was developing from an executive monarchy to a constitutional monarchy, when, in 1972, the Amir agreed to elections for a constituent assembly. That led in turn to the adoption of the 1973 constitution, under which a national assembly of 30 elected members and 15 nominated government Ministers came into being.
But that experiment in democracy lasted for only 18 months. When the assembly refused to pass a state security Bill, which gave the authorities the power to detain anybody for periods up to three years, renewable indefinitely, the Amir dissolved the assembly on 26th August 1975, abrogated the constitution and proceeded to rule by decree.
In the 20 years since then, several initiatives have been taken for the restoration of the 1973 constitution and assembly. The most recent of those began in October 1994 when a group of prominent citizens from both the Sunni and Shia communities launched a petition to the Amir, couched in the most respectful terms, citing the unemployment situation, inflation, business losses,
1244
citizenship decrees, forced exile, restrictions on freedom of expression and subordination of the press to the government as some of the problems which the 25,000 signatories believed would be soluble with the aid of the restoration of the national assembly and the greater involvement of women in the democratic process.
That petition was to have been presented to the Amir on a date on or about 6th December, which was the 21st anniversary of the promulgation of the suspended constitution. But before that could happen, on 5th December Sheikh Ali Salman—a popular young preacher—was arrested for speaking in favour of the petition at his daily prayers, and scores of people were detained in a series of 2 a.m. raids on the same day. That sparked off demonstrations which have continued intermittently for the six months since then and also sparked off the wave of arrests by the authorities which resulted in the detention of some 3,000 people. I know that that figure is challenged by the Foreign Office. But Amnesty International, for instance, said that it had a list of 700 names of detainees and believed that the real total was far higher.
Both Amnesty International and myself were received today by Mr. Al Gosaibi, the Deputy Foreign Minister of Bahrain. We are extremely grateful to him for the courtesy that he showed us and the amount of time which he gave to me in a detailed discussion I had with him on the current situation in Bahrain. When I raised the question of the visit by Amnesty International to Bahrain, he told me that, while there was no objection in principle to the visit, no date had yet been agreed. Since then I have confirmed with Amnesty International that it has been trying for the past six months to go to Bahrain but has not yet reached a position where a date can be fixed. That is contrary to what the Bahrain authorities have been saying to the Government. I have seen letters sent by the Foreign Secretary to not one but several people in which he tells the correspondents concerned that Amnesty International has been invited to go to Bahrain. Perhaps the noble Baroness will deal with that point when she replies.
I hoped to go to Bahrain when the Bahrain authorities invited me last November, but that invitation was cancelled at the last moment on the grounds at that time that they were in the course of preparations for the meeting of the Gulf Co-operation Council, which was not due then for another month. Although several times since then I have asked for the resuscitation of the invitation, I am afraid that the position is still on hold and this morning, when I asked Mr. Al Gosaibi whether I could go immediately to Bahrain, he prevaricated. I am still in doubt as to whether it will ever be possible for me to go there and see at first hand some of the problems we are discussing this evening.
The detentions resulted in charges against some people, the number of which Mr. Al Gosaibi was not able to give me. I understand that 16 were convicted early in May and another 19 are said to have confessed to acts of sabotage. I unreservedly condemn any acts of violence or destruction of private or public property which have occurred in association with the demonstrations of the past six months. The authorities have every right to take firm action against the criminals who are committing those acts. However, they seem not to be able to

1245
distinguish in their own minds between violent saboteurs and criminals and those people who are peacefully agitating for the return of democracy.
Amnesty International is not satisfied with the conduct of the trials. It says that none of the defendants were granted access to lawyers or independent medical advice. Mr. Al Gosaibi told me this morning that all had received legal advice and there is a conflict of evidence on that point. I should like to ask whether the Government are concerned to ensure that internationally accepted legal norms are upheld in those cases. If so, have they made representations accordingly? Will the Government ask the Bahrain authorities to agree that international legal observers should be present at all the proceedings? Will they agree that any confessions extracted from the defendants under torture should be excluded from consideration by the courts?
One other point which arose in the discussion with Mr. Al Gosaibi was the question of rights of appeal from the state security court. I was given to understand that once one was convicted by that court, it was an end to the matter. But I was told this morning that everybody convicted there had a right of appeal, and again that matter needs to be clarified.
So far 14 people have died as a result of violence by the security forces, either during demonstrations or after being taken into custody by the police. As an example, 17 year-old Hamid Qasim was hit by a rubber bullet outside the Duraz Intermediate School at 1530 on 25th March, then shot again at point blank range as he lay on the ground, and dragged into the school which had been occupied by the riot police. The following morning his mutilated body was delivered to his family, with several fingers cut off, and severe wounds to the top of his head, the side of his face, and underneath his chin. An eye witness, from the same village, told me yesterday—he was present at the incident—that the fingers were found later in a blood spattered corner of the school playground. Of the five young men who saw Hamid being seized by the police, three were arrested a few weeks later and one, Nidal Habib Al-Nashabah, was murdered by the police on the same day. The fifth witness has escaped abroad.
I also spoke yesterday to an eye-witness of the killing of Abdel Qader El-Fatlawi, a 25 year-old driver, who was shot dead by the riot police in January while trying to cross the road. When he was taken to the Salmaniya hospital in Manama, mortally wounded, the doctors said that they couldn't treat him without permission from the Ministry of the Interior and he died untreated shortly afterwards. The body was delivered to his family in a hospital van between 0800 and 0830. Later in the morning, when the friends and relatives took his body for burial, they were attacked by riot police using tear gas, batons, and a helicopter firing metal pellets, and driven from the cemetery.
The detained are routinely tortured. I spoke yesterday to a young man who was subjected to the "falaka", a form of torture in which the victim is suspended by the knees and wrists from a pole, which is excruciatingly painful in itself, and then beaten on the soles of his feet. The victim gave me the names of some of the torturers, and I gather he has also reported them to Amnesty International. But the most shocking feature of the whole system of torture,
1246
killings and arbitrary detention, is that the man who presides over it, Mr. Ian Henderson, is a British citizen. Mr. Hogg seems to think that this is a matter of little consequence, but for the victims and their relatives, it implies British complicity in the crimes of the security forces.
Among the detained are women and children. Because no lists have been published, one cannot be precise about the numbers, though one authority gave me the estimate that 30 women are in custody and up to 50 children aged between 12 and 15.
The noble Baroness, Lady Chalker, said on 15th May when the noble and learned Lord, Lord Archer, asked a Question about Bahrain, that opposition groups must act responsibly and within the law. I hope that the noble Baroness agrees that the Government also should do so, though since the law is what the Amir says it is from time to time, many acts and even words may be contrary to the domestic law, but within the scope of the law as it should be if international norms of freedom of expression and assembly were observed.
One of the detained women was Mrs. Afaf Al-Jamri. I sent the noble Baroness a copy of the letter to Mr. Hogg detailing the victimisation of the whole family of Sheikh Abdul Amir Al-Jamri, an elder statesman who was a member of the 1973 national assembly and a high court judge. Mrs. Al-Jamri was arrested and tortured in front of her own father by the notorious Mr. Adel Flaifel on 8th May. I told the Minister this morning that we have had several accounts of torture by that individual, so there is the ring of truth about these accounts, which are by no means isolated. Mrs. Al-Jamri had been detained since 8th May, although I heard only this afternoon that she was released at 4 p.m. I was very glad to hear that. But she left behind her during the period of her detention children aged seven and nine—Hussain aged seven and Zainab aged nine—who had to be looked after by their grandmother because Mrs. Al-Jamri's husband was also in prison at the time. The grandmother was looking after some 12 children of the various sons and daughters and sons-in-law of Sheikh Al-Jamri. The whole family has been the subject of gross victimisation.
I sent the noble Baroness also a copy of a petition sponsored by a group of some 300 distinguished women intellectuals condemning any attacks on public property but also calling for an end to the use of live ammunition against demonstrators, forced entry to private homes and mass arrests, and the initiation of a national dialogue, freedom of speech, reactivation of the constitution and the participation of women in political decision-making. All of the women who signed that petition have been given verbal warnings that unless they recant and apologise, they will be fired. One, Professor Muneera Ahmed Fakhro, was called in by the president of the university on Saturday and given a final warning. She again refused to withdraw her signature, and she told her students that she expected it was the last occasion that she would see them.
Does not the Minister agree that if people are acting responsibly and within the law, as these women are, they are entitled to the active support of the international community, and particularly of women everywhere else in the world? Will she ask the Bahraini authorities not to

1247
fire any of the signatories and to have those who have already been dismissed reinstated and a withdrawal of the threats made against the others?
I asked the Minister, Mr. Douglas Hogg, to raise the detention of women and children in Bahrain with the authorities, particularly the detention of women, especially with the Beijing Conference on women's rights approaching. I asked him to suggest that parents and guardians be given access to the children who are being detained in Al-Khamees police station and elsewhere. It is an absolute right of parents to have access to their children in detention, and that surely must be dealt with immediately. I mentioned one case to the noble Baroness in my letter of 16th May. It is the case of a 15 year-old boy, Mohamed Ali Mohamed Ekri, who was arrested from Daih village on or about 10th April and was held incommunicado for a month before his mother, Mrs. Zahra Alawi, was finally allowed to see him. The boy, who was very frightened, told his mother that he had been beaten up in the prison and sexually assaulted.
When I went to see Mr. Hogg on 21st February about the violations of human rights in Bahrain, I was not successful in engaging him in the discussion of particular human rights violations, and he made it clear that our political and economic relations with the state made it inexpedient for us to raise matters of detail with them as we do with many other countries. He agreed that it was the custom for the Amir to receive subjects who want to petition him, but added that Ministers could not directly advise him to receive those who had circulated and signed this petition of 25,000 names. They could only say that we would encourage dialogue, which should have come to the same thing because it ought to have meant that those petitioners got to see the Amir. However, what the Amir decided to do was to see small groups of hand picked Sunnis and Shi' a stooges separately, all of them strong supporters of the regime, thus implying that the interests of the two groups were different. That is not the case at all. I believe that many people are united in wanting to move towards a constitutional monarchy and that there is no division of opinion on religious lines.
About 70 per cent. of the inhabitants of Bahrain are Shi'as and 30 per cent. are Sunnis, the religion of the ruling Al-Khalifa family. There is a tendency to suggest that the Shi'as are dangerous fundamentalist radicals, or even that they are Iranian fifth columnists. I had some of that from the Minister this morning. At one time Iran did claim sovereignty over Bahrain, on the tenuous basis of a temporary occupation some 200 years ago. But that matter was disposed of at the time of independence, when the UN ascertained that the majority of the people wanted an independent Arab state. There is no reason to suppose that they have changed their minds. A greater degree of democracy would certainly mean that fewer top posts were allocated to the exclusive clique of royals and their Sunni hangers-on, but it would not usher in a variant of the clerical rule found in Iran. The opposition in Bahrain is genuinely democratic and is liberal in its attitude to the participation of women in politics.
Elsewhere in the world, the Foreign Office is prepared to speak out in favour of democracy and human rights. The noble Baroness herself has spoken out in favour of
1248
human rights in Nigeria. The Government speak out for human rights in Burma and Iraq. They call for the restoration of democracy in those countries and for an end to detentions, torture and other abuses. For reasons that may be comprehensible, but are not creditable, they adopt a different standard when it comes to Bahrain, refraining from criticism and uttering the mantra of "dialogue" in hushed whispers behind the scenes.
The end of this week is the great festival of Ashura, the anniversary of the death of the Imam Hussain, the grandson of the Prophet, who was killed at the battle at Karbala. Imam Hussain is considered to be a symbol of the struggle against oppression and there are bound to be manifestations of the people's indignation in Bahrain, in spite of warnings delivered by the Minister of Justice that on this anniversary there were to be no political slogans, no foreigners were to participate and no villagers were to come into the capital, Manama. The democracy movement has to find some outlet, and if the government are unwilling even to listen to the people's grievances, they are bound to take to the streets.
It must surely be clear that after six months of unrest, the modest demands of the petitioners, which would have been acceptable to monarchs like Charles I or Louis XVI, have got to be accepted by the Amir. Britain can either encourage him to enter into a dialogue with the opposition with a view to effecting peaceful democratic reforms and ending the abuses of human rights, or we can keep our mouths shut and thereby encourage an attitude of reactionary conservatism rivalling the Bourbons of Naples. Which is it to be?
7.47 p.m.
Lord Clinton-Davis: My Lords, the noble Lord, Lord Avebury, has impeccable credentials in fighting for the recognition of human rights—and I pay tribute to him for that—not simply in relation to this matter but over many years and over many issues. He has revealed today not only a powerful and compelling indictment based upon the findings of Amnesty International but he has also raised at least some questions about an inconsistency of approach by the Government vis-à-vis Bahrain, when in fact, as he has rightly said, the Government call for the restoration of democracy elsewhere. It would be helpful to hear from the noble Baroness the response of the Government to that charge.
Of course, it is right that there are substantial conflicts of evidence between Amnesty International and the case mounted by the noble Lord and the view taken by the Bahrain Government. At the very least the noble Lord is right in saying that because of our traditional influence— it is no more than that today: it can be no more than that—the voice of Britain should be heard seeking to persuade those in power in Bahrain, perhaps in their own interests—certainly those of their people—to adopt rather more humanitarian standards. In my view, the noble Lord is right in asserting that the experiment in democracy in Bahrain was indeed shortlived. Certainly, the response of the government in dealing with many thousands of complaints made by citizens is worthy of further investigation.

1249
The catalogue of concerns expressed by the noble Lord and Amnesty International include harassment; the shooting of civilians; arbitrary arrests and detention without trial; a denial of the right to be able to see a lawyer in so many cases; allegations of torture and beatings; the extraction of confessions under duress; forced exile—although it is true that some have been able to return after some years abroad while others have been denied entry—trials that are certainly questionable in their processes and severe, perhaps unconscionably long sentences, with no right of appeal to a higher tribunal afforded to those who have been sentenced. So it is an indictment which is based on formidable evidence which has been adduced before the House tonight.
It is right to say that some relaxation of the situation has been permitted by amnesties being given to political prisoners and indeed to victims of forcible exile in March, May and December of last year. But the allegation remains of a continuing series of arbitrary arrests and detention of people claiming to be prisoners of conscience.
Amnesty International has called on the Government of Bahrain to have regard to and respect for internationally recognised human rights. It has welcomed the releases following the amnesties, in particular the release of two detainees whose cases had been raised in 1992 by Amnesty International. The most recent situation appears to show a further deterioration, with 16 defendants named by the noble Lord who have been sentenced to between three years and 10 years' imprisonment on charges which include sabotage and membership of a proscribed organisation; namely, Hezbollah. Further trials on similar charges are due to take place shortly.
Observers to the trials have been requested by Amnesty International. Let it be added that trials are held in camera. Apparently those requests have fallen on deaf ears. I remember going to observe courts martial even under the Greek junta in 1973. There can be no doubt that the presence of observers can have a very telling effect. Therefore, it is a matter of grave concern that the authorities in Bahrain do not seem prepared to allow an objective, independent view of those trials. I hope that the Government will at least say tonight that they will seek to utilise their influence with a friendly government in persuading them to do that.
Likewise, Amnesty International has sought permission to carry out investigations into allegations of human rights violations. Again, such requests appear to have been totally ignored.
Concerns that the right of peaceful protest is being abrogated on a substantial scale by the security forces has also been expressed by the noble Lord. The number of shootings which have taken place and the refusal by the Bahraini authorities to attempt to prevent killings or to investigate the situations which have led to them also raise grave suspicion.
It is also alleged by Amnesty International that the mass arrest of thousands of people has taken place. Although the Bahraini Government assert that these reports are exaggerated, implicitly it would appear that therefore there must be some force in what has been alleged. Of course, it is to be welcomed that just over a month ago about 120 political detainees were released. It is probable
1250
that that has resulted from the international criticisms which have been made. It is unlikely that, if we had remained mute, that situation would have developed. But the fact remains that the names of detainees and details of where they are detained have been denied. The families of the people, even if they are suspected of grave crimes or even convicted of them, are entitled to no less than that information.
The noble Lord referred to the denial of independent medical care. It will be interesting to see what the Government have to say about that allegation, as, indeed, it will be to note what is said about the allegation of detention concerning women and children. I gather that about 43 children between the ages of 10 and 16 are so detained. So all these issues give rise to grave anxiety, as I believe the noble Baroness will acknowledge.
I was not originally scheduled to take part in this debate, but I took the opportunity, albeit late in the day, to speak to His Excellency the Ambassador of Bahrain on the telephone. It is right to point out what is said on behalf of the Bahraini Government. He said that those arrested were suspected of being, or were ultimately found to be, guilty of acts of violence and sabotage, including the spraying of a mosque with machine-gun fire. I am not sure where that took place, but that is what he said had occurred. He spoke of terrorism against innocent people and private property and of people who were detained being members or supporters of extremist groups whose design is to destroy the state. He alleges that Amnesty International fails to take account of the dire threat posed by these people to the state and its people or to recognise the provocation afforded to the government by these alleged acts of violence.
It is not easy to come to conclusions about these matters without personal knowledge. I have not visited Bahrain. I have certainly not received an invitation to do so and, to the best of my knowledge and belief, neither has any Member on this side of the House as far as the Front Bench is concerned. We have to ask questions, and important questions have been raised by the noble Lord in a very compelling speech this evening.
In general terms the case I submit from these Benches amounts to this. I believe that respect for human rights need not be inimical to the protection of the fundamental rights of a state to protect itself. Indeed, it is in the best interests of the government in pursuing their business to accord to prisoners the right of proper representation and fair trial and not to engage in abuses of those situations. I heard the noble Baroness say the other day that it was the duty of people to act within the law. Of course, that is right where there is law and it is capable of being properly and democratically enforced. But it hardly applies where there is no law or a complete abuse of it by any government, particularly one not freely elected.
I believe that it is therefore incumbent on the Bahraini authorities to make it clear that they are intent on establishing a rule of law, if they have not already done so, and on ensuring that that rule of law will be respected. Surely as a government and a country we should raise our

1251
voices as we have done elsewhere to ensure that those basic liberties and basic human rights are observed. If we do not, we are hardly doing our duty to our friends.
8 p.m.
Baroness Chalker of Wallasey: My Lords, I am grateful for this opportunity to take forward our discussions on Bahrain. At Question Time on 15th May we sought to open up the subject. I am grateful to the noble Lord, Lord Avebury, for his letter of yesterday's date and for all the other correspondence which he has now made available to me.
Perhaps I may begin by saying that we should not lose sight of the fact that Bahrain has been a good and close friend to the United Kingdom. Indeed, we should not lose sight of the many issues which have been raised both in tonight's debate and over a long period, particularly over the past six months. Bahrain played a valuable role in 1990–91 and again last year when the security of the middle eastern region was threatened by Iraq. Bahrain is an important trading partner of the United Kingdom and more than 7,000 British citizens live happily and peacefully in Bahrain. However, there is no doubt that there are problems, particularly where there is unrest for whatever reason and when people are arrested or detained without charge.
The noble Lords, Lord Avebury and Lord Clinton-Davis, asked me what steps the British Government can take to encourage the Government of Bahrain to promote human rights, the rule of law and human decency. Both noble Lords also asked a number of subsidiary questions which are covered by those phrases. One of the advantages of our close relationship with Bahrain is that we talk frankly and directly about a wide range of issues. One of the most important issues is human rights. I am sure from experience of other parts of the world which I know rather better than the Middle East that we need to offer support and encouragement for improved procedures. We need to be constructive in giving help and advice. If we have views which are clearly at variance because our evidence is different from that which is being presented to us by the government of another country, we should make our views and differences known in private discussions as well as acting with other nations to try to promote in public fora a far better standard of human rights worldwide.
Let us put Bahrain in context. It is not the only country where we have a concern about human rights. However, we are concerned about the rule of law and the capacity of a country to have a system of law which can be respected. We shall continue to make public statements where appropriate and, above all, to have private discussions where that may help more quickly to improve the situation for the people of that country. We shall continue to take a keen interest in Bahrain. The ambassador in London knows that we shall offer as much help, support and advice as we can. I am sure that noble Lords who have had contact with Bahrain's ministers and ambassador will know that they too are keen to improve their situation.
It has always been our policy to promote good government throughout the world. However, that does not mean that we should automatically try to force our version
1252
of democracy on countries with very different cultures and traditions. In many parts of the world it is critically necessary to make sure that the form of democracy that is selected by the people of that country fits their culture and tradition. We cannot go round forcing our views on other people. However, we believe that there must be respect for human rights and the rule of law in all countries.
In the case of the Gulf states, we have always made clear the importance that we attach to consultation. The establishment two years ago of a Consultative Council in Bahrain was a step in the right direction. We hope to see the role of that council broaden and develop. One way in which we can encourage that is to forge close links between the Consultative Council in Bahrain and our own Parliament. We have invited the Chairman of the Bahrain Consultative Council to pay an official visit to the United Kingdom later this year. I very much hope that he will take up that invitation. We were pleased that a large parliamentary delegation visited Bahrain two weeks ago. We are keen to develop more such contacts, and shall do our best in the Foreign Office to offer advice and assistance, because such contacts are an important backdrop to changing a situation which worries many Bahrainis just as much as some of your Lordships.
The noble Lord, Lord Avebury, referred to his discussions this morning with the Deputy Foreign Minister, and particularly to the question of a visit to Bahrain by Amnesty International, and indeed any other non-governmental organisation which would be useful in improving the situation of many of the people about whom the noble Lord spoke. We have encouraged the Bahrainis to contact Amnesty International to agree the terms of such a visit. We were pleased to learn that representatives from Amnesty International met the Deputy Foreign Minister and the noble Lord, Lord Avebury, this morning. That is a step forward in helping us to share information. However, the fact that the Deputy Foreign Minister could not respond to some of the noble Lord's questions and the fact that he would have to refer back to Bahrain does not surprise me in the slightest. Their situation is very different. If Foreign Office Ministers in this country have not been briefed on an issue, they will not give a definitive answer on which they may later have to go back—
Lord Clinton-Davis: My Lords, or even if they have been so briefed—
Baroness Chalker of Wallasey: My Lords, the noble Lord, Lord Clinton-Davis, is trying to impute to me something that I am not about to say and which is not true. I hope that his sotto voce intervention will have missed the Hansard Reporters.
It is important that we keep the dialogue going. However uncomfortable this morning's discussion may have been at times—I imagine that it was—it is important that that dialogue is actually taking place. In his letter of yesterday, the noble Lord, Lord Avebury, gave me a lot of information. I was pleased to receive it, sad to read it, but determined that we should do something about it. The British ambassador will call on the Interior Minister, Shaikh Mohammed bin Khalifa, tomorrow morning so that the specific cases mentioned in the noble Lord's letter can be raised. I shall of course respond.

1253
Both noble Lords referred to the recent disturbances in Bahrain. It is true that apart from the incidents that have been mentioned in tonight's debate, the overall situation has been calm for some time. However, it is critically important that every effort is made to address the issues peacefully. Dialogue is the only way in which the government and the Shia leaders will achieve a proper resolution of those issues. Therefore that dialogue must continue. Perhaps we can help with the problem of unemployment among the young. The Bahrainis will want to tackle that issue. We have been discussing it. Unemployment among the young is a very particular issue in Bahrain. It is something with which we can help. I know that the outcome will take some time, but we can address problems together.
We are also clear that the situation with regard to detainees needs to be looked at. Detention without trial is not right. We have always maintained that. We know too that the Bahraini authorities share that view. Some of the detainees have now been charged and trials have begun. As the noble Lord, Lord Clinton-Davis, said, a large number of detainees have been released without charge. I am told that releases are continuing on an almost daily basis. For instance, 150 prisoners were released in a special amnesty to mark the Eid holiday in May. But I still share the concern about the series of cases about which we continue to hear. I might offer noble Lords an open invitation to do as the noble Lord, Lord Avebury, never ceases to do, which is to give us the information as he receives it, just in case it has not reached us by some other means. I am glad that the noble Lord brings the information to our attention.
I am told that most of the women who were detained have now been released. We do not have evidence of systematic sexual or physical abuse of female prisoners, although that has been alleged on a number of occasions. If there is such evidence, I would expect the noble Lord, Lord Avebury, and others to bring it to our attention, and we would condemn it strongly.
The noble Lord, Lord Clinton-Davis, cited the cases of 43 children aged between 10 and 16 who are in detention. I believe they are regarded by the Bahrainis as teenagers. It is a matter of concern that some of them may also have been involved in the disturbances, and so perhaps the rather softer attitude—perhaps the too soft attitude—we sometimes take to youngsters in this country is not mirrored by the action taken in Bahrain.
Lord Avebury: My Lords, before the Minister leaves the subject of children, will she respond to my point about the access to children by parents and guardians? An important feature of the system is that the authorities do not let the parents see the children, sometimes for periods of upwards of a month.
Baroness Chalker of Wallasey: My Lords, I am obviously concerned about that, and I was just coming to what the noble Lord, Lord Avebury, said about the failure to give parents access to children. That is yet another point which I would expect our ambassador to be able to take up in some detail. It is important that we take this matter in a measured way, examining each case as it comes and taking it up with the Bahraini authorities.
1254
In Bahrain there are people who are genuinely aware of and committed to human rights. Indeed, Bahrain is already a party to two international conventions—one on racism and one on the rights of the child. It is in that context that many of the cases which have been discussed should be taken up. We urge Bahrain to consider ratification of other instruments which are part of the international human rights conventions such as instruments on torture and political and civil rights. They are important. If only there were a greater understanding of them, the whole question of dialogue between government and those of opposing views might be undertaken in a framework of greater understanding than is currently the case.
The noble Lord, Lord Avebury, spoke about the need for fair trials. He knows full well that we would expect fair trials for those who have been accused. Subject to Bahraini procedures, we believe that it would be helpful if foreign observers were able to monitor the trials. That is something which we should look at.
A number of other points were made. I should detain the House too long if I were to go into some of them in detail, and there are a couple upon which I wish to check before I respond.
I do not believe that violence will lead to a resolution of Bahrain's problems. That is the view also of the Government of Bahrain. There are there occasions, as in other places around the world, when in order to contain disturbances some police may use excessive force. I do not believe that that is generally the case. It is true that if one has to use tear-gas and rubber bullets, as the noble Lord will know, people are sometimes hurt who should not have been caught up in the conflict, but that happens on both sides. I am sorry that when the demonstrations became violent last December the use of tear-gas and rubber bullets led to the death of several demonstrators, and many more were injured. Policemen too were killed in the course of their duty at that time. That is why I said that it is dialogue, not violent disturbances, which will change society in Bahrain. The answer is peaceful dialogue, not confrontation.
The noble Lord, Lord Avebury, also commented on a certain Mr. Ian Henderson. I wish to make it clear beyond peradventure that Mr. Henderson is not a representative of Her Majesty's Government or of Britain. We cannot take responsibility for every British citizen overseas, and what he does is his own responsibility. He is not placed in Bahrain by us. We have nothing whatsoever to do with him. To quote a famous phrase, "He is not one of us".
I want to come to one of the questions that I know interests Bahrain. It is that of foreign dissidents in the UK. It must sometimes seem strange to governments of other countries—it even seems strange to some of our own number, I must say—that opponents of other governments find their way to London, and it is from London that they conduct their opposition. There are times when their actions are disgraceful. No foreigners who break our law or act in a disgraceful way, as do some opponents of foreign governments, are welcome here.
We have both ancient parliamentary law and modern case law. We are not always free to act as we would wish with some of these so-called visitors from overseas. They do not act according to our way of thinking. They should

1255
not think that we approve of them or their activities. The ways in which some dissidents exploit Britain's freedoms and our legal appeals procedure are thoroughly reprehensible. Some people use the faith of Islam as a cloak for terrorism. We all know that the terrorism that is so exhibited is just as much a threat to Arab governments as it is to Western ones. It has nothing to do with Islam.
On the question of those foreign dissidents in the UK, I am just saying that there are some here who we wish were not here, and there are those who use their presence here not just to disgrace their own countries but to seek to disgrace ours as well, and they are not welcome.
Lord Avebury: My Lords, if the Minister has any knowledge of persons who, purporting to be refugees in this country, are planning and perpetrating acts of violence, she should report it to the police. I do not know of such people. I have heard such language being used by the Foreign Secretary and the Prime Minister, and now by the Minister. Without any shred of evidence, it labels a whole community as being potential terrorists and criminals. That is not fair.
Baroness Chalker of Wallasey: My Lords, I am afraid that the noble Lord takes remarks made about a few as being our general view. That is not so. I repeat that those who come here and claim, as some do, to be acting on behalf of other countries and who literally encourage terrorism are not welcome here any more than they are in their own countries. They are the few, but it is always the few who let down the case for proper dissension and who undermine the chance of dialogue for the opposition in a country such as Bahrain. The noble Lord should not credit me with saying things that I neither said nor meant—
Lord Clinton-Davis: My Lords, I thank the Minister for giving way. I would not expect her to engage in any kind of generalised attack upon refugees, asylum seekers and so forth. That would not be in character. However, it
1256
is right to observe that sometimes criminal activities are undertaken but it is not clear that information about them reaches the ears of the police in good time for action to be taken. One could not have an example clearer than the recent arrests in relation to the attack on the Israeli Embassy and on a Jewish charity in Finchley. I believe that it is unreasonable to cite the remarks of the noble Baroness as suggesting an overall attack on all refugees and asylum seekers.
Baroness Chalker of Wallasey: My Lords, I am grateful to the noble Lord, Lord Clinton-Davis. As he said, it is the few who create an enormous problem for the country in which they seek refuge—so they say—and for the country from which they come, whose way of life they seek to change by violent non-democratic means. We wish to encourage and help to achieve the democratic path in those countries. While we shall give refuge to people who are threatened by their former governments, far too many people come here and abuse that. They let down the real dissidents and natural opposers of the government with which they cannot have a dialogue at the present time.
All that having been said, in recent years Bahrain has made considerable progress on human rights. We acknowledge and welcome that process but there is still room for improvement, as I said on 15th May. It is true that the recent disturbances did not help and that the cases cited by the noble Lord, Lord Avebury, in his letters and in today's debate give us real cause for worry. As I have said to him, we are taking those up but, unlike some other countries, Bahrain is showing a genuine willingness to make improvements and to listen. We intend to be, as good friends, a spur to better human rights and to a better life for the people of Bahrain. We also intend to encourage the promotion of sensible and fair laws, which is what every Member of your Lordships' House would want.
House adjourned at twenty-four minutes
past eight o'clock.